2 The State of AI 2025: Why Artificial Intelligence Is Becoming a Long-Term Competitive Advantage for Business

The McKinsey Global Survey on AI: The State of AI 2025 was published by the McKinsey Global Institute and McKinsey & Company, one of the world’s leading global management consulting firms. The report was compiled by McKinsey researchers and consultants who specialize in artificial intelligence, digital transformation, and business strategy. The principal authors include Michael Chui, Roger Roberts, Alex Singla, Alexander Sukharevsky, Lareina Yee, and colleagues from McKinsey’s AI practice. The report is available free of charge at https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai. It is an executive research report rather than a peer-reviewed academic journal article. Its purpose is to measure how organizations around the world are adopting artificial intelligence, identify the business value being created, understand the barriers to successful implementation, and document the management practices associated with organizations achieving the greatest returns from AI investments.

Executive Overview

The report demonstrates that artificial intelligence has moved beyond the experimental stage and is becoming an integral part of business operations across virtually every industry. Organizations are no longer asking whether they should adopt AI; instead, they are determining how to deploy it effectively, govern it responsibly, redesign business processes around it, and develop a workforce capable of working productively alongside intelligent systems.

One of the report’s central conclusions is that the organizations realizing the greatest value from AI are not simply purchasing new software. They are redesigning workflows, improving data quality, establishing governance frameworks, training employees, and integrating AI into everyday business operations. These organizations consistently report higher productivity, faster decision-making, improved customer experiences, and greater innovation than organizations using AI only for isolated experiments.

Perhaps most importantly, the report concludes that artificial intelligence is becoming a strategic business capability rather than simply another information technology tool.

Research Methodology

The report is based on McKinsey’s annual Global Survey on AI, one of the largest continuing studies of enterprise AI adoption.

The research methodology consists primarily of a large international survey of executives representing organizations from multiple industries, geographic regions, and company sizes. Respondents include senior executives, business-unit leaders, technology executives, digital transformation leaders, and functional managers responsible for implementing AI within their organizations.

Survey responses are analyzed statistically to identify trends in AI adoption, implementation strategies, organizational performance, governance practices, workforce development, investment priorities, and measurable business outcomes. McKinsey supplements these survey results with observations from client engagements, industry analysis, and organizational case studies to provide additional context for interpreting the survey findings.

This methodology is well suited for identifying broad business trends and management practices. Because it is survey-based, the report reflects organizational experience and executive assessments rather than controlled experimental research. Its value lies in documenting how businesses are actually implementing AI and the organizational characteristics associated with successful adoption.

Major Findings

The report identifies several significant trends demonstrating that artificial intelligence is becoming an increasingly important component of modern business.

One of the strongest findings is that AI adoption continues to expand rapidly across industries. Organizations are deploying AI not only within information technology departments but also throughout finance, marketing, customer service, software development, supply chain management, manufacturing, legal operations, human resources, procurement, and research and development. AI is evolving into an enterprise-wide capability rather than remaining a specialized technical resource.

The research also shows that organizations achieving the highest returns have moved beyond isolated pilot projects. Instead of implementing AI in a single department, they integrate intelligent systems into multiple business functions while redesigning workflows to maximize the complementary strengths of people and AI. This transformation frequently includes automating repetitive administrative work, improving access to enterprise knowledge, accelerating routine analysis, supporting decision-making, and enabling employees to devote more time to higher-value activities.

Generative AI represents one of the most rapidly growing areas of enterprise adoption. Businesses increasingly employ generative AI to draft documents, summarize information, develop software, analyze data, create marketing content, support customer interactions, assist research, and improve internal communications. The report indicates that organizations using generative AI effectively typically combine these capabilities with human review and organizational governance to maintain quality, accuracy, and accountability.

The survey also finds that organizations obtaining the greatest business value invest heavily in governance. Successful companies establish policies covering data quality, cybersecurity, privacy, regulatory compliance, human oversight, model evaluation, and responsible AI use. These governance practices help organizations reduce operational risks while increasing confidence in AI-assisted decision-making.

Another significant finding concerns workforce development. Companies generating the greatest returns from AI consistently invest in employee education and organizational change. Rather than viewing AI as a replacement for employees, these organizations prepare workers to collaborate effectively with intelligent systems, redesign jobs around higher-value activities, and encourage continuous learning as AI capabilities evolve.

Finally, McKinsey observes that organizations described as “high performers” distinguish themselves not primarily through the sophistication of their AI technology but through disciplined execution. Strong leadership, enterprise data quality, cross-functional collaboration, governance, workforce preparation, and process redesign consistently differentiate successful implementations from less successful ones.

Assessment of the Results

The report provides one of the most comprehensive executive perspectives available on enterprise AI adoption. Its greatest strength is the breadth of organizations represented, allowing meaningful comparisons across industries and regions while identifying common implementation patterns.

A particularly valuable contribution is its recognition that technology alone does not produce business transformation. Organizations create sustained value by redesigning business processes, integrating enterprise data, strengthening governance, developing employee skills, and aligning AI initiatives with broader business objectives. This emphasis on organizational capability rather than technology acquisition distinguishes the report from many discussions that focus primarily on AI models or software products.

The report also provides strong evidence that generative AI is accelerating the pace of digital transformation. Rather than replacing traditional automation technologies, generative AI expands the range of tasks that can be assisted by intelligent systems, including many knowledge-intensive activities previously considered difficult to automate.

Because the report relies primarily on executive surveys, its conclusions should be interpreted as evidence of organizational trends rather than experimental proof of causation. Survey responses reflect executive perceptions and reported business experiences, which may vary among organizations. Nevertheless, the consistency of the findings across industries and multiple years strengthens confidence in the overall direction of the observed trends.

Evaluation

The McKinsey Global Survey on AI is one of the most valuable recurring studies available for understanding how artificial intelligence is changing business. It successfully demonstrates that the greatest returns from AI come from combining technological innovation with organizational transformation. Companies that integrate AI into enterprise workflows, invest in governance, improve data quality, and prepare their workforce consistently outperform those pursuing isolated technology initiatives.

The report also reinforces an important principle emerging across many leading AI studies: artificial intelligence creates its greatest value when it augments human capabilities rather than simply replacing human labor. Employees increasingly spend less time performing repetitive administrative and analytical tasks while devoting more effort to innovation, customer relationships, strategic planning, complex problem-solving, and interdisciplinary collaboration.

For the United States, the implications are significant. Broad adoption of AI across American businesses has the potential to improve productivity, accelerate innovation, strengthen global competitiveness, enhance manufacturing, improve healthcare, modernize financial services, optimize supply chains, and create new products and services that support long-term economic growth. Because enterprise AI adoption remains in its early stages, only a relatively small proportion of business activities have been comprehensively redesigned around intelligent systems. This suggests that the opportunities for growth are likely to extend over several decades as organizations continue integrating AI into virtually every aspect of business operations.

As digital transformation progresses, success will depend increasingly on human capabilities that complement artificial intelligence. Critical thinking, analytical reasoning, complex problem-solving, effective communication, collaboration across multifunctional teams, adaptability, creativity, ethical judgment, and continuous learning will become essential skills for the modern workforce. Organizations that combine these human strengths with disciplined AI implementation will be well positioned to improve employee performance, increase organizational productivity, and sustain competitive leadership in the global economy.