Almost 70% of CEOs report they are accelerating Gen AI investments to maintain competitive advantage. Business leaders or CEOs globally recognize the potential of Gen AI, but are encountering significant challenges in formulating and operationalizing related strategies as per a survey.
While more than 2/3rd of CEOs see the need to act quickly on Gen AI to avoid giving their competitors a strategic advantage, 68% reported being stymied by uncertainty around this space.
CEOs embracing Gen AI
Conscious of the technology’s potential to disrupt their own business models, almost all CEOs (99%) told the quarterly survey of 1,200 global CEOs that they are making or planning significant investments in gen AI. However the findings report that investing in an AI-enabled future is easier said than done: more than a quarter (26%) of CEO respondents say the rapid pace of Gen AI progress is the biggest challenge to making capital allocation decisions on gen AI initiatives.
AI adoption strategies for CEOs
“The potential for gen AI to reinvent the way companies operate cannot be ignored, and CEOs are making bold investments in the technology to solidify their competitive advantages and future-proof their organizations,” commented Andrea Guerzoni, EY Global Vice Chair – Strategy and Transactions. “However, CEOs know that companies with genuine gen AI capabilities can become game-changing allies or acquisitions, but the relentless hype around artificial intelligence has clouded their view of the landscape.”
The past four years have seen CEOs reacting quickly to shifting consumer behaviors, a resetting and reconfiguring of supply chains, an upending of the global energy market, and rapid changes in the growth, inflation and interest rate environment. Yet, a significant number of respondents anticipate higher levels of growth (66%) and profitability (65%) in 2024 compared with 2023.
Corporate Expectations in 2024
With global economic growth expectations more likely to be revised on the downside in the near-term, AI adoption strategies that CEOs should consider should show their own growth expectations reflecting the slower global market projected over the next five years.
“It is possible that those CEOs planning for higher growth have already made the hard choices during the past few years, both in terms of competitive positioning and potential growth opportunities,” Guerzoni says. “For those yet to do so, challenging the existing business model based on the current and anticipated market conditions is an imperative step that needs immediate attention.
“CEOs need to scrutinize every area of their operations, from both a product and geographic angle, and decide which underperforming areas to jettison. Maximizing growth and profitability to fund this transformation will be the key to unlocking long-term value creation for companies.”
Business outlook for big companies
The business outlook of big companies and their leaders continues to brighten.
Almost 61% of U.S.-based CEOs expect higher revenue growth in 2024 and 69% expect higher profitability, as per a survey. In the global survey that canvassed 1,200 CEOs, 66% forecast higher revenue growth in 2024, and 65% forecast higher profitability. The increase in optimism appears to be affecting the appetite for mergers and acquisitions (M&A), but to different degrees in different parts of the world. While 52% of U.S. large-company CEOs said they expect to be involved in M&A activity over the next 12 months, just 35% of respondents globally said the same.
Every U.S. CEO surveyed said they were currently making or planning significant investments in generative GenAI, that describes artificial intelligence that uses existing data to generate new content. Around 62% of CEOs want to have AI adoption strategies to avoid giving competitors a strategic advantage, but that isn’t easily achieved; 61% said uncertainty around Gen AI makes it challenging to develop a strategy.
The survey comes on the heels of the EY European Financial Services AI Survey, in which 68% of respondents said that up to one-quarter of their workforce will require AI training in the next six to 12 months.
