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6 hard truths CEOs must confront in the generative AI era

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The rise of generative AI is a make-or-break moment for CEOs. All eyes are on them and the decisions they make now to steer their organizations into the future.

There is an exciting canvas of opportunity ahead with generative AI: improving productivity across virtually every enterprise function, delivering exciting new kinds of customer experiences, and powering the development of new digital products and services—all underpinned by transformed technology delivery.

To turn these opportunities into reality, IBM’s recent AI Academy episode identifies five key pillars that must be in place.

  • Strategy: Define a clear generative AI strategy, identifying priority use cases that tie to tangible business value and ROI.
  • AI control center: When scaling AI, you’ll have lots of technologies and AI models running in different places. An AI control center can be the layer that connects and wraps around multiple models, providing AI governance and secure access to your proprietary data.
  • Data: Unlock the full potential of your data, bringing the treasure trove of your proprietary data together with the right models so you can tap into new sources of value.
  • Operating Model: Rethink your entire transformation operating model to help your organization move quickly from idea to minimum viable product (MVP) to a scaled solution, with a focus on delivering seamless human experiences.
  • People: Think beyond just making your people more efficient. You need to reimagine how work gets done and create new skills, roles and careers to drive the AI-fueled organization of the future.

One thing is abundantly clear: CEOs can’t run tomorrow’s business with today’s mindset. Generative AI is more than a tool for incremental improvements. It will change business itself—if leaders come to grips with some hard truths.

The new IBM Institute for Business Value 2024 CEO study has identified six hard truths CEOs need to face head-on in order to thrive in this new era of business and technology.

6 hard truths CEOs must face: How to leap forward with courage and conviction in the generative AI era

Hard truth #1: Your team isn’t as strong as you think it is

The rise of generative AI has ignited a vigorous debate about its impact on the workforce. While some argue it will create new jobs, others warn it will eliminate them. The reality is that it will do both. Consider this: a small percentage of jobs may be newly created, a small percentage may disappear; what about the large percentage in the middle that will be transformed?

As CEOs move to act fast on generative AI, they understand that this technology will redefine jobs and tasks across every level. Already, 51% of CEOs say they are currently hiring for generative AI-related roles that didn’t exist last year. However, despite this rapid pace of change, only 44% say they have assessed the impact of generative AI on their workforce.

Leaders need to consider the future and ask what routine and mundane skills will AI assistants cover, and what skills will be most important for people? This will highlight the importance of innately human skills like creativity, design, ethics, critical thinking, communications and the ability to ask the right questions.

It’s on leaders to empower their people to leverage generative AI to reinvent the way they work. That means looking for the people doing tomorrow’s jobs today, rewarding thoughtful risk-taking and equipping employees with the resources and training they need to explore generative AI confidently and responsibly.

Remember, generative AI won’t replace people, but people who use generative AI will replace people who don’t.

Hard truth #2: The customer isn’t always right

“If I had asked people what they wanted, they would have said faster horses.”

The famous quote often attributed to Henry Ford comes to mind when considering the potential of generative AI in customer experience. Envisioning a better solution is one thing, but conceptualizing a completely new approach to a problem is a different story. Many CEOs are already embracing this mindset; they ranked product and service innovation as their highest priority in our 2024 survey, up from sixth place last year.

Truly innovative experiences build on customer feedback to give people what they want before they even know they want it. But that convenience is only valuable when it’s built on a foundation of trust.

Consider wearable tech. Apps powered by generative AI can capture data about users’ exercise habits, sleep patterns, diet and biometrics, and summarize the results. But first, users need to opt in to have their data collected and analyzed. Clearly explaining how generative AI will protect and process customer data can foster engagement, loyalty and trust as customers get more comfortable with generative AI.

With trust and responsible AI principles as a backbone, generative AI can revolutionize how companies connect with customers, providing truly tailored experiences that not only meet, but exceed expectations.

Hard truth #3: Tech short-cuts are a dead end

As CEOs adopt generative AI in their enterprises, they’re faced with a challenge: pursue short-term gains or invest in long-term success. In fact, two in three CEOs say they’re meeting short-term targets by reallocating resources from longer-term efforts.

But technology short-cuts are a dead end. CEOs must take a step back, assess their technology infrastructure and decide where it is structurally sound, where they need to shore it up, and where they need to start over. Generative AI experience layers can function as a band-aid on top, shielding users from the complexity and delivering superior experiences for customers and employees. However, they still need to do the hard work to fix what’s underneath.

Hard truth #4: C-suite sparring partners make the best leaders 

Many leaders today feel intense pressure to “do something” with generative AI. Across the C-suite, different officers are jockeying for leadership and control, and decision-making rights are not always clear.

Even so, disagreement can be productive. It’s the full picture that emerges from hearing each leader’s perspective that shows CEOs which direction the organization should take.

To ensure that conflict increases creativity, leaders should set ground rules and build the right kind of constructive tension. In particular, CEOs need to ensure their finance and tech functions have the right collaborative dynamic; nearly two-thirds of CEOs say success is directly tied to the quality of collaboration between finance and technology.

Hard truth #5: Sentimentality is a weakness when expertise is in short supply

It’s tempting to cling to what’s comfortable and familiar amid such rapid change. Yet successful business partnerships require more than just history, trust and shared values; they demand a willingness to adapt, innovate and evolve.

To stay ahead of the curve, enterprises must assess their ecosystem partnerships with a critical eye. This means clearly defining what they need from their partnerships and asking a tough, but necessary, question: are their current partners accelerating transformation, or holding them back?

No one can be the best at everything, but by teaming up with the right partner, organizations can leverage each other’s strengths to drive growth and build resilience.

Hard truth #6: People hate progress

Technology is only a tool, and its power lies in the hands of its users. If people choose to harness generative AI’s potential, businesses can expect rapid transformation. But if they don’t, efforts will stall. In fact, 64% of CEOs agree that success with generative AI hinges more on people’s adoption than the technology itself.

Yet, as things stand, a disconnect persists. Many employees see generative AI as something that’s happening to them, not as a tool that works for them. CEOs must hyper-focus on their workforce to cultivate a culture where people feel like they’re part of the solution, especially when so much of the change feels like it’s coming from the top down. Imagine a future where every employee is a creator, involved in reinventing their roles and writing the story of the organization’s future.

The future of business belongs to those who dare to reimagine, to disrupt and to drive transformation with courage and conviction. The six hard truths outlined are a call to action for CEOs to confront the realities of generative AI and to seize its potential to revolutionize their organization. It’s time to let go of “what has always worked” and take a leap of faith toward a new technology, a new business model and a new era of innovation.

IBM is a leading global hybrid cloud and AI, and business services provider, helping clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently, and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM's legendary commitment to trust, transparency, responsibility, inclusivity, and service.

For more information, visit: www.ibm.com.

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