AI Governance – The impact of AI on different business functions

AI Governance – The impact on different business functions

Following my article about AI Governance, several additional pieces of information have emerged regarding who in the organization is responsible for what, when it comes to artificial intelligence, and the data associated with it. The assignment of responsibilities regarding AI within organizations remains an evolving topic but critical to AI Governance. We still have much to learn about AI accountability. However, several recent studies are helping to shed more light on which roles see the impact first. And as a consequence, the challenge organizations have in developing leadership skills to handle complex AI and technology-driven functions, processes, customer engagement, and product development.

PETER SONDERGAARD | CHAIRMAN OF THE BOARD, 2021.AI | THE SONDERGAARD GROUP | JANUARY| 2020

Survey: Jobs affected by AI

In a recent survey on AI and jobs done by the Brookings Institution, data suggests that artificial intelligence will have a more significant impact on better-paid, better-educated office jobs first compared with production and service level jobs. This survey joins a list of studies that look at the impact on jobs by artificial intelligence. However, what is different about this survey is the methodology for determining the effects of job categories. The study uses an algorithm to correlate patent filing descriptions with job descriptions. The result, while only calculated for the US, is somewhat surprising in that better-paid jobs such in functions such as in Marketing, Sales and IT are most likely to see a negative impact of artificial intelligence compared with more job roles in Production, Service (physical service like cooking) and even HR. The survey provides a way to understand the variability in the impact on different leadership functions and, more specifically, when and how leaders in these functions need to be prepared for artificial intelligence to impact their job. This allows for a better understanding as to where we first need to increase awareness of AI Governance.

Survey: Functions affected by AI

McKinsey released a report in the Spring of 2018 detailing the status of artificial intelligence. The report uses a categorization of use-cases encountered by McKinsey. Towards the end of the report, you will see a chart comparing the impact of AI on different functions within an organization. The business functions most impacted are Marketing, Sales, Supply Chain, Legal & Risk, and Service. The effect is not only on jobs in the specific functions but equally on the end-to-end processes inter- and intra-organization, pricing, customer interaction, product and service design, and people relations. In a more recent study, The Global AI survey, just released the importance of these functions seem to be confirmed even though Product Development appears to be a distinct added function. While neither study focused on leadership skills and artificial intelligence, we can infer the difference in timing of leadership roles need to understand the details of AI Governance. Sales and Marketing are clearly at the forefront of needing more significant artificial intelligence leadership skills.

What can we conclude from the survey data?

The overlap between the two surveys first shows that the most impacted functions in the near-term would be Sales, Marketing, and Service. Chief Marketing Officers, Sales Leaders, and heads of Service functions should take note. Improving the understanding of AI within their organizations, as well as the artificial intelligence leadership skills of their management teams, is urgent (see the article about the seven new leadership skills for the digital economy). For many CMOs and CSOs, understanding AI governance, including the details of AI ethics, is critical. Managing AI Governance is a continuous balancing effort between, on the one hand, the organization’s brand, products, and services, and on the other hand, the customer, suppliers, and society. Not as a binary situation but a yin and yang situation. Leaders need to be aware of the fact that technology deployed today does very little to assist in managing AI governance and ethics. The responsibility to address this is, therefore, a leadership responsibility and will likely remain so for a very long time.

The second conclusion from the intersection between the two surveys shows the business functions of Supply Chain, Manufacturing, Product Development, and interestingly enough the Legal & Risk role(s) are the additional functional areas in organizations impacted. The impact here will vary based on the type of business, for example, whether it is B2B or B2C business. Equally, in supply chain and manufacturing, the impact is often broader than just the function within the company but more about the entire value chain of the organization. Again, leaders in these organizations should take note and immediately focus on the future required leadership skills of managers across their organization. These leaders need to understand the need to use software to manage AI, including AI governance. Unfortunately, very few AI software solutions today incorporate AI Governance as part of the environment.

The importance of AI in functions, like Sales, Marketing, Service, Supply Chain, Manufacturing, and Legal & Risk, creates a few essential actions for organizations to consider immediately.

Chief Human Resource Officers

CHROs need to focus on the evolution of leadership skills development in the organization to include new digital leadership skills as well as consider the need to add an understanding of data and artificial intelligence (including AI Governance) to the hiring criteria for all managers. These should be leadership skills sought externally and continuously developed internally.

Chief Data Officers

For organizations with no Chief Data Officer, consider establishing the position immediately or at a minimum, including it as a responsibility of another senior role such as the Chief Digital Officer or the CIO. The requirement to coordinate and strategically manage the corporate data, analytics and artificial intelligence requires the position of Chief Data Officer. Without an individual or assigned responsibility to coordinate AI Governance, organizations are at a significant competitive advantage going forward.

Chief Information Officers

The role of the CIO and the IT organization as a whole is critical at this stage. The CIO has, at minimum, the responsibility for ensuring the software deployed allows for software managed AI governance. Even if this is just for specific deployments, in parallel, the CIO must proactively establish a corporate-wide approach for the technology component of AI governance and ensure this is part of software development strategy and purchase criteria going forward.

Chief Legal Officers & Risk Officers

Chief Legal Officers and Risk Officers need to understand that they must be deeply involved in the organization’s future approach to AI governance.

SUMMARY

We need to evolve our understanding of AI governance. We need to focus on its impact on all leadership roles in organizations, and the importance of the immediate involvement of cross-functional leadership roles such as Chief Human Resource Officers, CIOs, and Chief Legal Officers. While recent extensive studies confirm the organizational impact on different functional roles, there remains a void in the market for how AI impacts leadership skills. As a leader, take note and get personally involved.

Source: The Sondergaard Group

About author

Peter Soendergaard

Peter Soendergaard

Chairman of the Board, 2021.AI

Peter Sondergaard is currently Chairman of the Board at 2021.AI and Owner of his Executive Advisory company, the Sondergaard Group. Before this, Peter worked as the Executive VP and member of Gartner’s operating committee for 15 years. Peter is a well known and sought out speaker covering many topics within IT, AI & ML.

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