The market is going up. The market is going down. New technologies are emerging. People are protesting new technologies. The world will end. Predicting the future is easyif you ignore time and leave out practical guidance on what to do.
But what about generative AI (GenAI)? Is this whole AI thing going to blow over? Would it be best just to let it glide past?
Some things are true. NFTs are not really a “thing.” The metaverse is now in meta-reverse. The world is not flat. Our take and new findings show the truth about GenAI: This is no mirage. It’s not a solution in search of a problem (#blockchain). It’s also not just market hype (although there is plenty of hype). How do we know? Data and analysis.
Be prepared to pull different value levers as peak impact varies
Our AI superstars give us practical strategic guidance on when we can expect to really see these technologies pay off (see Exhibit 1). In short, be prepared to pull different value levers over the coming years. First up? Cost, revenue, and productivity!
Cost is the nearest-term objective
As of late 2023, COVID cash is drying up, and interest rates make capital expensive. The world seems a little nuts with elections and conflict, so it’s no surprise that cost is the nearest-term objective for our early adopters.
Impact on revenue will hit its first peak over the next 24 months
Our leaders expect GenAI’s impact on revenue to peak over the next 24 months. Based on the use cases we’re seeing and the interview data with our experts, we expect this trend to continue growing for several years after the first peak.
Most companies will strive to balance cost control with productivity gains
Our early adopters are also dialing into GenAI’s productivity potential. Economists know cost and productivity are two sides of the cube. It’s easy to cut costs, but it’s harder to do that while improving productivity: the output of your job, team, or company. A response balancing near-term cost containment and productivity improvement is a perfect snapshot of what’s likely to happen as companies begin deploying GenAI meaningfully at the task and job levels. One enterprise technology leader told us, “With code automation… all the early pilots we have done show that there is, I don’t know, 20, 30, 40 percent productivity to be gained.”
“We are working through the economics of what it would mean for us to [create] a combination of human plus AI… We built a digital [generative AI] productivity platform, which we’re using to do work for clients.” – Karthik Krishnamurthy, CEO of Ascendion
Where should forward-thinking leaders focus beyond the near term?
What about in four years? In AI time, that seems like an eon, so what value levers do our AI leaders think will peak after 2026? What should forward-thinking leaders have their eyes on today?
Embracing GenAI makes firms more valuable
GenAI’s peak impact on market valuation is expected in 2026 and 2027. It’s early days, of course, but capital markets are already starting to price in expected productivity increases in specific sectors, so our leaders have solid ground to stand on for that prediction.
Profit improvement will peak after 2026
Our findings also show that leaders expect profit improvement to peak after 2026. As investments bear fruit, companies should be relentless in delivering higher returns on capital after the first innings of the GenAI revolution conclude.
The Bottom Line: GenAI will impact all the money… but not at the same time.
It’s time for business and technology leaders and practitioners to pay attention to what they are doing and how they’re doing it. Then, look with fresh eyes at how a new “engine” can improve each step, workflow, and job.
Imagination, learning, and exploration will win the day. Tasks, jobs, companies, and sectors will all have different levels of exposure to the potential value offered by AI. Look at how you are working and imagine how you could do this differently and better. The challenge is not easy, but it’s vital to enable you to pull all the GenAI value levers.
If your work is susceptible to being impacted by GenAI, it’s time to become a learn-it-all and lean into using new technologies to become an essential human-in-the-loop. Here again, expecting this to all blow over without impacting you is only a decent bet if your 401K is fully stocked.
For business leaders, heed what our superstar early adopters are saying. Actively explore where generative AI can improve your team’s productivity (without injecting unmanageable risk into how you work). There is no one-size-fits-all implementation, so the sooner you start figuring out what works for your company, the better. Or don’t-in which case, your successor will have a steeper hill to climb.
About this research
Your Generative Enterprise™ playbook for the future is an HFS Research and Ascendion research program based on 20+ in-depth interviews and a survey with more than 100 C-suite leaders and practitioners with first-hand experience implementing GenAI in organizations.
Watch out for more, and join us on the journey at Ascendion and HFS Research to access all our research findings.
