As many have observed, people tend to overestimate what the impact of a fresh, groundbreaking technology will be in the short term and underestimate the same over the long term. Bill Gates, for one, said it about the publicly accessible internet when it was still new in the late 1990s, and clearly, that vision has proven to be prescient.
Today’s analogous revolutionary technology is generative AI, and the same concept applies, notes a new white paper by Diligent Institute, a provider of research and services for board members. Most businesses, even while leveraging GenAI for worthy immediate purposes, are still dramatically underplaying its potential long-term impact, according to the white paper.
Whereas many organizations are so far looking mainly for efficiencies and productivity, they should also be targeting innovation, counsels the white paper, which resulted from a recent Diligent Institute summit that included corporate board members, C-suite leaders and subject matter experts.
“The companies that have tapped into AI as part of the user or customer experience have exploded in the market,” summit participant Sophia Velastegui, former chief AI officer and chief product officer for Microsoft, said in the white paper.
However, companies are increasingly likely to face scrutiny over innovative AI applications. Regulators in Europe, for example, have not dawdled in their efforts to rein in AI. The European Union AI Act, the first comprehensive attempt to regulate AI globally, was enacted on Aug. 1, with enforcement of most provisions slated to begin in 2026. The act has broad reach and covers any entity that sells or puts into service an AI system in the EU.
As noted in another recent report by KPMG, there is no similar legislative framework in the United States. However, President Biden in October 2023 signed an executive order identifying eight principles to advance and govern the use of AI.
“With AI and GenAI increasingly driving business decisions and activities, customers, regulators and other stakeholders are seeking greater transparency into how these data-driven technologies and underlying algorithms are used, monitored and managed,” KPMG wrote.
3 key AI questions for management and boards
1. Who is in charge of the company’s AI strategy? The same way you have cyber governance or any other governance framework, do you have a framework for responsible GenAI usage?
2. Who is actually getting value from AI? Pay attention to how big players are approaching AI technology and who benefits. How do you keep track of progress, given the exponential advancement and changes in the technology?
3. How do you do AI governance? Where does AI oversight fit into the overall oversight structures at the board level? Ensure internal understanding of where the company is headed with the technology. Prioritize safe-to-fail experiments to learn more about AI.
Source: Diligent Institute
The Diligent Institute report suggests the current regulatory activity may be premature, relative to the history around other regulated business practices.
“This is one of the first issues I can remember where practices and norms haven’t been broadly established by the time regulations come out,” said another summit attendee, Lavonne Burke, vice president of global security, IT and AI at Dell. Companies are left trying to create governance and compliance processes with “just the tip of the iceberg showing … and we don’t know specifically what else is coming from regulators.”
Most companies would rather have that information sooner than later, if for no other reason than the human capital challenges related to broad AI transformations. Florin Rotar, chief AI officer at Avanade, said in the white paper that he’s constantly surprised by the extent of change management needed to support such an effort.
“It requires so much engagement to unlearn [old habits] and relearn new habits, and it shouldn’t be like that,” said Rotar. “AI should adjust to people rather than the other way around, but [that’s not] the current reality. So, continuous change management is absolutely critical for success.”
Indeed, summit participants stressed that people and organizational readiness are more important for AI success than the technology itself. The white paper referenced a recent Pew Research Center analysis suggesting that 52% of Americans report feeling more concerned than excited about AI.
“Unless we genuinely overcome the hype and focus on building humane trust and organizational readiness, AI is unlikely to gain meaningful adoption in the enterprise,” Rotar declared.
