The transformative power of artificial intelligence

Our collaboration with the FT and World Economic Forum explores how technological shifts are transforming industry, business and society.

Few concepts have the ability to generate perceptions of opportunity and threat in almost equal measure as artificial intelligence (AI).

Those who see it as enabling technology are busy working on how to apply it to tasks carried out by humans.

In the corporate world, many companies - such as British online grocer Ocado and Chinese e-commerce giant Alibaba - are already pioneering the application of AI to their businesses.

PwC estimates that global gross domestic product will be 14% higher in 2030 as a result of AI, specifically as a result of productivity gains from businesses automating processes and augmenting existing labour forces with AI technologies, as well as through increased consumer demand resulting from the availability of AI-enhanced products and services.

On the other hand, others question AI’s potentially adverse impacts on society, may even be in a state of denial about it, or have yet to get to grips with how it applies to their business. This may be due to a lack of understanding, a concern about the potential for job displacement, a perception that it may be risky to implement, or insufficient clarity on the benefits.

Yet there is a real opportunity to view AI as a revolutionary organisational tool, not merely as technology that can make tasks easier and processes more efficient.

“The real challenge with AI is how leaders need to rethink the organisational fabric of their business to make sure it’s applied at the right scale, beyond just solving a specific technical problem,” says David Lancefield, a partner at PwC’s Strategy&. “That’s how AI’s full benefits can be realised.”

Applied wisely, AI can increase the whole capability of an organisation, offering higher levels of precision, optimisation and understanding of the business. Business decisions right across the board can be improved, with less reliance on incomplete data and gut feel, leading to false assumptions about causality.

As PwC said in a 2018 report on the macro-economic impact of AI, leadership is needed to demonstrate that AI is not viewed solely as an array of disconnected technology projects.

As a first step, leaders should be able to articulate the purpose, benefits and implications of AI in their organisation as a coherent strategy. At present, too many organisations are full of seemingly random experiments. This requires an internal dialogue on the opportunities and problems AI can address (and the data required) as well as decisions on where AI should be used with - and without - the involvement of people.

To help businesses learn about the organisational possibilities inherent in AI, the World Economic Forum (WEF) has initiated a project titled Empowering AI Leadership. This involves the launch this month of a “toolkit” for company boards, providing a practical set of measures to empower directors in asking the right questions, understanding the key trade-offs and meeting the needs of diverse stakeholders.

Creating the right conditions for human and machine means leaders, in turn, creating the conditions to foster diversity of perspective from AI experts inside and outside an organisation. This is needed to encourage innovative solutions and responsible use, and ensuring that unchecked biases of people “feeding” the machine with a range of examples aren’t exacerbated.

Leaders should also try to address gaps in their organisation’s knowledge of AI, by encouraging a learning mindset and the use of AI online courses from tech companies and business schools.

“Explaining how AI works becomes an important capability for leaders as customers look for trust and reassurance in what is often perceived as a ‘black box’,” says Lancefield.

AI should also inspire the people by giving them new tools, ideas and insights - which may facilitate more “job-crafting”, distributed responsibility and changes to the design of organisational functions. Organisationally, leaders also have a responsibility to help support those whose roles change or become redundant, and manage the anxiety that comes with a transition to this new world.

Ultimately, leaders should as a result find themselves enjoying more space to think, reflect and observe. They will be able to focus on what they do best: grappling with longer-term considerations, radical ideas and important choices.

Says Lancefield: “Much will depend on the mindset of leaders, whether they are willing to take a leap of faith to ‘sell’ the potential power of AI in their organisation.”

Note: This content was produced by the advertising department of the Financial Times, in collaboration with Strategy&, part of the PwC network.