The Current State of AI

The current state of AI is rapidly evolving, with new advancements and applications emerging every day. According to research conducted by McKinsey, generative AI tools are experiencing explosive growth and are expected to have a breakout year in 2023.

Generative AI refers to AI models and algorithms that can create new content, such as text, images, and even music, based on patterns and examples from existing data. These tools have gained significant traction in various industries, with one-third of surveyed organizations already using generative AI regularly in at least one business function.

The adoption of generative AI has transformed the way organizations operate and has caught the attention of top executives. Around one-quarter of C-suite executives report personally using generative AI tools for work, and more than one-quarter of companies using AI have gen AI on their boards’ agenda. This indicates the growing importance and impact of AI in strategic decision-making.

The potential of generative AI to disrupt industries and reshape competition is significant. Three-quarters of survey respondents expect gen AI to cause significant or disruptive change in the next three years. Industries reliant on knowledge work, such as technology, financial services, banking, pharmaceuticals, and education, are likely to experience the most significant effects and value creation from gen AI.

However, the widespread adoption of gen AI comes with challenges and risks. Many organizations are still in the early stages of managing the risks associated with these tools, with less than half of respondents stating that their companies are actively mitigating the risk of inaccuracy, which is one of the most relevant risks with gen AI.

AI high performers, organizations that attribute at least 20% of their EBIT (earnings before interest and taxes) to AI adoption, are leading the way in adopting both gen AI and traditional AI capabilities. These high performers are using gen AI across more business functions, such as product and service development and risk and supply chain management, compared to other organizations. They also have a higher focus on creating new businesses or revenue sources through gen AI.

The impact of AI on the workforce is another significant aspect of the current state of AI. Organizations anticipate substantial changes and expect more employees to be reskilled rather than separated. AI high performers are expected to conduct much higher levels of reskilling than other companies. The roles in demand to support AI initiatives are evolving, with data engineers, machine learning engineers, and AI data scientists being the most common hires.

Despite the rapid growth of gen AI, the overall adoption of AI remains steady, with 55% of organizations reporting AI adoption. The use of AI is mostly concentrated in specific business functions like product and service development and service operations. While organizations are seeing returns in these areas, there is still room to capture more value from AI.

In conclusion, the current state of AI is characterized by the rapid growth and adoption of generative AI tools. These tools have the potential to disrupt industries, transform business operations, and reshape competition. However, organizations need to address the challenges and risks associated with gen AI and invest in reskilling their workforce to fully leverage the benefits of AI adoption.

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