We at digX love technology, because we believe that it can generate gains and wealth, which will ultimately improve people's lives and make this planet a better place. The gains can be business profits, or they can be outcomes that serve people, e.g. cures for illnesses. Artificial Intelligence (AI) is a technology framework that has clearly contributed a lot already. In business, there are use cases in administration, maintenance, planning where leveraging AI has created visible outcomes. Therefore, AI is often seen as part of the CEO Agenda.
In a recent NBER study "Firm Data on AI" (link at bottom of this post), they sample 6,000 senior executives and are finding that AI absorption leaves - nicely put - room for growth. Here is the original post, and then we will share our take on what conclusions can be drawn:
The digX Perspective
"1. AI affinity"
💡
Here lies an opportunity for more established or less productive firms
to "get with the program": digitize, integrate and establish governance
for processes and data, to transform to digital and increase
productivity. AI adoption is not a scenario where you should wait out
the Kinderkrankheiten.
"2. Execs use AI average 1.5 hours a week."
🤔
Study does not state what for, but probably nowhere near business
critical issues. YES, here AI was used writing this article, but NOT for
anything content related (just wordsmithing). Most Execs know they can't
use AI to summarize confidential emails, so one might think they use it to determine
culinary preferences for dinner parties.
"3. Over the past 3 years, execs see little own-firm impact of AI, 90% see none"
😯
Wow! Only 10% of execs see "little" impact, 90% see none. Well, what's
up with all the spend then? Clearly, AI has potential. Therefore, most
must have been going about this the wrong way.
"4. Over the next 3 years, execs expect AI to result in a 0.7% employment cut"
🤷
True, AI will result in cuts (AI takes over most monitoring and routine
work), but then you have to hire AI aces (model trainer, prompt
engineer etc) to make it work. Replace 3 DB admins at $100k a year, with
a single AI engineer for $300k. And "shadow IT" cost may will likely
increase. Without clear governance, use cases and ROI, AI will become a
money pit - instead of creating value.
Conclusion:
Should a COO spend about half the time on manufacturing or would 1.5 hours suffice? Can a CIO be successful spending 1.5 hours a week on IT/MIS? Should AI be on the CEO agenda, if they can get away with 1.5 hours a week? We think, either the CEO needs to spend more time using AI, or this can be a great content to delegate. Of course, shareholders and supervisory boards want AI on the CEO agenda.
We do think that a solid strategy framework and data-supported use cases are a vital ingredient to have sustainable AI usage at a company. Without this, the shadow IT costs will surpass the benefits.
Source:
https://nber.org/papers/w34836
Image by https://pixabay.com/users/stevepb-282134/?utm_source=link-attribution&utm_medium=referral&utm_campaign=image&utm_content=2789092">Steve Buissinne