The age of digitization gave leaders exceedingly greater volumes of data to use when making decisions. Now however AI is giving these leaders much great ability to interpret these vast data sets. Leadership now needs to adapt its approach to strategy development, as the traditional “hard” skills of leadership such as domain knowledge and information processing give way to “soft” skills including adaptability, vision and engagement. We’ve heard of IQ and EQ, but these new combination of soft and hard skills required for leaders are coalescing into what we phrase, the Leadership Quotient or LQ.
In order to optimise augmented teams, leaders will need to develop these three skills to improve their LQ:
- Adaptability. AI reduces the cost and time to entry in numerous business functions by automating away rote tasks. This is great, but it also means competitors are greater able to steal a march on their rivals if they aren’t adequately agile and adaptable enough in their digital strategy. A recent survey showed that 85% of executives believe AI will allow their company to maintain a competitive edge.
In order to keep up with this accelerated pace of change leaders can implement the following actions:
- Incorporate AI data analytics in your decision making process. For example, a Hong Kong based VC fund, Deep Knowledge Ventures, introduced an AI system called VITAL to its board in 2014. VITAL was able to work through and make calculated decisions on vast data sets for potential acquisition targets.
- Incorporate agile business methodology in business units. ING has implemented 350 nine-person agile squads consisting of members from varying business functions to increase IT agility. As a result of this initiative, ING is now releasing software updates on a two- to three-week basis rather than five to six times a year, and has improved customer satisfaction and employee engagement scores.
- Vision.With the vast quantities of data and analysis now available at leaderships fingertips, there does exist a danger in becoming too adaptable and flexible, making actioning specific outcomes difficult as an organization is spread too thin. Also, leaders can be tempted to use automation for purely cost take-out initiatives, often damaging employee and customer sentiment in the short term and ultimately damaging revenue and profitability in the medium to long term. An example of this is the public backlash to the US governments implementation of AI in the Medicaid program. Here AI was primarily used as a cost take out initiative but failed citizens when there weren’t sufficient humans to monitor the systems decisions and provide a backstop for patients.
With this in mind, leadership needs to define a core vision that looks beyond the “numbers” of business, i.e. profitability and revenue, and instead focuses on the “why” message of an organization. Why are you actually doing the business you are in? A great example of this was IKEA’s mission statement of “Our vision is to create a better every-day life for many people”. Having this type of vision allows clear focus on the “why” of the company and allows leaders to use AI augmentation to action ROI that go beyond simple cost take-out.
To ensure an organization is guided by a consistent vision think about these three steps:
- Clearly set out the ideals of your organization that you will live and die by
- Actively engage as a leader within business units, or at least make sure leadership is easily accessible to teams. This allows easier integration of leader vision within business units
- Incentivise your workforce not on meaningless KPI’s but instead business outcomes that align with your vision. For example, customer or employee satisfaction.
- Empower. AI will free up employee’s time by automating away “red” work, allowing them to focus on “blue” work, or work that really matters. Leaders now need to make sure their teams are adequately engaged and empowered to action this “blue” work within their roles. An example of this is online clothing retailer, Zappos which by using AI within the companies call center, was able to reduce reliance on scripted interactions and instead empower call center agents to decide the best way to solve a customer’s query. The end been that Zappos consistently beats the competition is customer satisfaction.
Actions to consider to empower your workforce:
- Reduce hierarchical structures internally and encourage collective decision making and feedback
- Make innovation a cornerstone through design thinking workshops, hackathons and sprints
- Set clear objectives for teams and allow them the freedom to meet them however they see fit.
To explore how organizations can effectively integrate AI into their operations to augment multiple roles, read the CFoW latest report, The Symbiosis of Human and Machine.