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How AI will reshape leadership practices in a post-COVID-19 global economy

By , Senior Director: Industries & Customer Advisory – EMEA at SAP
Africa , South Africa , 05 Jun 2020
Rudeon Snell, Senior Director: Industries & Customer Advisory – EMEA at SAP.
Rudeon Snell, Senior Director: Industries & Customer Advisory – EMEA at SAP.

Advances in AI are accelerating at an unprecedented pace. Today, business leaders are able to augment their decision-making and problem-solving capabilities through a myriad of capabilities powered by AI.

With a continued rise in the adoption of Industry 4.0 technologies such as Internet of Things (IOT), Analytics, Machine Learning and Big Data, organisations have access to many data sources across their entire ecosystem, which previously was not always available to them.

The tools to digitise analogue data sources and then mine and analyse them for insights, are becoming more powerful. Organisational leaders in both developing and developed economies now have access to world class AI-powered systems, that are able to significantly enhance data-driven decision making.

That means more leaders today can make decisions based on insights gained from a synthesis of company, customer and market data, instead of basing decisions solely on intuition or past experience in days gone by.

And this trend, powered by AI, is reshaping the very foundation of leadership practices in the most fundamental ways.

AI reshaping corporate leadership

A 2019 McKinsey survey found that the global use of AI in standard business processes jumped by 25% year-on-year. For the majority of executives whose companies have adopted AI, an increase in revenue was evident, with 44% saying AI has helped with cost reductions. And this rings true across multiple lines of business, from marketing and sales to customer support, finance, risk, HR and especially global supply chains.

The most telling insight, however, is just how important AI is to high-performing organisations. McKinsey data found that AI strategy aligns with the broader corporate strategy at 72% of high-performing companies, compared to only 29% of other companies.

Closer to our current crisis, Boston Consulting Group recently outlined why AI should form a core part of organisational strategy post-COVID-19, citing high-value areas for AI deployment that include adapting to changing consumption patterns, enabling efficient remote work, and creating some predictability in value chains to prevent redundancy.

However, it’s not just plug-and-play. C-suite executives will need to develop new skillsets to navigate the symbiosis with AI across their enterprises in order to achieve the business outcomes promised by AI.

Leadership competencies shift from hard to soft skills

One of the advantages of deploying AI in an organisation is its ability to automate, augment and improve human intelligence in areas where such an intervention makes business sense. Radical shifts in business will occur more frequently as AI moves to form part of teams or move directly into leadership functions. Leaders will need new skills in managing these new realities.

Just take for example Scandinavian tech firm Tieto, which became the first European company to appoint an AI bot called Alicia T to the leadership team of a new data-driven business unit. Or for example Hong Kong-based life sciences fund Deep Knowledge Ventures, who in 2014 appointed a computer algorithm to its board of directors, giving the program a vote on the start-ups to invest in.

Although the foundations of leadership are unlikely to change, AI is likely to change the measure of effectiveness of leadership and will certainly change what traits we seek in leaders in an AI-first world.

When predicting leadership effectiveness, personality traits such as curiosity, emotional stability, adaptivity and agility are now considered more important than IQ, which was traditionally considered a core tenet of leadership competence.

The so-called ‘hard’ leadership skills are especially prone to AI influence, for example skills related to synthesising large volumes of data and extrapolating insights and patterns from such data.

Hard skills related to accounting, finance, planning, and supply chain management are also ripe for automation. A well-tuned AI algorithm is simply faster in these aspects than human counterparts, and less prone to subconscious bias and basic human error.

Where AI can’t match human capabilities yet, is in the softer leadership qualities. Things like empathy, teamwork, communication, collaboration and creativity have so far proven resilient to AI’s influence as algorithms simply lack to the basic human qualities to make such skills effective.

In a recent Gallup study, good decision-making by corporate leaders was found to be related to qualities such as nuanced discernment, emotional pattern recognition, social cohesion, relationship building, critical thinking and creativity.

Guiding organisations through uncertainty

Businesses will face fundamental new leadership challenges in this new AI-enabled future. In industries with a high prevalence of automation, for example the manufacturing sector, workers will need help and guidance with transitioning to a new workplace reality.

Leaders in such industries will need to develop engaging new organisational narratives about the nature of work and career, the roles humans and machines play in integrated teams, and how to navigate the emotional ups and downs brought by a period of exponential change.

If this sounds familiar, it is because we are seeing much of this play out in the world around us already. The coronavirus pandemic has brought into stark relief the importance of softer leadership qualities, as the emotional toll of the disruption brought by the pandemic starts to affect workers.

Leaders across the world are also having to adapt to a post-COVID-19 world where traditional boundaries between home and work have all but disappeared. As the economic and social effects of the pandemic become clearer, leaders will have to fast-track the development of many of the skills they’ll need in our AI-powered future.

As teams remain cut off from corporate offices and face-to-face meetings, the very nature of collaboration and teamwork will be redefined.

Leaders must focus on reinforcing the uniquely human aspects of leadership while also driving AI adoption in areas where data-driven or contextual decisions are paramount.

AI is not a spent force. The technology continues to improve and will become more refined - and effective - over time. Humans will need to understand how to use AI as a tool to make their own jobs more effective.

Here, leaders play arguably the most important role of all. By helping employees adapt to a new reality of AI-enabled work, leaders can make tremendous contributions to not only the people under their charge, but the long-term sustainability of their businesses and their industries.

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