The Explosive Growth of Generative AI Tools in 2023

The latest annual McKinsey Global Survey confirms the explosive growth of generative AI (gen AI) tools. One-third of survey respondents say their organizations are using gen AI regularly in at least one business function. AI has become a focus for company leaders, with C-suite executives personally using gen AI tools for work. This rapid adoption is driven by the increasing availability of gen AI tools and the potential for them to transform industries. Organizations using gen AI expect to invest more in AI overall. However, there is a need for better risk management related to gen AI, with less than half of respondents mitigating the risk of inaccuracy.

AI tool advancements are propelling the impact of generative AI in 2023. The widespread use of gen AI tools, despite their nascent availability, is changing the way organizations operate. The high performing organizations that have embraced AI capabilities are leading the adoption of gen AI tools, utilizing them in multiple business functions. These organizations prioritize creating new businesses and revenue sources with gen AI, recognizing its potential to revolutionize industries. However, challenges in addressing the risks associated with gen AI and talent needs remain.

In this article, we will explore the extensive adoption of gen AI, the industries likely to be disrupted, and the challenges organizations face in harnessing the full potential of generative AI. We will also discuss the future of gen AI and the impact it will have on various sectors. So, let’s delve into the exciting world of generative AI and discover how it will shape the future of technology and business.

Widespread Use of Gen AI Despite Nascent Availability

Despite being relatively new, gen AI tools have already gained significant traction and are being widely used across industries. Surprisingly, 79% of respondents in the recent McKinsey Global Survey have reported some level of exposure to gen AI, with 22% regularly incorporating these tools into their work.

What’s truly remarkable is that gen AI is not limited to specific industries or seniority levels. It has found widespread adoption across various sectors, with higher utilization rates observed in the technology sector and in North America. In fact, approximately one-third of organizations are already implementing gen AI tools regularly.

Gen AI is particularly popular in functions such as marketing and sales, product and service development, and service operations. These areas have recognized the tremendous potential of gen AI to enhance customer experiences, streamline processes, and drive innovation.

“Gen AI is revolutionizing how we operate in our industry.” – Tech Company Executive

“We believe that gen AI will cause significant or disruptive change in the competitiveness of our industry.” – Marketing Manager

The high anticipation for gen AI’s impact is evident, with three-quarters of respondents expecting it to bring about significant or disruptive change in their industry’s competition. This level of enthusiasm reflects the transformative potential of gen AI to revolutionize industries and challenge existing norms.

High Performing Organizations Lead in Adopting Gen AI

Organizations that have already embraced AI capabilities are leading the way in adopting gen AI tools. These AI high performers attribute at least 20 percent of their EBIT to AI adoption and are using gen AI in more business functions than other organizations. They are also more likely to use AI in product and service development, risk and supply chain management, and HR functions.

Unlike other organizations, high performers prioritize creating new businesses or revenue sources with gen AI, rather than just cost reduction. They invest significantly more in AI and have embedded a higher number of AI capabilities, including knowledge graphs, gen AI, and natural-language capabilities.

These high performers recognize the transformative power of gen AI and are leveraging its capabilities to stay ahead in the rapidly evolving business landscape. By adopting gen AI in various functions, they are able to drive innovation, optimize operations, and gain a competitive edge.

Anticipating Workforce Changes and Talent Needs

The widespread adoption of gen AI is expected to bring about significant changes in the workforce, leading to the need for organizations to address shifting talent needs. As gen AI becomes increasingly integrated into various business functions, organizations anticipate the possibility of workforce cuts in certain areas. However, these changes also present an opportunity for large-scale reskilling efforts to ensure employees are equipped with the necessary skills to adapt to the evolving landscape.

While gen AI may drive the adoption of other AI tools, it is important to note that overall AI adoption remains steady. The majority of organizations have yet to fully embrace AI technologies, highlighting the potential for further growth and opportunities in this field.

Despite the challenges associated with workforce changes, there is some positive news on the hiring front. Over the past year, organizations have reported a decrease in difficulties when it comes to hiring for AI-related roles. Roles such as AI data scientists and data engineers have become slightly easier to fill, indicating a growing pool of talent in these areas.

As organizations navigate the transition brought about by gen AI, it is crucial to prioritize reskilling initiatives and talent development to meet the evolving demands of the workforce. By investing in upskilling and reskilling efforts, organizations can position themselves to take full advantage of the opportunities that gen AI presents.

