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Even as you prepare your businesses to become an AI-amplified organization, it’s vital that you anticipate the broader economic and social implications of these technologies

Technology

The executive’s guide to generative AI: 10 essential truths, 5 unresolved uncertainties – and 1 overarching imperative

Published 13 July 2023 in Technology • 13 min read

Generative artificial intelligence (AI) is a technological tsunami. Business leaders and their organizations either need to learn to ride this wave of change or risk being swept away. In this article, we present 10 essential truths and five unresolved uncertainties about this transformational technology, concluding with one overarching imperative for leaders to pursue if they aspire to conquer the coming wave of disruption. 

10 essential truths 

Understanding and integrating generative AI into the business landscape is a complex task. These 10 truths highlight the potential, challenges, and roles leaders must play in navigating the transformative journey ahead. 

Truth #1: Generative AI can create new content from existing data. 

Generative AI takes us beyond merely recognizing patterns or providing outputs based on predefined criteria; it represents a novel form of creativity that will redefine the division of labor between humans and machines. As a leader, you must prepare for the transformative shift that generative AI will catalyze in your organization. This could require a complete reimagining of job roles and massive changes in processes as AI takes over routine tasks, allowing human creativity and judgment to be emphasized and brought to the forefront.  

The transition will be challenging and calls for proactive strategy and policy formulation, focusing on workforce education and adjustment to a new order of labor division. You must be the driving force behind this change, fostering an organizational culture that embraces AI as a tool for creative augmentation rather than a threat to job security. Moreover, you must leverage this newfound creativity to explore and venture into new avenues for products, services, and solutions, avenues that were previously constrained by human resource limitations. Finally, you must take your employees with you on the journey and ensure change management is done properly, showing them what’s “in it” for them. 

Truth #2: Generative AI is more versatile than earlier types of automation. 

Generative AI’s versatility allows it to be utilized across many domains, from generating personalized email responses and product descriptions to designing new pharmaceutical compounds or creating realistic video game environments. Its versatility makes it not industry-specific but application-specific.  

As a leader, your role involves focusing and pacing the transformation process within your business operations. One essential task is to discern the most beneficial areas or “use cases” for applying Generative AI. This must be done in line with your organizational goals and industry dynamics.  

The potential is vast, whether it’s improving customer service through personalized interactions, optimizing product design, or enhancing content creation. However, you must carefully choose the most promising use cases, identify the underlying applications, and secure early wins to maintain momentum. 

Truth #3: Generative AI enables unprecedented personalization. 

With the advent of generative AI, businesses can create custom solutions for individual clients or customer segments. As personalization becomes increasingly critical in the competitive market, this technology is a potent enabler. You must, therefore, acknowledge that personalization, facilitated by generative AI, is not just a nice-to-have but a critical business necessity. As customers increasingly expect personalized experiences, businesses that fail to deliver will find themselves lagging.  

Your responsibility lies in championing the deployment of generative AI to deliver deeper personalization, be it in marketing, customer service, product recommendations, or user experience. Achieving this isn’t merely about technological deployment; it also involves nurturing a company culture that understands and values the significance of personalized customer experiences. It requires prioritization of those activities which need to be business, not technology led. 

“The efficacy of generative AI is deeply rooted in the quality and diversity of the data used to train and support it.”

Truth #4: Generative AI will automate many routine tasks currently done by knowledge workers. 

Generative AI can liberate human resources from routine roles, enabling them to focus on tasks requiring human judgment and creativity. As a leader, you must embrace this automation with a visionary mindset. Implementing generative AI will challenge the status quo, but the productivity gains it can bring are substantial.  

It’s therefore essential to focus on the human side of change, recognizing that job roles and skill sets might require significant changes. Your role as a leader involves guiding your workforce through this transition, offering the necessary training and support, and building a culture of adaptability. You must focus on reskilling your workforce early to prepare them for the new AI environment. 

Truth #5: Generative AI is only as good as its data. 

The efficacy of generative AI is deeply rooted in the quality and diversity of the data used to train and support it. You must therefore invest strategically to ensure the integrity, quality, and variety of your data repositories. AI won’t solve the lack of data standardization but requires it as a foundation. Companies that prepare for this solid foundation will win in the AI space. 

Establishing data governance frameworks to manage, protect, and verify data quality becomes imperative. At the same time, ethical considerations and regulatory compliance around data usage must be respected. Diverse data sets must be included to avoid biases in AI outcomes, which could inadvertently lead to skewed results or unfair practices. Governance of your data is a business one, not solely a technology one. 

Truth #6: Generative AI will drive transformational change in organizational decision-making processes. 

The landscape of executive decision-making is on the cusp of significant change, driven by the predictive capabilities of generative AI. As forecasts evolve from educated guesses to precise predictions, the foundation of strategic choices will shift. Generative AI can help businesses anticipate market trends, customer behavior, and competitive maneuvers with previously unimaginable accuracy.  

As a leader, your role in this transformative journey involves more than just implementing this technology. You are tasked with leading your organization into a new era of data-driven decision-making, wherein generative AI plays a pivotal role. This shift demands a delicate balance of AI-derived insights and human judgment, a new leadership acumen that blends technological prowess with instinctive wisdom. Your part is to embody and cultivate this acumen, guiding your team in leveraging AI insights to make more informed and effective strategic decisions. 

