Artificial intelligence is seen as a major leap forward in business technology, yet relatively few companies are finding the competitive advantage.
A new report from Boston Consulting Group and MIT Sloan Management Review, based on a global survey of over 3,000 executives and interviews with tech experts and executives, assesses the current realities and future possibilities of AI in business. It found that expectations are high in companies of all sizes across geographies and industries. Three-quarters of executives believe AI will enable them to enter new businesses, and nearly 85% believe it will deliver competitive advantage. These outcomes are expected within the next five years, particularly in IT, operations and manufacturing, supply chain management and customer-facing activities.
Strikingly, the study found a significant gap between expectations and actual applications. This trend runs across sectors, and even between companies within the same industry. Only about one in five companies has incorporated AI into “some” of its offerings or processes, and one in 20 has done so “extensively.” And while more than 60% said they consider having an AI strategy in place an urgent matter, only half said their organization has one.
Then there are the companies which lead in AI, having made it a dominant features of their processes and operations. Among these companies, senior leaders find that hiring and developing skilled talent is the biggest challenge, along with establishing priorities for AI investments. There is also a considerable learning curve – both for humans and AI algorithms. Training, development and recruitment are needed to overcome the talent gap and use AI for competitive advantage.
As with other technology-driven transformations, there are also managerial challenges. Overcoming them demands qualities such as vision and leadership, openness to change, long-term thinking, and close alignment of business and technology strategy. In terms of organization, AI adoption may entail a change in talent strategy, as “soft” skills become more important. Cross-functional collaboration and organizational flexibility are integral to all working AI models, and the cultural change can be difficult, particularly for large companies.
“We have to bring in people from different disciplines. And then, of course, we need the machine learning and AI people,” said Agus Sudjianto, Executive Vice President and Head of Corporate Model Risk at Wells Fargo. “Somebody who can lead that type of team holistically is very important.” The real test, the report emphasizes, is understanding “the potential shift of entire value pools…and how to build sustainable competitive advantage in a changing environment.”