From buzzword to must-have: Why AI is now an imperative for business leaders

Yahoo

5 days ago

Artificial intelligence is no longer a futuristic buzzword − it's a strategic imperative. For today's C-suite executives, AI offers far more than just automation. It's a tool to unlock growth, spark innovation, and empower smarter decision-making − if deployed wisely.
'Most leaders at the moment are using AI to find productivity boosts, to save costs, to reduce headcount,' said Amy Webb, CEO of the Future Today Strategy Group, a New York consulting firm specializing in strategic foresight. 'But the real opportunity is top-line growth' − identifying the next waves of innovation and creativity, executing those ideas, and planning for the future more effectively.
To use AI strategically, leaders must first understand what kind they're dealing with.
There are two main types, said Tom Davenport, professor of IT and management at Babson College in Wellesley, Massachusetts: analytical AI, which makes predictions based on structured data, and generative AI, which creates content such as text, images or product ideas.
For companies in manufacturing or logistics, analytical AI can predict equipment failures or optimize pricing, he said. For those in media, law, or marketing, generative AI can drastically boost content creation.
For instance, Colgate-Palmolive uses generative AI to simulate customer reactions to new products, while Kroger's analytic AI predicts nightly inventory needs for every grocery store, said Davenport, co-author of 'All-in On AI: How Smart Companies Win Big with Artificial Intelligence.'
Despite AI's power, experts argue for always keeping humans in the loop.
Viewing AI just as a job killer is short-sighted, said Thomas Malone, Patrick J. McGovern professor of management at the MIT Sloan School of Management and founding director of the MIT Center for Collective Intelligence. He sees it as a collaborator, not a competitor.
Executives should be thinking about 'how can I use this technology (along with its generation of) new ideas about new kinds of products and services to create new jobs and make more profit?' said Malone, author of 'Superminds: The Surprising Power of People and Computers Thinking Together.'
Davenport calls for an augmentation mindset – deploying AI to empower employees, rather than to replace them. 'Most of these technologies are not powerful enough or accurate enough to use without some human intervention,' he said.
Embracing AI brings risks – but they're not the pop-culture notions that robots will take our jobs and murder us in our sleep, said Webb, author of 'The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity.'
One top risk is data decay – the way information can quickly become obsolete, undermining the effectivenes of AI that depends on it, she said.
Over-reliance on external partners is another danger.
'I see a lot of organizations, big and small, bringing in armies of consultants,' a short-term win, that sets up a long-term deficiency, Webb said. 'It creates a huge vulnerability, because that company won't have developed any skills (and remains) reliant on these consultants going forward.'
A third risk centers on policy and regulatory uncertainty, she said, meaning companies may have to constantly change gears as laws evolve.
AI should be rooted in business strategy, not just handed off to IT, experts say.
Embedding it throughout a company is more effective than trying to manage it from above, Malone said. Letting lots of employees experiment with AI, while offering support and training, may yield opportunities both big and small, and get more AI knowledge spread throughout a company.
'There's more risk of trying to steer it top down than trying to have a lot more flowers blooming,' he said.
With AI's rapid-fire evolution, leaders need to make sure they don't get boxed into just today's capabilities, Webb said. Rather, they should factor AI into strategic foresight – building scenarios for long-term, data-driven planning, rather than a narrow focus on the next few quarters or years.
'Decisions that are made on artificial intelligence today will have a reverberating effect for decades into the future, at a business level, at a societal level,' she said.
Leaders need to plunge into AI now without waiting for others to show the way, Davenport said. That means training people, developing good data and figuring out how AI fits into your business.
'Don't think you can be a fast follower in this area,' he said. 'The idea that you can catch up really quickly without having to make some of the early mistakes that your competitors do, is probably not going to be a good idea. It takes too long to get really good at it – so you should start now.'
AI is one case where the hype about transformation may be real.
'This technology has the potential to change business at least as much as the internet did, maybe quite a bit more,' Malone said.
This article originally appeared on USA TODAY: Not just a buzzword: Why business leaders are all in on AI