May 30, 2024

The potential economic impacts of artificial intelligence

Credera Team

Credera Team

The potential economic impacts of artificial intelligence

Adapted from a Technology Tangents podcast, with assistance from generative AI

In only a few years, generative artificial intelligence (AI) models have gone from being relatively unreliable and limited to achieving remarkable acceptance. This change has unlocked a massive economic opportunity, seemingly overnight.

Recent reports estimate that generative AI could add roughly $2.6 to $4.4 trillion annually across applications—that’s roughly equal to the United Kingdom's 2021 gross domestic product.

But generative AI is only one aspect organizations should consider in context of the value AI can create. Traditional AI applications, such as computer vision and natural language processing, are expected to contribute even more—around $13 trillion (about $40,000 per person in the U.S.).

Here's a look at two areas of business where AI is likely to have a significant impact: the workspace and marketing operations.

AI’s effect on the workspace

AI’s capacity to automate core tasks in a wide range of industries has led to a general fear that it will have a depressive effect on jobs when, in fact, it’s likely to do the opposite.

Based on data from the U.S. Census Bureau, there has been only one job throughout history that’s been fully automated—the elevator operator. The pattern of AI may be reminiscent of the impact of ATMs. While initially seen as job-killers for bank tellers, the adoption of ATMs led to more bank branches opening and even more roles for bank tellers because the cost for opening a single branch dropped substantially due to automation. This is a phenomenon known as Jevons paradox, when technological progress creates efficiencies and the associated falling costs increase demand to the point that more resources, rather than fewer, are needed.

But that doesn’t mean AI won’t change the employment landscape. There will be less need for certain human contributions as tasks that once took hours and many hands can be completed nearly instantaneously. Managing through the AI revolution will involve retraining the workforce to match changing demand.

AI’s effect on marketing operations

Another disruptive change is in the heightened potential for tailored customer experiences. By making personalization easier and more efficient, AI can help businesses increase revenue by capturing and retaining customers. But AI also has the potential to open new marketing channels.

For example, AI-powered personal assistants like Siri, Alexa, and Google Assistant will become even more sophisticated in learning individual preferences and providing tailored recommendations. This shift in interaction can have significant implications for businesses, as it means consumers may no longer be directly influenced by traditional advertising methods and advertisers may need to target the AI agents, which will be responsible for surfacing brands to their users.

The bottom line

As AI continues to advance, organizations must adapt and invest in the technology to stay competitive. Managing through the AI revolution will involve diving into the most relevant use cases, evaluating a strategic approach to leveraging AI tools, and retraining the workforce to match changing demand. Overall, AI presents both challenges and opportunities, and organizations must be prepared to navigate the changing landscape to stay ahead of the game.

Schedule a call with our specialists to learn more about how to make AI work for your organization.

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