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GenAI as a Strategy: Full Steam or No Steam?

On Monday and Tuesday this week, I received two apparently contradictory forecasts on the AI revolution from equally respected sources.

I know it is counter intuitive, counter cyclical, probably heresy and likely illegal in some places to challenge received wisdom, but I find it sharpens our critical faculties when we do . . . . 😉

I have come to the conclusion that both the positions in the articles referenced below could be true if we stick to the facts and evidence rather than forecasts.

Decide for yourself.

Christopher Mimms of WSJ makes a fair case for his comment “The pace of innovation in AI is slowing, its usefulness is limited, and the cost of running it remains exorbitant”.

Evidence suggests AI isn’t nearly the productivity booster it has been touted as.

Peter Cappelli, professor of management at the University of Pennsylvania’s Wharton School says “while these (AI) systems can help some people do their jobs, they can’t actually replace them. This means they are unlikely to help companies save on payroll. He compares it to the way that self-driving trucks have been slow to arrive, in part because it turns out that driving a truck is just one part of a truck driver’s job.

This brings to mind both the automation vs augmentation” and the “Doorman Fallacy” which I find very helpful in assessing digital transformation opportunities. . . .

The day after reading the WSJ article I read the McKinsey piece “Gen AI adoption spikes and starts to generate value”.

The article reports a survey that finds “65 percent of respondents report that their organizations are regularly using gen AI, nearly double the percentage from our previous survey just ten months ago. Respondents’ expectations for gen AI’s impact remain as high as they were last year, with three-quarters predicting that gen AI will lead to significant or disruptive change in their industries in the years ahead.

Usage of GenAI is certainly surging, the question remains where the real P&L impact is (for those not selling AI tech or advisory services).

There is an interesting quote from a CEO of Klarna saying that their new AI chatbot could do the work of 700 people in the customer service centre. It turns out that, coincidentally, they had to cut 700 jobs some months earlier due to financial difficulties. Fast Company wrote an interesting assessment of the company situation and the claims made.

You can read Christopher Mims’ WSJ article “The AI Revolution Is Already Losing Steam” here . . .

You can read the McKinsey article “The state of AI in early 2024” here . . .  

Worth some thought over the weekend . . .

AI as a strategy?

That’s a whole separate discussion about semantics.

AI, Generative and Predictive, are great tools, arrows in the quiver, weapons in the arsenal . . .

But AI is NOT a strategy.

Unless you are selling AI tech or advisory services (which may be reflected in all the excitement).

Thanks for reading . . .