Boards recognise the value of artificial intelligence (AI) but are concerned about their ability to match rapid technological advancements with the necessary levels of technical knowledge and understanding, according to a recent global report from Mazars and Board Agenda in association with INSEAD Corporate Governance Centre.
Despite high levels of interest in AI – 73% of survey respondents say they will implement AI in the next 12 months – business leaders fear they lack some of the relevant skills to make it happen. In Leadership in AI 2021: boards, barriers and new beginnings, legacy IT systems (cited by 37%), unclear business value (33%) and a ‘resistant’ company culture (31%) emerge as the top obstacles to adoption. The survey was carried out between September and November 2020 among 121 business leaders including CEOs, CFOs, board chairs, directors and company secretaries based in Australia, France, Germany, UK and the US.
That means the potential value of AI is threatened by ‘boardroom bottlenecks.’ Over half of respondents say their boards are not sufficiently skilled nor knowledgeable about technology and AI and their business implications. Just 26% of respondents say the board and senior management had assessed the skills and training required to lead AI into the future.
Lack of understanding means significant risk
“It is perhaps a symptom of rapid technological advancement that many boards are struggling to fully understand AI”, say Anish Venugopal, Head of data & automation, Mazars, UK and Asam Malik, Partner and Head of technology consulting & assurance, Mazars, UK. “There would appear to be a considerable knowledge gap at the top of organisations about its transformative capacity and application. The impact of AI on business will be considerable, so a lack of understanding on boards will not only cause constraints but also significant risk for organisations.”
One of those risks is ethical and cultural change: there is widespread interest in how organisations source and manage the data that feeds AI, with concerns over data bias and transparency. Some 76% of respondents agree ‘the use of AI in the firm will introduce significant ethical or cultural changes within the firm, which will need to be carefully managed.’ Hands-on experiences with AI, live demonstrations and clear communications are all necessary if an organisation wants to take full advantage of AI, advises the report.
Improving customer experiences
Chatbots and CRM systems powered by AI are increasingly common components of customer experience and unsurprisingly nearly half of respondents (49%) say they are applying or intending to apply AI to their customer service operations. This is followed by ‘operations’ (45%), ‘data management’ (42%) and ‘finance and accounting’ (37%). The benefits most commonly expected from AI are: ‘increased efficiencies of productivity’ (76%), ‘reduced costs’ (55%), ‘improved customer relationships’ (53%) and ‘revenue growth’ (53%).
Covid accelerating AI adoption
The Covid-19 pandemic has, according to the findings, led to a rise in AI adoption and innovation: more than half of respondents (54%) claim Covid-19 has accelerated adoption or plans for future artificial intelligence adoption. By turning data into effective actions and value, AI is increasingly viewed as a main ingredient in post-Covid recovery plans.
Job augmentation not replacement
While AI developments may be welcome, they are not necessarily straightforward. Theodoros Evgeniou, professor of technology management and decisions sciences, INSEAD, warns: “If they are to control their technology-driven destinies, organisations must develop new capabilities at all levels to enable data-driven decision making, AI-driven job augmentation (rather than replacement) and innovation, as well as new practices, processes and organisational structures.”
Venugopal and Malik add: “Organisations could be prone to expensive errors unless boardrooms and management can increase their knowledge and understanding to ensure that any AI adoption has clear return on investment and value to the on-going and future plans of the business. This is not an easy challenge for any organisation that wants to leap forward post-pandemic and build resilience and growth, meeting that challenge will determine their future.”
To read the full report from Mazars and Board Agenda in association with INSEAD Corporate Governance Centre, go here.
For more global insight on how businesses are implementing and investing in technology, download ‘Are you missing the tech train?’ here.