Can AI truly transform businesses? If adopted well, yes

Amid signs of AI overhype, businesses do have a way to derive value from this technology

- Kushe Bahl & Shrikant Laxminarayan

The buzz around Artificial Intelligence (AI) is inescapable. While there are no widespread examples of substantial impact yet—outside specific areas like software development—many believe AI could be transformative for businesses. McKinsey & Company, for instance, estimates that AI could add up to $4.4 trillion to annual global output by 2030.

While the possibilities prompt excitement, sceptics argue that they have seen such hype before, that an earlier wave of digital transformations was powered by lofty promises that did not convert to measurable business value. McKinsey research found that about 70% of transformation projects failed to meet their goals—not because of the digital technology employed, but because of a lack of user-centricity, slower-than-expected execution and poor tech adoption strategies—despite having the right intent and execution model. Businesses can avoid repeating the same mistakes with AI by following three major learnings from successful digital transformations.

First, find truly game-changing projects: AI has many useful but non-transformational use cases, such as analysts generating first-draft reports, lawyers drafting contracts or employees conversationally querying a large base of information and/or data. While these improve individual productivity, they rarely make a transformative impact on the performance of the entire organization. Yet, these remain the most visible and common AI efforts today.