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We’re a UK-wide research organisation exploring what productivity means for business

Businesses are crucial to solving the UK’s productivity problems.

Is AI the game changer for business productivity?

Artificial intelligence (AI) is revolutionising industries and shaping the future of business. It has the potential to boost productivity significantly, with studies suggesting an annual productivity gain of between 1 and 2%. AI can also drive continuous innovation and effectiveness in the long term.

To harness the power of AI effectively, businesses need to be equipped with human, technological and organisational capabilities to identify, support, and integrate AI solutions seamlessly into their operations. They also need to overcome internal barriers, such as adapting to new ways of working and identifying the purpose of AI applications.


Bart van ArkBy Bart van Ark, Managing Director & Professor of Productivity Studies, The Productivity Institute

In today’s technology-driven world, AI has emerged as a transformative force, potentially revolutionising industries and shaping the future of business. While the machines of the past were primarily focused on replacing physical and routine tasks, the power of AI is that it can replace complex human-initiated activities, even the most abstract and sophisticated tasks.

The fourth industrial revolution, driven by generative AI and robotics, is unfolding right before our eyes. While the full impact of AI is yet to be fully realised, it is clear that businesses need to rethink their innovation strategies and how workers engage with these emerging technologies.

Generative AI: opening doors for businesses

The rapid advancement of generative AI, exemplified by the likes of Chat GPT (content generation), Alpha3D (3D modelling) and OpenAI (code generation), has created immense opportunities for businesses of all sizes. These user-friendly applications are empowering SMEs to leverage AI capabilities that were once the domain of large corporations.

However, while generative AI is touted for its ease of use, implementing it effectively requires careful planning and consideration. Businesses need to be equipped with key capabilities to identify, support, and integrate AI solutions seamlessly into their operations.

AI-driven productivity gains

AI’s potential to boost productivity is undeniable. Studies suggest that AI could contribute to an annual productivity gain of 1-2%, with efficiency gains being just one aspect of the story. The true value of AI lies in its ability to drive continuous innovation and effectiveness, and therefore continued improvements in productivity in the long term.

However, realising this potential is not without its challenges. Businesses need to overcome internal barriers, such as adapting to new ways of working and identifying the purpose of each AI application. Additionally, external factors like security, privacy, and skill requirements need to be addressed.

Focus on human, technological and organisational capabilities

To benefit from the potential from AI fully, organisations need to commit to building key capabilities by creating an AI learning culture in which people can develop AI skills and competencies across the business, from data, engineering, design and product development to sales, marketing, risk management and other business functions.

Successful implementation of AI technologies are not based on standalone use cases, but need to be embedded in a business innovation model, characterised by developing new solutions based on end-to-end experiences and new ways of interacting with supplies and customers – current and future.

Collaboration: key to navigating AI’s uncertainties

AI’s rapid development presents both opportunities and uncertainties. Businesses need to be agile and adaptable, working closely with their employees to identify opportunities, navigate change processes, and manage risks.

Collaboration between businesses, government, and the education sector is crucial to address AI’s challenges and fully harness its potential. By working together, we can ensure a smooth transition into the AI-driven future.

Unlocking AI’s potential: National Productivity Week event, Manchester, 28th November 2023

On 28 November 2023, The Productivity Institute held a conference for National Productivity Week event in Manchester on 28 November 2023, hosted in conjunction with Be the Business, to learn how to transform AI’s potential into real-world business success. The event covers a range of topics, including the global and UK context of AI, using AI for internal process improvement, leveraging AI for business model innovation, and preparing the workforce for the AI-driven future.