Technology has emerged as both a beacon of hope and a source of perplexity in solving the global productivity puzzle. While many believe that digitization and artificial intelligence (AI) are essential to unlocking unprecedented productivity growth, recent analyses suggest that their effects remain uncertain, with results muddled at best.
According to a report by the McKinsey Global Institute, directed investments in digitization, automation, and AI could ignite new waves of productivity growth. Generative AI alone is projected to contribute more than 0.5 percentage points to this growth trajectory.
Yet, the impact of these technological advancements appears unevenly distributed across industries. While the information, computing, and telecommunications (ICT) sectors have experienced notable productivity gains, others have not seen similar transformations.
Several factors may contribute to this discrepancy. First, the benefits of technology adoption are often long-term, requiring time for adaptation and integration within organizations. Second, the proliferation of digital channels has led to duplication of processes, diluting potential productivity gains. Third, some argue that the returns on digital innovations may diminish compared to previous technological revolutions. Finally, traditional productivity measurements may fail to capture the full extent of value added by modern technologies, leading to potential underestimation of their impact.
However, to guarantee productivity enhancements, more than simply deploying technology within organizations is required. Instead, companies must adapt to changing realities, embracing faster creative destruction, market share shifts, and new technologies and best practices.
Despite these challenges, optimism surrounds AI applications’ potential to drive productivity growth. Several proven use cases have emerged, particularly in sales, marketing, customer operations, and software development. While AI’s exact impact and trajectory remain uncertain, its potential to revolutionize various business operations must be considered.
Technology’s role in boosting productivity remains complex and evolving. While there are promising signs of its potential, challenges such as uneven adoption, diminishing returns, and measurement limitations continue to obscure the whole picture. Nevertheless, with strategic investments and organizational adaptation, technology may catalyze the productivity growth needed to address today’s economic challenges.
