Most of the business world now agrees that generative artificial intelligence is on course to be the biggest productivity advance we have seen in decades, if not in living memory. Today, the question business leaders face is not whether they should pursue Gen AI but where they should focus their attention first.
From the rollout of Gen AI-enhanced support tools in most basic office software suites, to announcements nearly every month of a new large language model that has shattered a previous benchmark, to the ever-growing number of successful experiments, it’s becoming increasingly clear that AI is going to be part of all our futures, about as optional as electricity or the internet.
The reason for business leaders’ excitement – and trepidation – is that Gen AI represents a fundamentally different kind of technology than we have seen before. As Wharton professor Ethan Mollick has said, “We have invented technologies, from axes to helicopters, that boost our physical capabilities, and others, like spreadsheets, that automate complex tasks; but we have never built a generally applicable technology that can boost our intelligence.”
A rapid advance
This broad consensus has developed surprisingly quickly. Just a year ago, most companies were still debating whether they should start experimenting with Gen AI. Only 16% of executives saw business transformation as a high priority.
Now, they’re believers. In The Hackett Group’s 2025 Key Issues Study, 89% of executives polled said their company is pursuing Gen AI initiatives.
The outcomes of these programs have varied. Most executives say their companies have already realised value with Gen AI in productivity improvement (nearly 50% of respondents), followed by quality improvement (46%) and operating cost reduction (38%).
Looking ahead, executives also see a wide range of gains. Of the companies surveyed, 58% are adopting AI to enhance their customer satisfaction and experience, 47% are using it to innovate new products and services, and 46% are using it to increase their market penetration.
Reimagining work
So where should you begin?
One thing we keep telling our clients is not to sell themselves short. The productivity gains of up to 20% that people are reporting from the adoption of Microsoft Copilot and other off-the-shelf AI tools are achievable, but much more can be accomplished: with some holistic, strategic thinking, you can design transformative process improvements powered by AI that will yield productivity gains of 25% or more and new opportunities for competitive advantage.
Instead of simply letting the experiments bubble up from below, the companies we talk to with a good grasp of where the technology is heading are creating cross-functional senior teams to decide where their biggest opportunities are to be found, and then reimagining those workflows accelerated with AI support.
It won’t be easy. Executives tick off a long list of equally serious challenges that they will have to overcome to take full advantage of AI’s potential, including the complexity of the existing processes (59%), unrealistic benefit expectations (58%), the complexity of the existing technology landscape (58%), and concerns about data quality (58%).
In spite of those concerns, many companies are already making big bets: these days, as much as 50% of company innovation budgets are going into Gen AI initiatives, and executives are spending about 20% of their time making sure their organisation takes full advantage of the opportunity.
Four steps to take now
Ultimately, that right answer will have less to do with Gen AI than with the particular challenges and opportunities faced by your enterprise. However, best practices for using Gen AI to improve performance and create new competitive advantage are beginning to emerge that can profit almost every organisation. Here are four steps you should take immediately, if you haven’t already, to take control of your AI destiny:
- Take a holistic approach. Look beyond adoption. Encourage senior leadership and finance teams to cultivate an environment in which they can search for, evaluate, and support opportunities that deliver more than incremental productivity gains.
- Befriend an agent. AI agents with the ability to operate autonomously in the workforce are on their way, and will soon extend our sense of what’s possible. Others will work in a “co-intelligence” environment in which people and AI collaborate.
- Send everyone to AI school. Employees will need to be trained to use and engage with AI, and managers will need a crash course on how it can reshape what they expect of their teams.
- Keep it simple. Gen AI is so generally useful, it will be tempting to throw it at all of your processes. But as noted above, the truly transformative gains will be found when you take a narrower focus. Most oceans are best boiled a bucket at a time.
More than a tool
Generative AI is more than a tool that makes us stronger or a device that can execute certain tasks automatically. Used creatively, it can multiply the potential of every worker. That’s why companies that would once have killed for basis point gains in efficiency are now unimpressed with the 10-20% gains office workers are reporting, considering such returns pocket change compared to the reports they are hearing of the transformational gains leading digital companies have already seen.
Companies that can reimagine their operations to take full advantage of AI will outpace those that don’t. It’s as simple as that. For business leaders, this represents a fundamental shift in the way all businesses will be led and operated. As Mollick puts it, “The expert of the future isn’t the one who knows the most, but the one who can orchestrate knowledge most effectively. AI is a tool. Your mind is the workshop. What are you building?”
