Five Management Strategies for Getting the Most From AI

A global survey of C-level executives finds that AI is delivering real value to companies that use it across operations and within their core functions.

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Artificial Intelligence and Business Strategy

The Artificial Intelligence and Business Strategy initiative explores the growing use of artificial intelligence in the business landscape. The exploration looks specifically at how AI is affecting the development and execution of strategy in organizations.

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BCG
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Fueled by the buzz around powerful applications of artificial intelligence (AI), many business leaders are contemplating whether to introduce AI into their organizations. While practitioners and academics have outlined some of the strategic challenges of implementing AI, many executives are still seeking good models for how to generate competitive advantage from its application.

To find out more about what contributes to successful AI adoption, we helped lead a survey by the McKinsey Global Institute of 3,000 C-level executives across 10 countries and 14 sectors. From that research, we identified five fundamental strategies for how to get the most out of AI’s potential.

1. Plan to Grow, Not Just Cut

Executives should approach AI as an instrument to expand their businesses — creating new products or services, increasing productivity, or winning more market share — as much as a tool to cut costs. Companies with less experience in AI tend to focus on its ability to help cut costs, but the more that companies use and become familiar with AI, the more potential for growth they see in it.

Retailing executives in our survey, for example, mentioned cost cutting as often as increasing market share or market growth as their main objectives for implementing AI. But the subset of retailers who have adopted AI at scale — meaning, they deploy AI across technology groups, use AI in the most core parts of their value chains, and have the full support of their executive leadership — cited AI’s potential for business growth twice as often as its potential for cutting costs.

This same subset of retailers, the early AI adopters, reported that insight-based selling — using AI to review shoppers’ habits and suggest personalized promotions and tailored displays — increased sales by 1% to 5% in traditional stores. And they reported that personalization and AI-enabled dynamic pricing lifted online sales as much as 30%.

2. Invest in Both Technical and Managerial Talent Capabilities

In our survey, executives gave several reasons for not adopting AI. The largest share (30%) said they were uncertain of its business case. Another 21% cited the scarcity of AI-related human capabilities — and these same executives were 50% more likely to also say that AI presented an uncertain business case, suggesting that human capabilities are critically important to capture the returns from AI in new organizations.

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Topics

Artificial Intelligence and Business Strategy

The Artificial Intelligence and Business Strategy initiative explores the growing use of artificial intelligence in the business landscape. The exploration looks specifically at how AI is affecting the development and execution of strategy in organizations.

In collaboration with

BCG
See All Articles in This Section

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Comments (4)
Billy Martin
Will software engineers be AI devices in the not too distant future?
Perry Brissette
I'm curious how AI and machine learning will transform computer programming itself.  Compared to today's computers, which require extensive experience in programming and languages, artificial intelligence and machine learning could eliminate much of the drugery of coding -- and thus much of the human labor that goes into software development today.  Indeed, recent breakthroughs in AI, such as AlphaGo Zero, point to amazing ways that AI will largely code and "teach" itself.
MANI SAM
AI will redefine the manager's job and role. It will enable the manager to focus on innovation and creativity as all decisions based on available data and/or forecasts will be better handled by AI. May be two different worlds itself .
Aston Calvin
You shared the brilliant aspects about how we use artificial intelligence and improved our management system. I add another aspect in which AI is useful for managers. According to the survey, managers are consuming more than 50% time to manage administrative responsibilities. These responsibilities are executed in a single direction and very simple but time consuming, so you can leave your simple administrative responsibilities to AI and more focus on other tasks which are important to enhance business. 

I also share an article in which you can learn how big data and machine learning impact on the future of marketing. Read article at https://www.cygnismedia.com/blog/big-data-machine-learning-future-of-marketing/