Decoding AI Value -- An Analysis of McKinsey's 'The economic potential of generative AI'

Generative AI is transforming how data and content are generated in many types of use cases. Its ability to quickly summarize data and enable people to interact with systems in a conversational manner is redefining what work is and the value associated with it. In a recent conversation with Chris Kraus, we reviewed McKinsey & Co.'s, "The economic potential of generative AI: The next productivity frontier" on how generative AI is shaping different roles across several industries, particularly in customer service, labor cost efficiency, and the implications for high-value work.

Generative AI assists in front and back office tasks

The line between back office and front office operations is blurring as generative AI takes on a more significant role. AI's ability to assist in automating tasks previously managed by humans in areas such as customer service is remarkable. For example, consider the scenario where AI meticulously examines incoming documents in a loan application process, distinguishes them, and then forwards them to a loan officer for approval. AI aids professionals by automating routine tasks, allowing them to focus on higher-priority matters.

Generative AI ROI

One cannot overlook the financial implications of AI. In certain regions where labor costs are low, the financial burden of resolving a problem with AI may outweigh the cost of human labor. However, relying on humans in this context merely postpones the inevitable adoption of AI.

High-value work, which is the cornerstone of any successful business operation, deserves our attention. Every employee is often bombarded with requests from peers and external stakeholders. Amid these demands, it's important to prioritize. Generative AI can help by taking on tedious tasks, freeing up individuals to focus on high-value projects that require creative and critical thinking.

Generative AI innovation accelerated

When reflecting on McKinsey's previous reports, the advancement of natural language understanding technology surpasses all expectations. Previously, experts predicted that AI technology capable of human-like tasks would emerge in 2027. However, as of 2023, we are witnessing this transition happening right now. This leap signifies a four-year acceleration, which has tremendous implications for businesses worldwide.

What are the practical uses of Generative AI?

The question remains: How should businesses perceive and respond to this accelerated development? While some might dismiss it as mere hype, the practical use cases of AI, as outlined in various research papers, are too compelling to ignore.

In one instance, a Krista partner who sought ten potential use cases for AI from customers ended up identifying a hundred viable scenarios, each with a distinct dollar value. With the rapid advancement of technology, waiting and watching is no longer an option. If you don't adopt AI now, your competitors will, leaving you trailing in their wake.

Generative AI is redefining businesses

As we move towards 2024, we can anticipate a significant shift in business budgets to accommodate the integration of generative AI. Businesses are already implementing or conducting pilots and realizing the immense value generative AI offers. Notably, implementing AI is not as complex as it may seem, provided you approach it the right way. Previous episodes on our generative AI integration methods underscore how swiftly you can actualize AI, govern your data, and automate the next steps of generative AI.

We are on the brink of an AI revolution. Businesses that wish to survive must embrace generative AI and start integrating it into their operations. The future is here.