The pace of technical change seems to run at an exponential rate. The latest developments in new artificial intelligence (AI) and, especially, large language models (LLMs) are incredibly exciting and have the potential to transform our industry.
Business consultancy firm McKinsey has argued that we are at a generational moment in tech, with generative AI offering the potential to transform the way we work. Firms that respond effectively to make the most of this potential stand to gain significant competitive advantage.
What is the potential of generative AI?
McKinsey research suggests that, globally, AI could add $2.6 trillion of value annually. It’s an astronomical figure when we consider that the entire UK economy in 2021 was valued at $3.1 trillion.
The McKinsey research focused on 63 different use cases. It identified four key areas where generative AI has vast potential to add value:
Customer operations
Marketing and sales
Software engineering
Research and development
Generative AI will have a significant impact across all industry sectors. McKinsey highlights the areas of banking, high tech, and life sciences as well as retail and consumer packaged goods as standing to see the biggest impact as a percentage of their revenues from generative AI.
How best can businesses reap the benefits of generative AI?
To realise the potential of generative AI, businesses must prepare, warns McKinsey. Firstly, it is important to determine the company’s posture. As the availability of the technologies becomes increasingly widespread, some CIOs and CTOs have responded by blocking employee access to publicly available applications in order to limit risk. However, in doing so, these companies risk missing out on opportunities for innovation and competitive advantage.
It is, therefore, vital to balance the need to innovate with well-defined controls and, most importantly, well-defined responsible AI principles. While governments globally struggle to keep up, many consultancy and technology companies have set out their own responsible AI principles, including McKinsey and Microsoft.
Alongside these principles, companies need to develop a number of new tools, practices and competencies:
Develop financial capabilities to determine the true costs and returns of generative AI and identified use cases,
Upgrade IT and data architectures to integrate and manage generative AI technologies,
Invest in upskilling roles so that business line teams have the skills and knowledge to take advantage of the new possibilities,
Establish new risk management practices to scan the landscape for new and emerging related threats and action mitigation activities,
Create a centralised, cross-functional team (in a similar model to the Centre of Excellence adopted to coordinate robotic process automation and low-code / no-code development) to promote best practice, identify risk and ensure quality control.
A generational moment in tech?
It is certainly true that we stand at the cusp of a revolutionary moment in technology innovation. The risks and potential rewards are huge. The European Union and other governments are already leading the charge to put guardrails in place.
In the meantime, businesses need to act swiftly to define their own stance, agree and communicate responsible AI principles as well as establish processes for control and monitoring. In this way, business leaders can ensure that innovation can continue to generate more opportunities than risks for society and the economy.
What next?
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