Generative AI: Challenging the Productivity Promise

Executive Summary

This article explores the expansive realm of generative AI in business, examining its diverse capabilities from text generation to creating novel images and proteins. We investigate its expected impacts on business productivity, bolstered by early success stories across sectors. However, a deeper historical analysis reveals a complex narrative. Past technological advancements, while boosting productivity, have also encountered challenges, such as time lags and the need for substantial investments and workforce re-skilling. Similarly, generative AI, despite its promise, faces hurdles in effective implementation and realizing actual productivity gains. Furthermore, the impact of generative AI on the workforce, including job displacement and the need for new skills, adds layers of complexity. Ethical considerations and the necessity of robust governance are also critical in ensuring responsible AI use. Ultimately, the article underscores the potential of generative AI in revolutionizing business productivity while highlighting the importance of cautious and informed integration into existing systems and societal structures.

woman standing in odd light representing generative ai


  • Generative AI’s Business Impact: Generative AI advances business operations with capabilities in text generation and multimodal content creation, though its productivity impact may vary across sectors.
  • Lessons from Technology History: Historical trends show that while technological advancements like generative AI can drive productivity, full benefits often require substantial time and investment.
  • Workforce Evolution: Generative AI’s integration into the workforce necessitates new skill sets, with a focus on digital literacy, adaptability, and the creation of AI-specific roles.
  • Ethical Use and Governance: The responsible deployment of generative AI in business demands robust governance to address ethical challenges and data privacy concerns.


The advent of generative AI marks a transformative era in business, where the boundaries of productivity and creativity are being redefined. As we delve into the capabilities of generative AI, from text generation to multimodal models, its potential in various sectors becomes evident. This article explores how generative AI is reshaping business landscapes, analyzing historical trends to contextualize its impact on productivity. While early success stories herald a new age of efficiency, a deeper historical perspective reveals the complex relationship between technological advancement and productivity gains. We critically examine the realities, challenges, and ethical considerations of integrating generative AI into the workforce, navigating through optimistic projections and contrasting them with lessons from past technological integrations.

The Promise of Generative AI in Business

Description of Generative AI Capabilities

Generative AI, a groundbreaking advancement in artificial intelligence, has the potential to revolutionize various business operations. This technology encompasses a range of models, including text generators like GPT-3, LaMDA, and LLaMA, and multimodal models such as GPT-4, DALL-E, and Stable Diffusion. These AI models have the ability to generate high-quality natural language texts, offering functionalities such as language translation, summarization, and question answering. The multimodal models can process both image and text inputs, creating comprehensive outputs. For instance, GPT-4’s post-training alignment process enhances its performance on factuality and desired behavior adherence. DALL-E and Stable Diffusion, on the other hand, can create novel images or artwork from text inputs, while Progen (a biomedical generative AI) focuses on generating proteins based on desired properties specified through natural language.

Expected Impacts on Business Productivity and Efficiency

Generative AI is poised to significantly impact business productivity and efficiency. Its applications range from generating marketing copy and job descriptions to providing instant conversational support. Additionally, it can be used to summarize texts for easier comprehension, search internal documents to increase knowledge transfer within a company, condense lengthy documents into brief summaries, and power efficient chatbots. It also has potential uses in data entry, analyzing massive datasets, tracking consumer sentiment, writing software, creating scripts for testing code, and identifying common bugs in code. Deloitte Insights suggests that the most productive uses of generative AI will arm employees with tools that enhance their productivity, knowledge, and creativity, thereby driving innovation in the enterprise.

Early Success Stories and Optimistic Projections

Early success stories and projections regarding generative AI’s impact on businesses are promising. For example, BCG and Zeiss developed an application to provide fast, accurate answers about elective treatments, demonstrating the utility of generative AI in healthcare solutions. Companies like Schneider Electric are transforming business processes and people development through generative AI. Enbridge, North America’s largest natural gas utility, leveraged generative AI to enhance operations, improve safety, elevate customer experience, and enhance environmental performance. They employed a generative AI-based copilot tool for developers and office staff, significantly accelerating delivery and driving innovation and efficiency. Such examples highlight the transformative capabilities of generative AI in various sectors, indicating a potential surge in business productivity and growth.

Historical Trends in Technology and Productivity

Overview of Historical Productivity Trends in Technology

Historically, technological advancements have significantly influenced productivity trends. The World Economic Forum highlights major technological innovations over the last 150 years, showing how they have changed the way we work and boosted productivity. The National Bureau of Economic Research (NBER) notes that the strong performance of productivity growth in the late 1990s was primarily due to accelerating technical change rather than poor measurement or temporary factors. This era witnessed the integration of information technology across various sectors, leading to a significant enhancement in both operational efficiencies and economic output. These historical insights demonstrate how technology acts as a driving force behind economic growth, emphasizing its crucial role in shaping productivity trends and in the broader context of economic development. This interplay between technology and productivity not only reflects past patterns but also offers insights into potential future trajectories of economic progress driven by technological innovation.

