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Artificial Intelligence
Introducing AI to the C-suite: Three opportunities, three risks
AI is not just for digital natives – the greatest gains may be seen in the C-suite, says IMD’s Michael Wade.
Where in your organization has the leadership decided to implement AI? If they have shared the tools exclusively among junior staff, the business may be missing a trick. Increasingly, senior executives are unlocking the greatest value from AI, and particularly generative AI (GenAI).
Research from Korn Ferry suggests that most business leaders recognize this opportunity. Around three-quarters of the global CEOs and senior executives the consulting firm surveyed last year said they expected AI to enhance their value as leaders over the coming three years.
So far, they’ve been proven right. In a recent study that IMD conducted with pharmaceutical giant Novo Nordisk, we found that senior members of the organization derived greater benefit from their use of AI than did their junior colleagues.
While this finding is initially surprising, it does have a logical grounding. Younger employees are “digitally native,” having grown up with innovative technologies, but their senior colleagues have the advantage of really understanding the context of their implementation within the organization.
So, where in the business should leaders look to secure this value?
GenAI powers creative intervention
GenAI offers creativity, enabling businesses to improve the quality of output at all organizational levels.
For example, a manufacturing organization might have a factory that is consistently – and inexplicably – underperforming. GenAI enables executives to interrogate performance in granular detail and, crucially, also offers suggestions for resolving any issues.
Similarly, consumer-facing businesses struggling to win share in a particular market or demographic often retreat in confusion. GenAI gives the business a chance to explore a much wider range of data (including unstructured data such as social media sentiment or video content) and suggests how it might be used.
Businesses involved in M&A could also benefit. Many organizations struggle to integrate the acquired businesses post-transaction, losing value in the process. GenAI could help you identify how and where to focus efforts to accelerate the formation of the new organization.
Whatever the business problem, senior leaders will have the experience and honed judgment to evaluate AI-generated suggestions and to direct implementation of the strongest ones.
Some organizations are even giving executives AI sidekicks. These assistants are always ready to act as a sounding board, critiquing proposals and offering their own suggestions.
A fresh pair of (artificial) eyes
A second AI-enabled opportunity for executives lies in personalized coaching and support. Senior leaders are increasingly open to coaching, with many organizations investing heavily in recent years in learning and development for executives. AI could elevate such support to new levels.
Some organizations are even giving executives AI sidekicks. These assistants are always ready to act as a sounding board, critiquing proposals and offering their own suggestions. Unlike a busy senior leader, who can only check in with colleagues when time allows, a dedicated personal AI coach or mentor can continuously gather data on individual performance and role requirements. Armed with this comprehensive evaluation, it is ideally placed to offer advice and guidance. Plus, it can be rebuffed without any egos being bruised.
Such a tool could also be useful in many other ways. For instance, leaders could get it to analyze the transcript of an unproductive meeting and suggest ways to better direct discussion at the next one. It could also suggest alternative approaches to a knotty business issue or constructively challenge opinions, and, not being human, do so without fear of censure.
Models that can accurately assess an individual’s likelihood of success in a particular position, both initially and in terms of growing into the role over time, could revolutionize the HR function.
Letting AI into the people function
The third example of how AI might help executives to deliver value lies in the HR domain. HR departments are already using AI to streamline recruitment processes, from screening CVs to gathering basic information about candidates. But AI can extend to helping optimize talent management throughout the business.
Models that can accurately assess an individual’s likelihood of success in a particular position, both initially and in terms of growing into the role over time, could revolutionize the HR function. It would be like having a digital twin of an employee, enabling leaders to predict the trajectory of their growth and stress-test their response to different scenarios. This could guide not only recruitment but also training and development of the selected candidate.
Three risks that senior leaders should be aware of
There is much to be excited about, but increased executive use of AI will also expose organizations to new risks.
One major concern is “cognitive offloading” – the phenomenon of humans losing foundational skills when they repeatedly ask technology to take over. The invention of the calculator, for example, has led to a decline in mental arithmetic skills. Likewise, in a world of Google Maps and satnav, many people now struggle to read a traditional map or even to find their way without digital support.
In the context of executive use of AI, that dependence on technology could lead to an erosion of more subtle skills and qualities that are difficult to replace. Even when AI is available, it will be important for executives to preserve and exercise their analytical skills, their ability to innovate and their capacity to work empathetically with colleagues.
A second risk lies in the fact that GenAI is far from a perfect solution. Problems around bias and hallucination are well-documented. GenAI applications tend to try to please their masters, to the point of inventing answers where none exist.
Senior leaders must develop a keen eye for such outputs and learn to prompt GenAI models to produce accurate and independently minded results. They must work with IT teams to ensure that GenAI challenges prejudices and received thinking, rather than reinforcing them.
Third, CHROs, as well as other senior leaders, must pay close attention to the regulatory environment that is evolving around AI. At the global level, the landscape is highly fragmented. The EU’s AI Act, for example, designates the use of AI for hiring and promotion as “high-risk.” Organizations operating in, or entering, the European market should be aware of such sensitivities to avoid falling foul of regulatory divergence.
Balancing risk and opportunity
Overall, the benefits of increased AI adoption by senior executives are likely to outweigh the risks. But that does not mean the dangers can be ignored.
Before anything else, senior leaders must get to grips with the technologies they’re considering using, whether that involves a one-off session or an extended training program. Once they have a reasonably advanced understanding of the tools, they can begin to experiment and test boundaries.
Open-minded leaders should not be disconcerted by such an approach. They should already spend much of their working lives in a state of “skeptical enthusiasm” – keen to explore new ideas in every area of the business, but in a critical, interrogatory manner, testing for practicality and value.
While senior AI users might need some support in catching up with the technical expertise of their younger colleagues, they have the priceless assets of experience and perspective. These will help them envision how these exciting new tools can best be implemented to transform the business.
This article is part of a continuing series of insight articles on ‘AI and the CxO’.
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