Artificial intelligence (AI) is becoming more of a reality for businesses, and an evolving one at that. The technology is designed so that it is constantly changing, learning and adapting to its underlying data. This makes it a great tool to help businesses to stay ahead in the market. It also comes with a healthy dose of caution – there are challenges and risks that need to be appropriately dealt with.

In our recent instalment of ‘The Real Economy’, we found that 45% of middle market businesses are already using generative AI in at least one area of their businesses. Additionally, 37% of respondents said they were experimenting with the technology. Only 6% of businesses said they had no plans to use it in the future. That means that 94% of businesses are intending to use AI to put themselves ahead in the market – and those organisations must ensure they know how best to deploy it. The questions we must ask ourselves are – how will that 94% use it and what will it mean if we do not?

To answer these questions and to effectively and efficiently utilise AI, organisations need to have a systematic approach to really understand the context of the ‘why’. Critically, leaders, boards and NEDs need to look to the ‘future’ and consider what is going on in the ecosystem of their businesses that requires them to adapt to new technologies and ultimately become more future fit.

Why should NEDs care about AI?

NEDs have responsibilities to not only assist in driving strategic decision making, but in providing independent oversight and governance. This means that there are specific considerations for the NED community. They must challenge their boards and executive teams to be thinking specifically about what intelligence they would like from utilising new technologies (such as generative AI) that will help give the business advantage. And crucially to articulate the use cases and business problems they expect to solve and the success criteria against which they will be measured. They should encourage experimentation and innovation balanced with appropriate guardrails, acting now with controls and policies in place to mitigate against risks.

What are the key considerations?

• Legal, regulatory and compliance: Using unauthorised data or accidentally sharing sensitive client or personal data is a potential risk, particularly with publicly available generative AI. As it currently stands, without official regulation around the use of and deployment of artificial intelligence, it could be that organisations leave themselves vulnerable to data breaches or inadvertently using sensitive data.
• Reputational: Artificial intelligence can be convincingly wrong. Basing business decisions on incorrect intelligence outputs can leave an organisation very exposed. The output of AI is based on the underlying data. If the quality of the source data is questionable, unreliable or biased, the output will be more so.
• Internal competencies: We know that knowledge is built by testing and experimenting and getting familiar with new tools. However, doing so without guardrails or a strategy can be a big risk. A lack of direction or a too hasty approach to integrating artificial intelligence can be as risky (if not more so), than not engaging with it at all.

Where should you start?

• Create a strategy and keep it agile: AI needs to serve a purpose and that purpose should be aligned to your wider business objectives and strategy.
• Assess the data infrastructure: As mentioned above, any AI output needs to be based on reliable data sources.
• Resource: You can upskill your existing workforce (after all, this is an emerging area for most people), but make sure you’re doing so with the right skills and understanding of the bigger picture.
• Proactively manage risks and governance: Be aware of what can go wrong and put measures in place to mitigate the risks.
• Pick the right technology: There are a growing number of options available to businesses and picking the right tools to help achieve your business objectives will be the difference between securing competitive advantage and lagging behind.
• Identify and explore use cases: Be clear on how you want to use AI, its applications are pretty limitless, but they won’t all serve to help achieve your business goals.

Summary

AI is just one tool in the wider business transformation toolkit that organisations will need to embrace as the business landscape becomes more advanced, competitive, and digital. Boards and NEDs will need to look at the bigger picture, factoring in the direction of their organisation as well as their capability to adapt before throwing themselves in to just ‘using’ AI.

If you’d like to discuss AI, analytics, or business transformation, please contact Sarah or Joel for more information on how we can help.

If you missed this event, you can catch up on demand to our 'AI – can NEDs make use of it in their roles?' session.