Mind the-(ai)-gap : BCG study
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Online survey of companies → Goal: Understanding the role of artificial intelligence (AI) and machine learning across countries and industries • Evaluation: Which companies are active leaders in adopting or piloting AI
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Mind the-(ai)-gap : BCG study
- 1. 04 DECEMBER 2018 Mind the (AI) Gap: Leadership Makes the Difference
- 2. Copyright©2018byBostonConsultingGroup.Allrightsreserved. 1 Authors Jörg Erlebach Senior Partner and Head of BCG GAMMA Germany Marc Pauly Associate Director BCG GAMMA Methodology • Online survey of companies → Goal: Understanding the role of artificial intelligence (AI) and machine learning across countries and industries • Evaluation: Which companies are active leaders in adopting or piloting AI • Goal: Understanding which organizational, procedural and cultural drivers are underlying success factors that differentiate leaders from laggards • Sampling size: More than 2700 managers from Germany, Austria, China, France, Japan, Switzerland and the United States • Participant companies: Ranged from small SMEs (> 250 employees) to large corporates of 50,000 or more employees • Condition: Respondents with at least a basic understanding of AI and its potential Sylvain Duranton Senior Partner and Head of BCG GAMMA Global
- 3. 2 Copyright©2018byBostonConsultingGroup.Allrightsreserved. Results at a glance • French companies are lagging behind in leveraging AI, but the global race is still open – Only 20% are actively using AI, 30% are still at adoption level – But: France is on the same level than Germany (20 %), far ahead Japan (11%). Only China is far ahead in AI usage with nearly 9 out of 10 companies as Active AI Players – French Technology, Media and Telecommunication industry with many Active AI Players, whereas Industrial and Financial Services companies have low figures • When it comes to AI, leadership makes the difference – Active Players excel on three dimensions of organization and company culture, as the new BCG GAMMA study shows: short, fast-paced innovation cycles, active management “pull” on AI innovation and cross-functional approach to innovation – French companies have nearly 80% longer innovation cycles than Chinese companies • Call for action – Factors like government AI initiatives, good infrastructure, skill levels and business-friendly environments are necessary but not sufficient: Managers need to adapt their working culture to become an active AI Player
- 4. 3 Copyright©2018byBostonConsultingGroup.Allrightsreserved. French companies are lagging behind in leveraging AI 1. For additional data: See report Note: The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers Share of Active Players in AI by country • Only half of French companies are Active Players in AI • Optimistic part of the forecast: Hardly any difference between France and Germany. "Old Europa far beyond Japan • Of French companies having prior experience with AI initiatives, only 6 of 10 report generally successful outcomes (compared to 9 of 10 in China)1 • Pessimistic part of the forecast: China far leading compared to other countries on overall AI activity 32% 22% 20% 20% 15% 13% 11% 53% 29% 29% 29% 31% 29% 28% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% China USA France Germany Switzer- land Austria Japan 85% 51% 49% 49% 46% 42% 39% AI piloting AI adoption
- 5. 4 Copyright©2018byBostonConsultingGroup.Allrightsreserved. The global race to leverage AI in practice is still open • The current situation in most countries is similar—besides China • In Consumer, France is leading compared to most other countries besides China • France needs to catch up especially in sectors like Industrial and Financial Services: less than half of those companies are active AI players • Tech companies are leading in AI activity overall Note: Values denote the percentage share of Active Players in each country and/or industry. Colors highlight their relative positioning. “n.a.” denotes clusters with insufficient survey statistics. The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers Share of Active Players in AI by country/industry cluster Consumer 84% 41% 57% 39% 65% 32% 35% 50% Energy 86% 73% 48% 50% n.a. 67% 38% 67% Financial Services 86% 61% 45% 34% 67% 22% 42% 52% Healthcare 83% 49% 51% 43% 38% 33% 23% 49% Industrial 83% 49% 43% 60% 35% 44% 32% 55% Technology, Media, Telecom 89% 65% 63% 64% 43% 67% 60% 71% Total 85% 51% 49% 49% 46% 42% 39% 55% China USA France Germany Switzer- land Austria Japan
- 6. 5 Copyright©2018byBostonConsultingGroup.Allrightsreserved. 63% 57% 51% 48% 45% 43% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Leading Industries in AI in France are Technology, Media, Telecom and Consumer Note: The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers • France is performing above average in the data-rich Consumer segment, with other countries struggling harder to leverage the potential • In Industrial and Financial Services Industry, France underperforms with only few active AI Players Share of Active Players in AI by industry in France Consumer Energy Financial Services Healthcare IndustrialTechnology, Media, Telecom
- 7. 6 Copyright©2018byBostonConsultingGroup.Allrightsreserved. 49% 57% 82% 67% 58% 59% 54% 48% 50% 34% 48% 43% 57% Media & telecommuni- cations providers Software & services Technology / IT equipment and hardware Telecommunications equipment and hardware Other Consumer products Consumer services Retail Travel & tourism Other Medical technologies Payers & providers Pharmaceuticals Other France is winning in some sectors like Consumer Services... Note: The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers • Technology, Media and Telecoms are leading AI activity in France (like in other countries too), but only Media & Telecoms providers are ahead in a cross-country comparison • Consumer services show France strong on AI activity Share of Active Players in AI by industry Industry average across countries 71% Across countries … In France … Technology, Media, Telecom Consumer Healthcare 71% 50% 73% 50% 0% 53% 80% 50% 75% 56% 67% 40% Media & telecommuni- cations providers Software & services Technology / IT equipment and hardware Telecommunications equipment and hardware Other Consumer products Consumer services Retail Travel & tourism Other Medical technologies Payers & providers Pharmaceuticals Other Industry average In France 63% 57% 51% n.a. 49% 50% n.a. n.a.