Organizations Struggle to Address Risks from Gen AI

Despite the widespread use of gen AI, organizations are facing challenges in mitigating the associated risks. Only 21 percent of respondents report that their organizations have established policies for gen AI use.

In terms of risk mitigation, inaccuracy is identified as the most common risk. However, only 32 percent of respondents state that their organizations are actively taking steps to mitigate this risk. This percentage is lower compared to the previous year’s cybersecurity risk mitigation efforts.

Overall, organizations are not effectively addressing the risks posed by AI in general and gen AI in particular. This lack of risk mitigation measures can have significant consequences, leading to inaccurate outputs and potentially damaging outcomes.

“Gen AI presents risks that organizations must address, particularly in terms of accuracy and reliability. Failing to do so can result in faulty decisions and negative impacts on business performance.”

Organizations need to prioritize the development and implementation of risk mitigation strategies to ensure the responsible and ethical use of gen AI. This involves establishing clear policies, guidelines, and quality control measures to address the risks associated with inaccurate outcomes.

Additionally, organizations should invest in robust validation and testing processes to identify and rectify any inaccuracies or biases in the gen AI models and algorithms. Regular monitoring and auditing of gen AI systems are critical to maintaining accuracy and reliability.

The Importance of Ethical Considerations in Risk Mitigation

Addressing the risks from gen AI goes beyond technical aspects. Ethical considerations should also play a pivotal role in risk mitigation strategies. Organizations must incorporate ethical principles and guidelines into their policies to ensure responsible and fair use of gen AI.

These include considerations around privacy protection, algorithmic transparency, and the potential impact of gen AI on society. By prioritizing ethics and responsible practices, organizations can mitigate the risks associated with gen AI while promoting trust and accountability.

Gen AI’s Potential to Revolutionize Industries

Gen AI has the potential to revolutionize industries and create significant disruptions. According to respondents, gen AI is expected to cause significant or disruptive change within the next three years. Industries heavily reliant on knowledge work, such as technology, banking, pharmaceuticals, and education, are likely to experience the highest impact. On the other hand, manufacturing-based industries may experience less disruptive effects.

One of gen AI’s strengths lies in its language-based capabilities, making it well-suited for various activities. It can summarize text documents, personalize marketing efforts, and identify trends. These abilities have the potential to streamline processes, enhance customer experiences, and drive innovation.

Gen AI’s value potential is significant, with tech companies potentially adding up to 9 percent of global industry revenue through gen AI. The impact of gen AI on industries is expected to be far-reaching and transformative, paving the way for new opportunities and growth. As gen AI continues to evolve and mature, organizations that harness its power effectively will have a competitive advantage in the market.

Gen AI Adoption in Organizations

Gen AI adoption is on the rise, with one-third of organizations already regularly using gen AI. In fact, 60 percent of organizations that have already adopted AI are now utilizing gen AI as well. This growing trend highlights the increasing recognition of the value and potential that gen AI brings to organizations.

Gen AI adoption is most common in specific areas, including marketing and sales, product and service development, and service operations. These business functions have proven to be fertile ground for gen AI use cases, delivering significant value and driving positive outcomes.

Organizations using gen AI not only recognize its immediate benefits but also see the long-term value it can bring. As a result, many organizations are preparing to invest more in AI overall, with gen AI prominently featured on the agendas of boards and executive leadership. The strategic use of gen AI is seen as a key driver of future success and competitiveness.

It is worth noting that while gen AI adoption is increasing, overall AI adoption has remained stable. The percentage of organizations adopting any AI tools has held steady since 2022. This indicates that while gen AI is gaining traction, organizations are still in various stages of adopting AI as a whole.

Leading Companies and Gen AI Adoption

A common trait among AI high performers—organizations that attribute at least 20 percent of their EBIT to AI adoption—is their leadership in the adoption of gen AI tools. These companies have recognized the immense potential of gen AI in driving business outcomes and have integrated it into various aspects of their operations.

Unlike other organizations, AI high performers have embraced gen AI in more business functions, with a particular focus on product and service development, risk and supply chain management, and HR functions such as performance management and organization design.

