While artificial intelligence became 2023's biggest story, will AI manage to capture headlines in 2024 as lawmakers consider regulation and companies pivot to large-language models?

Boston Consulting Group (BCG) Global Chair Richard Lesser sits down with Yahoo Finance Live to discuss the use cases companies will seek to implement to a wider scale in the coming year.

"If they also tackle the people side of it that they can capture enormous value, but people assume tackling the people side is about... cutting jobs. And what we're seeing so far is that's not the focus," Lesser says. "The big focus is how do you upscale and rescale your workforce? How do you get people to get rid of the more drudgery parts of their job and focus on higher value customer interactions or higher value focus on innovation?"

Follow along with Yahoo Finance's 2024 Investor Guide for more expert insight, or click here to watch this full episode of Yahoo Finance Live.

This post was written by Luke Carberry Mogan.

Video Transcript

AKIKO FUJITA: Well, breakthrough in generative AI fueled investments in the tech sector this year and sparked a big rally in AI-related stocks, at least in the first half of 2023. Our next guest sees the AI revolution bursting with promise, but also riddled with challenges as we look ahead to 2024. So what are some of those risks?

For more on that, let's bring in Rich Lesser, global chair of Boston Consulting Group as part of our Yahoo Finance's 2024 Investor Guide. Rich, it's always good to talk to you today. To what extent does AI-- do AI investments get supercharged going into next year?

RICHARD LESSER: I think companies are going to end up spending a lot more on AI in the year ahead. I think they're all in an exploration phase right now. We're working with over 170 companies now on generative AI up from zero, say, in March or April. So it's really been a shocking acceleration of activity that we're seeing, and people are exploring it on many fronts from productivity, to supporting their employees, to driving new revenue streams.

But as we see more of those come to light and more value being captured, I think companies are going to realize there's a lot of value to be created here on different dimensions and they're going to want to double down to take advantage of it.

RACHELLE AKUFFO: And Rich, we continue to see companies, you know, cutting costs in different ways. How do you see AI affecting things like labor costs and productivity? How are companies prioritizing that?

RICHARD LESSER: So I do see the particularly this opportunity to combine generative AI with classic forms of predictive AI and proprietary data. If they also tackle the people side of it, that they can capture enormous value. But people assume tackling the people side is about, you know, cutting jobs. And what we're seeing so far is that's not the focus.

The big focus is how do you upskill and reskill your workforce? How do you get people to get rid of the more drudgery parts of their job and focus on higher-value customer interactions or higher value focus on innovation? And then how do you think about workforce planning?

Which could involve fewer jobs, but it could also just involve different kinds of jobs to be able to leverage the technology to the fullest. So that's the way we're seeing companies use it now. Of course, over years, maybe it'll shift in a different direction, I think it's too soon to tell.

AKIKO FUJITA: Rich, you talked about the different applications companies are looking at right now, I wonder how the thinking around the technology itself has shifted over this last year as companies have had the full year to really process how they can integrate this.

RICHARD LESSER: I couldn't agree more with you. We've seen a big shift as people are learning. I think the early focus was on the kinds of tools that would be available, the personal assistants, the tools and HR or legal or software writing, and really viewed it as an opportunity to deploy much better tools, which are better and which can create 10%, 29% productivity improvements.

But as the year has gone along and as we see more companies digging in, I think there are two other kinds of opportunities that are really coming to the fore. One is to just reshape entire functions, customer service, IT, marketing, field operations. And in those opportunities, it's not just about handing employees a different tool, it's often combining in generative AI with the classic predictive AI that can help solve specific problems.

It's about leveraging all the proprietary data that companies have built and it's most importantly, taking on the people side of it too-- skills, organization processes. So there's a whole reshaping of functions that companies now see as a much bigger 40%, 50% productivity improvement than just handing people tools.

And then I'd also say, more forward-leaning companies are saying, how do I generate revenue with this? How do I change the way customers interact? How do I create new products and services? And they're seeing meaningful business opportunities. I actually think we're going to see real launches in 2024 in consumer products, in financial services, in other areas that will have big revenue streams associated with them. That's really different, I think, than the way people were just looking at it 8, 10 months ago.