New Zealand's AI Adoption Falls Short of Productivity Gains

New Zealand's rapid adoption of artificial intelligence (AI) is not translating into productivity gains, according to experts. Despite 91% of organisations using AI in some form, only 4% say it is transforming their core operations.

The current situation is a repeat of the pattern seen with earlier waves of IT and automation, where slow technology diffusion and low investment in intangible capital hindered productivity growth. Singapore, Australia, and the US are taking proactive steps to harness AI for economic and productivity growth, treating adoption as a starting point rather than an achievement.

To ensure AI works for New Zealand's economy, organisations need to move from mere adoption to organisational transformation. This involves redesigning processes, roles, management practices, and operating models around AI. Additionally, leaders must prepare people and the workforce for a different way of working, including new skills and approaches to leadership.

The government and businesses must also create conditions that allow organisations, especially smaller firms, to adopt AI at scale. This includes addressing barriers such as lack of investment in intangible capital and technology diffusion.