CAMBRIDGE, Mass., Nov. 2, 2021 /PRNewswire/ -- More than 75% of managers who reported that their artificial intelligence implementations improved their team's decision-making and efficiency also saw improvements in collective learning (87%), team morale (79%), and collaboration (78%), according to the just-released MIT Sloan Management Review (MIT SMR) and Boston Consulting Group (BCG) 2021 global study "The Cultural Benefits of Artificial Intelligence in the Enterprise."
In its fifth consecutive year, this longitudinal examination of cross-industry AI adoption identifies a wide range of AI-related cultural benefits at both the team and organizational levels.
Key study findings include:
- AI-related cultural and financial benefits build off of each other. Using AI helps companies reassess what being effective means in their organizations. This leads to new business objectives, which leads to new ways to measure performance, new behaviors, and improved outcomes.
- Survey respondents who see significant financial benefits with their AI initiatives are 10 times more likely to change how they measure success as a result of using AI than those who saw no such benefits.
- Sixty-four percent of companies that use AI extensively or in some parts of their processes change how they measure performance and adjust their key performance indicators (KPIs).
- When AI enables workers to outperform existing KPIs, new success measures are necessary. Sixty-six percent of respondents who agree that their KPIs have changed because of AI also see improvements in team-level collaboration.
"Most companies still have a long way to go to generate substantial financial benefits with AI," says Sam Ransbotham, a professor in the information system department at the Carroll School of Management at Boston College, an MIT SMR guest editor, and a report coauthor. "Those who do obtain significant financial benefits often have learned how to culturally benefit from AI and how to use AI to glean financial rewards. Our research suggests that these are connected, not separate, activities."
- Innovating with AI improves competitiveness.
- Of companies using AI to explore new ways to create value (versus improve existing processes), 59% agree that using AI helps them defend against competitors and capture opportunities from adjacent industries.
- These companies are also 2.7 times more likely to agree that AI is helping their company capture opportunities in adjacent industries.
"Successful organizations have moved beyond using AI just to improve their current business and processes," says François Candelon, senior partner and managing director at BCG and global director of the BCG Henderson Institute. "They are now harnessing the power of AI to uncover new business opportunities to create competitive advantage."
- Mistrust of AI can undermine adoption. Both financial and nonfinancial benefits with AI depend on employees working with and trusting the technology.
- Nearly half of companies believe that mistrust of AI stems from a lack of understanding (49%) or training (46%).
- Providing too little context behind decisions (34%) or too much information (17%) can erode trust.
- No amount of user education can overcome a poor tool. Insufficient quality data (31%), failure to meet expectations (20%), or incorrect solutions (14%) contribute to mistrust of AI.
"Culture change is often necessary to adopt AI, and adopting AI can improve culture," says David Kiron, editorial director at MIT SMR and a report coauthor. "But AI adoption won't happen if your culture rejects AI tools. Cultural acceptance of AI begins with trust. Building that trust depends on teaching and training workers, explaining the reasons for AI recommendations, and providing AI tools that solve problems."
- AI that is effective at the team level doesn't always yield financial success at the organizational level.
- At the team level, 58% of global executives agree that their teams have improved in both efficiency and decision quality since implementing AI solutions.
- But, at the organizational level, only 11% have seen significant financial benefits from their AI initiatives. It may be that few companies are implementing AI at a scale sufficient to generate substantial financial benefits.
Shervin Khodabandeh, a senior partner and managing director at BCG and the coleader of BCG GAMMA (BCG's AI practice) in North America, adds, "Given how effective AI has proved to be at the team and cultural levels, it is imperative that leaders within companies find ways to translate that more broadly to the organizational level. Furthermore, AI can become a managerial tool to align micro behavior with broader goals, including societal purpose, equity, and inclusivity."
This MIT SMR-BCG annual global study is based on a survey of 2,197 managers across 106 countries and 28 industries, plus 18 in-depth executive interviews, aimed at understanding how business culture affects AI deployments and AI deployments affect business culture. Interviews were conducted with leading experts from Pernod Ricard, CBS, Northwestern Mutual, Rexel, Humana, KLM, McDonald's, H&M, Nasdaq, Moderna, Spotify, PepsiCo, Levi Strauss, Cooper Standard, the Notre Dame-IBM Technology Ethics Lab, 1-800-Flowers, and Mastercard.
Along with the report, MIT SMR and BCG have launched Season 3 of the popular executive-interview podcast series Me, Myself, and AI, in which report coauthors Ransbotham and Khodabandeh talk to leaders successfully leveraging AI in their companies to learn how they did it and what cultural benefits ensued. The first two episodes, featuring Wharton School professor Kartik Hosanagar and ExxonMobil's AI for IT operations manager Sarah Karthigan, are available on all major podcast platforms.
To read the full report, please visit MIT Sloan Management Review. Access the Me, Myself, and AI podcast series on all major podcast platforms.
About MIT Sloan Management Review
MIT Sloan Management Review (MIT SMR) is an independent, research-based magazine and digital platform for business leaders, published at the MIT Sloan School of Management. MIT SMR explores how leadership and management are transforming in a disruptive world. We help thoughtful leaders capture the exciting opportunities — and face down the challenges — created as technological, societal, and environmental forces reshape how organizations operate, compete, and create value.
About Boston Consulting Group
Boston Consulting Group (BCG) partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders — empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.
Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.
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About the Authors
Sam Ransbotham is a professor in the information systems department at the Carroll School of Business at Boston College, as well as guest editor for MIT SMR's Artificial Intelligence Big Ideas initiative.
François Candelon is a senior partner and managing director at BCG and the global director of the BCG Henderson Institute.
David Kiron is the executive editor of MIT SMR and is program lead for its Future of the Workforce and Artificial Intelligence and Business Strategy projects.
Shervin Khodabandeh is a senior partner and managing director at BCG and the coleader of BCG GAMMA (BCG's AI practice) in North America.
Burt LaFountain is a partner and managing director at BCG and a core member of BCG GAMMA.
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SOURCE MIT Sloan Management Review
