Artificial Intelligence in Business Gets Real – 2018 AI report by MIT Sloan & BCG

By Sam Ransbotham, Philipp Gerbert, Martin Reeves, David Kiron, and Michael Spira

MIT Sloan Management Review Research Report
In collaboration with BCG Henderson Institute

Findings from the 2018 Artificial Intelligence Global Executive Study and Research Project

Pioneering Companies Aim for AI at Scale

Executive Summary

Executives in companies around the world are increasingly looking to artificial intelligence to create new sources of business value.

This is especially true for leading adopters of AI — those that have invested in AI initiatives and seen impressive results. This small group of companies is doubling down on AI investments, building competencies, and working to take AI to scale.

The opportunities and challenges these AI Pioneers face are the focus of the 2018 MIT Sloan Management Review and The Boston Consulting Group (BCG) Artificial Intelligence Global Executive Study and Research Report.

Continuing last year’s analytical approach, our latest research combines a global survey of 

  • 3,076 business executives and
  • 36 in-depth interviews with business executives.

We classified the organizations surveyed into four groups based on respondents’ responses to questions about their levels of AI adoption and AI understanding.

  • Pioneers are enterprises that have extensive understanding of AI tools and concepts and significant levels of AI adoption;
  • Investigators understand AI but have limited adoption;
  • Experimenters have adopted AI but with limited understanding of it, and
  • Passives have limited adoption and understanding of AI.

This report highlights four major patterns in the survey and interview data:  

  • Pioneers are deepening their commitments to AI 
  • Pioneers are eager to scale AI throughout their enterprise
  • Pioneers prioritize revenue-generating applications over cost-saving ones.
  • AI is creating both fear and hope among workers.

1.Pioneers are deepening their commitments to AI.

Is AI really taking off in business?

In one respect, the percentage of Pioneers among survey respondents remained essentially the same as last year, at just under one-fifth of those polled.

Yet the level of commitment to AI within the Pioneer group is striking:
Fully 88% of Pioneers invested more in AI than in the previous year — in contrast to just 62% of Experimenters and Investigators.

Pioneers continue to push forward.

2.Pioneers are eager to scale AI throughout their enterprise.

Typically, an organization that gained early success with AI did so because some AI-knowledgeable managers within a business unit spotted a problem that could be solved more effectively with, for example, natural language processing. Attacking such targets in isolation, they came up with impressive solutions.

However, these point solutions left enterprises with no greater systemic capabilities than they had before.

This year’s research highlights a growing ambition in organizations to scale AI for enterprise-level advantage. As Ibrahim Gokcen, chief digital officer at Danish shipping company Maersk, puts it, “AI at scale is the next step of digital transformation.

But how do you get beyond isolated AI point solutions?
Many companies have discovered, often to their surprise, that it is easy to apply AI and get quick results. What is not so easy is building a system of AI applications along with associated data pipelines that interact and are reliable.

Pioneers overwhelmingly see the need for an AI strategy:85% agree they have an urgent need for an AI strategy, and 90% say they have a strategy in place already.
Organizing AI for the entire enterprise requires a strategy.

3.Pioneers prioritize revenue-generating applications over cost-saving ones.

Which is more important to pursue with AI applications: new revenues or cost efficiencies?

In the first wave of corporate AI adoption, many companies focused on making operational processes more efficient. Easily documented cost savings are a classic way of garnering support for further investment.

But the finding here is that all but the most passive organizations anticipate AI will pay off most on the revenue-generating side. More sophisticated organizations expect more in this direction, as 72% of Pioneers say AI will deliver mainly revenue increases in the next five years, while only 28% of Pioneers expect mainly cost savings.
For the Investigators group, the corresponding numbers are 59% and 41%.

In the near future, AI initiatives will focus on generating revenues, not cutting costs. 

4.AI is creating both fear and hope among workers.

How will AI affect individual workers?
Popular societal debate evokes the specter of smart machines outperforming humans, making legions of workers redundant.
Other research has found individuals are evenly divided on the question of whether AI will produce job losses or job gains overall.[1]

Our survey echoes the ambivalence: 47% say their workforce will be reduced because of AI in the next five years.Yet a gulf opens when we consider the respondents’ positions in their organizations. Lower-level operational and clerical workers are most concerned that layoffs are imminent, perhaps because these workers are less able to influence the course of events and thus feel particularly exposed.

Chief executives are among those least convinced AI adoption will result in more overall job loss.
Only 38% of surveyed CEOs expect workforce reductions due to AI.
The effects of AI on the workforce won’t be uniform.

Managers need to address the concerns of their employees through reskilling, change management, and communication.

In addition, we conducted a separate survey of 300 executives in China.

