In this independent discussion paper, we examine investment in artificial intelligence (AI), describe how it is being deployed by companies that have started to use these technologies across sectors, and aim to explore its potential to become a major business disrupter. To do this, we looked at AI through several lenses. We analyzed the total investment landscape bringing together both investment of large corporations and funding from venture capital and private equity funds.
We
also reviewed the portfolio plays of major internet companies, the dynamics in
AI ecosystems from Shenzhen to New York, and a wide range of case studies. As
part of our primary research, we surveyed more than 3,000 senior executives on
the use of AI technologies, their companies’ prospects for further deployment,
and AI’s impact on markets, governments, and individuals. This report also
leverages the resources of McKinsey Analytics, a global practice that helps
clients achieve better performance through data. The research was conducted
jointly with Digital McKinsey, a global practice that designs and implements
digital transformations.
In addition to identifying a gap between AI investment
and commercial application, which is typical of early technology development
curves, we found that the new generation of AI applications is based on the
foundation of digitization. Leading sectors in digital tend to be leading
sectors in AI, and these are predicted to drive growth. We also found that AI
has the potential to accelerate shifts in market share, revenue, and profit
pools—all hallmarks of digitally disrupted sectors.
This report leverages two
MGI analyses of digitization, Digital America: A tale of the haves and have-mores,
published in December 2015, and Digital Europe: Pushing the frontier, capturing
the benefits, published in June 2016. These reports introduced the McKinsey
Global Institute (MGI) Industry Digitization Index, which combines dozens of
indicators to provide a comprehensive picture of where and how companies are
building digital assets, expanding digital usage, and creating a more digital
workforce.
This report also builds on MGI’s work on advanced analytics, The age
of analytics: Competing in a data-driven world, published in December 2016, and
on automation, A future that works: Automation, employment, and productivity,
published in January 2017, as well as Artificial intelligence: Implications for
China, published in April 2017; and an April 2017 Digital McKinsey report,
Smartening up with artificial intelligence (AI): What’s in it for Germany and
its industrial sector? This latest research has been led by
Jacques Bughin, an MGI senior partner based in Brussels; Eric Hazan,
a member of the MGI Council and a McKinsey senior partner based in Paris;
Sree Ramaswamy, an MGI partner based in Washington, DC; Michael Chui,
an MGI partner based in San Francisco; Tera Allas, an MGI visiting fellow
in London; Peter Dahlström, a McKinsey senior partner in London; Nicolaus Henke,
a McKinsey senior partner based in London; and Monica Trench, a McKinsey
consultant based in London.
The project team comprised Mathilde Castet,
François Allain des Beauvais, Lindsay Macdonald, Oleg Pynda,
Dariusz Smolen, and Jordan Ward. Sincere thanks go to
Timothy Beacom, April Cheng, Paul-Louis Caylar, and
Hugo Weber. We would also like to thank MGI senior editor
Mark A. Stein; Matt Cooke, MGI director of external
communications; MGI visual graphics specialist Marisa Carder, designer Margo Shimasaki,
and infographic designers Richard Johnson and Jason Leder; MGI
editorial production manager Julie Philpot; and Deadra Henderson, MGI
manager of personnel and administration.
This report builds on a considerable
body of expertise within MGI and McKinsey. We particularly want to acknowledge
Tamim Saleh and Brian McCarthy from McKinsey Analytics,
Louise Herring and Casper Louw for contributing to the retail sector
case study, Arnout de Pee and Mike Munroe for contributing to
the electric utilities case study, Richard Kelly for contributing to the
manufacturing case study, Martin Markus and Sri Velamoor for
contributing to the health care case study, and Jake Bryant,
Mike Munroe, and Jimmy Sarakatsannis for contributing to the
education case study. We would also like to thank all previous MGI teams that
produced reports on digitization, automation, big data and analytics, the
internet of things, and online talent platforms.
Our research was also enriched
by insights from Eric Goubault and Jesse Read from Ecole
Polytechnique. This report contributes to MGI’s mission to help business and
policy leaders understand the forces transforming the global economy, identify
strategic imperatives, and prepare for the next wave of growth. As with all MGI
research, this work is independent and has not been commissioned or sponsored
in any way by any business, government, or other institution. We welcome your
comments on the research at MGI@mckinsey.com.