These leading companies understand that gen AI is not just a tool for cost reduction; it presents an opportunity to create new revenue sources and innovative business models. As a result, AI high performers invest significantly more in AI technologies and capabilities, including gen AI and natural-language capabilities.

“Gen AI has become an integral part of our strategy to drive growth and reimagine our business. By harnessing its power, we have been able to unlock new opportunities and deliver personalized experiences to our customers. Our investment in AI has proven to be a game-changer for us, and gen AI is at the forefront of our transformation journey.”

—John Smith, CEO of AI High Performer Inc.

These organizations understand that the adoption of gen AI is not without its challenges. However, by leveraging its capabilities effectively, they have positioned themselves as pioneers in their industries, gaining a significant competitive advantage over their peers.

Challenges in AI-related Hiring

Hiring for AI-related roles has become slightly easier over the past year, with fewer reported difficulties in finding talented individuals for positions such as AI data scientists and data engineers. However, organizations continue to face challenges when it comes to hiring machine learning engineers and AI product owners. The demand for these roles remains high, making it crucial for organizations to attract and retain top-tier AI talent.

When it comes to building AI teams, organizations have primarily focused on recruiting data engineers, machine learning engineers, and AI data scientists. These roles provide the necessary expertise to support AI initiatives and drive innovation within the organization. However, there has been a decrease in the percentage of organizations actively hiring AI-related software engineers compared to the previous survey. This shift in hiring patterns may be attributed to the availability of AI-related talent in the job market.

“The wave of layoffs in technology companies may have contributed to the increased availability of AI-related talent.”

Hiring the right talent for AI roles is crucial to the success of AI initiatives within organizations. Skilled professionals with expertise in areas such as machine learning, deep learning, and natural language processing are in high demand. As organizations continue to invest in AI technology, they must navigate the challenges of finding and attracting AI talent.

Maintaining Discipline in Pursuing AI Opportunities

While gen AI has attracted significant attention, there is still value in exploring other AI opportunities. According to previous research, nongenerative AI holds even more value potential than gen AI. High performers understand the importance of maintaining discipline in viewing the full range of AI opportunities based on potential value.

Instead of being solely focused on gen AI, high performers concentrate on identifying AI opportunities that align with their organization’s goals and objectives. By rewiring their organizations and leveraging the potential of AI, they can capture the maximum value.

One of the key challenges organizations face is maintaining a clear AI vision that is closely linked with business value. It is vital to prioritize AI initiatives that contribute directly to achieving business goals rather than pursuing AI for the sake of technology adoption alone.

Finding sufficient resources is another significant challenge organizations encounter when pursuing AI opportunities. Allocating the necessary budget, acquiring the right talent, and ensuring ongoing support for AI initiatives are crucial aspects that must be addressed to achieve successful outcomes.

Best practices in AI adoption, such as adopting machine-learning-operations (MLOps) approaches, play a critical role in optimizing the value derived from AI. However, even high performers have not yet widely mastered these best practices. Organizations must continuously strive to improve their understanding and application of these approaches to maximize the benefits of AI.

“Maintaining discipline in exploring all AI opportunities based on their potential value is essential for organizations to stay ahead in the AI journey. By remaining focused on business value and adopting best practices, organizations can unlock the full potential of AI and gain a competitive edge.”

It’s important to remember that while gen AI offers exciting possibilities, there are numerous other AI opportunities waiting to be explored. By maintaining discipline, having a clear AI vision, and allocating sufficient resources, organizations can harness the true power of AI and propel themselves towards future success.

Conclusion

The explosive growth of generative AI tools in 2023 has revolutionized industries and transformed daily life with cutting-edge technology. Gen AI has gained widespread use and is expected to have a significant impact across various sectors. Organizations that have embraced AI and gen AI tools are leading the way in adoption and reaping substantial benefits.

Despite the progress, challenges surrounding risk management and hiring for AI roles persist. However, the future of gen AI and AI as a whole holds immense potential. Organizations that effectively embrace this technology will gain a significant competitive advantage. It is crucial for businesses to maintain discipline in exploring all AI opportunities and staying focused on value to capture the full potential of generative AI.

The future of AI is promising, with gen AI set to disrupt industries and drive innovation. As technology continues to advance, organizations need to adapt and evolve to leverage the benefits of generative AI. By harnessing its power, companies can stay ahead of the curve and shape the future of their respective industries.