Analysis of Past Technological Advancements and Their Impact on Workforce Productivity

While past technological advancements have significantly boosted workforce productivity, a deeper analysis reveals a more complex picture. The NBER reports that changes in technology are the only source of permanent increases in productivity. For example, the introduction of information technology in the late 1980s led to a significant rise in business investment and a corresponding increase in productivity during the 1990s. The Stanford Digital Economy Lab observes that even though technological advances were rapid, there was a significant time lag for these technologies to be widely embraced across economies and societies. This lag is attributed to the need for massive complementary investments, including new products, processes, and business models, as well as workforce re-skilling.

This perspective suggests that while technology is a catalyst for productivity, its impact is not immediate and requires significant structural and educational adjustments. The history of technological integration shows that initial productivity gains can be misleading, as the full benefits often materialize only after a period of adjustment and adaptation. This pattern raises questions about the current optimism surrounding generative AI and its potential impact on productivity. There’s a possibility that, like its predecessors, the integration of generative AI into the workforce could encounter similar delays and require substantial investments in infrastructure and skills training, tempering expectations of immediate productivity miracles.

Lessons from History: Unfulfilled Promises of Technology in Productivity Enhancement

Historical trends also show instances where technological advancements did not fulfill their productivity enhancement promises. McKinsey’s research indicates that technology adoption can lead to short-term labor displacement, but in the longer run, it creates more jobs and unleashes demand for existing ones, thus enhancing productivity. However, this transition can be challenging and requires substantial policy reforms to mitigate its impact on workers. Britannica Money notes that after World War II, productivity growth in various countries more than tripled compared to the preceding 80 years, demonstrating significant technological impact. Yet, after 1973, there was a notable decline in productivity growth, indicating that the promise of continuous productivity enhancement through technology is not always realized. This historical perspective suggests that while technological advancements can be powerful drivers of productivity, their benefits are not guaranteed and can be subject to various economic, social, and political factors. These insights are crucial in tempering expectations regarding the potential impact of emerging technologies like generative AI on future productivity growth.

The Reality Behind Generative AI and Productivity

Contradicting Evidence: Cases Where Generative AI Hasn’t Significantly Boosted Productivity

Despite the potential of generative AI, there are instances where it hasn’t significantly enhanced productivity. In some cases, generative AI tools have created outputs that require extensive human intervention for error correction and refinement. The time and resources spent in these activities can offset the anticipated productivity gains. Furthermore, generative AI’s reliance on vast data sets and advanced computing resources can lead to high operational costs, especially for smaller businesses. For certain tasks, the expected efficiency from automation is negated by the need for human oversight and intervention. Another issue arises in creative industries, where AI-generated content often lacks the nuanced understanding and originality that human creativity offers, leading to a preference for traditional methods over AI-assisted production. These cases demonstrate that while generative AI has vast potential, its impact on productivity is not universally positive and can vary significantly based on the context and application.

Challenges in Implementing Generative AI Effectively in Business Operations

Implementing generative AI in business operations comes with its set of challenges. One major hurdle is the integration of AI systems into existing business infrastructures. Companies often face difficulties in modifying their current processes to accommodate AI technologies, which can lead to operational inefficiencies. Additionally, the cost of implementing and maintaining advanced AI systems can be prohibitive for many businesses, especially small and medium-sized enterprises. The quality and availability of data is another critical factor; generative AI systems require large, diverse, and high-quality datasets to function effectively, which many businesses may not have access to. There’s also a significant talent gap in the field of AI, making it challenging for companies to find skilled professionals who can manage and operate these systems effectively. Lastly, resistance to change within organizations can impede the adoption of new technologies, as employees may fear job displacement or struggle to adapt to new ways of working.

The Gap Between Potential and Actual Productivity Gains

The gap between the potential and actual productivity gains from generative AI is a significant concern. While generative AI holds the promise of automating complex tasks and generating new insights, the actual productivity gains can be less than anticipated. This discrepancy is often due to the lack of alignment between AI capabilities and business needs. AI systems, while powerful, may not always be suited to the specific tasks or challenges a business faces. There’s also the issue of overestimating AI’s capabilities, leading to unrealistic expectations and underwhelming results. The complexity of AI systems can also result in a steep learning curve, reducing immediate productivity gains as employees take time to adapt and fully utilize these tools. Additionally, the lack of standardization and interoperability among AI systems can lead to inefficiencies, as businesses struggle to integrate these systems seamlessly into their existing workflows. These factors contribute to the gap between the potential efficiencies promised by generative AI and the actual productivity outcomes achieved in practice.

