Good morning.
Risk is certainly an area of concern for CFOs when it comes to implementing generative AI.
However, Andrew McAfee, a principal research scientist at MIT, has a message for CFOs regarding the technology: “Risk tolerance needs to shift,” McAfee said. “Not being agile is a deep, deep risk,” he said.
Fortune CEO Alan Murray interviewed McAfee during the Fortune CFO Collaborative dinner in Boston on Nov. 9, held in collaboration with Workday and Deloitte. A group of 40 CFOs from leading companies gathered to discuss what’s top of mind for finance leaders. And it was evident that generative AI remains a hot topic.
“This stuff is going to diffuse throughout the economy,” said McAfee, who is also the inaugural visiting fellow for technology and society at Google. “It’s going to separate winners from losers, and it’s going to turbocharge the winners faster than you and I have been expecting based on the past 25 years of technology.”
McAfee did indicate that one of the biggest risks related to generative AI is hallucinations—a response that may sound plausible but is factually incorrect or unrelated to the context.
“Every smart person I talk to whose opinion I respect on this says this is a problem that’s deeply rooted in technology,” he said. And tech giants are working hard to fix all of these problems, McAfee said.
The generative AI boom was accelerated in November 2022 when OpenAI announced ChatGPT. In research released in May, OpenAI addressed its efforts to mitigate hallucinations. An approach called “process supervision,” in which the AI models are rewarded for each correct step of reasoning, was found more effective, instead of simply rewarding the correct final answer (“outcome supervision”), according to the research.
Hallucinations aren’t a reason not to dive into experimenting with generative AI, McAfee said. Waiting on the sidelines to see what other companies are doing and then becoming a fast follower, ”is a recipe for long-term decline,” McAfee warned.
“You’re behind on learning about [generative AI],” he continued, “you’re behind on the experience curve, and you’re missing out on the productivity benefits. The risks are real, but they are manageable.”
McAfee is the author of the new book, The Geek Way: The Radical Mindset that Drives Extraordinary Results. The “geek way” of running a company sprung up in the 20th century, largely concentrated in Silicon Valley, McAfee said.
“The geeks dove in deep on a problem, they experimented and iterated and came up with a set of practices, and as I look across them, they are weirdly consistent and better,” he said. The “incumbents of the industrial era” have a lot to learn from the geeks if they want to stay competitive, he said.
And going into 2024, generative AI will definitely be a high-priority for geeks, McAfee told the CFOs.
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
Scott Lem was named CFO at Ares Capital Corporation (Nasdaq: ARCC), effective Feb. 15. Lem was promoted from the role of chief accounting officer, VP and treasurer. Since joining Ares in 2003, he has served in several senior finance and accounting roles, both at Ares Capital and in the Ares Credit Group.
Steve McClanahan was named CFO at Martin Supply. McClanahan spent the past 25 years at ANConnect, formerly Anderson Merchandisers, and held several executive management positions, including CFO and COO.
Big deal
A new report by Pew Research Center finds that women make up 35% of workers in the United States’ 10 highest-paying occupations, which is up from 13% in 1980. For example, the share of women as physicians is 38%, dentists at 33%, and actuaries at 26%.
The findings are based on Pew's analysis of 1980 census data and the 2021 American Community survey. Pew indicated the data for chief executives and public administrators from the 1980 census was not available. However, as of 2021, the share of women in chief executive and public administrator roles is at 29%, according to the report.
Pew also found that women remain the minority in nine of the 10 highest-paying occupations, except for pharmacists, 61% of whom are women.
Going deeper
In the new report, How Generative AI Could Reshape Work, Morgan Stanley economists explain the technology’s near-term impacts on labor and the economy. “It is impossible to know for sure, but current generative AI technologies could affect as much as a quarter of the occupations that exist today, meaning that AI has the potential to augment them now or in the future, with associated labor costs that could reach at most $2.1 trillion,” Seth Carpenter, global chief economist for Morgan Stanley, said in the report. “Within three years, this might rise to 44% of occupations affected and $4.1 trillion of associated labor costs.”
Overheard
"In the near future, anyone who’s online will be able to have a personal assistant powered by artificial intelligence that’s far beyond today’s technology. This type of software—something that responds to natural language and can accomplish many different tasks based on its knowledge of the user—is called an agent."
—Bill Gates, the cofounder of Microsoft Corporation, writes in his latest blog post, "AI is about to completely change how you use computers (and upend the software industry)."
This is the web version of CFO Daily, a newsletter on the trends and individuals shaping corporate finance. Sign up for free.