According to a recent survey, a majority of Fortune 500 CEOs see Artificial Intelligence (AI) as a big challenge[i]. Their feelings are spot on because smart technologies, including AI, are already disrupting markets, and rendering many competitive strategies and business models obsolete. Fortunately, emerging opportunities are staggering for those prepared to exploit them. AI and related technologies are projected to add $10-$15 trillion in GDP by 2030. So – Why are CEOs expressing concerns?
Business leaders are facing challenges in three critical areas: leadership, strategy, and talent acquisition and retention. Leadership is indispensable during disruptive periods and the last two decades witnessed repeated waves of disruptive technological innovations. In this context, executives increasingly see AI as driving the next wave of widespread disruptions. It’s reflected in Fortune’s survey results, which found that of responding CEOs:
74% judged leading their organizations through a period of rapid technological change as their number one challenge,
71% believed they were leading a technological company, and
81% considered artificial intelligence and machine learning “very important” or “extremely important” to their company’s future[ii].
These findings point to broad leadership challenges facing executive teams working to cope and exploit AI for competitive advantage and growth.
While leadership is crucial, companies working with disruptive, innovative technologies will need new roadmaps and purpose to guide their decision-making. It’s a key lesson learned from the Dot-Com boom and bust, when companies lacking effective strategies wasted critical time and investment dollars on uncoordinated, unproductive initiatives. The latest research from MIT and Columbia show that the best performing companies in the world are guided by competitive strategies that promote disciplined development, experimentation, testing and adoption of innovative technologies[iii].
Addressing the strategy challenge will require on-going attention and engagement from corporate leadership teams. Dr. Cynthia Montgomery, a Harvard Business School professor in the Entrepreneur, Owner, President (EOP) program points out that the only sustainable strategy is one that anticipates and responds to change. In this context, strategy is a non-stop responsibility that CEOs and their executive teams can’t outsource or expect to solve in old-fashion brainstorming sessions[iv].
Compounding the challenges of leadership and strategy is the need to acquire, develop and retain technical talent. The scarcity of trained, experienced engineers, programmers, mathematicians and scientists is creating “have and have nots” situations that can stifle competition and innovation. It’s affecting startups and communities developing centers of innovations because they frequently can’t find the technical, academic and intellectual talent to support their initiatives. For example, small and startup technology companies that once attracted top candidates are facing growing competition from large companies that offer AI experts up to $500K per year in salary and benefits[v].
Businesses also need executives and managers well versed in AI and smart technologies to lead their initiatives. These are critical roles given the high costs of developing AI applications and related smart systems, equipment and services. Delays, inadequate planning and poor execution can drain capital and trigger catastrophic talent flight. Capable management and leadership are indispensable to preventing costly missteps that can doom startups and weaken established companies. Unfortunately, executives and managers with relevant AI and smart technology experience are also in short supply.
Summary and implications
AI and related smart technologies are economic game changers. Their impacts will likely exceed those of the early Internet, which was hampered by obsolete, expensive telecommunications services. Modern digital infrastructures offer dramatically higher bandwidths, throughput, processing speeds and cloud storage capacity at relatively low costs. They are no longer barriers to emerging innovative technologies like artificial intelligence, Internet-of-Things and advanced automation.
Today’s barriers are primarily human: leadership, strategy, business models, talent and effective management. Their impacts are being magnified by the scarcity of technical talent, and experienced executives and managers. Academic, technical and executive training programs are gearing up to meet demands, but it will be years before talent pools expand to meet growing needs. In the meantime, many companies and centers of excellence will be struggling to attract and retain the best and brightest to their ranks.
References
[i] Alan Murray, Fortune 500 CEOs on Trump, the economy and artificial intelligence, Fortune, June 8, 2017 http://fortune.com/2017/06/08/fortune-500-companies-ceo-survey/
[ii] Alan Murray, Fortune 500 CEOs see AI as a big challenge, Fortune, June 8, 2017, http://fortune.com/2017/06/08/fortune-500-ceos-survey-ai/
[iii] Ozzie Paez, Competitive strategy, digital strategy and transformation, May 3, 2018, Ozzie Paez Research, https://www.ozziepaezresearch.com/single-post/2018/05/03/Competitive-strategy-digital-strategy-and-transformation
[iv] Cynthia Montgomery, The Strategist: be the leader your business needs, p. 132, 2012, Harper Business.
[v] Cade Metz, Tech giants are paying huge salaries for scarce AI talent, October 22, 2017, New York Times, https://www.nytimes.com/2017/10/22/technology/artificial-intelligence-experts-salaries.html