It’s been a year and a half since Chat-GPT and other such AI tools were released to the public. Since then, generative artificial intelligence (AI) has attracted massive media attention, investment, and controversy. Now, new data from McKinsey suggests that generative AI tools are already seeing relatively widespread adoption in enterprise environments.
Generative AI investment doubled last year
The value of private equity and venture capital-backed investments in generative AI companies more than doubled last year. Even bucking an otherwise sluggish investment landscape. According to S&P Global Market Intelligence data, generative AI investments by private equity firms reached $2.18 billion in 2023. This is compared to $1 billion the year before.
However, there’s a difference between investment and real-world applications that support a profitable business model. Just ask Uber, Netflix, WeWork, or any other “disruptive” tech company.
In 2023, generative AI captivated the attention of everyone from the media to investors. Since then, the debate has raged over what exactly the technology will actually do.
Is AI coming for our jobs?
According to many prominent tech industry figures, from Elon Musk to the “godfather of AI” Geoffrey Hinton, AI is definitely coming for our jobs. Any day now. If Musk is to be believed, we can all expect to be out of work imminently. He claimed recently that “AI and the robots will provide any goods and services that you want”. Jobs would be, he concluded reduced to hobbies.
However, studies like the one recently performed at MIT suggest that AI may not be ready to take our jobs just yet… or any time soon, for that matter. The last few weeks’ tech news has been dominated by Google’s AI search melting down, hallucinating, and giving factually inaccurate answers. A crop of AI apps designed to help identify mushrooms have been performing poorly, with potentially deadly results—part of what Tatum Hunter for the Washington Post describes as “emblematic of a larger trend toward adding AI into products that might not benefit from it.”
According to Peter Cappelli, a management professor at the University of Pennsylvania Wharton School, generative AI is regularly being over-applied to situations where simple automation will suffice. According to Capelli, generative AI may be creating more work for people than it alleviates. LLMs are difficult to deploy. “It turns out there are many things generative AI could do that we don’t really need doing,” he added.
Generative AI is delivering return on investment
Nevertheless, generative AI adoption is accelerating at a meaningful pace among enterprises, according to McKinsey’s new data. Not only that, but “Organisations are already seeing material benefits from gen AI use, reporting both cost decreases and revenue jumps in the business units deploying the technology,” note authors Alex Singla, Alexander Sukharevsky, Lareina Yee, and Michael Chui, with Bryce Hall on behalf of Quantum Black, MicKinsey’s AI division.
Most organisations using gen AI are deploying it in both marketing and sales and in product and service development. The biggest increase from 2023 took place in marketing and sales, where MicKinsey found that adoption had more than doubled. The function where the most respondents reported seeing cost decreases was human resources. However, respondents most commonly reported “meaningful” revenue increases in their supply chain and inventory management functions.
So, are we headed for a radical employment apocalypse?
“The technology’s potential is no longer in question,” said Singla. “And while most organisations are still in the early stages of their journeys with gen AI, we are beginning to get a picture of what works and what doesn’t in implementing—and generating actual value with—the technology.”
According to Brian Merchant at Blood in the Machine, “regardless of how this is framed in the media or McKinsey reports or internal memos, ‘AI’ or ‘a robot’ is never, ever going to take your job. It can’t. It’s not sentient, or capable of making decisions. Generative AI is not going to kill your job — but your manager might.”
He adds that, while “there will almost certainly be no AI jobs apocalypse,” this doesn’t necessarily mean that people won’t suffer as the technology continues to be more widely adopted. “Your boss isn’t going to use AI to replace jobs, or, more likely, going to use the spectre of AI to keep pay down and demand higher productivity,” Merchant adds.
- Data & AI
