New Zealand’s productivity problem is no longer a future risk – it is a present constraint on growth.
Across key indicators, labour productivity, capital productivity and GDP per capita have all declined, reinforcing a long-standing structural weakness in the economy. For business leaders, the question is no longer whether to act, but what will genuinely move the dial.
Artificial intelligence is increasingly positioned as part of the answer. But new research suggests its impact will depend less on adoption, and more on how effectively it is executed.
From promise to proof
The latest Productivity Propelled report, commissioned by 2degrees and prepared by Deloitte Access Economics, provides one of the first New Zealand-specific datasets linking AI adoption to firm-level productivity. It shifts the conversation from global speculation to local evidence, and offers a clearer view of where value is being created.
The findings show a consistent pattern: organisations with more advanced AI adoption are outperforming their peers.
For small and medium-sized enterprises, that equates to around 4.3% in additional annual revenue on average, largely driven by operational efficiency – streamlining processes and reducing manual workloads. Larger organisations are seeing significantly greater impact, with gains of 6.8% more revenue, by applying AI to pricing, cost management and broader financial performance.
Investment is accelerating, but impact is uneven
Investment trends reflect growing confidence. Newer businesses are leading the shift, with companies established in the past two years expecting to allocate more than 50% of their technology budgets to AI by FY27. Across the wider market, AI is rapidly transitioning from experimentation to a core category of spend.
Yet despite this momentum, impact remains uneven.
Around 82% of New Zealand businesses report using AI in some form, but in most cases, adoption is still relatively shallow, confined to features within existing tools or publicly available platforms. Activity is often fragmented, with limited alignment to core business strategy.
This gap between adoption and impact is now the defining challenge. The report finds that a ten-point increase in AI adoption correlates with a 1.5% lift in labour productivity, but only where AI is meaningfully embedded into operations. The advantage comes not from using AI, but from integrating it.
What leading organisations are doing differently
The organisations seeing the greatest returns are taking a fundamentally different approach.
They are moving beyond isolated pilots and embedding AI into core workflows – from customer operations to supply chains and financial planning. They are investing in workforce capability, governance and data foundations alongside the technology itself. And critically, they are prioritising use cases tied directly to commercial outcomes, including efficiency gains, cost reduction and revenue growth.
Just as importantly, they are building for scale from the outset – avoiding the fragmentation that comes with ad hoc adoption.
The leadership challenge
For many organisations, however, structural barriers remain. Capability gaps continue to constrain progress, while governance and risk maturity have struggled to keep pace. Legacy systems and fragmented data environments add further complexity, particularly in larger enterprises.
Addressing this requires more than incremental change. Turning AI into a productivity driver demands a shift in how organisations are structured, how decisions are made, and how technology is embedded into day-to-day operations.
At 2degrees for example, AI experimentation is being integrated directly into its broader technology and data environment, including the development of a sovereign AI platform in partnership with HPE. The focus is on creating a secure, scalable foundation where teams can test, learn and deploy AI use cases in ways that are aligned to business outcomes, not as standalone initiatives, but as part of core operations.
From access to advantage
For New Zealand’s business leaders, the implication is clear. Competitive advantage will not come from access to AI, but from how effectively it is embedded across the organisation.
AI alone will not resolve New Zealand’s productivity challenge. But the next phase is execution, and leadership teams that get this right will play a defining role in lifting firm performance and shaping the country’s economic trajectory.
