Beyond the Buzz: Understanding AI's Business Dilemma
December 3, 2023
The buzz around artificial intelligence (AI) among America's leading companies has reached a crescendo, with nearly half of the S&P 500 mentioning AI in earnings calls since May, rivalling discussions on the Federal Reserve and interest rates. However, a stark disconnection between rhetoric and implementation is evident, as a November survey by the Census Bureau reveals that merely 4.4% of businesses nationwide are actively utilizing AI to produce goods or services.
The surge in AI discourse gained momentum following the introduction of OpenAI's ChatGPT in November 2022, causing a spike in mentions during earnings calls. Even non-tech entities such as Walmart and Bath & Body Works are joining the AI bandwagon, with Walmart experimenting with AI-powered search and chat features, and Bath & Body Works piloting a machine-learning tool to re-engage inactive customers.
Despite the pervasive talk of AI, the actual adoption in business operations appears conservative, according to Brian Nagel, a senior analyst at Oppenheimer & Co. While companies may embrace the hype to signal commitment to long-term growth, the sluggish implementation can be attributed to AI technology's early stages and the challenges of adapting established business practices to innovative solutions.
A significant barrier to widespread AI adoption is the scarcity of resources. Kristina McElheran, an associate professor at the University of Toronto, emphasizes the importance of education, access to skilled personnel, and financial resources for companies to effectively integrate AI tools. McElheran's research indicates that the costliness of AI tools and the limited expertise available contribute to the slow adoption rate.
The current scenario reflects an impending "AI divide," with early adopters clustering in what McElheran terms "superstar" cities, creating a disparity between businesses and cities equipped to leverage AI tools and those lagging behind. Despite the challenges, some, like Mike Loukas, CEO of TrueMark Investments, remain optimistic, foreseeing over 75% of businesses incorporating AI within the next decade. The caveat is that businesses may not directly engage with AI but will use user-friendly applications built on AI for enhanced efficiency and seamless operations.
The surge in AI discourse gained momentum following the introduction of OpenAI's ChatGPT in November 2022, causing a spike in mentions during earnings calls. Even non-tech entities such as Walmart and Bath & Body Works are joining the AI bandwagon, with Walmart experimenting with AI-powered search and chat features, and Bath & Body Works piloting a machine-learning tool to re-engage inactive customers.
Despite the pervasive talk of AI, the actual adoption in business operations appears conservative, according to Brian Nagel, a senior analyst at Oppenheimer & Co. While companies may embrace the hype to signal commitment to long-term growth, the sluggish implementation can be attributed to AI technology's early stages and the challenges of adapting established business practices to innovative solutions.
A significant barrier to widespread AI adoption is the scarcity of resources. Kristina McElheran, an associate professor at the University of Toronto, emphasizes the importance of education, access to skilled personnel, and financial resources for companies to effectively integrate AI tools. McElheran's research indicates that the costliness of AI tools and the limited expertise available contribute to the slow adoption rate.
The current scenario reflects an impending "AI divide," with early adopters clustering in what McElheran terms "superstar" cities, creating a disparity between businesses and cities equipped to leverage AI tools and those lagging behind. Despite the challenges, some, like Mike Loukas, CEO of TrueMark Investments, remain optimistic, foreseeing over 75% of businesses incorporating AI within the next decade. The caveat is that businesses may not directly engage with AI but will use user-friendly applications built on AI for enhanced efficiency and seamless operations.