Artificial intelligence: Business leaders start to realise the risks

A Gartner survey of 2,500 executive leaders has found that almost half (45%) say the publicity of ChatGPT has prompted them to increase artificial intelligence (AI) investments. The survey reported that 70% of executives said their organisations are investigating the use of AI, while 19% are in pilot or have deployed AI in production.

The poll found that 68% of executives believe the benefits of generative AI outweigh the risks, compared with just 5% that feel the risks outweigh the benefits. However, executives may begin to shift their perspective as investments deepen.

Frances Karamouzis, distinguished vice-president analyst at Gartner, said: “Initial enthusiasm for a new technology can give way to more rigorous analysis of risks and implementation challenges. Organisations will likely encounter a host of trust, risk, security, privacy and ethical questions as they start to develop and deploy generative AI.”

Gartner’s study found that organisations are using generative AI such as ChatGPT for media content improvement or code generation. While these efforts can be a strong initial value-add, Gartner believes such technology has the potential to augment humans or machines and autonomously execute business and IT processes.

While AI technology offers potential business improvements, the financial markets have been spooked by its impact on existing business models. For instance, on 1 May, education provider Chegg saw its share price nosedive following remarks by CEO Dan Rosensweig during the company’s first quarter 2023 earning call.

Rosensweig said: “In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups.

“However, since March, we saw a significant spike in student interest in ChatGPT. We now believe it’s having an impact on our new customer growth rate.”

This statement caused the company’s share price to plummet. UK education tech firm, Pearson, also saw its share price impacted. According to The FT, Rosensweig’s admission is the first time a company boss has spoken openly about the threat AI poses to an existing business model.

In fact, generative AI such as ChatGPT offers an opportunity for businesses to increase their value proposition. In a recent Harvard Business Review article, David Edelman, a senior lecturer at Harvard Business School, and Mark Abraham, a senior partner at Boston Consulting Group, discussed how generative AI offers a way to connect information, automate code creation and generate output in a way that extends company borders beyond conventional “vertical”, or “horizontal” expansion.

“When you can offer ‘services’ based on a simple user command, those commands will reflect the customer’s true goal and the total solution they seek, not just a small component that you may have been dealing with before,” they wrote.

Near-term, Gartner sees AI as a tool for automating business processes intelligently.

“Autonomous business, the next macrophase of technological change, can mitigate the impact of inflation, talent shortages and even economic downturns,” said Karamouzis. “CEOs and CIOs that leverage generative AI to drive transformation through new products and business models will find massive opportunities for revenue growth.”

However, those organisations that fail to grasp the longer-term impact of emerging AI-based technologies are likely to be penalised both by customers and the financial market, as their unique selling point is eroded.