How can companies harness AI to forge ahead?
The human capital requirement in Applied AI world and the resulting new organisational structure needs specific understanding of AI technology and capability by informed leaders.
“Artificial Intelligence is the game changing element in digital transformations going forward. I strongly recommend executive and supervisory boards to review the topic and its implications thoroughly and take action!”
Siegfried Russwurm, Chairman, Supervisory Boards, thyssenkrupp and Voith
AI is indeed a game changer. And it demands a very different approach to any preceding digital evolution, in strategy, implementation and in your human resource management. Leaders in all areas of your organisation need to be informed and involved. In the first of a four part series, we look at how organisations need to adapt to surf the AI wave.
How broadly is AI being adopted?
AI is no longer emerging; it is being adopted widely as an essential tool of corporate competitiveness. In September 2020, despite the impact of the pandemic, a Gartner poll showed 47% of artificial intelligence investments had not changed and 30% of companies polled planned to increase funding for AI.[1]
Leaders need to be educated and skilled
The delivery of results is still slow, however. In October 2019, an MIT Sloan Management Review and Boston Consulting Group survey found that 7 out of 10 companies reported “minimal or no impact of AI”.[2]
Odgers Berndtson’s recent report from Germany, Artificial Intelligence for Boards – Gearing up for the Future of Business, in collaboration with the Initiative for Applied Artificial Intelligence, suggests this might be to do with their leaders rather than AI.
A different breed of technology than digital transformation, AI’s ability to substantially change opportunities, risks, people skills and more is vast. New learning is paramount to guide your AI programme effectively.
“AI simply is one of the most important factors for competitive ad-vantage that every company needs to be able to apply. It is nothing magical. The job of the CEO is to demystify AI to create acceptance, reduce fears and start a real transformation – with value adding use cases. You cannot afford not using AI.”
Stefan Vilsmeier CEO brainlab
How will AI change your human capital needs?
New processes could create crossover among traditional roles and responsibilities and therefore have strong implications on an organisation’s structure. Foreseeing this new structure requires a good understanding of the implications AI technology and it will be mandatory that your C-suite develops this capability.
An ideal Chief HR Officer predicts the shape of roles in an AI world.
AI will create a surge in the need for new skills, such as in data science and machine learning. A company’s CHRO must be competent in defining new or changed role profiles to incorporate AI capabilities that will form part of a comprehensive AI strategy. Aware of the scarcity in AI talent, a human resources development plan must design a specific acquisition strategy. A distinct working culture needs to work hard to retain and further develop skills among its teams.
To keep talent eager and loyal, a company that is ambitious in AI will have state of the art infrastructure and computing power, access to rich data sets, challenging projects, clear career paths and AI goals that are aligned with their technology roadmap. Never before has the CHRO’s remit been so closely woven with that of the CEO, and indeed the CFO. Defining decisions will demand mutuality of purpose and alignment of vision among these leaders.
Plan for AI to infuse every area of your business.
Rather than resourcing and delegating control to the relevant business unit, as was the case with previous iterations of tech advancement, AI is pervasive throughout your business. It requires close collaboration among different teams in your company. This demands hands on steering from the executive team, in particular the CEO—continuously. When this direction is informed and skilled, the benefits can be outstanding.
AI’s speed and scale are unprecedented. It can have enormous consequences—beneficial and detrimental. The slightest inaccuracy or bias can translate into huge liabilities. When designing an executive team or choosing your CEO therefore, it’s critical to ensure candidates have, with specific industry expertise, a deep understanding of how AI can make systems more productive, more resilient and more sustainable.
Be prepared.
Candidates need to be knowledgeable and decisive on things like the interpretation of results, scaling AI, bias, risk and ethics. Reassuringly, pwc recognise that “Regardless of your starting point, you don’t need a PhD in the subject, more like a working knowledge of the full range of potential applications and the different development paths (such as capabilities built in-house, partnerships, acquisitions and licensing).”[3]
“AI and digital technologies, combined with deep industry expertise, can help companies reshape their manufacturing and supply chains in order to adapt to a post-Covid world. We have now a unique opportunity to make industrial and infrastructure systems more productive, more resilient and more sustainable. When designing a future board, it is critical to ensure a deep understanding of how technologies can help us to drive this transformation.”
Roland Busch, Deputy CEO and CTO of Siemens AG
Harvard Business Review’s 2019 article Building the AI-Powered Organization[4] says “One of the biggest mistakes leaders make is to view AI as a plug-and-play technology with immediate returns.” AI cannot be delegated or nodded to with fancy hires or titles.
CEOs who are serious about utilising AI need to step back and view all aspects of their businesses through an AI lens. Our Artificial Intelligence for Boards report[5] from Germany summarises three critical starting points:
- Assess your company’s AI maturity and set your priorities accordingly.
Experimenters, Practitioners, Professionals or Shapers?
- Act as role model—living and fostering change.
Get up to speed with AI and let your commitment be prominent in your communication and actions.
- Embrace AI as a transformational journey—well beyond IT.
Your AI strategy and vision need a programmatic approach, engaging all stakeholders.
Is your CEO committed to AI?
With a rounded vision of the capabilities of applied AI, a CEO who is openly committed to AI can infuse in company culture an expectation of a future manifested through its benefits. As a leader, authentic behaviour and demonstrated priorities place AI foremost in business strategy. Team leaders take these cues and feel supported in addressing resistance to change, more easily bringing their members on the AI journey.
Companies with AI-driven business models are already striving for industry dominance and can see their path to it. This will not be achieved through incremental changes, but with deep and broad technical understanding and a clear vision of possibilities and potential. Competitive strategy must be built on alertness to new business opportunities and also threats. Nothing opens new horizons, directions and markets than well applied AI.
Ethics and regulation
Even the most sophisticated tech players have proven unprepared for ethical challenges posed by AI. CEOs need enough insight to be able to balance its speed and scale with measurability and re-engineering; to interpret data, understand their potential and foresee consequences. Nuances in simple ethical rules can become amplified and need responsible judgement to remain inside ethical, legal and regulatory requirements.
AI is a technological step change driving business into the future. Odgers Berndtson is here to fully support you in designing your plans for leaders and teams who have the drive, vision and expertise to implement a successful AI strategy for your company.
[2] S. Ransbotham, S. Khodabandeh, R. Fehling, B. LaFountain, D. Kiron, “Winning With AI,” MIT Sloan Management Review and Boston Consulting Group, October 2019.
[3] https://www.pwc.com/gx/en/innovation/assets/how-ceos-can-tap-ai-full-potential.pdf
[4] https://hbr.org/2019/07/building-the-ai-powered-organization
[5] https://aai.frb.io/assets/logos/Applying-AI-Artificial-Intelligence-for-Boards-vf-4.pdf