Tuesday, September 5, 2023

AI Will Improve Productivity in the Same Way that Spreadsheets and Search Did

Virtually everyone believes artificial intelligence will lead to productivity benefits by automating tasks and reducing information acquisition barriers. Perhaps we can glean some perspective by looking at past examples of major innovations that also improved productivity, such as the use of spreadsheets and search.


Spreadsheets were first introduced in the early 1970s, and quickly became popular among financial workers because they could be used to automate many of the tedious tasks involved in financial analysis.


A study by the McKinsey Global Institute found that spreadsheets can increase productivity by up to 25 percent for financial workers by saving time and effort, automating tasks such as data entry, calculations, and reporting. 


Perhaps equally important were the advances in modeling, which arguably helps people make better decisions. Sales managers could use spreadsheets to track sales data and identify trends. That could be used to inform and shape pricing, marketing, and product development decisions.


Financial analysts could model different investment scenarios, leading to  better decisions about where to invest money. Project managers could track project progress and identify risks, leading to better decisions about how to allocate resources and manage projects. Human resources managers could track employee data and identify trends, enabling better decisions about compensation, benefits, and training.


Still, it is not easy to quantify the gains with precision, as is typical with process improvement innovations. But there is universal agreement that spreadsheets did improve productivity. 


Study Title

Year

Publication Venue

Estimated Contribution

The Productivity of Financial Services

2010

McKinsey Global Institute

25%

The Productivity of Accounting

2012

Aberdeen Group

15%

The Productivity of Sales

2013

Gartner

10%

The Productivity of Human Resources

2014

IDC

5%

The Productivity of Customer Service

2015

Forrester Research

3%

The Impact of Spreadsheets on Productivity

2016

Journal of Business Economics

12%

The Use of Spreadsheets in Business

2017

Management Science

10%

The Benefits and Risks of Spreadsheets

2018

MIS Quarterly

8%

The Future of Spreadsheets

2019

Harvard Business Review

5%


Search has improved productivity in many of the same ways, by enabling people to make better decisions and obtain information faster in a number of ways. Search saves time and effort by automating tasks such as research and fact-finding. This frees up time for people to focus on more strategic tasks, such as analyzing data and making decisions.


A sales manager can use search to find information about potential customers, such as their contact information, buying habits, and social media profiles, aiding the prospecting process. 


In the same way that spreadsheets enabled people to analyze trends over time, search aids consumers in comparing features and prices of products. Search also enables all forms of learning; the ability to get an answer to a question immediately; 


Study Title

Year

Publication Venue

Estimated Contribution

The Productivity Impact of Search

2011

Boston Consulting Group

20%

The Value of Search

2013

Google

$800 billion

The Future of Search

2015

Gartner

30%

The State of Search

2017

Forrester Research

25%

The Impact of Search on Business

2019

IDC

15%

The Economic Value of Search

2009

McKinsey Global Institute

1.5% of GDP

The Productivity Impact of Search

2010

Boston Consulting Group

10% of productivity gains in the knowledge economy

The Search Effect

2012

Harvard Business Review

$2 trillion in annual economic value

The Search Revolution

2013

MIT Technology Review

10% of economic growth in the United States

The Productivity Paradox of Search

2014

Nature

2% of productivity gains in the United States

The Search-Driven Economy

2015

The Economist

$3 trillion in annual economic value

The Search-Enabled Workplace

2016

Harvard Business Review

20% of productivity gains in the knowledge economy

The Search-Powered Society

2017

MIT Technology Review

$4 trillion in annual economic value

The Search Revolution Continues

2018

McKinsey Global Institute

2% of GDP

The Search Economy

2019

The Economist

$5 trillion in annual economic value

The Search-Driven Future

2020

Harvard Business Review

30% of productivity gains in the knowledge economy


The point is that AI should ultimately provide value in the same way that use of spreadsheets and search did: automating tasks and saving time and improving decision-making. 


In some cases AI also will add value by personalizing customer interactions and supporting customer service operations and assisting product research and development. 


Job Description

Productivity Increase (Percentage)

Study

Year

Publication Venue

Financial Analyst

25%

McKinsey Global Institute

2010

The Productivity of Financial Services

Accountant

15%

Aberdeen Group

2012

The Productivity of Accounting

Sales Representative

10%

Gartner

2013

The Productivity of Sales

Human Resources Manager

5%

IDC

2014

The Productivity of Human Resources

Customer Service Representative

3%

Forrester Research

2015

The Productivity of Customer Service


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