AI: Avoiding The Wrong Move

Guardrails for AI have been established. Millions of dollars have been invested. Some processes and functions have already been automated. But the question many are asking is, “Now what?”

If only most CEOs knew. According to many experts, and leaders themselves, they’re still trying to figure that out. Indeed, as this once-in-a-generation technology moves out of the gestation phase, CEOs are increasingly facing pressure to capitalize on—and not be sunk by—AI. “The risk of falling behind with AI is existential for many leaders,” says Alan Guarino, a vice chairman in the Board and CEO Services practice at Korn Ferry. To be sure, with overall growth at firms slowing and activists waiting to pounce on any misstep, the approach CEOs take to AI’s next stage of development is mission critical for both their firms and their careers.

Experts say boards should try to help. Historically, when massive technological disruption has confronted CEOs, they’ve either gone all-in or sat back and waited. When it comes to AI, however, experts say both approaches could prove disastrous. Some investors are already losing patience with the lack of return on the billions of dollars being poured into the technology, for instance, while others are pushing CEOs to use AI to cut costs and expand profit margins. “AI is more invasive compared to technologies like cloud computing or big data,” Guarino says. “Those are enablers, whereas AI is a replacement.”

Torrey Foster, a vice chairman in the Board and CEO Services practice and managing partner of the North American Consumer Markets practice at Korn Ferry, says that the financial, cultural, and talent implications of AI will make change “more gradual and sequential.” The challenge for boards will be guiding CEOs in moving fast—but not too fast. “It’s a topic at every board meeting,” says Foster. “How can we go fast, but still at a measured pace?”

If boards are going to help CEOs harness the power of AI, they need to get more comfortable with risk, says Anthony Goodman, a senior client partner and head of the Board Effectiveness practice at Korn Ferry. Goodman says boards need to look at the technology through a lens of opportunity instead. “The next stage of development is determining how AI will help with actual innovation, business strategy, and growth,” he says. “Boards aren’t asking CEOs those questions right now.”

What boards are doing is learning about AI in real time. In the past, they might have appointed a subject-matter expert to address the knowledge gap, because AI touches all the most important areas of oversight—capital allocation, strategy, risk, talent, culture, and others. Today, however, boards are leaning on advisory councils and outside resources to help them think through growth opportunities. “AI isn’t something that requires a single person’s perspective,” says Foster. “All board members need to understand it.”

Experts say boards can also help CEOs by encouraging experimentation, with a focus on learning, iterating, and ultimately scaling. Guarino advises measuring outcomes of AI initiatives and benchmarking them against peer companies and outside industry leaders. Boards should also align AI initiatives with the company’s strategic direction, corporate values, and purpose, so employees won’t be alienated or threatened. “AI is going to require constant adaptation on the part of employees, CEOs, and boards,” says Guarino. 

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