While they recognise the potential, many companies are struggling to realise the value from their AI investments, according to a major new study released by MIT Sloan Management Review (MIT SMR) and Boston Consulting Group (BCG).
The report Winning With AI: Pioneers Combine Strategy, Organisational Behaviour, and Technology, is based on a survey of more than 2,500 executives and 17 in-depth interviews with leading experts.
From the research, nine out of 10 respondents agreed that AI represents a business opportunity for their company.
However, seven out of 10 companies surveyed report minimal or no impact from AI so far. Among the 90 per cent of companies that have made some investment in AI, fewer than two out of five report business gains from AI in the past three years.
When looking at companies “making significant investments in AI,” 40 per cent say they haven’t reported any business gains from the technology.
“AI is a significant strategic opportunity and a major strategic risk if companies don’t act thoughtfully. There is already a gap between winners and losers, and this gap will only get larger in the years to come. But to get value, technology and algorithms are not enough,” said coauthor Shervin Khodabandeh.
The report argues that two a large extent the challenges are organisational, not technical.
“Companies have to seriously integrate AI into their core business strategy and their core business processes. This is often much harder than the AI tech itself, and getting it right requires a new way of working that is different than typical tech programs.”
AI efforts led by C-level executives and closely coordinated with the company’s broader digital transformation are more likely to generate value than those that are led by other executives or unintegrated with digital transformation, according to the research.
Talent is a major focus of the research. 65 per cent of respondents report obtaining business value from AI when using a multipronged talent approach: they build internal teams and rely less on third party vendors; they selectively import experienced AI talent for technical leadership roles; and they upskill their existing workforce to enable AI literacy and understanding of how to manage with AI.
They are also more likely to think bigger, taking on large, often risky, AI efforts that prioritise revenue growth over cost reduction.
“As business leaders develop strategy with AI, talent is a complex problem without simple answers. The skill sets of the workforce of tomorrow must differ markedly from the skill sets today—not only for the relatively smaller number of workers developing AI solutions but more importantly for the far greater number of workers who will be using AI solutions either directly or indirectly,” said coauthor Sam Ransbotham.