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McKinsey The state of AI in 2023: Generative AI’s breakout year

Also: Goldman Sachs AI investment forecast to approach $200 billion globally by 2025

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AI KATANA
August 02, 2023

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Generative AI (gen AI) tools have seen a breakout year, with a third of respondents in a McKinsey Global Survey stating their organizations use them regularly in at least one business function. Despite the uptick, managing gen AI-related risks is still in its infancy. Elsewhere, Goldman Sachs projects global AI investment to approach $200 billion by 2025, indicating a significant boost to global GDP. As generative AI applications enhance customer engagement, HBR advocates for responsible AI use to ensure customer-centricity and data privacy. Nobel laureate Joseph Stiglitz warns that unregulated AI may worsen income inequality and calls for regulation. YouTube has a new AI feature generating video summaries to help users decide what to watch next, and AI-powered medication management platform FeelBetter has raised $5.9 million in a funding round.

Sliced:

  • 📈 McKinsey The state of AI in 2023: Generative AI’s breakout year

  • 💸 Goldman Sachs AI investment forecast to approach $200 billion globally by 2025

  • 💪🏻 Using AI to Build Stronger Connections with Customers

  • 😟 Unregulated AI Will Worsen Inequality, Warns Nobel-Winning Economist Joseph Stiglitz

The latest McKinsey Global Survey reveals the rapid adoption of generative AI (gen AI) tools, with a third of respondents indicating their organisations use gen AI regularly in at least one business function less than a year after these tools emerged. The survey also highlights that gen AI has entered the boardroom agenda and is personally used by about a quarter of C-suite executives. Despite growing investment, organizations are still in the early stages of managing gen AI-related risks, with less than half of respondents mitigating even the most relevant risk - inaccuracy. The leading adopters of gen AI tools are organizations with already embedded AI capabilities and those gaining the most value from traditional AI, termed as AI high performers. Though the anticipated impact of gen AI on business is significant, the adoption of other AI tools hasn't seen a substantial increase, remaining concentrated within a limited number of business functions.

Investment in AI could have a profound impact on global GDP, with potential to surpass the economic booms triggered by innovations in electricity and personal computing, according to Goldman Sachs Economics Research. The report suggests generative AI could enhance global labour productivity by over 1% annually post widespread use, and predicts global investments in AI to reach approximately $200 billion by 2025. Despite starting from a low base, AI-related investments are poised to surge, with the US leading the way. However, it may take several years for these investments to substantially influence the economy. In the long-term, AI-related investment might peak at 2.5 to 4% of GDP in the US and 1.5 to 2.5% in other AI leaders. The report also highlights that while the uptake of AI has been slow, with only 4% of US firms currently utilising AI, a significant majority expect to adopt AI over the next three to ten years, indicating potential for a notable impact on the US economy between 2025 and 2030.

Generative AI applications are transforming customer engagement, but there is concern about over-reliance on AI, which could compromise customer experience and data privacy. Responsible use of AI is therefore key, with a focus on enhancing long-term customer relationships rather than short-term gains. By using AI to enrich customer experiences, businesses can build stronger connections and loyalty. Stanford University and Massachusetts Institute of Technology found positive impacts from AI-based customer support tools, which increased agent productivity, improved customer satisfaction, and reduced agent attrition. Furthermore, personalizing experiences using AI, as demonstrated by the Royal Bank of Canada and Morgan Stanley, can increase customer engagement and reduce attrition. The integration of AI into standard operating procedures, predictive routing, and real-time script recommendations can further improve customer experience. Despite cost and efficiency benefits, the greatest value of generative AI lies in enriching customer lives, necessitating a focus on customer-centric applications.

Nobel-winning economist Joseph Stiglitz expresses concern over the economic impact of unregulated artificial intelligence (AI), particularly generative AI, warning that it could significantly exacerbate income inequality by automating jobs and concentrating wealth among companies. While acknowledging AI's potential for productivity enhancement, he argues that unchecked innovation doesn't necessarily lead to societal well-being, as evidenced by job losses and labor disruption in industries like Hollywood and writing due to AI advancements. As a solution, Stiglitz proposes regulations such as a shorter work week and retraining programs to transition workers into new roles created by AI. He also emphasizes the importance of implementing policies that increase aggregate demand and the bargaining power of workers. Despite potential benefits of AI, Stiglitz remains pessimistic about the prospects for equality, citing political challenges in implementing necessary changes.

🛠️ AI tools updates

YouTube is implementing a new AI feature that generates video summaries in search and watch pages, aiming to aid users in deciding which video to watch next. The brief AI-generated summaries will only complement the existing descriptions provided by the video creators and will be initially tested on a limited number of English language videos. YouTube hasn't disclosed specifics about the feature's deployment. This introduction comes as part of a series of changes in YouTube, including an AI voice dubbing feature, price rise for its Premium service, and several non-AI-related improvements. The major challenge the feature faces is ensuring accuracy, and its impact on content creators, who continually adapt to algorithm changes, is also being keenly observed.

💵 Venture Capital updates

FeelBetter, a startup utilizing machine learning for personalized medication management, especially in polypharmacy scenarios, has successfully secured $5.9 million in a funding round led by Firstime Ventures and Shoni Health Ventures. Random Forest VC, The Group Ventures, and existing investor Triventures also participated in the round, bringing the total raised by FeelBetter to $8 million. The company's AI platform analyzes a patient's health status, medical history, pharmacology, and clinical guidelines to optimize medication regimens. With these funds, FeelBetter aims to expand its reach and enhance its platform. The firm's technology addresses the growing global health issue of suboptimal medication management, particularly in older adults where polypharmacy is common and often leads to hospital admissions.

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⭐️ Generative AI image of the day