Reshaping Business With Artificial Intelligence

Closing the Gap Between Ambition and Action

by: Sam Ransbotham, David Kiron, Philipp Gerbert, and Martin Reeves



Expectations for artificial intelligence (AI) are sky-high, but what are businesses actually doing now? The goal of this report is to present a realistic baseline that allows companies to compare their AI ambitions and efforts. Building on data rather than conjecture, the research is based on a global survey of more than 3,000 executives, managers, and analysts across industries and in-depth interviews with more than 30 technology experts and executives. (See “About the Research.”)

The gap between ambition and execution is large at most companies. Three-quarters of executives believe AI will enable their companies to move into new businesses. Almost 85% believe AI will allow their companies to obtain or sustain a competitive advantage. But only about one in five companies has incorporated AI in some offerings or processes. Only one in 20 companies has extensively incorporated AI in offerings or processes. Less than 39% of all companies have an AI strategy in place. The largest companies — those with at least 100,000 employees — are the most likely to have an AI strategy, but only half have one.

Our research reveals large gaps between today’s leaders — companies that already understand and have adopted AI — and laggards. One sizeable difference is their approach to data. AI algorithms are not natively “intelligent.” They learn inductively by analyzing data. While most leaders are investing in AI talent and have built robust information infrastructures, other companies lack analytics expertise and easy access to their data. Our research surfaced several misunderstandings about the resources needed to train AI. The leaders not only have a much deeper appreciation about what’s required to produce AI than laggards, they are also more likely to have senior leadership support and have developed a business case for AI initiatives.

AI has implications for management and organizational practices. While there are already multiple models for organizing for AI, organizational flexibility is a centerpiece of all of them. For large companies, the culture change required to implement AI will be daunting, according to several executives with whom we spoke.

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.

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.

Philipp Gerbert is a senior partner and managing director at The Boston Consulting Group’s Munich, Germany, 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.

Contributors

Sebastian Steinhäuser, principal and member of the AI core team, BCG

Patrick Ruwolt, consultant and member of the AI core team, BCG

Allison Ryder, senior project editor, MIT Sloan Management Review

Acknowledgments

We thank each of the following individuals, who were interviewed for this report:

Fabien Beckers, cofounder and chief executive officer, Arterys

Erik Brynjolfsson, director, MIT Initiative on the Digital Economy; Schussel Family Professor, MIT Sloan School; research associate, NBER

Eric Colson, chief algorithms officer, Stitch Fix

Missy Cummings, director, Humans and Autonomy Lab, Duke University

Steve Derbis, director, innovation development, Anthem

Steve Eglash, executive director, strategic research initiatives, computer science, Stanford University

J.D. Elliott, director, enterprise data management, TIAA

Eldad Elnekave, MD, chief medical officer, Zebra Medical Vision Ltd.

Matthew Evans, vice president, digital transformation, Airbus

Avi Goldfarb, professor of marketing, Rotman School of Management, University of Toronto

Mirsad Hadzikadic, director, data science and business analytics, UNC Charlotte

Ahmed Hashmi, global head of upstream technology, BP plc

Amy Hoe, chief technology and operations officer, FWD Group

Eric Horvitz, director, Microsoft Research, Microsoft

Michael Jordan, professor, computer science, University of California, Berkeley

Jonathan Larsen, chief innovation officer, Ping An Insurance Co. of China Ltd.

Bryce Meredig, cofounder and chief science officer, Citrine Informatics

James Platt, chief operating officer, Aon Risk Solutions

Julie Shah, associate professor, aeronautics, MIT

Vishal Sikka, chief executive officer and managing director, Infosys Ltd.

Simon Smiles, chief investment officer, ultra high net worth, UBS

Beth Smith, general manager, IBM Watson Platform

Alfred Spector, chief technology officer, Two Sigma

Jacob Spoelstra, director, data science, Microsoft

Agus Sudjianto, executive vice president, corporate model risk, Wells Fargo & Co.

Jessica Tan, group executive vice president, group chief operating officer, and chief information officer, Ping An Insurance Co. of China Ltd.

Marcus Winter, head of reinsurance development, Munich Re Group

References

1. At the time of his interview, Vishal Sikka was serving as CEO and managing director of Infosys. He has since resigned from that position to become executive vice chairman prior to the publication of this report.

2. We built a composite index of organizational understanding of AI based on the responses to nine survey questions related to AI understanding. This index, combined with the level of organizational adoption of AI, determined classification into the four clusters of organizations.

3. S. Ransbotham and D. Kiron, “Analytics as a Source of Business Innovation,” Feb. 28, 2017, www.sloanreview.mit.edu.

4. Y. Wang, “China Is Quickly Embracing Facial Recognition Tech, for Better and Worse,” July 11, 2017, www.forbes.com.

5. J. Ito and D. Kirkpatrick, “Davos — An Insight, an Idea with Joi Ito,” World Economic Forum interview, Jan. 20, 2017, www.youtube.com.

6. R. Ramirez, S. Churchhouse, A. Palermo, and J. Hoffman, “Using Scenario Planning to Reshape Strategy,” MIT Sloan Management Review 58 no. 4 (summer 2017): 31-37.

7. We did not ask respondents to look beyond five years, a horizon that is reasonably foreseeable. For some thoughts on what is possible in a 10- or 20-year time frame, see the Appendix.

8. World Economic Forum, “The Future of Jobs: Employment, Skills, and Workforce Strategy for the Fourth Industrial Revolution” (January 2016), 13.

9. Ibid., 8.

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Comments (4)
jing su
I completely agree with the section on "Expectations for Change Across Industries and Within Organizations". People definitely have to be aware if they are in an industry that is at high risk of being replaced by AI. I read this article on jobacer.com that listed out similar industries that could be easily replaced. It also gave helpful tips on how to find a long-term stable career with the exponential growth of technology in the 21st century.
Jeniffer de Souza
Muito esclarecedor, serve como importante alerta!

É notável que a maioria das empresas e empresários não estão cientes ou preocupados com a questão de inteligência artificial dominando os negócios daqui alguns anos.

Bom, ao meu ver isso é preocupante, pois tudo indica que isso dominará o mercado e as ações do mundo; é algo planejado a muito tempo por grandes líderes mundiais, então, só resta aguardar a revolução.
Jonathan Obise
The future looks interesting for companies and organizations that are open to new ways of thinking and doing business.

I do also believe AI would massively help improve business process across various industries in the near future.
Josafat Valle
This article was completely enriching and powerful, the game is changing and we need to be prepared for it.