Saturday, June 16, 2018

Wait-and-See Could Be a Costly AI Strategy

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, June 15, 2018

by Jacques Bughin

From the dexterity of Amazon’s Kiva robots to the facial recognition in Apple’s iPhone X, artificial intelligence is increasingly sophisticated and accessible. It also promises to be a rich source of profit uplift — up to 10% of revenue, depending on your industry.

Nevertheless, more than 95% of companies have not embraced AI technology to reinvent how they do business. Even though there are many unknowns regarding AI’s capabilities and uses, our research at the McKinsey Global Institute suggests that following a wait-and-see strategy for too much longer could be a costly mistake.

How costly? When we collected more than 400 use cases in 19 industries and simulated the dynamics of AI diffusion (based on current corporate intent to adopt, the technology’s impact on cash flow, and the profit growth linked to adoption), we found significant divergences in the patterns of economic growth between early adopters of AI at scale and non-adopters. In the simulation, early diffusers — that is, companies that will use a full suite of AI technologies in the next five years — doubled their normal profits by 2030, bringing in an additional 4% of gross profit growth annually at the expense of their competitors. When we extrapolated this on a global basis, it equated to a shift in corporate profit to early AI diffusers of approximately $1 trillion by 2030, or 10% of the current profit pool. Read the rest here.

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