The AI balance sheet

6th September 2023 |   Nick de Cent

What will be the impact of artificial intelligence on business?

What will be the impact of artificial intelligence on business?

There is a fierce debate (not to mention a lot of hype) surrounding the future impact of artificial intelligence, related both to its potential benefits and also to the not inconsiderable dangers of introducing AI into business and society.

On the one hand, AI investment has been growing rapidly over recent years and is expected to expand even faster over the current decade – an indication of the potential that business sees in this technology. According to Statista, AI is heavily used for service operations, strategy and corporate finance, with most sectors reporting around 20 percent usage of AI in these functions. Use of AI in manufacturing and marketing is low, “as these can require individual human instincts” and so lend themselves less easily to its application.

The most commonly reported uses of generative AI tools are in marketing and sales, product and service development, and service operations.

On the other hand, there have been multiple warnings from scientists, business leaders and politicians about the threat that AI poses to humanity and even our very existence, not least the loss of jobs, the spread of misinformation and the concern that future systems could prove as deadly as pandemics and nuclear weapons.

Statista says AI investment has increased more than sixfold since 2016 (mostly from private sources), while total global corporate AI investment was almost $92 billion in 2022, albeit that this actually represents a slight decrease from the previous year. But then AI investment was saved by the advent of so-called Generative AI (or GenAI) which exploded into people’s consciousnesses towards the end of 2022 (though it can in fact trace its origins back to the 1960s). GenAI can produce credible text (for instance, summarising reports or answering exam questions, create artwork, and generate computer code. See what you think of GenAI’s capabilities by reading a Journal article that was largely written using ChatGPT: “Sales AI in its own words”.

The total global AI market has grown from $95.6 billion in 2021 to an estimated 207.9 billion this year, and is expected to reach 1,847.5 billion by 2030. Meanwhile, the chatbot market is forecast to reach around $1.25 billion in 2025, likely powered by the rapidly expanding use of this technology for customer service applications.

Inter-governmental trade group, the Organisation for Economic Cooperation and Development (OECD) predicts that AI will have a profound impact on labour markets. Writing in the OECD Employment Outlook 2023: Artificial Intelligence and the Labour Market report, Julie Lassebie suggests this will be not only in terms of employment levels and job quality, but also on how work is organised, the type of tasks workers perform, and therefore on the skills that will be needed (see “Skill needs and policies in the age of artificial intelligence”).

There have been multiple warnings from scientists, business leaders and politicians about the threat that AI poses to humanity.

Notably, as AI becomes widespread, it will be increasingly important for workers in various occupations to possess a broad range of skills to effectively develop and interact with AI systems.

So, what are the pros and cons of AI and what is likely to be its specific impact in sales? As ever, opinion is divided.

Will the impact be negligible as one sales leader commented on LinkedIn in response to a recent edition of the Journal? “This topic in commercial sales is as old as the very dinosaur on the front cover!!!!” they trumpeted. “We are still here and will always be. Human beings are mammals; we buy on EMOTION and justify with LOGIC. Chat GBT and AI cannot ‘understand’ the depth, complexity, and nuances that exist among us social beings and the thousands of varied cultures and histories that have shaped the way in which our prefrontal cortex processes and correlates data from mere information to insights….”

Of course, as one of the oldest professions, sales has existed since time immemorial and, despite being extensively modified across the course of the 20th century and into the current century, is likely to persist so long as human interaction continues. Nevertheless, there are more implications to the introduction of AI than the LinkedIn commentator above likely envisages. And one thing’s for sure: there’s no room for complacency in the context of this particular technology.

AI balance sheet: the pros

  • Improves performance, job satisfaction, well-being and potentially wages, according to an OECD survey in 2022 amongst the finance and manufacturing sectors. However, there are risks around privacy, work intensity and bias. Well over half of respondents (63% in finance, 57% in manufacturing) said they were worried about losing their job because of AI in the next ten years.
  • Boosts medical science, by enabling faster and earlier diagnoses (for instance by interpreting scans), rapid development of new drugs and antibiotics, and helping paralysed people walk again.
  • Computer coding – AI can write computer code, but this is still in its relative infancy. Currently AI presents more as a useful tool for programmers by boosting productivity and carrying out mundane tasks. It still needs to be supervised for accuracy to ensure it is generating the right code, free from errors, and also is not infringing intellectual property rights.
  • Invent new jobs – There is much talk about this but little in the way of concrete ideas. In general, we mostly don’t understand what these will be yet.
  • Automating drudgery at work – Beyond taking over some of the boring aspects of coding (see above) AI has recently been seen to generate lucid text and can potentially be useful in a business context by summarising reports and helping to draft documents. Nevertheless, GenAI can create seemingly plausible text that is factually inaccurate, biased or simply untrue (depending on how the system has been trained).
  • Sales – AI has many potential uses in assisting sales efforts, notably at the sales and marketing interface by harnessing data analytics to understand your customers better and also fostering personalisation. For example, AI can boost business intelligence applications and improve targeting, both for B2B (eg, market analysis) and in B2C to help companies understand people’s lifestyles and buying habits. As such, AI can help firms research and reach underserved consumer segments to create and launch new businesses. It can also facilitate the creation of new digital channels to simplify the way customers engage with suppliers and their offerings, making customers’ interactions with a company seamless, convenient, and personalised. All of these enhancements bring business “closer” to their customers.
    AI also has multiple applications within sales operations, training and sales enablement (for instance, by suggesting next best options during interactions). In this context it can be applied to help make CRM systems “intelligent”. Greater use of AI can also be made to improve the design, targeting and delivery of training but risks need to be understood and mitigated. Meanwhile, some software companies are adding AI enhancements to their offerings to bring greater value to customers and justify price increases.
  • Customer service is a key area in which AI is expected to take over from routine call centre interactions (at least for initial interactions before an issue is escalated). However, will this make it more difficult to contact a real person if needed? A likely trend is for many customer service agent roles to morph into more of a sales role.
The AI Balance Sheet