Findings from this survey contrast pioneering Chinese companies with companies based in other regions.

  • Chinese AI Pioneers are investing more aggressively and report a greater focus on business model transformation. 
  • However, they may be held back by unclear business cases and shortfalls of technical capabilities.

Other striking differences are

  • Chinese companies’ larger emphasis on using AI to achieve cost reductions versus revenue enhancements, and
  • their greater expectations of job losses due to AI.

Whether China’s approach is successful or not, the determination of Chinese companies serves as a wake-up call for governments and other companies across the globe.

Overall, the second annual MIT Sloan Management Review-BCG research report tells a story of measurable benefits from current AI initiatives, increased investments, and determined efforts to expand AI across the enterprise.

 

About the research:

To understand the challenges and opportunities associated with the use of artificial intelligence in business, MIT Sloan Management Review, in collaboration with The Boston Consulting Group, conducted its second annual survey of business executives, managers, and analysts from organizations around the world, which this year included 3,076 participants.

The survey, conducted in the spring of 2018, captured insights from individuals working in organizations of various sizes, spread across 29 industries and located in 126 countries. More than two-thirds of the respondents were based outside the United States.

The sample was drawn from a number of sources, including MIT Sloan Management Review readers and other interested parties.

As a starting point for this report’s analysis, the total survey population was divided into four subgroups based on the relative AI maturity of respondents’ organizations, combining levels of understanding of AI tools and concepts and levels of adoption of AI applications.

To indicate overall understanding, respondents rated their organization’s understanding of nine areas, ranging from familiarity with the technological state of the art to challenges of AI application development to organizational behavior implications.

Based on their level of adoption and understanding, we divided survey respondents into these four groups:

  • Pioneers (18%): Organizations that both understand and have adopted AI. These organizations are on the leading edge of incorporating AI into both their offerings and internal processes.
  • Investigators (33%): Organizations that understand AI but are not deploying it beyond the pilot stage. Their investigation into what AI may offer emphasizes looking before leaping. 
  • Experimenters (16%): Organizations that are piloting or adopting AI without deep understanding. These organizations are learning by doing. 
  • Passives (34%): Organizations with no adoption or much understanding of AI.

 

“Artificial intelligence” is a term that can refer to various technologies.
It is often used loosely, and it can mean different things to people in different groups.
Participants in this study were made aware of the definition of artificial intelligence in the Oxford English Dictionary:

“AI is the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision making, and translation between languages.”

To gain context and a deeper understanding of survey findings, the research team interviewed 36 executives.
All of the interviewees are experienced managers, representing a variety of industries and types of organizations.

About the Authors

SAM RANSBOTHAM is an associate professor in the information systems department at the Carroll School of Business at Boston College, as well as guest editor for MIT Sloan Management Review’s Artificial Intelligence Big Ideas Initiative. He can be reached on Twitter @ransbotham.


PHILIPP GERBERT
is a senior partner and managing director at The Boston Consulting Group’s Munich office. He is BCG’s global topic leader for digital strategy and a BCG Henderson Institute Fellow for the Impact of Artificial Intelligence on Business. He can be reached at gerbert.philipp@bcg.com.

MARTIN REEVES is a senior partner and managing director at The Boston Consulting Group and the director of the BCG Henderson Institute, which brings ideas and inspiration to forward-looking leaders.

DAVID KIRON is the executive editor of MIT Sloan Management Review, which brings ideas from the world of thinkers to the executives and managers who use them.

MICHAEL SPIRA is a project leader in The Boston Consulting Group’s Munich office. He is also a BCG Henderson Institute ambassador exploring the impact of AI on business and a core member of BCG’s Energy practice.

 

Contributors

Carolyn Ann Geason, Julia Kirby, and Allison Ryder

The research and analysis for this report was conducted under the direction of the authors as part of an MIT Sloan Management Review research initiative in collaboration with and sponsored by The Boston Consulting Group.

To cite this report, please use:

  1. Ransbotham, P. Gerbert, M. Reeves, D. Kiron, and M. Spira, “Artificial Intelligence in Business Gets Real,” MIT Sloan Management Review and The Boston Consulting Group, September 2018.

Originally published at https://sloanreview.mit.edu
https://sloanreview.mit.edu/projects/artificial-intelligence-in-business-gets-real/

Click below to download the PDF version:

https://innovationinsider.com.br/wp-content/uploads/2018/09/60280-MITSMR-BCG-Report-2018.pdf

 

 

 

Total
0
Shares
Deixe um comentário

O seu endereço de e-mail não será publicado. Campos obrigatórios são marcados com *

Related Posts

Subscribe

PortugueseSpanishEnglish
Total
0
Share