By Sophia Velastegui
C200 member Sophia Velastegui is the Chief Product Officer of Aptiv, a pioneering automotive and autonomous tech company. Sophia has served as Chief Technology Officer for AI at Microsoft within the Business Applications group, where she played a role in advancing traditional AI and OpenAI/ChatGPT. She has held significant roles at tech giants Google/Alphabet & Apple. Sophia also serves as board director for Blackline (NASDAQ:BL).
Artificial Intelligence (AI) has evolved significantly, moving beyond its origins in search engines and ride-sharing algorithms. Recent advancements in generative AI have bridged the communication gap between humans and machines, making AI accessible to anyone with questions, much like the futuristic world of Star Trek. While many initially viewed AI as a tool for specialists like data scientists and machine learning engineers, its role has expanded dramatically.
One key aspect of AI’s significance is its ability to drive business growth. The latest McKinsey State of AI Global Survey reveals that AI high-performing organizations benefit significantly from focus on how it can expand and impact their core business value, using AI as a strategic tool to gain a competitive advantage. By effectively implementing AI, especially leveraging LLM (Large Language Models) technology and traditional AI, companies can innovate rapidly, respond to market changes efficiently, and adapt to customer needs with agility.
Scalability is another driver of AI adoption. AI systems can efficiently handle larger volumes of data and customers without a proportional increase in human resources, leading to revenue growth from the main business operations. Although there may be an initial investment, AI can lead to significant cost reductions in the long run by automating tasks and optimizing processes.
If you don’t jump on the new, you don’t survive
Corporate directors, responsible for steering their organizations toward success, are facing a pivotal moment. They must acknowledge the growing importance of AI and other technological advancements, understanding that embracing these changes is not merely an option but a necessity to stay competitive.
There are considerable parallels between the innovation of AI and the transformative impacts of the internet and mobile technology. To thrive in this new era, businesses must not just dabble in AI but fully embrace it.
To accomplish this, corporate boards must take proactive steps to build tech expertise among their directors. According to Accenture, “Across all industries, organizations are embracing digital transformation on the one hand, while not being sufficiently prepared to deal with the consequences of new technology for the enterprise, on the other hand. And there’s one major reason for this: the required tech expertise is missing at the board level.”
I have experienced this as one of only a handful of public board directors who have successfully launched multiple scaled AI products from tech giants like Microsoft, Google, and Apple. As Microsoft’s AI Chief Technology Officer within the Business Applications group, I worked to advance traditional AI and OpenAI/ChatGPT, and have also leveraged emerging technology at Google/Alphabet, Apple, and now Aptiv. I’ve seen the benefits of having a tech-savvy board and leadership to guide the organization in leveraging AI for competitive advantage.
Don’t worry about AI, worry about your competitors using AI better than you
Embracing AI isn’t just about keeping up with the latest tech trends; forward-thinking organizations are aligning AI adoption with corporate culture, strategy, and operations for a competitive advantage.
For instance, AI-driven chatbots and virtual assistants at Microsoft and Apple are enhancing user experiences by providing efficient 24/7 customer engagement. In finance, AI algorithms are revolutionizing investment strategies for hedge funds and banks, while robo-advisors like Wealthfront and Betterment make financial advice accessible to a broader audience. Blackline recently announced its “Intercompany Predictive Guidance,” amplifying AI’s role in error prediction and prevention in financial transactions.
AI is also innovating healthcare, offering the potential to save lives and reduce costs. Researchers at the National University of Singapore have developed AI systems that can create images based on brain scans, deepening our understanding of the human brain. Additionally, AI-powered diagnostic tools are aiding doctors in making quicker and more precise diagnoses.
AI should be viewed as a precision tool, a capability that serves a distinct purpose in your business strategy, rather than a mere checkbox on your technology checklist. It’s about transitioning out of pilot purgatory and seamlessly integrating AI into your organizational DNA. Digital natives don’t just embrace technology; they infuse it into every nook and cranny of their operations, extending far beyond their products and IT.
Steps for Embracing AI on the Board
The Covid pandemic accelerated the rate of digital transformation and AI adoption, and this momentum will continue into the 2020s, according to a Harvard Business Review article, which reports that 86% of companies say that AI is becoming a “mainstream technology” at their organization. To keep pace, boards must recruit directors with a deep understanding of AI and its capabilities, considering these steps:
- Continuous Learning: Prioritize continuous board learning and education on AI and its applications, risks, and dependencies.
- Prioritize Technology: Elevate technology discussions by establishing dedicated technology or risk committees and appointing technology-savvy advisors.
- Tech-Savvy Directors: Ensure the board includes at least a few AI or emerging technology savvy directors who have recently demonstrated the adoption and application of this in their careers. Given the rapid pace of technological advancement, their expertise is invaluable.
- Cultivate a Culture of Experimentation: Foster a board culture that embraces a mindset where there is no failure, only opportunities for continuous learning and improvement. Accept that change is the new norm.
- Talent Strategy: Promote talent strategies that support innovation and attracting and retaining AI experts—critical assets in the AI-driven world.
Adding AI and emerging technology expertise to the board brings a multitude of benefits. These directors act as change agents, possess the functional knowledge to differentiate AI marketing from reality, and are better equipped to identify threats and opportunities. They can assess critical issues related to the company’s AI strategy and evaluate strategic collaborations with tech partners.
Overcoming Board Resistance and Challenges
The emergence of Artificial Intelligence (AI) as a transformative force cannot be overstated. Yet, despite its potential for innovation, boards often grapple with common challenges and internal resistance when it comes to AI integration. It’s essential to understand these concerns and employ effective strategies to overcome them.
Boards often question the initial investment in AI. Organizations should develop a clear business case for AI implementation, outlining the expected costs and projected ROI while emphasizing the long-term benefits. Consider starting with smaller AI pilot projects to demonstrate tangible results and build confidence.
Perceived complexity in implementing and managing AI solutions can also deter boards from adoption. To overcome this, choose user-friendly AI solutions that offer robust support and training, and start with simpler AI applications before scaling up to more complex ones.
Another common obstacle arises from concerns that AI will disrupt traditional industries. It’s crucial for boards to recognize that industry transformation is inevitable—but by gaining a deeper understanding of AI, the organization can proactively respond to this disruption and emerge stronger.
Data privacy and security are also concerns in the era of AI. Boards may hesitate due to worries about data breaches, privacy violations, and ethical dilemmas associated with AI. Addressing this requires establishing robust data protection measures and ethical guidelines for AI use, and demonstrating how AI can enhance cybersecurity and ensure compliance with data privacy regulations.
Overcoming board resistance to AI adoption requires a multifaceted approach that includes education, clear communication, strategic planning, and addressing uncertainties. By systematically tackling these obstacles, organizations can enable their boards to make informed decisions and embrace AI as a transformative force for their businesses.
Moving Forward with AI-Driven Disruption
In today’s business landscape, AI is not just a technological tool but a strategic imperative that will define the successful organizations of tomorrow—adaptation is key to staying competitive and relevant. AI’s potential to revolutionize operations, enhance decision-making, and create unparalleled value for stakeholders demands attention and action.
Corporate directors have an important role in steering through challenges and driving the integration of AI. As businesses continue to navigate the AI revolution, we must empower boards with the knowledge and motivation to leverage AI for success, encouraging them to stay informed and responsive in the face of ongoing disruption.
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