Truth #7: Generative AI will dramatically accelerate innovation. 

Generative AI holds the potential to serve as a potent catalyst for innovation, enabling businesses to create and explore at a scale and pace unseen before. Whether ideating new product designs, optimizing processes, or discovering untapped market niches, the possibilities are vast and exciting. As a leader, your role extends beyond merely integrating this technology into your company’s operations. You need to lead a paradigm shift in your organization’s approach to innovation, inspiring and motivating your team to harness the capabilities of generative AI fully. By fostering a culture of innovation that values calculated risk-taking and embraces the power of generative AI, you can fuel a new engine of creative exploration and development within your company. 

Generative AI is at an early stage of its evolution, with new developments and advancements emerging daily

Truth #8: Generative AI is not a plug-and-play solution. 

Integrating generative AI into your business is a complex, nuanced process that requires more than financial investments. It is not comparable with a software implementation but sits on top of the data generated by your applications. It involves a substantial investment in upskilling and reskilling your workforce to utilize this technology effectively. As a leader, the onus is on you to drive this talent development strategy. You need to foster an environment of continuous learning and cultivate the AI literacy of your team. Furthermore, you may also need to explore partnerships and collaborations to bring in external talent with the required expertise. You can build a strong, well-equipped team capable of leveraging the potential of generative AI through the right mix of in-house development and external talent acquisition. 

Truth #9: Generative AI will massively increase the cybersecurity risks your business faces. 

The power of generative AI is a double-edged sword; it can be harnessed for innovation and exploited for malicious intent. As this technology evolves, it opens new avenues for cyber threats, including sophisticated phishing scams and deep fakes. As a leader, your responsibility extends to securing your organization against these potential risks. This involves implementing robust cybersecurity measures, educating your team on emerging threats, and cultivating a culture of vigilance. Your role also involves keeping pace with technological advancements in cybersecurity to ensure your defenses remain robust and effective. 

Truth #10: Generative AI is still early in its development. 

Generative AI is at an early stage of its evolution, with new developments and advancements emerging daily. Staying abreast of these changes is not merely a matter of staying informed: it’s a strategic necessity. As a leader, you need to ensure your organization not only keeps pace with these changes but also anticipates them, shaping your business strategy to leverage emerging opportunities and mitigate potential risks. This forward-thinking approach can provide a competitive edge, positioning your company as a trailblazer in adopting and utilizing generative AI. 

5 unresolved uncertainties 

The transformative potential of generative AI is undeniable, but the full breadth of its impact remains challenging to predict. Specifically, we grapple with five key uncertainties leaders must address to harness this technology effectively. 

Uncertainty #1: The magnitude of the economic and societal impacts ranges from substantial to unprecedented. 

Generative AI, with its unrivaled potential for efficiency, introduces the possibility of dramatic societal change. This includes disruptions in the employment sector, where job displacement may occur. As a leader, your challenge lies in navigating these transformative waves, integrating AI to enhance productivity while anticipating and mitigating potential job losses. This delicate balancing act might involve creating strategies for retraining and upskilling employees or even identifying new job opportunities emerging from the integration of AI. 

Your responsibilities extend beyond your company walls. Engaging with policymakers and other societal stakeholders to collaboratively address potential AI-driven disruptions is crucial. These economic and societal uncertainties demand leadership that doesn’t just revolve around business strategy but also embraces the principles of corporate social responsibility. Consequently, you must address both your organization’s and society’s needs as generative AI continues to evolve and disrupt traditional norms. 

“As a leader, you must understand that while AI harbors tremendous potential, it also carries a certain degree of financial risk. ”

Uncertainty #2: The financial implications of adopting generative AI are yet to be fully clarified. 

Adopting generative AI is not a financial decision to be taken lightly. Acquiring quality data, training AI models, and assembling the right team to develop and manage these systems is costly. It requires a sizable upfront investment, and its return is currently undefined across various industries and applications. 

As a leader, you must understand that while AI harbors tremendous potential, it also carries a certain degree of financial risk. Weighing these costs and risks against the potential benefits of AI adoption involves conducting the best possible cost-benefit analysis while recognizing that there will be significant uncertainty about the total cost of ownership of AI systems and their return on investment. 

Remember, returns on AI investments may materialize slowly, and the journey to profitability might be longer and more complex than conventional technology investments. Success requires long-term strategic planning, robust risk management, and clear investor communication. Additionally, considering the considerable costs of training and talent acquisition for AI, effective human capital management and workforce planning are critical. 

Uncertainty #3: The extent of the impact on authenticity and trust is hard to predict. 

As generative AI becomes increasingly proficient at creating content that mimics human-made content, its impact on the trustworthiness of digital content becomes a crucial consideration. This progress presents a new challenge: maintaining trust within your organization and with external stakeholders, including customers and partners, in an era where the line between human and AI-generated content is increasingly blurred. 

