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A leader’s guide to the future of tech management

Leading Off

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ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

—Alex and Axel

Around the world, leaders of organizations are working to realize the massive potential value of generative AI (gen AI). From developing new products to boosting workforce productivity, the promise of gen AI extends to many corners of business. But across an organization, the roles most likely to be affected by the gen AI wave are those of tech executives. These leaders are being called upon to take on broader responsibilities for business performance while also weighing new risks as they consider the changes that will be necessary to build data- and AI-driven organizations. This week, we highlight the issues that tech officers and their organizations face as they seek to create value from gen AI.

AN IDEA

An image linking to the web page “A new dawn for the technology officer” on McKinsey.com.

Put tech execs at the center

The pressure is growing on tech executives, who are tasked with achieving the often-elusive goal of generating real value from gen AI and other technological innovations. McKinsey’s Aamer Baig, Jeffrey Lewis, Klemens Hjartar, and their coauthors have identified a set of shifts that tech officers can make to meet the growing demands of their bosses. These include assuming greater accountability for business outcomes, creating new digital- and AI-first businesses, being more proactive in protecting the enterprise from various threats, and expanding their leadership into areas outside IT. “In many cases, the pressure to move quickly leads to too much of a focus on the tech itself and not enough on everything else that’s required to make it work for an organization,” the authors say. “Creating significant gains from AI and tech means integrating multiple facets of the organization, such as adoption, business strategy, data, operating model, scaling, and talent.”

A BIG NUMBER

65%

That’s the percentage of organizations that are regularly using gen AI in at least one business function—up from one-third in 2023, according to a 2024 McKinsey Global Survey on the state of AI. McKinsey’s Alex Singla, Alexander Sukharevsky, Lareina Yee, and their coauthors note that organizations are using gen AI most often in marketing and sales, product and service development, and IT. This finding aligns with previous McKinsey research showing that gen AI adoption in marketing and sales and in product and service development could generate the most value. The biggest increase in gen AI use is in marketing and sales, where reported adoption has more than doubled since 2023.

A QUOTE

“Companies looking to score early wins with gen AI should move quickly. But those hoping that gen AI offers a shortcut past the tough—and necessary—organizational surgery are likely to meet with disappointing results.”

That’s McKinsey experts Alex Singla, Alexander Sukharevsky, Eric Lamarre, and Rodney Zemmel on the need to balance speed with precision to make the most of gen AI’s potential. This is harder than many leaders expect because deploying gen AI at scale means implementing broad changes to the ways their organizations fundamentally work. To start, leaders should determine the areas where gen AI can create true competitive advantages, identify the gen-AI-specific skills needed, and create a central team to scale up gen AI responsibly.

A SPOTLIGHT INTERVIEW

An image linking to the web page “What an AI-powered finance function of the future looks like” on McKinsey.com.

Gen AI can help power the finance team of the future to become “the home for business insights, driving the business to go bigger and faster,” OpenAI CFO Sarah Friar says in a recent episode of McKinsey’s At the Edge podcast. Friar tells senior partner Lareina Yee that she joined OpenAI, the company behind ChatGPT, to serve “in the crucible of the AI transformation.” Friar is leading by example, aiming to transform OpenAI’s finance function “from number crunching to being a better business partner.” Today, her department is using gen AI to streamline data collection, improve investor relations, and expand the team’s skill set. Five years from now, Friar says, “I want to be able to look at my team and see that everyone is in that mode of forward-thinking and insight-driven work.”

FIND YOUR AI ALLIES

An image linking to the web page “Strategic alliances for gen AI: How to build them and make them work” on McKinsey.com.

Gen AI is rewriting the script for many business functions, including the rules for picking your partners. McKinsey’s Alex Singla, Alexander Sukharevsky, Ben Ellencweig, and their coauthors say that strategic alliances with gen AI providers are vital, but treating them like traditional vendor arrangements won’t work. “The technology is still rapidly maturing, implementation is complex, and stability issues bedevil solutions,” the authors say. Important factors for forging strong gen AI partnerships include deepening trust and collaboration; finding multiple partners to meet the organization’s needs, since no one vendor can do it all; and avoiding overdependence on third-party capabilities.

Lead by creating lasting value from gen AI.

— Edited by Eric Quiñones, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 02:08 - 25 Nov 2024

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A leader’s guide to the future of tech management

Put tech execs at the center

“Companies looking to score early wins with gen AI should move quickly. But those hoping that gen AI offers a shortcut past the tough—and necessary—organizational surgery are likely to meet with disappointing results.”

Celebrating 60 years of the McKinsey Quarterly