Are you in the driver's seat?
McKinsey Growth, Marketing & Sales
Helping clients grow faster than the market
For all the C-suite talk about generative artificial intelligence (gen AI), US Census Bureau research finds that only 5.4 percent of US firms are actually using it to produce goods and services.
You can’t be in the driver’s seat of a new, breakthrough technology if you stand on the sidelines, waiting to see what everyone else does first. Gen AI promises to be the gateway to even greater innovation, so CEOs, CMOs, and CROs who don’t get behind the wheel face the very real prospect of their companies falling permanently behind their competitors.
So what does it take to turn talk about gen AI into actions that unlock a virtuous cycle of innovation and deployment that captures the full value of digital investments?
My colleagues Laura LaBerge and Matt Banholzer, who co-lead McKinsey’s Strategic Growth & Innovation service line, explored that question recently with McKinsey’s Inside the Strategy Room.
Why this matters now: “Our research suggests that we may be transitioning to a new era shaped by new technology platforms and major demographic shifts,” says Matt. “To thrive in this world, you have to innovate because what got you here may not get you there.”
Zoom in: Our survey of more than 1,000 companies found crucial performance variations between those with strong innovation cultures versus those with weak ones.
- 62 percent of strong innovators said their products and services consistently lead the industry in their ability to meet emerging customer demands, compared with 14 percent of weak innovators.
- 58 percent of strong innovators said their products consistently hit their target market, compared with 13 percent of weak innovators.
- 59 percent of strong innovators said they successfully scale new businesses and product lines faster than their industry standard, compared with 8 percent of weak innovators.
A crucial differentiator: Top innovators spend 55 percent more on digital technologies, especially those that enable the companies to develop strategic differentiation.
- Laura says top innovators don’t just invest more, “They invest differently and get much higher returns on those investments.”
Gut check: Matt notes that some leading companies “were deploying gen AI one or two years before ChatGPT took off.”
Bottom line: Top innovators are well ahead in deploying gen AI at scale to improve and accelerate R&D and innovation processes.
What do leaders think of gen AI use cases?
The headline: Our research shows commercial leaders are cautiously optimistic about gen AI use cases, anticipating moderate to significant impact.
Key findings:
- Leaders are most enthusiastic about use cases in the early stages of the customer journey, including lead identification, marketing optimization, and personalized outreach.
- Some 90 percent of commercial leaders expect to utilize gen AI solutions “often” over the next two years.
Bottom line: Winning B2B companies go beyond account-based marketing and disproportionately use hyper-personalization in their outreach. Meanwhile, for B2C companies, AI coupled with company-specific data and context can enable consumer insights at the most granular level, boosting personalization through targeted marketing and sales offerings.
Beating the transformation odds
A successful transformation captures unrealized or potential growth, generates greater efficiencies, and motivates a company’s workforce. But the majority of transformations fail to realize those goals. My colleague Kevin Carmody with McKinsey’s Transformation Practice recently spoke on McKinsey’s Inside the Strategy Room to share his insights on how to beat the transformation odds.
Why it matters now: McKinsey research finds that less than a third of transformations improve organizational performance and sustain improvements over time.
What Kevin says: A transformation “wins the hearts and minds of the company from the executive suite down to the line management level. It starts with people, and it covers the entire enterprise.”
Zoom in: Teamwork at the top is essential. “The biggest stories of inspiration that we’ve seen are where executives find a common bond to solve a difficult problem, as opposed to focusing on their business unit at the expense of the others and keeping score,” says Kevin.
Kevin’s bottom line: “Being very clear about what transformation is—and what it is not—and being committed to it will save everybody a lot of time.”
Save the date
May 23, 2024 (10:30–11:00 AM CDT): Check out our mainstage CMO panel at Connections, Salesforce’s flagship event for marketers and commerce professionals. Our very own Lisa Harkness will be joining Salesforce President and CMO Ariel Kelman to explore how leaders can grasp AI opportunities and navigate challenges in the ever-evolving world of marketing. Check out the livestream here if you can’t be there in person.
June 17, 2024: McKinsey returns to the Cannes Lions Festival of Creativity in France to host an exclusive event where we’ll share our latest research insights into the state of consumer, marketing, and tech. Check out the next edition of The Growth Question for more details.
What I’m reading now
The Armor of Light by Ken Follett
Why I love getting lost in this novel:
The Armor of Light is the fifth installment in Ken Follett's Kingsbridge series, which started with one of my favorite books of all time, Pillars of the Earth. Though set in a fictional English town, its characters are inspired by real people living during the Industrial Revolution. The men, women, and children you meet in this world struggle under the weight of a clash of traditions, class struggles, and war. I love learning from history, and this is a gripping account of how technological innovation disrupted the economy of this time, changing society in parallel.
How it helps me think outside the box:
Right now, we are at the very beginning of a gen-AI-powered revolution. In Follett's novel, the Spinning Jenny is the major tech innovation. And just as the Spinning Jenny ushered in a new era of manufacturing and industry, where leading innovators benefited disproportionately, gen AI is creating a new landscape in which leading strategic business innovators will thrive.
Bottom line:
Follett is a best-selling author whose keen insight into human nature and compelling storytelling illuminate how technological innovations can change the economic, political, and cultural landscape.