Generative AI’s ability to create ultra-realistic content can potentially raise grave ethical, legal, and reputational issues. For instance, AI-generated deepfakes could be misused to fabricate deceptive communications, damaging your organization’s reputation or resulting in legal repercussions. As a leader, you must proactively manage these risks. This requires setting clear ethical guidelines for AI use, investing in technologies capable of detecting AI-generated content, and committing to transparency in AI usage. 

Uncertainty #4: Our ability to control dangerous bias in AI-generated outputs is hard to predict. 

Inherent biases in AI can lead to unfair or unethical outcomes, resulting in reputational damage and potential legal liability. If an AI system unintentionally discriminates against certain demographic groups in critical decisions, such as loan approvals, it can spark public outrage and legal ramifications. As a leader, you must ensure that AI systems are trained on diverse and representative data sets and that mechanisms are in place to scrutinize and correct bias. 

Beyond striving to minimize bias, you must communicate your efforts transparently. This includes engaging in ongoing dialogue about AI’s ethical implications and institutionalizing new practices in response to evolving societal norms and expectations. 

DALLE - artificial intelligence as a technological tsunami with a lone surfer riding the top and a bunch of other people underneath about to be drowned
DALL-E generated artwork - artificial intelligence as a technological tsunami with a lone surfer riding the top and a bunch of other people underneath about to be drowned

Uncertainty #5: The pace and extent of AI regulation remain uncertain. 

As lawmakers and regulators grapple with this new technology’s implications, businesses must navigate an evolving regulatory landscape. This changing terrain introduces new requirements for transparency and accountability, as well as potential unexpected costs and compliance challenges. As a leader, you must remain informed of these developments and be ready to adapt your strategies as needed. 

Regulation can sometimes feel restrictive, but it also presents opportunities. Demonstrating compliance with stringent regulatory standards can boost your competitive standing and build trust with customers and stakeholders. Navigating the regulatory environment is an integral part of your journey with AI, and it’s your responsibility as a leader to guide this journey ethically, equitably, and sustainably. 

1 overarching imperative 

While understanding the 10 truths and five uncertainties around generative AI provides a solid foundation, this understanding must be synthesized into action. That is captured in this overarching imperative for executives: to educate themselves and their teams on the technology and its impact, and to be thoughtfully aggressive in moving things forward. This involves theoretical understanding and a concrete, practical grasp of how generative AI can transform their specific industry, business, and operations. 

As we described at the start of the article, Generative AI is like a technological tsunami. Its strength and potential are immense, its velocity breathtaking. Like any tsunami, it’s relentless and unforgiving to those who are unprepared. However, with the right knowledge, skills, and preparation, you can ride this wave, harnessing its immense power to propel your business forward. 

Education is paramount and must encompass a broad range of aspects, including the capabilities and limitations of the technology, its potential applications, ethical considerations, and the evolving regulatory landscape. It also includes understanding how generative AI aligns with your organization’s strategic goals. Moreover, you must ensure this education permeates the entire organization, enabling all employees, from senior management to frontline workers, to understand and play their part in the AI journey. 

Being “thoughtfully aggressive” involves moving beyond observing and reacting to the generative AI wave to proactively seeking to shape and harness it. This doesn’t mean recklessly rushing into AI implementations without due consideration. Instead, it implies moving forward with conviction and caution, balancing the urge to innovate with the need to manage risk and ensure ethical, responsible use of the technology. And it reminds organizations to “do their homework” in standardizing data which is imperative to benefit from AI. These foundational activities are non-regret moves that should start immediately. 

The challenge for leaders is to strike the right balance – to ride the crest of the AI wave without getting swept away. This requires agility, balance, and judgment, continually adjusting their stance as the wave evolves and the landscape changes. It means making informed decisions, taking calculated risks, and learning from both your successes and your failures. 

Authors

Michael Watkins - IMD Professor

Michael D. Watkins

Professor of Leadership and Organizational Change at IMD

Michael D Watkins is Professor of Leadership and Organizational Change at IMD, and author of The First 90 Days, Master Your Next Move, Predictable Surprises, and 12 other books on leadership and negotiation. His book, The Six Disciplines of Strategic Thinking, explores how executives can learn to think strategically and lead their organizations into the future. A Thinkers 50-ranked management influencer and recognized expert in his field, his work features in HBR Guides and HBR’s 10 Must Reads on leadership, teams, strategic initiatives, and new managers. Over the past 20 years, he has used his First 90 Days® methodology to help leaders make successful transitions, both in his teaching at IMD, INSEAD, and Harvard Business School, where he gained his PhD in decision sciences, as well as through his private consultancy practice Genesis Advisers. At IMD, he directs the First 90 Days open program for leaders taking on challenging new roles and co-directs the Transition to Business Leadership (TBL) executive program for future enterprise leaders, as well as the Program for Executive Development.

Ralf Weissbeck

Former Group Chief Information Officer and member of the Executive Committee at The Adecco Group.

Ralf Weissbeck is the former CIO of The Adecco Group. He co-led the recovery of the 2022 Akka Technologies ransomware attack. He also led the recovery of the 2017 Maersk ransomware attack that shut down 49,000 devices and 7000 servers and destroyed 1000 applications.

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