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If AI has the answers, are CEOs asking the right questions?

Authors

  • Nam Soon Liew

    EY Asean Regional Managing Partner; EY Singapore and Brunei Managing Partner

  • Ritin Mathur

    Partner, Consulting, Ernst & Young Advisory Pte. Ltd.

6 minute read 08 Apr 2024
Related topics
Consulting
AI
CEO agenda
Technology leader's agenda
Board governance and oversight

CEOs must guide the business in leveraging artificial intelligence strategically to realize greater value from the evolving technology.

In brief

  • Many companies only consider artificial intelligence (AI) from an efficiency improvement perspective rather than how it could transform business models.
  • CEOs need to spearhead the AI strategy with several key actions to effectively tap into the technology’s growth potential.
  • For example, embedding AI capabilities in the business and driving responsible, ethical AI governance are crucial. 

Artificial intelligence (AI) is rapidly reshaping the business landscape with wide-ranging impacts. Organizations know they need to act fast on generative AI (GenAI) to help keep their competitive edge. Yet the uncertainty surrounding this evolving transformative force means that many companies are still thinking incrementally about AI — in terms of how it could make existing processes more efficient rather than how it could transform business models and functions.

In many cases, the level of preparedness is holding back a bolder approach to AI. A discussion paper by the Economic Research Institute for ASEAN (Association of Southeast Asian Nations) and East Asia noted that significant disparities exist among ASEAN member states in their preparedness for AI.1 To narrow the AI readiness gap, intraregional cooperation will be essential to help reduce disparities and achieve a more equitable distribution of AI benefits across Southeast Asia. 

Regardless of local constraints, CEOs — as stewards of the long-term corporate strategy — have an important role in guiding their organizations to think more boldly about AI while expanding oversight for its responsible and ethical use when strategies are implemented.

CEOs have a crucial role in guiding their organizations to think more boldly about AI while increasing oversight for its responsible and ethical use. 

How EY can Help

Redefining business functions and capabilities with AI 

To challenge and steer their companies to be more visionary in using AI, CEOs need to understand and exercise oversight of its impact on the business model, operating model and related risks. There are several key areas where AI can redefine business functions and capabilities.

 

AI-generated products and services 

Highly personalized AI-generated products and services are expected to be one of the biggest areas of impact. For example, some asset managers are already contacting clients with personalized investment suggestions curated by AI.

AI-powered solutions enable notable cost reductions and enhanced operational effectiveness. Of greater significance is the capability of AI to provide tailored experiences that can lead to exceptional customer satisfaction.

 

Innovation 

New AI capabilities can be embedded within existing technologies or combined with them or help create new technologies altogether. CEOs should challenge the management to revisit the company’s innovation budget and program. Is there an informed strategic plan to leverage emerging technologies? How are investments in innovation tracked and reported to the management? Importantly, the management should be engaged in innovation discussions as part of the strategy-setting process.

 

Customer experience 

By utilizing the data processing capabilities of AI, companies can develop predictive models to anticipate market shifts, customer actions or sales trends and delve deeper into understanding customer preferences. By taking insights from analyses of customer interactions, purchasing history, social media activity and demographic information, offerings can be personalized in real time and offered proactively in anticipation of customers’ needs.

 

Optimized enterprise decision-making 

With access to real-time data and predictive analytics, GenAI will enable executives to make more accurate, data-driven decisions, allowing enterprises to adapt swiftly to dynamic market conditions. By harnessing advanced algorithms and machine learning techniques, GenAI can rapidly uncover hidden patterns and correlations within vast data sets, providing invaluable insights beyond the reach of traditional decision-making approaches.

How EY can Help

Act now to spearhead the AI strategy 

To effectively tap into the growth potential of AI and stay ahead of the innovation curve, CEOs should challenge the management to consider the following.

 

Embed AI capabilities in the business 

Organizations need a new business unit — an “AI control tower” to explore future scenarios and define and execute their AI strategy. Such a function should have the authority to allocate capital and command resources to collaborate across different areas of the business. Unit leaders need strong experience in heading up digital transformation. They should also be empowered to build a team with sufficient seniority, budgets and skills to drive change across the organization.

 

Build an ecosystem of AI alliances 

Creating a large language model is a substantial endeavor requiring collaboration with ecosystem partners — especially if existing platforms are to be incorporated effectively. Establishing strategic partnerships with complementary technology firms can facilitate the seamless integration of AI solutions into existing infrastructure, promoting scalability and interoperability. Likewise, forming partnerships with GenAI solution providers will be invaluable in addressing skill and technology shortages and restructuring business operations.

 

Be proactive in gaining human acceptance

As AI becomes more prevalent within the enterprise, various business functions may be reinvented based on the increasing use of AI and the changing roles of people. A workforce is more likely to feel positive about such changes when AI is used to augment or streamline repetitive tasks and elevate workers through upskilling and the preparation of employees for future roles. Addressing the discrepancy in employee support requires consistent communication emphasizing that AI will not replace humans but rather assist them by streamlining tasks and freeing up time for more meaningful work. Crucially, the workforce will need training in skills like data literacy to effectively reap the benefits of collaborating with AI.

Maintain responsible and ethical AI 

CEOs should consider setting up a new body to drive AI governance, such as an AI council or AI ethics committee. Such a body will be tasked with establishing ethical principles for the use of AI to guide policies and procedures, implementing and testing AI controls, and establishing new AI risk management practices.

While the regulatory landscape for AI is still evolving, any new use cases adopted by a company must at least comply with existing regulations around privacy and data residency. The management should also see to it that its teams are tracking the latest government regulations across markets in which the company operates, updating controls and policies accordingly, and asking potential ecosystem partners about their preparedness for such regulations.

As CEOs prime their organizations to take advantage of AI while addressing risks adequately, they should consider the following questions:

  1. How might AI disrupt our industry and how does the organization’s value proposition need to change to remain competitive?
  2. What use cases are relevant to the organization that could form the groundwork for a long-term AI vision and strategy?
  3. How can the company leverage ecosystem alliances to create AI-driven synergies that generate a better value proposition for users and customers?
  4. How will the organization equip and upskill its workforce and build enterprise-wide confidence in AI?
  5. Where are the biggest risks around ethics and responsible AI in the organization’s strategy?

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    Summary

    To help maintain a competitive edge, CEOs must actively lead their organizations in harnessing the potential of AI. This involves embedding AI capabilities in the business, building an ecosystem of AI alliances, being proactive in gaining human acceptance of the technology and driving responsible, ethical AI governance. 

    About this article

    Authors

    • Nam Soon Liew
      EY Asean Regional Managing Partner; EY Singapore and Brunei Managing Partner
    • Ritin Mathur
      Partner, Consulting, Ernst & Young Advisory Pte. Ltd.
    Related topics
    Consulting
    AI
    CEO agenda
    Technology leader's agenda
    Board governance and oversight

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.