How CFOs can reframe AI adoption
José Parra Moyano of IMD outlines why a lot of AI projects fail and advises CFOs to put more emphasis on staff buy-in, data preparation, and business value. ...
Artificial Intelligence
How AI will help us pursue sustainability goals: the industrial use case
Digital technologies, and artificial intelligence in particular, allow us to extract insights from data. This will allow industrial companies, the backbone of our economy, to be more resource-efficient, more productive, and more sustainable.
Industrial organizations face similar challenges that require rapid innovation: there are shortages of skilled workers, strained supply chains, and mounting geopolitical conflict.
In addition to these, our society faces the existential threat of climate change. With around 30% of global greenhouse gas emissions coming from industry, leaders have a responsibility to tackle this pressing problem.
By harnessing the power of data, industrial companies are becoming more resource-efficient and productive, and therefore more sustainable. However, while we have seen evidence of success, many industrial organizations find managing the pace, scale, and complexity of the transformative change required to meet net-zero targets and mitigate environmental impacts extremely challenging. Here we will explore why it is necessary to run this dual transformation of digitalization and sustainability concurrently.
AI can make all the difference. It lets you go faster while ensuring you stay on the track. It helps turn a race to transform into a finely tuned victory lap.
The progress of AI determines the progress of sustainability
Time is running out, and we need both urgency and precision. “We need to accomplish something gigantic we have never done before, much faster than we have ever done anything similar,” is how Bill Gates explains the situation in his book How to Avoid a Climate Disaster.
Think of it like the classic slot car game; digitalization is the accelerator, pushing the car – your business – faster on the track ahead. In the real world, this enables quicker production, market agility, and sustainable transformation.
But at some point, you will hit a speed limit or fly off the ‘track’ at a curve. In business, progress stalls, strategy gets diluted, and efficiency drops.
Here’s where artificial intelligence (AI) comes into play: it acts like the elevated curves of the track keeping the vehicle grounded despite its speed. Every variable impacting that car – velocity, friction, timing – is under control. All data within the organization is harnessed to push the limits; mastering sharp turns in markets, resource management, and strategic vision without losing momentum.
AI can make all the difference. It lets you go faster while ensuring you stay on the track. It helps turn a race to transform into a finely tuned victory lap.
“Undoubtedly, there is a level of hype but the technology behind this is real and will have a transformative impact.”
Is AI overhyped?
As consumers, AI-based tools have become a feature in our daily lives, whether that’s helping us to write better copy or translating languages in real-time. However, while there is great talk about AI’s gigantic potential, it has yet to materialize in supporting tangible societal progress and large-scale development, significant GDP growth, or broad economic gains outside of a small group of tech players.
But is AI overhyped? And does this mean we should deprioritize it and turn to other technological developments? I believe it is, but that doesn’t mean that it is not valuable; again, precision matters. Undoubtedly, there is a level of hype but the technology behind this is real and will have a transformative impact.
To start with, AI is not new, particularly in the industrial context: industry has been steadily developing AI since the 1970s, making it reliable, secure, trustworthy, and suitable for industrial use. ‘Industrial AI’ now meets the requirements of the most demanding environments, enabling us to communicate with software, equipment, or machines in natural language, and helping us to design processes or even entire plants.
Crucially, industrial AI is making a difference in the one area where we cannot afford any hype: sustainability. It enables us to leverage all the data that sits in digital twins, for example, to do things faster in the virtual world first, improving efficiency and reducing waste so that we can do more with less in the real world.
Extracting value from data
Industrial AI enables us to harness the one vital thing we have in abundance across industries: huge amounts of data. We’ve all heard it: data is the new oil – but with far greater potential for sustainable good. AI gives us the means to transform that data into meaningful information, turning numbers into actionable insights.
In the future, we will be able to develop new industrial AI solutions much faster thanks to the power of data. The next powerful models will be trained around industrial environments, with industrial data – Industrial Language Models. Today, the modalities –the types of input and output data an AI system can interpret – are pictures, texts, video, or code. Soon, these will also be 3D/CAD data, 2D/complex diagrams, time series, and industrial business data.
Using AI to scale
The real value and potential benefit of AI lies in the industrial world – the backbone of our economies. Our opportunity is to extract the most useful parts of industrial AI and combine them with data and other technologies like digital twins or software-defined automation. It will be a supercharger for digital and sustainability transformation – and we have only scratched the surface.
Reaping the full benefits of industrial AI will largely depend on whether we, as industrial companies, can master the complexities, fully adopt, and scale this technology, and jointly drive it forward. We also need to invest heavily in the enablers of AI – chips, computing, and people. Without the chips, we have no computers – and without the AI experts creating the smart algorithms, AI will not reach its full potential. Now is the time for boldness; to scale the development and application of industrial AI – both bottom-up and top-down – at speed.
To win the race against climate change, we are going to need every bit of creativity we can get, and not just human creativity.
AI is a tool we can use for good
We always need to come back to the ‘Why of AI.’ We must not use AI – or indeed any other technology – just for the sake of it. Technology can only ever be our ‘How’ in making an impact and transforming the everyday.
To win the race against climate change, we are going to need every bit of creativity we can get, and not just human creativity. AI will enable us to do more with less in our industrial world. It’s our duty to make sure we use it for good.
Authors
Related
Cybersecurity: the risks and opportunities in the scaling of industrial AI
Concerns over the ‘unpredictability’ of AI are widespread, but Industrial AI proves the value proposition of this tool, says Öykü Işık. This article explains how to build security into your strategy....
Why leaders need an ethical framework for AI
Business leaders need to ensure that their organizations consider all AI-related decisions and operations through an ethical lens, warns IMD’s Michael Wade. ...
Working with AI to create a sustainable future for employers and employees
As AI continues to reshape industries, businesses must navigate the balance between automation and human contribution. This article explores how AI can drive sustainability while empowering both employers and employees through data...
Learn Brain Circuits
Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
Explore Leadership
What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
Join Membership
Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.