I recently attended a CEO forum focused on becoming an ‘AI-Age Leader.’ It forced me to clinically evaluate my own capabilities as a board member and CEO advisor, and to face the uncomfortable challenge to assess the relevance of my experience to help CEOs and companies in today’s AI-driven business environment. AI is having a profound impact that is bringing into question many of the tried and true metrics of performance, and it is changing the underlying economics of technology companies.
Across the enterprise, many routine tasks are easier to perform, and deliver results much faster. What used to be entry-level administrative grunt work is now performed very efficiently by AI tools. Complex coding tasks are dramatically accelerated by AI, and AI is able to perform the entire development lifecycle from coding to testing and release, making engineers much more productive, and accelerating time to market. All of these changes are having an impact on the performance of tech businesses, although most companies cannot specifically connect the dots from AI initiatives to P&L improvements.
Task-level AI applications are making knowledge workers more productive. Instead of spending hours designing a slide deck, AI does it in seconds, and it take minimal human guidance to polish it into a finished presentation. In some cases, these productivity gains are leading to headcount reductions, or at least freeing up humans to perform higher-level work that increases their contribution to corporate success. However, leading in the age of AI requires CEOs to embrace AI and drive it throughout the company in a coordinated manner. Leadership also includes establishing the guardrails for AI. As an example, several CEOs in our meeting limit the use of AI as a direct, unassisted interface to prospects and customers. They insist on humans to at least manually approve all AI generated outreach and responses.
One of the exercises during our forum forced us to move up from task oriented applications to higher-level strategic uses for AI. The exercise was to engage an AI tool to research your competitors and your own business, produce a brief comparing the two, and create a marketing campaign for your competitor to take away your most profitable customers. The objective was to highlight your company’s vulnerabilities and demonstrate how the competition could exploit them. Even more impactful was to ask the AI tool how to defend against an AI-native company with only a handful of employees and a pile of money that could deliver a product that would disrupt your business. The essence of the exercise was to force a CEO to think outside of the box or the echo chamber that is their own company, to see how a new-age competitor will displace their business if they do not do it to themself. It is a helpful approach to discover your true value proposition, highlight your competitive positioning, and guide your messaging.
As I participated in the exercises, I particularly watched the first-time CEOs in the room. My introspective question was ‘what is AI not providing these CEOs that I can, and is my toolkit relevant.‘ The elements that kept coming to mind centered on experience: the ability to anticipate unintended consequences, the tools for company and culture building, nuanced understanding of how to facilitate board and investor support and collaboration, and how to differentiate core from context to avoid the tyranny of the urgent from becoming overwhelming. For many of the first-timers, they have never lived through a technology upheaval before. Granted, the AI wave is bigger and possibly more impactful than any prior technology revolution, but the need for thoughtful strategic assessment and strong leadership is the same, and there is a degree of pattern recognition that comes with experience. First-timers may be AI natives, while we older-timers are immigrants to the AI landscape, but we come with perspective and our experiences inform our skepticism and our curiosity. What became evident to me was the importance of focusing on fundamentals such as unit economics, margin analysis, resource allocation, branding and go-to-market tactics, human resource management, establishing product/market fit and truly understanding your value proposition.
In cooking, the fundamentals of a good staple recipe do not change that much, but each chef adds their own twist or special ingredient to update the dish and make it theirs. Similarly, the fundamentals of business do not change that much, but the new special ingredient is AI, and CEOs need to adjust the recipe to the current competitive market, and formulate their strategy accordingly.