CEOs See AI Boosting Productivity but Struggle to Link Gains to Growth

Navigating the AI-Driven Productivity Dilemma

A recent survey conducted by EY-Parthenon sheds light on the complex relationship between artificial intelligence (AI) and corporate growth. As CEOs continue to recognize AI as a significant driver of productivity, they face mounting challenges in translating these technological advancements into tangible business growth.

Key Findings from the CEO Outlook Survey

The survey, which included insights from 1,200 CEOs across 21 countries, indicates that half of these executives (50%) considered AI as a leading factor contributing to productivity gains, surpassing traditional drivers such as operational process reform (46%). Despite this positive outlook, there remains a critical disconnect: 23% of CEOs struggle to link productivity improvements directly to measurable financial outcomes.

Furthermore, the ability to measure the return on investment (ROI) from AI initiatives remains a challenge for many. Only 16% of CEOs reported having a clear and real-time understanding of AI-related costs and returns, suggesting a significant gap between AI implementations and financial performance measurement.

Impediments to Growth: Skills and Resources

An alarming 72% of CEOs identified a shortage of talent and skills as a more pressing barrier to growth than securing funding. This highlights a growing realization that for AI to fulfill its promise, organizations must invest not just in technology but also in upskilling their workforce.

The survey revealed that 47% of executives believe their organizations are lagging in developing AI skills in line with the rapid pace of technological change. Additionally, 80% expect AI to transform employee roles and skills beyond merely adjusting workforce size in the coming three years.

A Shift from Efficiency to Value Creation

As organizations implement AI, the focus has begun to shift from mere cost-cutting to creating genuine value. While almost half of CEO respondents indicated they plan to reinvest productivity gains into future growth initiatives, many still grapple with the challenge of converting AI-driven efficiencies into long-term business advantages.

Legacy systems and the complexities of organizational operations continue to hinder progress. A significant portion of respondents (23%) noted that productivity gains from AI often dissipate before they can be fully realized as financial returns. This indicates a need for strategic decision-making regarding operating models, workforce management, and capital allocation to ensure sustained success.

The Balancing Act of Growth Strategies

Amidst a backdrop of geopolitical uncertainty and macroeconomic slowdowns, CEOs are being more selective in their growth strategies. Close to 96% of surveyed executives plan to pursue some form of deal-making within the next 12 months, with 51% focusing on mergers and acquisitions and 60% on strategic alliances.

Moreover, 51% of CEOs intend to prioritize divestitures to streamline operations and clarify strategic priorities. This trend reflects a broader intent to optimize business portfolios while balancing risk, speed, control, and cost-effectiveness.

Additionally, the role of AI in deal-making is gaining traction. Approximately 46% of CEOs are experimenting with AI in certain deal processes, with nearly half indicating its use across various operations. This shift points to a growing recognition of the potential for AI to enhance decision-making and expedite transaction processes.

Conclusion

The EY-Parthenon CEO Outlook reveals a dual narrative: while AI emerges as a pivotal force in boosting productivity, the journey from productivity gains to sustained growth remains fraught with challenges. As CEOs navigate this landscape, the emphasis increasingly lies on reimagining the interplay between technology, human capability, and strategic decision-making.

In light of these insights, leaders are urged to focus on developing a cohesive strategy that embraces not just the integration of AI technology but also the necessary investments in human capital. By fostering a culture of continuous learning and adaptability, organizations will be better positioned to convert AI-driven efficiencies into lasting competitive advantages.