AI can damage your business
(This article is part of a series on Artificial Intelligence for Board Members and Senior Executives.)
Back in June, 2023, Yale University assembled 150 founders, CEOs, and chairmen of Fortune 500 companies, along with distinguished professors, investors, and government dignitaries, to discuss the “threats, hope, and hype” of artificial intelligence. Amongst other lines of inquiry, organizers asked the distinguished assembly to weigh in on one provocative question:
“Can AI destroy humanity?”
And the results? 8% of those in attendance felt that AI could, in fact, destroy humanity within just five years; Another 34% said it would take 10 years for AI to do away with human beings; And the remaining 58% thought that this existential worry was—well, overstated.
What’s interesting to me about the poll, however, was another statistic—how many attendees thought that AI could destroy humanity “within one year.”
The answer to that one? Zero. None. Not a soul in the room worried about the existential threat of AI in the timeline of one year.
It’s quite good news, right?
Well, maybe.
No, it’s not the end of the world as we know it, but—if you are at all responsible for your company’s future—you should absolutely NOT feel fine. The changes set to arrive in the coming year won’t destroy humanity, but they may indeed wreak havoc on your business, if you don’t take immediate action.
Here are three ways that Generative AI can damage slow movers:
1. Productivity gap:
I have written previously about the efficiency and output advantages that will be gained by companies who aggressively adopt Artificial Intelligence. AI has been increasing revenue and lowering costs for some companies for years now, across customer service, sales and marketing, product development, software engineering, supply chain management, competitive intelligence, and many more areas. (Read “5 Ways AI Can Increase Your Revenue).
By how much? Well, the National Bureau of Economic Research estimates the average AI productivity increase at 14%, while some companies gain up to 400%. 92% of large companies made returns on their AI investments in 2022, while 8% of leading AI adopters attributed a full 20% of their EBIT to AI in 2022—and that was before most people had ever heard of ChatGPT!
This, of course, is just the beginning. McKinsey predicts that generative AI alone will add $4.4 trillion to global output annually—more than the GDP of the United Kingdom. Clearly, if your organization is not aggressively seeking opportunities to implement AI, you may soon find yourself unable to bridge the productivity gap between you and your competitors.
Discover what productivity gains can be achieved by AI in your organization and look to be a leader, not a laggard. (Read “What to Do with All That Productivity?”)
2. AI powered cyber attacks:
I have also previously warned of cybercriminals using generative AI to fool targets. (Read “AI Risk Management for Corporate Boards”) In fact, 75% of security professionals reported an increase in cyber attacks over the past year, mostly attributed to generative AI. Between January and February, 2023 alone, there was a 135% increase in novel social engineering attacks, following the release of ChatGPT.
These generative AI attacks include sophisticated phishing emails that use large language models as well as virtual kidnappings that use deep fake and voice clone technology. But AI is also used to select victims and gather useful information about them, to scan code in search of vulnerabilities, and to write malware that exploits those vulnerabilities. Worst of all, this can all be done by someone with a very limited skill set, thanks to AI.
This may not be an existential problem for your company just yet, but the damage a successful AI-powered cyber attack can do goes beyond monetary loss. It can also result in loss of critical data, dilute the trust of your customers, and damage your stock price.
Gather your cybersecurity teams and vendors today, to find out—are you outpacing new AI threats? Or is it the other way around?
3. Lightning disruption:
A third threat that corporate executives and board members need to worry about is the possibility of disruption at a speed like we have never seen before. Prior to November, 2022, most business leaders had never heard of large language models. The release of ChatGPT had an almost immediate effect on a number of industry players. Shares of language learning platform Chegg dropped nearly 50% overnight and continued to fall, as it became clear that subscribers were abandoning the platform for ChatGPT. (As of this writing, Chegg is trading at about 30% of its 2022 share price.)
It took 13 years from its founding for Netflix to drive Blockbuster video into bankruptcy. It took at least five years for Uber and AirBnB to significantly impact the transportation and hospitality industries, respectively. But, while technology has been the key to disruption across many industries in the last two decades, it is clear that AI has the power to generate massive disruption in record time—even for the mighty Google.
The AI disruption is already underway, both with new modalities of AI like ChatGPT that you know about, and with a dozen more developments in the pipeline that you don’t. Experts have identified healthcare, banking, logistics, insurance, customer service, e-commerce, and more industry sectors as particularly vulnerable to lightning disruption. Although it may not seem like a “code red” today, Ernest Hemingway explained how this kind of bankruptcy happens in The Sun also Rises: “Two ways: Gradually, then suddenly.”
Research what’s happening in AI and examine where your organization may be vulnerable to disruption. (Read: “If ChatGPT can Disrupt Google in 2023, What About Your Company?”)
No, AI will not “destroy humanity” in one year, if ever. But we will see shocking changes to the business landscape, resulting in some players rising and others falling. You can be out-maneuvered and find yourself on a path of reducing revenues with no way out. It really isn’t enough to “do just enough” on this one. I encourage you to make AI an item of discussion at every board meeting and executive huddle.
If you care about how AI is determining the winners and losers in business, how you can leverage AI for the benefit of your organization, and how you can manage AI risk, I encourage you to stay tuned. I write and speak about how senior executives, board members, and other business leaders can use AI effectively. You can read past articles and be notified of new ones by clicking the “follow” button here.
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