Artificial intelligence can help boards make better decisions, but without the right data, it can’t be done,
Artifical Intelligence (AI) is coming, bringing with it a wave of disruption and opportunity for businesses. And while automation continues to fill headlines, that change won't just be reserved to the factory floor or the back office. It'll take place right up to the level of the boardroom too.
Many boards are already acting on information and even recommendations from AI systems, even if perhaps they aren’t aware that they are. Already, AI systems are producing data and opinions on markets, doing risk analysis, combatting fraud, looking at compliance – the emerging field of ‘Regtech’ – and producing insights.
Augmenting the board with AI isn’t a threat. According to KPMG’s 2017 Global CEO Survey, 65 percent of CEOs see disruption as an opportunity for their business. Cognitive systems can improve quality and efficiency in everything from everyday processes to strategic decisions.
Take next year’s budget: if you ask your own sales force to make predictions, they are likely to be over-optimistic. With an AI system, a sales director can look at economic data from target markets, their own spend, market position, and other factors, and generate a more objective prediction.
Automation around due diligence and regulation will be among the first systems to be adopted widely, for example in acquisitions; several startups are working in this area already. In HR, we are already starting to see companies adopting smart systems to analyse performance, staff and customer satisfaction, and company culture, to give a more holistic picture of an organisation.
Despite headline-grabbing efforts by one or two companies, we’re yet to see the meaningful adoption of an ‘AI’ as a board member just yet. That may happen, but in the near term it’s likely that cognitive systems will increasingly augment the C-suite’s decisions in an ongoing trend that will continue to affect the market. Preparing for this new future will be the differentiator between the winners and losers in the coming cognitive disruption.
There are a number of steps businesses can start taking now to prepare. As ever with AI, the most fundamental issue is data. Almost all large organisations are undergoing master projects. The problem, though, is this: you get your data together for a brief period of time – and then the governance around it slips away.
At KPMG we have analysed what data it is that will differentiate us in five years’ time. We have looked at the systems we want to be building and asked: “What data do we need to collect? "How do we collect it in a way that is unbiased?” It’s easy to have a series of goals, but not think about the training data needed to get there. Prioritise the data that matters: that which is crucial to your business advantage, and the data you are going to need to train new cognitive systems. Start collecting that today.
It took 30 years from the invention of the digital camera to the end of Kodak. Today, that same process could take just five years. The number of Kodaks – industry leaders totally disrupted by innovative competitors and resistance to technological change – in the next 10 years is going to be vast.
We have to ask: the traditional management were good at pulling the operational levers to get us through the last 10 years – but will they get us through the next decade? Or will their world view, based on what made for a successful business in the last decade, become the single biggest internal problem for companies that need to radically reinvent themselves?
Perhaps it’s time for business leaders to look to cognitive technologies to help them make decisions that are led more by cold hard facts, not gut feelings.
Companies taking the lead with AI are already grappling with this question. 68 percent of CEOs have taken steps to disrupt their role in 2017; 25 percent of organisations now employ a Chief Digital Officer. In the future, we will need different roles in the C-suite.
When CEOs have a virtual assistant with access to all of the company’s performance data, a lot of these roles will no longer exist – or will need to change.
And the enterprise will need to be led by two groups: one focused on everyday management; and one focused on transformation. Because in this new world, you’re going to end up having to do both. The rate of change will only continue to increase.
That’s a challenge for boards, but also an exciting opportunity. DeepMind's, narrow AI system, AlphaGo, which since early 2016 has beaten the world’s best Go players, devised new strategies to win that humans hadn’t considered. When paired cooperatively with AlphaGo, human grandmasters raised their own game to higher levels than ever before.
There’s no reason that won’t happen with your business – provided you’re thinking a few moves ahead.
To read more in-depth insights into artificial intelligence and its advantages, download our full report: Advantage AI.