Does your business have an AI strategy? If that sounds too far afield, know this: three-quarters of executives believe AI will enable their companies to move into new businesses, and almost 85% believe AI will allow their companies to obtain or sustain a competitive advantage.
This data comes from the newly released study by Boston Consulting Group and MIT Sloan Management Review, Reshaping Business With Artificial Intelligence. Building on data rather than conjecture, the research is based on a global survey of more than 3,000 executives, managers, and analysts across industries and in-depth interviews with more than 30 technology experts and executives.
If you suddenly feel behind the curve, you’ll take comfort in knowing that, according to the same study results, less than 39% of all companies have an AI strategy in place. Only about one in five companies has incorporated AI in some offerings or processes, and approximately one in 20 companies has extensively incorporated AI in offerings or processes. The largest companies—those with at least 100,000 employees—are the most likely to have an AI strategy, but only half have one.
High expectations for big effects
Nonetheless, expectations are high. While most executives (across industries, company sizes, and geography) have not yet seen substantial effects from AI, 63% expect to see these effects within just five years. Most of these organizations foresee sizable effects on information technology, operations and manufacturing, supply chain management, and customer-facing activities. Here are three examples:
- Information technology: With AI techniques, there are systems that can now handle many of the jobs that have been typically outsourced to low labor-cost countries, e.g., system administration, IT administration, business operations, and verification. At this moment in time, only portions of these jobs are automated, but AI is headed in the direction of full automation of these jobs.
- Operations and manufacturing: Executives at industrial companies expect a large impact in operations and manufacturing from the advances of AI. Oil and gas company BP, for example, heavily engages in the augmentation of human skills with AI in order to improve operations in the field. Their “BP well advisor” takes all of the data that’s coming off of the drilling systems and creates advice for the engineers to adjust their drilling parameters to remain in the optimum zone. It also alerts them to potential operational upsets and risks down the road.
- Customer-facing activities: AI is already powering nearly every experience we have as consumers, from our customer journeys on Amazon to consumer apps delivering real personalized value, in real-time. Extended and enhanced experiences as a result of AI will continue to grow, and those uses will become more differentiating for businesses. Take, for example, Ping An Insurance Co. of China Ltd. The second-largest insurer in China, the company offers an online loan in three minutes by using an internally developed AI-based facial recognition capability that is more accurate than humans. The tool has verified more than 300 million faces in various uses and now complements Ping An's cognitive AI capabilities including voice and imaging recognition.
Complementing and strengthening the workforce with AI
Despite these trends and advances, executives simultaneously recognize the potential risks of AI, which presents many of the same issues and challenges as other digital technologies. Experimentation and learning with AI can take much longer than other digital initiatives, with a higher variability of success and failure. AI also stands to create significant unease—even the most knowledgeable expert has difficulties specifying how programs will play out, or which programs and functions should be off limits for AI.
Executives and experts interviewed as part of this study also understand that the leaps-and-bounds improvements of AI do not necessarily create a sustainable competitive advantage for businesses—especially when looking 10 or 20 years down the road, when everyone is using AI. For AI to be strategic, companies must figure out how humans and computers can build off each other’s strengths to create competitive advantage.
MIT Sloan Professor Thomas Malone devotes much research, writing, and instruction to this topic, focusing on how people and machines can work more effectively together and how organizations can be designed to take advantage of the possibilities provided by information technology. Malone teaches in the new, online program Artificial Intelligence: Implications for Business Strategy. This self-paced program, designed by the MIT Sloan School of Management and the MIT Computer Science and Artificial Intelligence Laboratory (CSAIL), focuses on the organizational and managerial implications of AI technologies (such as machine learning, natural language processing, and robotics), rather than on their technical aspects.
This online course will help participants understand the implications of these new technologies for business strategy and how artificial intelligence will complement and strengthen our workforce rather than just eliminate jobs. Additionally, the program will emphasize how the collective intelligence of people and computers together can solve business problems that only recently were considered impossible. Learn more about this new program.