Generative AI (GenAI) exploded into the public consciousness in 2023 promising to transform the way business functions but, despite the potential, business leaders are struggling to convert hype into reality.

According to a new report by Boston Consulting Group (BCG), 66% of global executives are ambivalent or outright dissatisfied with their organisation’s progress on AI and GenAI so far, citing three primary reasons for their dissatisfaction: a lack of talent and skills (62%); an unclear AI and GenAI roadmap and investment priorities (47%); and absence of strategy regarding responsible AI and GenAI (42%).

“This is the year to turn GenAI’s promise into tangible business success,” says Christoph Schweizer, BCG’s CEO. “Almost every CEO, myself included, has experienced a steep learning curve with GenAI. When technology is changing so quickly it can be tempting to wait and see where things land. But with GenAI, the early winners are experimenting, learning, and building at scale.”

The report – BCG AI Radar: From Potential to Profit with GenAI – is based on a survey of 1 406 C-level executives in 50 markets and 14 industries, including 69 executives from Africa. Seventy-one percent of global executives surveyed say they plan to increase tech investments in 2024 – an 11-point jump from 2023 – and even more (85%) plan to increase their spending on AI and GenAI.

While more than three-quarters (77%) of African executives plan to boost their tech investments, less than half (43%) puts AI and GenAI as their top tech priority for 2024, compared to half (51%) globally – and 82% of executives in Africa plan to increase their AI and GenAI investments in 2024, compared to 85% overall.

Fifty-four percent of global leaders already expect AI to provide cost savings this year, primarily through productivity gains in operations, customer service, and IT.

“African executives are among the most optimistic in expecting productivity gains from AI and GenAI,” says Nihmal Marrie, MD and partner at BCG, Johannesburg. “More than half (59%) are expecting 10% or more productivity gains from AI and GenAI this year compared to less than half (46%) of executives globally.”

Sylvain Duranton, global leader of BCG X and a co-author of the research, adds: “Generative AI is radically reshaping businesses. Leading companies on the GenAI front are planning to realise up to $1-billion in productivity gains and they are already looking at ways to reinvest into new business models and growth. This is a second chance for companies who missed the first AI wave.”

This is not the time to wait and see

Although a small percentage of companies are already reaping the rewards of AI and GenAI, others are either playing catch up or standing on the sidelines. More than 60% of global executives surveyed say their firms are still waiting to see how AI-specific regulations develop – and just 6% of global companies have trained more than 25% of their people on GenAI tools so far.

The Middle East leads globally while Africa lags on scaled AI and GenAI initiatives. Just over half (54%) of Middle East executives say their current AI and GenAI capabilities focus on limited experimentation and small-scale pilots compared to more than three-quarters (77%) of African executives and 71% of executives overall.

African executives (87%) see the greatest need globally for significant change management to deal with GenAI, compared to 74% of executives globally, while North American executives see the least need (69%).

Executives in Africa face massive gaps in upskilling their workers with only 3% reporting that more than a quarter of their workers have trained on GenAI tools compared to just 6% globally.

“Executives worldwide must boost upskilling, especially in Africa, Europe, and South America through accelerated programmes of systematic capability building to fully realise benefits such as productivity gains and cost savings,” says Marrie.

Winners are acting now

According to the report, “winning” companies acknowledge GenAI’s permanence and recognise its potential for both enhanced productivity and topline growth. It outlines several characteristics that set the winners apart from observers including:

* Winners invest for productivity and top-line growth. Organisations that plan to invest more than $50-million in AI and GenAI this year are 1.3 times more likely to see cost savings in 2024 – and 1.5 times more likely to achieve more than 10% in cost savings.

* Winners are systematically upskilling. Twenty-one percent of organisations spending upward of $50-million on AI and GenAI this year have already trained more than a quarter of their people.

* Winners are vigilant about GenAI cost of use. Cost of use, which has serious long-term implications, is not commanding the attention it should. Only 19% of global executives surveyed consider cost the top concern when choosing an AI and GenAI solution.

* Winners build intentional relationships. Only 3% of global executives consider pre-existing partnerships a priority when looking for AI solutions.

* Winners implement responsible AI (RAI) principles. Of the global companies surveyed that are investing more than $50-million in AI in 2024, 27% put the CEO in charge of their RAI strategy (versus 14% overall). Africa lags in setting up guardrails for AI and GenAI use with more than half (59%) of executives reporting lack of guidance or restrictions on AI and GenAI usage at work, compared to less than half (45%) globally.

“To unlock GenAI’s full potential executives should deploy it to improve efficiency of everyday tasks, reshape critical functions, and invent new business models,” says Schweizer. “Doing so can increase productivity by up to 20%, enhance efficiency and effectiveness by up to 50%, boost revenue, and create long-term competitive advantage.”