CEOs Focusing On AI Growth Potential Over Cost Cutting But Wary Of Risks

CEOs and other corporate leaders are more interested in AI's potential as a source of growth than they are in its cost-cutting capabilities, but they are wary of the considerable risks associated with its implementation, including cost, shortages of skilled staff, disinformation, reputational damage, legal threats and operational challenges. 

As a result, most appear to be proceeding prudently, which is not what big tech and VCs would prefer. JL

Jun Bolivar reports in CoinGeek:

87% of CEOs believe that the benefits of AI outweigh its risks to their businesses. (But), a significant 56% of CEOs acknowledge that disinformation, misinformation and deepfakes could cause operational problems. In addition, 29% of CEOs expressed concerns over constrained electricity supply, while 53% cited supply chain issues as potential problems driven by the demand for GenAI. These operational challenges highlight the complexities and obstacles associated with integrating advanced AI technologies into business operations. CEOs are mindful of these risks and are strategizing to mitigate them. CEO's focus on AI growth potential marks a departure from the previous year’s emphasis on cost management.

A recent survey conducted by Gartner reveals a significant shift in CEO priorities, with “growth” emerging as the foremost business priority for 62% of CEOs in 2024. This figure marks the highest level of prioritization for growth since 2014, indicating a notable rise from the 49% of CEOs who deemed growth as their top priority in the previous year.

David Furlonger, Distinguished VP Analyst and Gartner Fellow said the relatively weak focus on cost management suggests that most CEOs and senior business executives believe the most challenging economic times are already behind us.

The 2024 Gartner CEO and Senior Business Executive Survey was conducted from July through December 2023 and included 416 CEOs and other senior business executives. These participants represented a variety of industries, revenue brackets, and company sizes across North America, Europe, Asia/Pacific, Latin America, the Middle East, and South Africa. The comprehensive scope of the survey aimed to capture top business leaders’ evolving priorities and strategies as they navigate the post-pandemic economic landscape.

AI as a transformation catalyst

Artificial intelligence (AI) has emerged as a critical focus area for business transformations, with 34% of CEOs identifying it as the primary theme following digital transformation. Operations efficiency followed at 9%. Don Scheibenreif, Distinguished VP Analyst at Gartner, highlighted the prominence of generative AI (GenAI) in displacing digital as the primary buzzword among top executives.

The role of GenAI in business strategy

Generative AI, in particular, has captivated the attention of CEOs, becoming a central theme in discussions about future business transformations. Scheibenreif noted that generative AI has surpassed digital transformation in terms of buzz and potential impact. He said CEOs are increasingly looking to their technology leaders to harness the power of GenAI and integrate it into their business strategies. This collaborative approach underscores the importance of teamwork and cross-departmental efforts in realizing the full potential of AI.

Balancing AI optimism with caution

Despite the optimism surrounding AI, caution remains among CEOs. A striking 87% of CEOs believe that the benefits of AI outweigh its risks to their businesses. Moreover, 90% agree that the notion of AI posing an existential threat to humanity is exaggerated. However, the potential challenges posed by AI are not overlooked. A significant 56% of CEOs acknowledge that disinformation, misinformation, and deepfakes could cause operational problems.

Scheibenreif advises CEOs to adopt a balanced approach to AI integration. He further cautioned that the trough of disillusionment for GenAI might arrive before the end of 2024. He said CEOs should clamp down only on experiments they believe are dangerous for the company’s reputation and allow the herd to police itself this time.

Operational challenges and supply chain issues

In addition to concerns about disinformation and misinformation, 29% of CEOs expressed concerns over constrained electricity supply, while 53% cited general supply chain issues as potential problems driven by the demand for GenAI. These operational challenges highlight the complexities and potential obstacles associated with integrating advanced AI technologies into business operations. CEOs are mindful of these risks and are strategizing to mitigate them effectively.

Strategic focus on growth

The survey underlined a renewed focus on growth and AI’s vast potential and challenges as business environments evolve in 2024. This renewed focus on growth marks a departure from the previous year’s emphasis on cost management, reflecting a widespread belief among CEOs and senior executives that the most challenging economic conditions have passed. The shift toward growth is accompanied by a diminished emphasis on cost management, indicating a more optimistic outlook for the future.

Collaborative approaches and leadership strategies

The Gartner survey also sheds light on the collaborative approaches being adopted by CEOs to integrate AI into their business strategies. By entrusting CIOs, CTOs, and CDOs with the task of unlocking the value of GenAI, CEOs are fostering a culture of teamwork and innovation within their organizations. This approach not only leverages the expertise of technology leaders but also ensures that AI initiatives are aligned with the broader strategic goals of the company.

The findings of the Gartner survey have significant implications for the tech sector. The high level of CEO confidence in AI’s potential validates the hype surrounding AI technologies and signals a strong demand for AI solutions in the coming years. Tech companies that can offer innovative and reliable AI products and services are likely to see increased interest and investment from businesses looking to leverage AI for growth and competitive advantage.

Future outlook and challenges

As CEOs continue to prioritize growth and integrate AI into their business strategies, the future outlook appears promising yet challenging. Balancing optimism with caution, managing operational risks, and navigating supply chain issues will be crucial for the successful implementation of AI initiatives. Additionally, the potential for disillusionment as the hype cycle progresses underscores the importance of realistic expectations and measured approaches to AI adoption.