With AI at the wheel, will your board steer the course?

Play video
13 minute read 12 Dec 2018
Authors

Randall Miller

EY Global Advanced Manufacturing & Mobility Leader

Passionate about manufacturing, mobility and disruption. Champion for women and diversity & inclusiveness in the Advanced Manufacturing & Mobility industries.

Sharon Sutherland

EY Global Center for Board Matters Leader and Area Program Management Leader

Global mindset. Power through diversity. Art lover. Intellectually curious. Traveler. Legacy matters. Passionate about learning initiatives.

Contributors
13 minute read 12 Dec 2018

Show resources

The automotive sector is undergoing a huge transformation, with artificial intelligence (AI) driving it. It’s no longer AI hype — it’s AI happening, fast.

When we think and talk about the impact of AI on the automotive market, most often it’s in the context of the self-driving vehicle. It’s not surprising these high-tech triumphs have captured our imaginations so completely, given only a decade or two ago the idea of a vehicle controlled and navigated entirely by its own computers was the stuff of science fiction. 

The factors that influence purchasing decisions in today’s ‘drive experience’ world – brand perception, the quality of the drive, total cost of ownership – will be replaced in the ‘ride experience’ future by completely new factors such as availability, ease of use, reliability and pricing.
John Simlett
EY Global Future of Mobility Leader

From a board perspective most are already well aware of the importance of AI for the autonomous vehicle. With AI at the wheel, customers of tomorrow will be won not by the best “drive experience” but by the best “ride experience,” and organizations will succeed or fail based on their ability to establish consumer-for-life relationships. 

“The factors that influence purchasing decisions in today’s ‘drive experience’ world — brand perception, the quality of the drive, total cost of ownership — will be replaced in the ‘ride experience’ future by completely new factors such as availability, ease of use, reliability and pricing,” said John Simlett, EY Global Future of Mobility Leader.

The seasoned board director will likely appreciate that this seismic shift in the competitive landscape is driven, quite literally, by AI. In recent years, the boards of established automotive players have not only supported multibillion dollar startup acquisitions and AI-based R&D investments, but have equally backed initiatives to expand their presence in Silicon Valley thus boosting their access to AI-centric talent.

However, the influence of AI on the automotive industry goes well beyond the self-driving car. While most eye-catching – there is a real danger that the fascination with this aspect of the technology could lead to missing more significant opportunities. As such, it’s vital for the future of the industry that today’s boardroom conversations cover the broader potential impacts of AI and not just its most visible on-road applications. The challenge: many automotive boards and management teams don’t understand AI well enough to appreciate its impacts and the pace at which it’s evolving.

Customers are starting to expect AI whether they understand it or not, so if you’re not meeting that new expectation with customers, your experience and the service you’re providing will feel increasingly dated and uncompetitive.
Keith Strier
EY Global and Americas Advisory Leader for AI

It’s risk, but not as we know it

In this context, boards are not the only institutions struggling to keep up with the pace of AI. Regulators are being left behind too as new technologies outpace their ability to oversee them.  While the rules they set – around data privacy and security, for example – must be complied with, regulators don’t offer boards much support when it comes to guiding the risk management agenda.

Best practice boards have a bias to action, and they know they need to move faster and be bolder on AI. Yet, not only are most board directors constrained by a knowledge gap when it comes to exploiting the benefits of AI, they are also effectively on their own governing the associated risks — risks which are both novel and substantial across every industry.

Evidence suggests that public trust in autonomous, intelligent and robotic systems is uncertain and easily damaged. Despite their transformative power, these systems are not fail-safe — they can malfunction, be corrupted or contain algorithmic human bias with potentially fatal consequences. It is up to the board therefore to make sure that trust is earned rather than destroyed.

“It may be new territory, but being bold and embracing innovations such as AI is critical,” said Sharon Sutherland, EY Global Center for Board Matters Leader and EY Global Markets Strategy and Operations Leader. “The role of the board is to help provide perspective, prevent negligence and ensure organizational longevity. Advocacy for AI is one of the key components to realize this.”

A new framework for sustaining trust in AI

To achieve this in a way that is authentic and long lasting, boards need to move beyond just managing risk in the age of AI, to sustaining trust. This mindset shift creates a new set of organizational principles. Trust should be thought of in a framework, which is applied not only to organizational systems but to all processes impacted by AI. When thinking about trust in a systems framework there are many dimensions: ethics, responsibility, accountability, transparency and ultimately the explain-ability of those underlying systems. Without taking a holistic approach, it’s very difficult to sustain trust over time.

“The potential of AI to transform our world is tremendous, but the risks are significant, complex and fast-evolving,” said Nicola Morini Bianzino, EY Global Chief Client Technology Officer. “Those who embed the principles of trust in AI from the start are better positioned to reap AI’s greatest rewards.”

With trust embedded, organizations can then start to fully realize the potential opportunities that AI will bring. These wider conversations are starting to happen. Boards are beginning to talk about the power of AI to make sense of the huge – and growing – volumes of data their businesses now generate. They’re looking into how AI can help achieve efficiencies in manufacturing and supply chains, automate routine back-office tasks, improve decision making and deliver a more personalized retail experience for customers.

“Customers are starting to expect AI whether they understand it or not, so if you’re not meeting that new expectation with customers, your experience and the service you’re providing will feel increasingly dated and uncompetitive,” said Keith Strier, EY Global and EY Americas Advisory Leader for AI.

The potential of AI to transform our world is tremendous, but the risks are significant, complex and fast-evolving. Those who embed the principles of trust in AI from the start are better positioned to reap AI’s greatest rewards.
Nicola Morini Bianzino
EY Global Chief Client Technology Officer

Asking the right questions

Board members don’t have to be experts in AI, but they do need enough knowledge and understanding to be able to ask the right questions about it. Questions around its impact on the business model, the potential rewards and risks and who pays for them, and attracting the right kind of talent.

Questions for the board to consider

  1. Do you have a trusted advisor that helps inform your board around AI and its impacts on the organization?
  2. How do you challenge management to reimagine the way the organization delivers value to consumers by reflecting the shift to machine scale that AI offers?
  3. Does your organization have a talent strategy for recruiting and retaining people with the necessary skill-sets to manage and staff AI-related projects?
  4. How are you challenging management to respond strategically to both the opportunities AI presents and the risks associated with its technologies?

There’s no doubt that AI is fundamentally changing the strategic landscape of how organizations operate, thus presenting boards with an unprecedented series of challenges.

Closing the knowledge gap will be tough but acknowledging and addressing board composition is a critical step in the process. To unlock the full potential of AI, the experience and judgment of respected industry veterans needs to be augmented by others with a more creative and disruptive mindset. Boards need members that can cut across both the scale of the opportunities AI brings and the balancing act of the associated risks.

Summary

The automotive sector is experiencing transformation on a scale unmatched since the introduction of the moving assembly line a century ago, and artificial intelligence is driving this disruption. And it's happening fast.

About this article

Authors

Randall Miller

EY Global Advanced Manufacturing & Mobility Leader

Passionate about manufacturing, mobility and disruption. Champion for women and diversity & inclusiveness in the Advanced Manufacturing & Mobility industries.

Sharon Sutherland

EY Global Center for Board Matters Leader and Area Program Management Leader

Global mindset. Power through diversity. Art lover. Intellectually curious. Traveler. Legacy matters. Passionate about learning initiatives.

Contributors