AI edge will depend on building hard-to-copy systems, says McKinsey

New Delhi [India], May 25 (ANI): As artificial intelligence becomes widely adopted across industries, companies can no longer rely on standard AI models alone to stay ahead, according to a new report by McKinsey & Company.
The report said nearly 90 per cent of organizations are already using large language models to improve productivity, making AI a basic business requirement rather than a unique advantage.
According to McKinsey, the real competitive edge will come from how companies build systems, workflows, and infrastructure around AI that rivals cannot easily replicate.
"The strategic moat comes from turning cognitive work into infrastructure--data pipelines, fine-tuned models, integrated workflows, governance layers--that can scale at very low incremental cost," the report said.
The report noted that AI is sharply reducing costs in sectors dependent on cognitive work, pushing companies to focus on deeper operational integration.
As an example, insurance company Resolution Life uses AI to automate actuarial and financial processes, cutting claim processing times from weeks to just 15 seconds while handling larger business volumes efficiently.
McKinsey also highlighted Amazon as a company benefiting from large-scale proprietary data. The report said Amazon uses customer search activity, purchases, product views, and advertising response data to improve recommendations, forecasting, and marketplace performance in ways competitors struggle to match.
The report added that AI tools become indispensable when they are deeply integrated into core business operations.
"AI solutions go from convenience to necessity when they are embedded in core work and shape how work gets done to deliver a better product or service at a competitive price," it said.
Citing another example, the report pointed to Microsoft Dragon Copilot, which drafts clinical notes directly within hospital electronic health records. Used across 150 hospitals, the tool has reportedly reduced documentation time by around 50 per cent and helped lower clinician burnout.
McKinsey said companies that learn and adapt faster than competitors are likely to build stronger long-term advantages.
"Because AI performance improves with experimentation and data, organizations with a learning and development velocity that is consistently greater than their peers can create competitive moats," the report said.
The report advised company boards and leadership teams to closely track indicators linked to their AI strategy, including transaction costs, customer interactions handled by AI, and operational efficiency.
McKinsey compared the current AI boom to the early phase of digital transformation, when companies rushed to launch websites and mobile apps. However, the report said long-term success came not from simply adopting technology, but from integrating it deeply into customer journeys and business operations.
The report noted that companies will create lasting value by moving beyond basic AI adoption and building systems and assets that are difficult for competitors to duplicate. (ANI)