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We are in what might be termed the early days of generative AI (GenAI) —it was only in November 2022 that the consumer release of ChatGPT captured the world’s imagination. Since then, companies have been struggling to keep pace as GenAI’s potential and risks continue to expand. Early leaders have developed a strategy to address six critical priorities for effective GenAI adoption. To fashion and maintain a successful early days GenAI strategy, boards should engage with management and consider focusing their attention on these key priorities.
Priority 1: Oversee the balancing of AI risks and rewards
Organizations need to strike a balance, finding ways to tap GenAI’s undeniable excitement and potential while taking the associated risks seriously. Opportunity seekers and risk-minded leaders need a healthy dose of appreciation for the priorities and concerns of the other and to be on the same page. This demands management and board alignment on the company’s risk tolerance and appetite around GenAI.
Priority 2: Manage alignment of your GenAI strategy with your digital strategy
Considering GenAI’s primary output is digital — digital data, assets and analytic insights — it’s no surprise that the technology is already impacting companies’ ongoing digital transformation campaigns. Boards should discuss with management how the GenAI strategy can align with the overall digital strategy, both current and prospective.
Priority 3: Focus on experimentation with an eye for scaling
People at all levels are initiating and developing GenAI use cases, with major implications: Breakthroughs and pilot projects, appropriately scaled, can not only generate revenue but shift entire business models. Board oversight could hardly be more important, viewing experimentation through a holistic lens to see long-term value creation as well as risks managed.
Priority 4: Manage strategic thinking about productivity gains
AI applications have long increased workplace productivity, of course, but the rise of GenAI has boosted leaders’ awareness of and interest in AI-enabled productivity gains. Companies can look to use those gains to reduce labor input, or for reinvestment to boost quality, volume, and speed of goods and services. The board should discuss with management their plans around productivity gains.
Priority 5: Place people at the heart of your GenAI strategy
Management may see GenAI as an engine of opportunity, but employees are uncertain and less optimistic about the technology. The board should look to help position the organization to capitalize on GenAI’s promise to everyone’s benefit, encouraging management to communicate early and often so employees understand how the technology aligns with the company’s goals and how it can enhance work rather than replace it.
Priority 6: Understand your ecosystem to unlock potential benefits
As GenAI experimentation ramps up, it’s important to look beyond the company’s four walls. The GenAI strategy should look at the company’s ecosystem and how broad initiatives might unlock benefits. For example, does management know how partners such as suppliers and service providers are leveraging GenAI? Could closer collaboration lead to fresh opportunities?
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