AI governance as a competitive advantage

Discover how the White House's AI Action Plan offers companies a chance to build tailored governance frameworks for competitive edge.

In brief

• The White House's AI Action Plan establishes voluntary frameworks, allowing companies to develop tailored governances that address sector-specific challenges.Organizations that establish sector-specific gvernance can foster innovation, enhance competitive advantage and lead standard development in their industries.
• Effective governance is a strategic asset, enabling companies to thrive in an uncertain economic landscape while adapting to global regulatory variations.

How the AI Action Plan creates opportunities for sector-specific governance

In an era where more than one-third of CEOs expect geopolitical disruption and the shifting economic environment to be among the top disruptive forces in the next 12 months, the White House’s new America’s AI Action Plan represents a notable shift in federal policy. The plan’s approach toward voluntary frameworks reflect an understanding of AI’s diverse applications across industries. Given the considerable uncertainty in the current environment, uniform federal regulations may not sufficiently address the  varied challenges different sectors face.

Exploring the boundary conditions will make the previous statement very evident. To support this analysis, consider a thought exercise that assumes comprehensive federal regulatory frameworks were implemented for AI. For companies that carry significant inherent risk (healthcare, defense, banking), there could be scenarios where companies operate in ways that comply with regulatory frameworks but pass costs along to third parties. This regulatory exploitation has surfaced many times in the past; the subprime mortgage securitization of the 2000s that led to the housing crisis serves as an example. In this case, the regulation did not provide enough coverage.

The other boundary presents a scenario where overly stringent frameworks prevent companies from capitalizing on opportunities in the global marketplace, leaving them at a competitive disadvantage The strategic opportunity lies in the space that deregulation creates for building tailored governance frameworks that address organization-specific challenges while enabling innovation.

What emerges is not a governance vacuum but a governance opportunity. Companies that move quickly to establish sector-aligned frameworks may set the standards others must follow, turning the absence of federal mandates into opportunities in an increasingly fragmented global landscape.

The global arbitrage: turning fragmentation into opportunity

As legislators worldwide develop distinctly different approaches to AI regulation, American companies with sector-specific governance capabilities gain unique advantages. Rather than being constrained by the lowest common denominator of global regulations, they can build modular frameworks with agility to adapt to various jurisdictions while maintaining operational efficiency. A more relaxed regulatory environment allows American companies the opportunity to decide which markets they operate in rather than meeting multiple strict regulations.

Therefore, companies with a sector-aligned governance can operate globally, meeting varied requirements through flexible frameworks rather than rigid compliance structures.

Innovation acceleration through targeted governance

The challenge of balancing  of choosing between innovation and governance dissolves when governance becomes sector-specific rather than federally mandated. Companies can build governance frameworks to address the sector-specific risks of AI technologies.

This targeted approach to governance accelerates deployment. When governance frameworks align with actual operational risks, companies can move faster with greater confidence. They understand their specific risk profiles and build mitigation strategies accordingly.

The geopolitical context reinforces this advantage. In an environment of heightened uncertainty, companies benefit from adaptive governance frameworks that can evolve with changing conditions. Sector-specific approaches provide this flexibility.

Five actions companies should consider now

The current federal approach to AI governance creates opportunities for companies to establish sector-leading governance frameworks. Those that move decisively may shape standards rather than follow them:

1. Build sector-specific governance frameworks

Collaborate with industry peers to develop governance standards that address operational risks in your sector. These frameworks should be sophisticated enough to manage complex risks and flexible enough to enable innovation. Focus on creating competitive advantage through governance excellence rather than minimum compliance.

2. Lead standard development in your sector

With federal standards absent by design, industry leaders must fill the gap with frameworks that work. Engage with sector associations, key customers and global stakeholders to develop standards that become the de facto requirements. Companies leading this process may l shape market access for years to come.

3. Prepare for global governance leadership

Build capabilities to not just meet but shape global standards. With strong sector-specific frameworks, American companies may lead international standard-setting rather than merely comply with requirements set elsewhere. This positions governance as a tool for market expansion rather than limitation.

4. Invest in adaptive governance infrastructure

Allocate resources to build resilient governance capabilities that can evolve with your AI applications. This includes not just policies and procedures but the organizational capabilities to implement them effectively. Consider targeting at least 5% of AI investment toward governance infrastructure that enhances deployment capabilities.

5. Create innovation-enabling risk frameworks

Develop technology-enabled risk management approaches that accelerate rather than impede AI deployment. This means understanding your specific risk profile and building targeted mitigation strategies rather than broad defensive measures. Consider making governance a tool for confident innovation rather than cautious compliance.

The strategic imperative: governance as a competitive capability

The White House AI Action Plan’s represents a notable shift in federal policy that may promote the development of sector-specific governance frameworks that drive real competitive advantage. By maintaining voluntary rather than mandatory broad-stroke regulations, this approach enables companies to develop governance frameworks tailored to their specific needs and challenges.

As global economic growth faces headwinds amid mounting uncertainty, companies that build sophisticated governance capabilities may thrive while others struggle with either no governance or ineffective compliance frameworks. Success may come to those who seize the opportunities to build effective governance for their organization.

The current federal approach to AI regulations should be be viewed as a not a void but rather as an opportunity for development and guidance. Companies that develop compelling governance frameworks may find themselves not constrained but enabled, not followers but leaders, not compliant but competitive. In the new AI economy, the question is not whether to govern AI, but whether your governance framework will set the standard or follow someone else’s. The choice and the opportunity—exists for organizations ready to act.