Ways AI use could have an impact on sales

Here are some potential impacts of AI that sales and marketing leaders (as well as CEOs) may need to think about:

  • Could AI fundamentally change (or eliminate) some existing markets as it replaces certain functions entirely, not only adversely affecting the individuals previously employed but also fundamentally altering the way suppliers address such markets?
  • Will AI exacerbate inequalities in society between those that have applicable skills and those that do not, so concentrating wealth in certain segments – with profound implications for suppliers.
  • More generally, could mass redundancies make most people poorer, so reducing available wealth and consumer spending power?
  • Or, on a positive note, will consumers have more leisure time, changing their spending habits accordingly?
  • How can AI be used to identify potential market opportunities?
  • How will use of AI in procurement affect sales organisations?
  • Where AI is used to filter emails, will this effectively eliminate email marketing and force salespeople to be more targeted?
  • Will AI eliminate the majority of customer service openings with a move towards repositioning customer service representatives as salespeople?

AI balance sheet: the cons

  • Destruction of jobs (for example in admin, management, legal work, architecture). A much-quoted April 2023 article, “Generative AI could raise global GDP by 7%”, from the investment bank Goldman Sachs suggests AI could replace the equivalent of 300 million full-time jobs while simultaneously boosting GDP. AI could replace a quarter of existing work tasks in Europe and the US but also create new jobs. The BBC, highlighting the same research, pointed out that 60% of workers are now in occupations that did not exist in 1940; however, it flagged up other research which suggests that technological change since the 1980s has displaced workers faster than it has created jobs.
    Meanwhile, the OECD suggests that 27% of jobs are in occupations at high-risk of automation (taking into account all automation technologies including AI). And 60% of workers fear that they could lose their job to AI over the next ten years, according to a 2022 OECD survey that covered 5,300 workers in 2,000 firms across manufacturing and finance in seven countries.
    Is this threat real? Well, telecoms giant BT announced earlier this year that it will cut up to 55,000 mostly UK jobs by the end of the decade, with up to a fifth of these affecting customer services as roles are replaced by AI and other technologies. The firm is looking to GenAI to support its services, making them faster, better and more seamless.
    At the same time there is concern that AI technology could contribute to the lowering of wages in various sectors, in a similar fashion to the way satnavs and ride hailing have impacted taxi drivers.
  • Cognitive bias – Poorly trained AI systems can introduce bias into job applications and mortgage and loan applications: for instance, by inadvertently introducing gender, racial and postcode discrimination.
  • Inaccurate information – Similarly, systems trained on poor or incomplete samples (or those with particular political slants or worldviews) could introduce inaccuracies around political or scientific issues or present misleading or contested information as fact. There are also concerns that AI could be used to influence elections.
  • Undermining qualifications – ChatGPT has demonstrated its capability to write credible essays and exam answers, potentially allowing people to cheat in professional exams, so bringing qualifications into question.
  • Easier to create malware and pursue other criminal activity.
  • Erosion of intellectual property – AI can lead to loss of IP and commercial advantage: for example, when AI is trained on organisations’ IP without their permission, through copyright infringement, the creation of deep fakes, and also artistic “plagiarism”.
  • Threat to humanity – “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.” (Statement by the Center for AI Safety signed by academics, AI experts, business leaders and politicians.)

GenAI in sales and marketing

According to the latest annual McKinsey Global Survey on the current state of AI, a third of survey respondents say their organizations are using gen AI regularly in at least one business function, while 40 percent of organizations will increase investment in AI overall due to advances in GenAI. However, fewer than half of organizations are mitigating the most apparent risk – that of inaccuracy.

McKinsey says the “most commonly reported uses of generative AI tools are in marketing and sales, product and service development, and service operations”. Some 14% of respondents to the survey said their organisation was regularly using GenAI in marketing and sales, with 13% using it in product or service development, and 10% in service operations. In marketing and sales, the top three applications are “crafting first drafts of text documents” (9%), personalised marketing (8%) and summarising text documents (8%). The top applications in product and service development and service operations are, respectively, identifying trends in customer needs (7%) and use of chatbots (6%).