The Intersection of Geopolitics and Artificial Intelligence: Insights from McKinsey’s Asutosh Padhi
Navigating the AI Landscape
Geopolitics and artificial intelligence (AI) are emerging as the dominant themes among consulting firm clients, according to Asutosh Padhi, the global leader of firm strategy at McKinsey & Company. In an exclusive interview with ET, Padhi discussed the current state of AI adoption and its implications for businesses.
The Early Stages of AI Adoption
Despite the buzz surrounding AI, tangible impacts in early-adopting companies remain ambiguous. “It is still a work in progress,” Padhi noted. He highlighted that only about 10% of companies are beginning to see AI influence their profit and loss statements. “I’ve heard CEOs say, ‘We see AI everywhere—except in the bottom line.’ That sums up where most businesses are today,” he shared.
The New Challenge for CEOs
A notable insight from one CEO Padhi recently spoke with is that “analysis will become easier, but strategy will become harder.” This statement underscores the paradox that as companies gain analytical capabilities through AI, the strategic implications become increasingly complex.
Consulting Firms in an AI Race
In response to the growing demand for AI integration, consulting firms are competing to embed AI into their workflows. McKinsey & Company, with its long-standing history, is navigating this wave of technological transformation. Padhi remarked, “We see AI as one of the biggest opportunities ahead for McKinsey.”
Rapid Adoption Among Consulting Firms
As companies strive to deploy AI across their operations, consulting firms like McKinsey are among the earliest and most ambitious adopters, rivaling even major tech companies.
The Synergy of AI and Human Judgment
McKinsey is focused on striking the right balance between AI capabilities and human judgment to drive real-world impact. Currently, the firm has approximately 11,000 AI agents collaborating with its pool of 40,000 employees.
The Role of Human Expertise
Padhi explained, “These tools are shortening learning curves, making knowledge more accessible, and speeding up specific types of analysis.” However, he emphasized that human insight is still crucial: “The AI can help you gather momentum, but to lift off and reach your destination, you still need pilots—human judgment, creativity, and leadership.”
AI at the Forefront of Boardroom Discussions
On the client side, AI remains a primary topic among executives. McKinsey advises companies to delineate their business objectives, which Padhi terms a “value creation thesis,” to effectively prepare for AI integration.
Guiding CEOs in AI Readiness
Padhi recommends that CEOs ask, “Where are we headed over the next five years?” and identify how AI can facilitate that journey. This may involve aspects such as AI-powered product development, customer acquisition, cross-selling, or pricing optimization.
Focused Problem-Solving
Padhi stresses that true AI readiness isn’t about scattered experimentation. Instead, it’s about addressing one high-impact, business-critical issue and utilizing AI to tackle it end-to-end. “That’s where meaningful learning, momentum, and scale happen,” he noted.
The Future of Consulting
Looking ahead, Padhi outlined three significant shifts anticipated in the consulting industry: deeper integration of technology across all functions, consolidation where only firms with distinct advantages will survive, and increased strategic partnerships between consulting firms and tech entities.
McKinsey’s Own AI Strategy
To sharpen its competitive edge in AI, McKinsey has developed its proprietary AI platform, Lilli, which has been trained on the firm’s extensive knowledge base. Padhi shared that Lilli is now seeing a usage rate of over 95%.
Enhancing Efficiency with AI
“It helps people prepare for C-suite discussions, ramp up on industries, or explore new functions faster and better,” Padhi explained. He also pointed out that AI is incorporated into training from the onset, even for senior partners.
Accelerating Impact with Client Lighthouses
Additionally, McKinsey has identified around 25 global “client lighthouses” where top personnel utilize accelerators—repeatable software assets—to deliver impactful results more rapidly.
Conclusion: AI as a Driving Force
As the consulting landscape continues to evolve, it becomes evident that AI will be a key driver in shaping strategies and outcomes for businesses. McKinsey is committed to optimizing its use of AI, paving the way for transformational change in both consulting practices and client engagements.
FAQs
1. What are the current trends in AI adoption among companies?
- AI adoption is still in the early stages, with only about 10% of companies reporting significant impacts on their profits.
2. What does Asutosh Padhi identify as the challenges of AI?
- While analysis may become simpler, the complexity of strategic decision-making is anticipated to increase.
3. How is McKinsey approaching AI integration?
- McKinsey focuses on blending AI capabilities with human judgment to achieve real-world results, employing around 11,000 AI agents alongside its workforce.
4. What should CEOs consider for AI readiness?
- CEOs should clarify their five-year business objectives and determine how AI can facilitate their strategic goals.
5. What future shifts does Padhi foresee for consulting firms?
- Padhi predicts deeper tech integration, market consolidation of firms with unique strengths, and enhanced partnerships between consulting and technology firms.
