Companies need to get on board the Generative AI Train

Beyond the confines of the World Economic Forum’s AI House, all the talk at Davos recently seemed to revolve around “GenAI,” boosted by Sam Altman, CEO of Open AI, who participated in more than a dozen sessions on with the new technology.

But beyond the media frenzy, where are the companies?

As in Davos, the excitement is palpable. According to a recent BCG survey, 85% of large company leaders plan to increase their AI budget in 2024. Almost all companies are finally enabling some use of genetic AI—only half did so six months ago. The excitement is reminiscent of the dot-com boom of the late 1990s, only now it’s happening even faster.

However, despite the excitement, implementation remains uncertain. The business world is divided into two camps: the “champions” and the “spectators”.

Only 10% of companies are champions, setting ambitious goals for productivity gains worth a billion dollars or more, which they plan to reinvest for growth. These companies allocate budgets to meet their ambitions, generally at least $50 million per year dedicated to AI initiatives.

Many of these champions have already trained more than 25% of their teams to use AI and are beginning to transform functions such as marketing, customer relations, maintenance, engineering and compliance. However, most leaders have limited confidence in the productive AI skills of their executives. CEOs have taken the helm of genetic AI strategy at 27% of companies investing more than $50 million in AI this year.

Meanwhile, 90% of companies that fall into the beholder camp believe in AI, but not with their hearts. They hesitate, face talent shortages, cyber security concerns, regulatory uncertainties and have settled for small experiments. Even though the leaders of these companies estimate that they will eventually need to train nearly half of their teams to be AI-savvy, most are barely getting started.

The challenges are certainly real, but they are reasons to move forward rather than hesitate. To remain competitive in the era that is now dawning, companies will need to continuously evolve their technology infrastructure, their organizations, their processes and especially the skills of their teams. Most people have yet to build that muscle.

Reluctant business leaders don’t have to wait long. The gap widens between champions and spectators. In the short term, unlocking key returns through automating routine workflows provides the fastest and clearest ROI.

BCG estimates that targeted automation could reduce 20% of costs and boost productivity by between 30-50% in customer service, operations and IT. But in the long term, we expect even bolder disruption due to GenAI, from renewed business models to ground-breaking products and services.

Only 19% of companies surveyed by BCG ranked cost as their top GenAI selection criteria. This suggests that the promise of tools like ChatGPT often outweighs a sober assessment of their value. Companies should prefer solutions designed specifically for their specific use cases rather than responding to the latest viral sensation.

Collaboration is also often overlooked, with only 3% of companies prioritizing pre-existing partnerships when procuring GenAI. Companies should actively curate ecosystems of internal developers, external vendors, researchers, and consultants to successfully navigate the uncertainties of GenAI.

However, most companies remain stuck between the promise of GenAI and the reality. Those who recognize the permanence of GenAI and are actively upskilling their employees, tracking costs, building partnerships and developing practical strategies are in a position to carve a path through the hype.