The full-scale use of AI will alter the way work gets done in nearly every organization, challenge existing business models and change the ways companies engage with individuals and each other. AI-driven automation improves the efficiency of operations and technology teams; creates individualized approaches to marketing and sales; customizes products and services for individuals; and brings enormous and previously unreconcilable forms of data and inputs to financial forecasting, risk management and strategic decision-making. At the same time, embedding AI in policy, procedures and controls can improve the ways in which organizations manage and mitigate risk and evaluate strategic advantage.
Companies that take advantage of AI and other emerging technology for it transformation capability will go further. These companies may be better prepared to change how work gets done and create new business and operating models. Sixty-two percent of CEOs believe that their organization must act now on GenAI to avoid ceding ground to competitors. Successful implementation can improve knowledge of the corporate genome – people, assets, customers, suppliers and history – and organizational decision-making. This in turn creates the conditions for the company to transform how it connects products and services to customers. From our discussions with directors, leading companies are now pushing to leverage AI to further enable value creation and, in some cases, to create new businesses and operating approaches.
Why boards should care
Given the potential impact of AI from incremental to transformational, boards will play a pivotal role in encouraging the appropriate pace of integration of these new technologies into the business – particularly in light of the change management that will be needed as this new technology disrupts old processes and decision-making.
Specifically, companies should balance smaller one-off AI uses within the company with a broader strategic framework so that there is real business value to the many AI use cases that might be underway. After all, a proof of concept or specific use case does not require that all risks and interdependencies be accounted for across the organization. Directors are in a unique position to support management in determining a strategic approach to AI. Because of the board’s longer-term perspective and often longer-tenured experience, it can help management pause to create a broader strategic framework. Such a framework can align the firm’s resources to the most fruitful initiatives.
Directors are noting the growing importance of organizational change management to seeing that AI is integrated and leveraged, particularly since it is so different from traditional software solutions and training. In our discussions we heard that learning to work with AI is akin to learning to work with a new colleague. As one director put it, “Boards are asking, ‘How are we using AI?’ instead of asking, ‘How are we making sure our people are ready?’”
How boards can help
Boards can guide management to take a broader perspective around AI by setting expectations and accountability accordingly. Instead of centering discussion on whether AI can improve a specific process, they can direct management to determine how AI can help the business as a whole to differentiate itself from competitors. As Dan Diasio, EY Global Artificial Intelligence Consulting Leader, writes, “AI should drive major shifts in revenue and business model transformation, help a firm enter a new market, or fend off a major threat.” Boards can help management keep these transformative aspects in their plans. They can also ask questions about potential new competitors, as the democratization of AI will increasingly enable smaller organizations to break apart and challenge the value chains of larger companies. Boards can also ask whether management is including the people aspect of change management needed for AI to become embedded in the business.