With so much touted potential, GenAI has so far given business leaders a run for their money—with, it seems, little result. In July, as part of our Director Confidence Index initiative in partnership with Diligent Institute, Corporate Board Member surveyed nearly 100 board members about how their respective companies are using the technology, where they see potential and who should run the strategy. Here are some takeaways from that research:
UNLOCKING AI’S VALUE
Across the board, the CEOs, CHROs, CFOs and, most recently, board members we’ve surveyed generally report that their companies have yet to derive value from GenAI. Among directors, about a third say their company has managed to unlock some value from the technology when it comes to data analysis and reporting capabilities. The numbers dwindle from there.
“I haven’t seen or heard of many companies that I would describe as really far along with GenAI,” said Lisa Nelson, who serves on several boards, including Astra, Destiny, Brooks Running and Spark New Zealand, and is a strategic advisor to a variety of tech companies. “There are certainly some companies further along than others, but I would still characterize it as very much early days.”
One hurdle is that GenAI isn’t an out-of-the-box solution. “Companies are realizing that it takes a long time to figure out,” said Nelson. “There’s this huge promise there, but we’re not really seeing the practical application of it yet. Certainly not enough examples where people are seeing huge efficiency gains or cost savings to warrant saying, ‘Hey, let me take my foot off the gas on these other things that we’ve been working on.’”
WHERE’S THE POTENTIAL?
Drilling down into where directors expect the technology will offer the greatest potential for their companies, “enhancing products/services” and “supporting marketing/communications” tied for first place, with three-quarters of board members seeing great opportunities for the future. This view was prevalent in service-intensive sectors such as financials, where 89 percent of directors report expecting to derive value from GenAI in these two areas.
Directors in sectors like healthcare, on the other hand, were more likely to cite “supporting new product development” (87 percent) than peers, even those in consumer-driven sectors such as consumer discretionary, where only 60 percent of directors said they expect the technology to help drive innovation. Instead, consumer discretionary companies are focused more on the workforce productivity aspect of the tech—an area that many experts have posited as a gold mine for GenAI. “AI offers potential in all areas of business,” noted one board member. “The issue is how to most effectively utilize its potential.”
For Joyce Li, the CEO and chief AI strategist at Averanda Partners and an advisory board member for various startups, extracting value from GenAI right now comes down to not the tools companies use but their organizational structure and data readiness. “A lot of tools are capable, but they’re so general-purpose right now that they’re not tailored to the customer service in your industry or your due diligence work or your internal business intelligence work,” she said. “So, if the expectation is, ‘Okay, the tools are available, let’s get some vendors and implement it, and let’s see how much productivity improvement we can measure,’ you’re going to be disappointed.”
WHO DRIVES STRATEGY?
While the head of technology (38 percent) bears responsibilty for driving GenAI strategy at most companies whose directors we surveyed, 32 percent say everyone in the organization is responsible for uncovering GenAI areas of value and potential. A significant number of companies (15 percent) have formed a team to focus on driving GenAI strategy.
“As companies continue down their AI journeys, it’s vital that boards and C-Suite leaders know how to oversee this technology, its applications and possible risks,” said Dottie Schindlinger, executive director of the Diligent Institute, our partner in this research.
Ideally, boardroom conversations around GenAI start with a broad conversation about goals and get more granular over time, said Sonita Lontoh, an independent board director at Sunrun and TrueBlue and an advisor at VC company Sway Ventures. “Boards and companies need to define their organization’s GenAI ambition, including how much risk appetite they have, the amount of resources they’re willing to invest and how integral GenAI is to their business strategy,” she said. “In order to do that, boards and management need to cut through the complexity and hype and examine the potential AI risks and opportunities for their particular business through several lenses, including understanding the difference between ‘Everyday AI’ and ‘Game-Changing AI.’”
Frequent reports are also key, said Nelson. “AI absolutely needs to be on every agenda at every board meeting and then in every boardroom, irrespective of the company’s industry or stage of growth,” she said, noting that her boards examine AI strategy through three questions:
1. Is the company resourcing this?
2. Has the company put the right talent on it?
3. Do we as a board understand management’s plan, and how does that align with the longer-term strategy?
Some directors view designating an individual in charge of AI strategy as an imperative. “It can’t be an afterthought or, ‘Hey, let’s find somebody who can look at this,’” said Nelson. “It’s really thinking about who is the best talent with, yes, a technical mindset, but also a really strategic mindset, who can be an influencer within the organization.”
“This individual needs to ensure that the company’s AI strategy actually supports and is aligned with the overall business strategy for long-term value creation, contributing to real business outcomes,” Lontoh added. “This person also needs to collaborate with a cross-functional team consisting of not just the technology team but also the business leaders and leaders from legal, finance, compliance and audit to ensure that the company has a set of guiding principles and a code of conduct to ensure that their AI approaches are ethical and responsible.”
Li cautions boards and management teams to seek individuals with the ability to think strategically in addition to AI experience. “As you check out most of the appointments in that space, you’ll unfortunately realize that many default to someone with 10 years of AI experience, someone with a lot of the technology background, while, in fact, the better [candidate] would be someone with a technology background but also with the business acumen and change management mindset because people resist,” she said.
“People who were AI experts six months ago may not be AI experts anymore today because it’s evolving so quickly,” added Nelson. “That pace of change is so rapid, unlike anything we’ve ever seen. And it may be such early days that the thinking is, ‘Hey, we’re just going to monitor, we’re going to figure it out because it’s a really long-term thing.’ But one thing you can’t do—you can’t afford to bury your head in the sand.”
