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McKinsey: The economic potential of generative AI

Generative AI is poised to unleash the next wave of productivity. We take a first look at where business value could accrue and the potential impacts on the workforce.

AI has permeated our lives incrementally, through everything from the tech powering our smartphones to autonomous-driving features on cars to the tools retailers use to surprise and delight consumers. As a result, its progress has been almost imperceptible. Clear milestones, such as when AlphaGo, an AI-based program developed by DeepMind, defeated a world champion Go player in 2016, were celebrated but then quickly faded from the public’s consciousness.

 

Generative AI applications such as ChatGPT, GitHub Copilot, Stable Diffusion, and others have captured the imagination of people around the world in a way AlphaGo did not, thanks to their broad utility—almost anyone can use them to communicate and create—and preternatural ability to have a conversation with a user. The latest generative AI applications can perform a range of routine tasks, such as the reorganization and classification of data. But it is their ability to write text, compose music, and create digital art that has garnered headlines and persuaded consumers and households to experiment on their own. As a result, a broader set of stakeholders are grappling with generative AI’s impact on business and society but without much context to help them make sense of it.

The speed at which generative AI technology is developing isn’t making this task any easier. ChatGPT was released in November 2022. Four months later, OpenAI released a new large language model, or LLM, called GPT-4 with markedly improved capabilities.1 Similarly, by May 2023, Anthropic’s generative AI, Claude, was able to process 100,000 tokens of text, equal to about 75,000 words in a minute—the length of the average novel—compared with roughly 9,000 tokens when it was introduced in March 2023.2 And in May 2023, Google announced several new features powered by generative AI, including Search Generative Experience and a new LLM called PaLM 2 that will power its Bard chatbot, among other Google products.3

To grasp what lies ahead requires an understanding of the breakthroughs that have enabled the rise of generative AI, which were decades in the making. For the purposes of this report, we define generative AI as applications typically built using foundation models. These models contain expansive artificial neural networks inspired by the billions of neurons connected in the human brain. Foundation models are part of what is called deep learning, a term that alludes to the many deep layers within neural networks. Deep learning has powered many of the recent advances in AI, but the foundation models powering generative AI applications are a step-change evolution within deep learning. Unlike previous deep learning models, they can process extremely large and varied sets of unstructured data and perform more than one task.

More in the McKinsey Report: The economic potential of generative AI

Authors
Michael Chui
Eric Hazan
Roger Roberts
Alex Singla
Kate Smaje
Alex Sukharevsky
Lareina Yee
Rodney Zemmel

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Organizations today face ten significant shifts. Here’s what to do about them

 

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Business leaders around the world are currently addressing not only economic volatility, geopolitical instability, and the lingering effects of the COVID-19 pandemic but also a range of organizational shifts that have significant implications for structures, processes, and people. The shifts include complex questions about how to organize for speed to shore up resilience, find the right balance between in-person and remote work models, address employees’ declining mental health,1 and build new institutional capabilities at a time of rapid technological change, among others.

To help CEOs and their leadership teams consider such questions, we have launched McKinsey’s The State of Organizations 2023 report. The report is an account of an ongoing research initiative that seeks both to pinpoint the most important shifts that organizations are grappling with and to provide some ideas and suggestions about how to approach them.

As part of the research, we conducted a survey of more than 2,500 business leaders around the world.2 Only half say their organizations are well prepared to anticipate and react to external shocks, and two-thirds see their organizations as overly complex and inefficient. We also spoke with business leaders to gather inspiring stories and best practices from beacons—organizations that have been able to adapt to recent economic and operational disruptions and forge new paths. Finally, we developed four points to consider in addressing the ten organizational shifts, leveraging the survey results, the quantitative research with executives, and insights from our work in the field and through existing McKinsey research.

The ten most significant shifts facing organizations today

Through the State of Organizations Survey, conversations with CEOs and their teams, and the findings of recent McKinsey research, we have identified ten of the most important organizational shifts that businesses need to address today. These shifts are both challenging and harbingers of opportunity, depending on how organizations address them.

1. Increasing speed, strengthening resilience.

2. ‘True hybrid’: The new balance of in-person and remote work.

3. Making way for applied AI

More: Full Report (92 pages)

Authors:  Patrick GuggenbergerDana MaorMichael Park, and Patrick Simon

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Gdańsk University of Technology – Kraken supercomputer

By Marek Grzybowski

The STOS Competence Center of the Gdańsk University of Technology and the presentation of the Kraken supercomputer took place in Gdańsk on April 25, 2023.

– Kraken will have a nice computing power of 13.6 PFlops, which according to forecasts will place it in December 2023 in the TOP 100 most powerful supercomputers in the world and at the forefront of supercomputers used in Europe – said Prof. Ph.D., D. Sc., Eng. Krzysztof Wilde, Corresponding member of the PAS.

The Kraken PG supercomputer is located in a special building underground. The computer has seven server rooms and can operate alone or as a team of several supercomputers. Its work will be led by scientists from the Gdańsk University of Technology and the team of the Tri-City Academic Computer Network of GUT.
Buildings for the supercomputer and work for scientists were designed by ARCHDECO from Gdynia
Kraken will allow you to conduct advanced research and complex simulations. Its computing power will enable scientists to conduct advanced work in the field of the development of artificial intelligence algorithms, nuclear energy, environmental protection technologies, as well as medicine and pharmaceuticals.

The total cost of the investment will amount to almost PLN 250 million.

Kraken provides unlimited research and development opportunities and the development of new technologies and solutions that serve society, both now and in the future. The entire research complex has been designed so that its capabilities can be gradually expanded in the coming years – says prof. Henryk Krawczyk, director of CI TASK GUT and originator of the construction of the complex.