The Impact of Generative AI on the Workforce

Job Displacement and the Changing Nature of Work

Generative AI is reshaping the workforce, leading to job displacement and significant changes in the nature of work. Automation of routine tasks by AI systems is resulting in the reduction or elimination of certain job roles, particularly in industries like manufacturing, customer service, and data entry. This shift raises concerns about the long-term employment prospects in sectors heavily reliant on repetitive tasks. However, it’s not just low-skilled jobs that are at risk; AI’s ability to analyze complex data and generate insights can also impact higher-skilled professions like analysis and design. The changing nature of work due to AI also entails a shift in required skill sets, with an increasing demand for digital literacy, problem-solving, and adaptability. This technological evolution is leading to the creation of new job roles focused on AI management, development, and ethical oversight, signifying a transformation in the kind of work and skills valued in the modern economy.

The Need for New Skills and the Challenge of Upskilling

The rise of generative AI in the workplace necessitates the development of new skills and poses significant challenges in upskilling the workforce. As AI takes over routine tasks, there is a growing demand for skills that AI cannot replicate easily, such as creative thinking, emotional intelligence, and complex problem-solving. This shift requires substantial investment in education and training programs to prepare the current and future workforce for an AI-driven economy. The challenge of upskilling is particularly acute for mid-career professionals who may find their existing skills becoming obsolete. Organizations and educational institutions need to collaborate to create learning pathways that are accessible and relevant to these workers. Additionally, there’s a need for a cultural shift in the perception of lifelong learning, encouraging continuous skill development throughout one’s career. The challenge also lies in ensuring equitable access to these upskilling opportunities, particularly for workers in lower-paying jobs who are most at risk of displacement by AI. Addressing these challenges is crucial for harnessing the benefits of generative AI while mitigating its impact on the workforce.

Ethical and Governance Considerations

Ethical Challenges Posed by Generative AI

Generative AI presents several ethical challenges that need to be addressed. One major concern is the potential for bias in AI-generated content, as these systems learn from existing data which may contain inherent biases. This can lead to the perpetuation and amplification of stereotypes, particularly in sensitive areas such as race, gender, and cultural representation. Another ethical issue is the authenticity and originality of AI-generated content, raising questions about intellectual property rights and the blurring lines between human and machine creativity. The use of generative AI in deepfake technologies poses risks for misinformation and the manipulation of public opinion. Additionally, the ability of AI to generate realistic human-like interactions raises ethical concerns about the potential for deception and the erosion of trust in digital communications. Addressing these ethical challenges requires the development of clear guidelines and ethical standards for the use and development of generative AI technologies.

The Need for Robust Governance and Responsible AI Use

Robust governance is essential to ensure the responsible use of generative AI. This involves establishing regulations and policies that govern the development and deployment of AI systems, ensuring they are used ethically and transparently. Key aspects of governance include data privacy, security, and the protection of personal information, especially as AI systems often rely on large datasets that can contain sensitive information. It’s also important to have clear accountability mechanisms in place to address any negative consequences arising from the use of AI. There’s a need for collaboration between governments, industry leaders, and academia to develop standards and best practices for AI development and use. This includes the creation of ethical AI frameworks that guide decision-making and ensure AI is used for the benefit of society. Furthermore, public awareness and engagement are crucial in developing governance models that are informed by a broad range of perspectives and values. Establishing robust governance structures is key to building public trust in AI technologies and ensuring their positive impact on society.


Generative AI stands at the forefront of technological innovation, yet its journey in enhancing productivity is nuanced and multifaceted. While it offers unparalleled opportunities for business transformation, the historical lens cautions us against overestimating immediate gains. The real impact of generative AI on productivity lies in its long-term integration, necessitating strategic implementation, infrastructure development, and workforce adaptation. This calls for a balanced approach, where optimism is tempered with realism, acknowledging both the potential and the challenges of this evolving technology. As we embrace generative AI, a responsible and informed pathway is crucial for harnessing its true value in the business world.

Consulting Interventions

At Merillot, we understand the critical role generative AI plays in redefining business operations and productivity. Our services help clients leverage generative AI to innovate and maintain competitive advantage. Our offerings include:

  • Generative AI Implementation: Tailored strategies for integrating generative AI into your business, enhancing efficiency and creative capabilities.
  • Productivity Analysis: Evaluating the impact of generative AI on your operations to maximize productivity gains.
  • Custom AI Solutions: Designing bespoke generative AI models to meet unique business needs.
  • AI Ethical Frameworks: Developing ethical guidelines and governance models for responsible AI use.
  • Skills Development: Upskilling programs focused on generative AI applications and management.