Generative AI, The Next Consulting Frontier

This summary covers a groundbreaking article from McKinsey & Co., June 14, 2023, on the economic potential of generative AI.

The Economic Potential of Generative AI, The Next Productivity Frontier

Large portions of this summary were AI generated from the June 14, 2023 McKinsey article.

“About 75 percent of the value that generative AI use cases could deliver falls across four areas: Customer operations, marketing and sales, software engineering, and R&D. Across 16 business functions, we examined 63 use cases in which the technology can address specific business challenges in ways that produce one or more measurable outcomes. Examples include generative AI’s ability to support interactions with customers, generate creative content for marketing and sales, and draft computer code based on natural-language prompts, among many other tasks.”

“Generative AI has the potential to change the anatomy of work, augmenting the capabilities of individual workers by automating some of their individual activities.”

What is Generative AI?

Generative AI, like ChatGPT and Jasper, is a revolutionary technology that enables machines to create content without human input, such as text, images, music, and code. It can transform various industries and sectors by enhancing productivity, innovation, and customer experience. However, it poses significant challenges and risks, such as data quality, ethical issues, social implications, and regulatory uncertainty.

Economic Impact

According to McKinsey & Co., generative AI could add $2.6 trillion to $4.4 trillion annually to the global economy by 2030, depending on the speed and scale of adoption.

Areas of Significant Application

The biggest economic applications of generative AI are expected to be in,

• Marketing
• Sales
• Product development
• Operations
• Education and training
• Banking
• High tech
• Life sciences

For example, generative AI can create personalized and intelligent content for marketing campaigns, generate new product ideas or designs, optimize business processes or workflows, and provide interactive and adaptive learning experiences.

Employment Skills

Generative AI, like ChatGPT, could automate up to 30 percent of hours worked across the US economy by 2030. It’s expected to automate and enhance the work of STEM, creative, and business professionals.

Workers in lower-wage jobs are more likely to need to change occupations and reskill than those in higher-wage positions, and women are more affected than men. Therefore, investing in education and training programs is important to prepare the workforce for the generative AI era.

In the next newsletter, I will publish the results from multiple studies showing which jobs and skills AI will most greatly impact.

Quality and Reliability

Generative AI also raises some important risks and challenges that must be addressed. One is the quality and reliability of the data used to train generative AI models.

Generative AI can produce inaccurate or misleading content if the data is incomplete, biased, or outdated. Also, using poorly written prompts (instructions) is almost a guarantee for poor-quality output.

Following newsletters will include examples of well-written prompts. Learning the proper use of AI is a critical skill for consultants.

Another challenge is the ethical and social implications of generative AI. Generative AI can create content that violates intellectual property rights, privacy rights, or human dignity. It can also generate fake or harmful content that can manipulate public opinion or cause harm to individuals or groups.

It is essential that consultants and their clients develop standards, regulations, and best practices for generative AI to ensure its responsible and beneficial use.

In summary, generative AI is a powerful technology that can create value for various industries and sectors, but also poses some significant risks and challenges. Organizations need to adopt a strategic approach to leverage generative AI’s opportunities and mitigate its risks. This includes investing in talent, infrastructure, governance, and collaboration.