- 8. 7 Copyright©2018byBostonConsultingGroup.Allrightsreserved. ...but needs to catch up Industrials and Corporate / Investment Banking Note: The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers • French materials and process industries are particularly strongly behind, lagging the cross- country average by almost half • Financial services companies have been early movers on adopting AI in many countries, but France lags here in Corporates and IB Share of Active Players in AI by industry 74% 76% 62% 50% 50% 60% 49% 45% 83% 57% 60% 61% 56% 28% Oil & gas Energy engineering & services Power & gas utilities Other Corporate and investment banking Retail banking Asset & wealth management Insurance Other Automotive Engineered products & infrastructure Materials & process industries Transportation & logistics Other Industry average across countries Financial Services Across countries … n.a. 71% 60% 17% 33% 18% 60% 50% 46% 67% 39% 32% 43% 47% Oil & gas Energy engineering & services Power & gas utilities Other Corporate and investment banking Retail banking Asset & wealth management Insurance Other Automotive Engineered products & infrastructure Materials & process industries Transportation & logistics Other Industrial Energy n.a. In France … 48% 45% 43% Industry average In France 55% 67% 52%
- 9. 8 Copyright©2018byBostonConsultingGroup.Allrightsreserved. How Active Players excel on three dimensions of organization and company culture Active management “pull” on AI innovation Cross-functional approach to innovation Short, fast-paced innovation cycles 321
- 10. 9 Copyright©2018byBostonConsultingGroup.Allrightsreserved. 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% Shorter innovation cycles lead to stronger AI activity Note: The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers Share of Active Players by length of innovation cycle • 72% of high-velocity innovators (1 to 3 months average between idea and working prototype) are active Players in AI • Activity decreases with speed of innovation: Only one third of the slowest companies are active Players • French companies surveyed reported 78% longer innovation cycles on average than Chinese companiesAverage innovation cycle in months (bucketed) 1 to 3 4 to 6 7 to 12 13 to 24 over 24 7,3 12,4 13.0 China FranceUSA Average length of innovation cycle (in months)
- 11. 10 Copyright©2018byBostonConsultingGroup.Allrightsreserved. Active Players are much more willing to pilot early and experiment with AI Note: The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers Share of Active Players by openness to rapid piloting • 75% of companies whose managers are willing to invest in AI initiatives at an early stage are active Players • Of companies whose managers wait for “game changer” proof, only 30% are active • China’s managers are 50% more likely than French managers to pilot early • Only half of the French managers treat AI with greater attention (“pull”) than other innovation topics, while 9 of 10 of Chinese managers do 28% 19% 13% China USA Share willing to pilot without detailed impact analysis 75% 44% 30% 25% 56% 70% Willing to pilot without detailed impact analysis Willing to pilot only with impact analysis for function or process Willing to pilot only if proven game- changer Active Players Observers France
- 12. 11 Copyright©2018byBostonConsultingGroup.Allrightsreserved. Driving innovation within functional silos hinders AI activity Note: The survey defines Active Players as those companies who are already moving to adopt AI into existing processes or currently running pilot initiatives, and whose efforts thus far are reported to have generally been successful. Others are defined as Observers Share of organizational approaches for Active Players and Observers • Working in functional silos on AI (e.g., AI projects only driven by IT) significantly reduces the chances of becoming an active Player • 41% of active Players drive AI innovation through cross-functional teams, compared to only 22% of Observers • Two-thirds of French companies still address topics like AI through silosChina USAFrance Distribution of organizational approaches to implementing AI 41% 22% 59% 78% CN DEActive Players Observers Cross-functional teaming on AI initiatives AI innovation driven by functional silos only 50 % 50 % 29 % 71 % 28 % 72 % Cross-functional teaming on AI initiatives AI innovation driven by functional silos only
- 13. 12 Copyright©2018byBostonConsultingGroup.Allrightsreserved. Management leadership on AI makes the difference CEOs need to act to become Active AI Players • Launch and pilot fast and make sure you move to agile* • Set the tone on AI innovation, selecting use cases and promoting projects top-down • Don’t follow the silos of your organization and try new ways of working Don’t ask for support, first act yourself External factors such as infrastructure and a business friendly environment are important, but don’t make the difference Learn from the one who are already on top Looking beyond one’s own nose is key: French CEOs should re-think their processes and learn from industries already leading in AI * Agile is a team-centered, iterative, and cross-functional approach that can be applied across many business contexts. For more information see the following BCG report: https://www.bcg.com/de-de/publications/2017/people-boosting-performance-through-organization-design.aspx
- 14. bcg.com