The global productivity crisis that has been ongoing since the 2008-2009 financial crisis has many experts looking towards technology, especially digitization and AI, as a solution. According to a recent analysis by the McKinsey Global Institute, directed investment in areas like digitization, automation, and artificial intelligence could lead to new waves of productivity growth. Generative AI alone could potentially increase productivity by more than 0.5 percentage points. However, the impacts of these technology initiatives may not be long-lasting and do not seem to be spreading across all industries.
The McKinsey report suggests four possible reasons for the limited impact of technology on productivity. Firstly, technology adoption is a long-term process and may not immediately lead to significant productivity gains. Secondly, the duplication of online and offline channels due to digitization may dilute the benefits. Thirdly, digital innovations may not be as transformational as past innovations, leading to diminishing returns. Finally, current productivity measurements may not accurately capture the true value added by new technologies, leading to possible mismeasurement issues.
Simply implementing new technology into an organization is not enough to drive productivity growth – organizations themselves need to adapt to changing realities in order to fully realize the benefits of technology. While the direction and impact of AI are uncertain, there are already proven productivity-enhancing use cases across various functions such as sales and marketing, customer operations, and software development. The McKinsey authors believe that AI applications hold significant productivity potential and could potentially expand faster than previous technologies.
In conclusion, technology, particularly digitization and AI, is seen as a promising solution to the global productivity crisis. However, the long-term impacts remain unclear and the benefits of technology may not be evenly distributed across industries. Despite these challenges, organizations can maximize the productivity benefits of technology by adapting to changing realities and adopting new technologies, ideas, and best practices. The potential for AI to drive productivity growth is significant, with various proven use cases already showing improvements across different functions. While the impact of AI remains uncertain, the proven benefits of technology in boosting productivity offer hope for a brighter future.