– The opening of the STOS GUT center and the launch of the Kraken supercomputer provides huge research potential and will also translate into an influx of a large number of young and talented people to Gdańsk who will stay with us on a permanent basis. This is one of the most modern complexes of this type in Europe, which will significantly increase the competitiveness and attractiveness of not only our university, but also the entire Pomeranian region – said Rector Wilde.

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The quantum revolution in the maritime logistics

By Marek Grzybowski

Maritime transport has recently experienced great turmoil. The new mutations of the coronavirus pandemic and the sanctions imposed on Russia after that country invaded Ukraine have caused disruptions in global logistics. Congestion at the last mile in a port, logistics center or container terminal causes global turmoil in leading industrial markets, both on the supply and demand side.

The world’s merchant ship fleet reached a capacity of around 2.3 billion dwt in January 2023. This is about 60 million dwt more than a year earlier and over 120 million dwt than in January 2021. Tonnage has increased significantly in all segments except general cargo operators in the last two years.

Bulk carriers recorded a particularly rapid increase in overall carrying capacity. The share of bulk carriers in the total capacity increased from 41 to 43 percent, the share of tankers decreased from 30 to 29 percent, and the share of general cargo ships from 5 to 4 percent. in the years 2012-2022.

Over 500 LNG tankers transported liquefied gas across the oceans in 2021. About 650 LNG tankers transported LNG on sea routes in 2022. By the end of 2023, their number will increase to about 690 LNG tankers.

Quantum technology for the logistics industry

What can a forward-thinking organization do with the current state of technology? – asks Dr. Christopher Savoie, CEO of Zapata Computing in Forbs and answers: “It’s best to start with making the most of this technology.”

“We’re seeing a steady evolution of quantum hardware, which is becoming increasingly fault-tolerant, and existing technology is slowly becoming more widely available,” said CEO Zapata Computing.

“Quantum technology is an exciting development for the logistics industry as it allows us to solve the recurring problem of finding the most efficient route between multiple hubs, which is becoming increasingly difficult in a complex environment,” said Justin Baird, Head of Innovation, DHL, Asia-Pacific Center. DHL portal.

Logistics in storms need support

Turmoil in sea and land logistics networks will require the support of efficient tools. These include the already widespread use of IoT and the management of ship and car fleets, traffic control in ports, on railroads and on rivers.
The smallest yacht or even a boat moving on inland waterways is supported by satellite technologies.

No one can imagine the movement of ships, cars and even couriers without the support of satellite technologies. Tracking a package purchased in a store by an individual customer is already a standard. It can therefore be expected that according to the predictions of IBM and DHL and the services introduced by UPS, quantum algorithms will enter global and local logistics at a rapid pace.

If large and small ports, terminals and logistics centers, sea and land connections are to participate in the logistics networks of the global economy, then we must be prepared to introduce innovative solutions based on quantum, information and space technologies today. Otherwise, we risk marginalization or even falling out of the market.

Sources: Forbs, Zapata Computing, IBM, DHL, UPS

More: The quantum revolution in maritime logistics

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BCG: How the Metaverse Will Remake Your Strategy

 

By Rony AbovitzSumit BanerjeeGuy GillilandChristy LiuEdwardo SackeyAlexey Timashkov, and Rob Trollinger

The metaverse is already a big part of business. It will only become more central.

As digital technologies move to the next stage of advancement—the metaverse—there are two questions companies should ask: How will the metaverse change our business? And how can we get ahead of the change and shape it to our advantage? This is our perspective on both.

The Data and Technology Universe

There’s plenty of debate about the definition of the metaverse, but we find it more useful to take a practical view and focus on the productive use cases that it enables. The metaverse is based on the convergence of multiple technologies and the proliferation of data and content, which combine to create value for users. In the case of consumers, the result might be a virtual-reality (VR) gaming platform, while for business it could be a machine-learning algorithm that incorporates multiple diverse data sets to provide better insights and improve decision making.

In this sense, the metaverse encompasses broad categories of technology (including computing, connectivity, artificial intelligence, and machine learning) that come together in rich ways to create new and unprecedented value. It’s an aircraft engine technician connecting via the company’s help line to an expert 3,000 miles away. It’s the digital twin of an electrical grid that highlights maintenance needs or security vulnerabilities. It’s a smartphone app that integrates with an augmented-reality-enabled windshield to serve up driving directions, which it feeds to the car’s self-driving algorithms. It’s the technology that enables emergency services to respond when a phone or watch belonging to an injured person automatically sends an SOS.

It’s hard to pinpoint where the metaverse ends. It is flourishing, in part, thanks to continuing advancements in technologies such as augmented reality (AR) and VR, big data, artificial intelligence, machine learning, and blockchain. Just as our understanding of the universe and what it encompasses has been vastly expanded by the Hubble space telescope, the nature of the metaverse is a work in progress. Were we able to define its boundaries today, some future technological advance would almost certainly cause us to reassess.

If the metaverse seems a bit amorphous, its use cases are easier to spot and are multiplying fast. (See Exhibit 1.) Many companies already see the metaverse as an opportunity to connect with consumers in new ways. But for both B2C and B2B enterprises, it really represents a new way to do business and an opportunity to reinvent everything from customer journeys to operational processes. We can point to dozens of use cases for companies in all sectors and industries—and the technology underlying these applications is still only in its infancy. Their impact ranges from greater convenience and efficiency (remote maintenance, for example) to the life-changing and disruptive (enhanced surgical assistance and in-home health care). The new use cases can lead not just to quicker and easier ways of doing things but to whole new industries and business models.

More: BCG Metaverse Services