Generative artificial intelligence (AI) is a type of AI that generates or produces new outputs (text, audio, video, images, code and simulations) from existing content or data.
With its potential uses and opportunities for organizations and its executives, generative AI is here to stay. In a recent survey by KPMG of 300 global C-suite and senior executives, “Almost two-thirds (65%) of the 225 U.S. executives surveyed in the last two weeks of March believe generative AI will have a high or extremely high impact on their organization in the next three to five years, far above every other emerging technology.”
Despite this expectation, 60% of respondents aren’t prepared for immediate adoption, reporting that they are still a year or two away from implementing their first generative AI solution. While generative AI has entered the lexicon of executives and boards, organizations are struggling to keep pace with the rapidly evolving technology, with fewer than half of respondents claiming to have the “Right technology, talent, and governance in place to successfully implement generative AI.”
These executives “Anticipate spending the next 6-12 months focused on increasing their understanding of how generative AI works, evaluating internal capabilities, and investing in generative AI tools”, the KPMG survey noted.
Generative AI: the ultimate game-changer that could outshine other emerging technologies
According to the KPMG survey, “77% of executives believe that generative AI will have a bigger impact on broader society in the next three to five years than any other emerging technology.”
Stephen Chase, U.S. Consulting Leader at KPMG, further adds that “Generative AI has the potential to be the most disruptive technology we’ve seen to date.”
“It will fundamentally change business models, providing new opportunities for growth, efficiency, and innovation, while surfacing significant risks and challenges.”
Furthermore, executives polled expect the impact of generative AI to be the highest in enterprise-wide areas, such as “Driving innovation, customer success, tech investment, and sales and marketing.” However, the greatest transformational impact of generative AI, as per the survey, will be felt in research and development, product development, and operations, functional areas where the largest number of respondents are currently exploring the implementation of generative AI.
In terms of the respondents’ prioritization of generative AI, this varied significantly by sector. Of all industries, executives in technology, media and telecommunications (TMT) industries have accorded the highest priority to generative AI. They say that “Researching generative AI applications is a high or extremely high priority in the next 3-6 months.”
Respondents in the health care and life sciences sector also place high importance on prioritizing generative AI (67%), whereas only 30% of executives in the consumer and retail industries view it as a priority. Additionally, among the survey participants, executives working in TMT and financial services are the most inclined to believe that the recent attention given to AI tools like ChatGPT has had a considerable influence on their digital and innovation strategies.
With generative AI evolving at a breakneck pace and garnering attention from investors, global business and tech leaders, and society at large, “2023 has proven to be a game changer, moving AI from the minds of a few thousand data scientists into the hands of 100 million people”, observed Pär Edin, Innovation Leader for Deal Advisory & Strategy at KPMG.
Given the potential of the technology to generate trillions of dollars of economic value, Todd Lohr, Principal, U.S. Technology Consulting Leader at KPMG, remarked that “There is no doubt that generative AI could be truly revolutionary for both businesses and society. More than two-thirds of leaders say that changing customer demands and market competition are among the largest factors influencing the need for generative AI.”
Most companies lack dedicated risk evaluation and mitigation teams for generative AI
“There is a true first-mover advantage with the pace of generative AI innovation. Winning organizations will establish their competitive advantage by taking decisive action now, while ensuring they are taking the proper steps toward mitigating risk and implementing responsible AI”, Lohr recommends.
The risks and concerns associated with generative AI can be extensive. Risks that users and developers have been discussing so far include vulnerability to cybersecurity attacks and the potential to spread misinformation, perpetuate bias and discrimination, produce incorrect responses, violate privacy, infringe on third-party intellectual property rights, and impact job security and employee morale.
Despite the enormous impact that generative AI is expected to have on companies and their customers, “Only 6% of organizations report having a dedicated team in place for evaluating risk and implementing risk mitigation strategies as part of their overall generative AI strategy”, while nearly a quarter (22%) of organizations have yet to commence the evaluation of risk and mitigation strategies.
Almost half (47%) of respondent companies are still in the initial or early stages of evaluating and implementing risk mitigation strategies as part of the overall generative AI strategy, with an additional 25% of organizations that are in the process of putting risk management strategies in place, though these measures are really a “work in progress”.
Despite a tiny fraction of companies having teams focused on risk evaluation and mitigation for generative AI, nearly four in five executives (79%) believe that “Organizations that leverage generative AI will have a competitive advantage in risk management compared with their peers.”
Moreover, 72% of respondents think that this new technology can play a crucial role in building and maintaining stakeholder trust, with almost half (45%) of the executives cautioning that without the implementation of appropriate risk management tools, generative AI could have an adverse effect on their organization’s trust.
Organizations yet to develop responsible AI governance programmes
The impact of generative AI is likely to be felt in every company in every sector worldwide, particularly in improving efficiency, increasing productivity, accelerating research and development, personalizing experiences and boosting growth. However, the frenzy and hype around generative AI has also sparked a new wave of anxiety and fear, with many calling for development and roll-out of AI governance within organizations.
Getting companies to operationalise AI governance that includes a set of principles, regulations and social, ethical and technical considerations is important, but this is being adopted to a notably limited extent.
According to the KPMG survey, “Only 5% report having a mature responsible AI governance program in place”, and another 19% say an AI governance programme is either in progress or has been partially implemented.
Surprisingly, more than a quarter (27%) indicate that “They do not currently see a need or have not reached enough scale to merit a responsible AI governance program”, while nearly half (49%) plan to develop governance guidelines but have not yet made progress in doing so.
Besides the AI governance theme, a broad consensus among respondents emerged that we are heading into a new era for the labour force that integrates human work with generative AI. While most believe that generative AI will increase productivity (72%), change how people work (66%) and encourage innovation (62%), many are also concerned about the potential adverse effects.
“Almost 4 in 10 executives (39%) believe that generative AI could lead to decreased social interactions and human connections with coworkers that may have negative impacts on the workforce. Another 32% report a concern that they will see increased mental health issues among their workforce due to the stress of job loss and uncertainty about the future”, the survey noted.
To address this, organizations are placing emphasis on a hybrid approach of “hiring and capability building among their teams across industry and function”, as per the KPMG survey.
The world of generative AI is vast and expanding, and it is expected to disrupt every industry and have a monumental impact on society. As organizations realize the positive impacts of this incredibly powerful technology, they must also take steps to address the risks and concerns, including the potentially egregious consequences of AI mishaps.
To successfully do so, KPMG advocates that “Executives must prioritize its rapid implementation to stay competitive, while ensuring that it is deployed in a responsible and ethical manner.” In addition, KPMG recommends that organizations must determine clear business cases, install the right technology, talent and governance, and encourage their business leaders and board members to invest time in understanding generative AI.
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