Good morning.
Most companies are currently looking at generative AI through a productivity lens. Take virtual assistants, for example. But using the technology to help reimagine a business is an ideal long-term goal that’s possible but will take a lot of hard work.
Generative AI was one of several topics discussed Monday during the Fortune Global Forum taking place this week in Abu Dhabi. I watched via livestream a conversation between Alexander Sukharevsky, senior partner and global leader of McKinsey-owned AI firm QuantumBlack, and Fortune CEO Alan Murray on the impact of generative AI.
“Ninety percent of the world is focused on productivity,” Sukharevsky said. However, the advanced technology can be a tool to “reimagine your business and your industry,” he said. “I think this is a very exciting piece that I'm personally passionate about and work with a lot of clients on.”
“Although the new kid is generative AI, it's only one fourth of the potential of AI,” Sukharevsky explained. There are other technologies that are getting mature now like virtual reality, and Web 3.0 around tokenization, which is the process of converting physical or digital assets into a digital token.
“If you were to combine these three, and think about what it means for your industry…I think the shift is quite fundamental,” Sukharevsky said. But just 10% of companies are focused on fundamental rethinking at this time, he estimates.
CFOs should select a very small number of use cases for generative AI that could have the most meaningful impact for the function, according to Gen AI: A guide for CFOs, a new McKinsey report produced by firm partners Ankur Agrawal, Ben Ellencweig, Rohit Sood, and Michele Tam.
“Gen AI holds the potential to be a revolutionary technology, but it doesn’t change foundational principles of finance and economics: a company must generate a return above its cost of capital,” according to the report. To maximize value creation, finance chiefs must rank the company’s 20 to 30 most value-accretive projects regardless of whether they are AI-related, the authors explain.
A "world-class CFO" makes sure that generative AI initiatives "aren’t starved of capital," the authors warn. "One of the biggest misconceptions we find is the belief that it’s the job of the CFO to wait and see—or, worse, be the organization’s naysayer," according to the report. “Capital shouldn’t sit; it should be aggressively moved to fund profitable growth.”
In Sukharevsky’s conversation with Murray, he said that there are productivity use cases for generative AI “where you could clearly create a lot of value in a very short term, based on the levers that you have today.” This allows executives to educate themselves and the organization on the technology and focus more on the risk side, he said. “Seventy percent of employees’ tasks today could be automated,” Sukharevsky said.
“I truly believe it’s the first time in the last 15 years that we see a real platform shift,” he said. “A platform shift happens when the cost of production goes down 1,000 times.”
The Fortune Global Forum continues through Wednesday. You can watch via livestream here.
Sheryl Estrada
sheryl.estrada@fortune.com
