Good morning.
Chat GPT has sparked an explosion of interest in generative A.I.—computer models that create text, images and computer code. But many CEOs are still focused on earlier generations of the technology, like predictive A.I. or robotic process automation. In our new survey of Fortune 500 CEOs, we asked leaders to rank technologies “in terms of your view of their potential as opportunities for your business over the next ten years.” Predictive A.I. (data analytics) won the contest hands down, with 58% of CEOs choosing it as having the highest potential. Generative A.I. (creating content) was chosen as having the highest potential by only 12%—roughly equal to the number who chose robotic process automation.
So why is generative A.I., which has enjoyed the fastest user growth of any new technology in history, causing less excitement among Fortune 500 CEOs? I decided to go to the person who can probably answer that question better than anyone else in business: Julie Sweet, CEO of Accenture, which advises the vast majority of the Fortune 500 on technology issues. Her response:
“There is a broad and widespread interest, and a reasonable, healthy sense of skepticism, not about whether generative A.I. will be transformative in the long term, but skepticism in the short term about how fast to go. Some of it is because they don’t completely understand it. And for many, it’s also because they are still in the middle of their digital journey.”
What does it mean to be “in the middle of their digital journey”?
“We say that cloud is the enabler, data is the driver, and A.I. is the differentiator…Many companies are still building their data core. And to start doing a bunch of experimentation with generative A.I. may not make sense for them… It’s really important as a CEO to step back and say, ‘Where should my team focus?’ If you are in health care, you may say, ‘I can use generative A.I. to talk with patients, but I still don’t have a single (data) view of the patient.’ Which is more important to medical outcomes?”
Sweet said it’s also important for CEOs to have a clear-eyed view of the shortcomings of the new technology. It doesn’t do complicated math or analytics. It has a tendency on occasion to engage in “hallucinations”—or what we might call B.S. if it was produced by a human. Factual accuracy is less than perfect.
“If you are trying to detect fraud or money laundering, 99% accuracy may be fine. If you are in precision medicine, it’s not good enough…Generative A.I. is a better tool for some use cases, but not all use cases.”
Yet the bottom line, Sweet says, is that the new generative A.I. tools have accelerated corporate efforts to tackle A.I. opportunities. This is not a passing fad. The age of A.I. is here.
More news below. And check out Qualcomm CEO Cristiano Amon’s piece on how A.I. “is going to touch every corner of our lives” here.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
First TikTok ban
Montana is the first U.S. state to completely ban the Chinese-owned social media app TikTok. On Wednesday, Gov. Greg Gianforte signed a law that will fine companies for offering access to the app starting in January 2024, though TikTok users will not be penalized. The ban is likely to receive legal challenges on First Amendment grounds. The Associated Press
Tencent earnings
Chinese video game giant Tencent reported its fastest pace of quarterly sales growth in over a year on Wednesday. The company’s annual revenue declined last year for the first time in its history, due to lower consumption amid China’s COVID-zero policy and a government freeze on game approvals. Tencent said it would invest further in A.I., as competitors like Alibaba and Baidu announce ChatGPT competitors. Bloomberg
Microsoft compensation
Microsoft’s chief marketing officer tried to reassure workers frustrated with pay freezes and layoffs by suggesting the moves would help the company’s shares, reports Fortune’s Kylie Robison. Christopher Capossela called stock prices “the most important lever” for compensation in an internal chat last week, after employees complained about cost cuts amid Microsoft’s rising profits. The executive has sold about $4.4 million worth of stock in recent weeks.
AROUND THE WATERCOOLER
Target CEO: DEI has ‘fueled much of our growth over the last 9 years’ by Fortune Editors
The Big Squeeze: The housing market is so unaffordable that builders have no choice but to build smaller homes by Alena Botros
Top economist Larry Summers says the debt ceiling gridlock is a ‘foolish exercise’ that could slash $6 trillion from the stock market by Tristan Bove
Dads are now more worried than mothers about how working from home will impact their careers by Orianna Rosa Royle
Nintendo sells 10 million copies of The Legend of Zelda: Tears of the Kingdom in 3 days by Chris Morris
How Cathie Wood squares the fact that so many retail investors follow her investments—even when she gets it really wrong by Jane Thier
Has Elon Musk become a risk to his own investors? ‘I’ll say what I want and if the consequence of that is losing money, so be it’ by Christiaan Hetzner
This edition of CEO Daily was curated by Nicholas Gordon.
This is the web version of CEO Daily, a newsletter of must-read insights from Fortune CEO Alan Murray. Sign up to get it delivered free to your inbox.
