The AI Mandate: Why CEOs Must Take Responsibility Now

Reprinted with permission from Fast Company after originally published on November 14, 2024.

As AI revolutionizes the landscape of larger organizations, many CEOs and boards are still grappling with this profound shift. Tuck Rickards, managing director and co-head of global technology practice for Russell Reynolds Associates, emphasizes that CEOs need to take AI head-on.

“We need to elevate the conversation about AI,” Rickards asserts. CEOs are often faced with reactive short-term concerns about AI and need to take the time to step back and immerse themselves in where their AI journey can take their business model. “The real question is: What are the fundamental opportunities and risks for our business in the long term, and how can AI reshape this vision?” he says.

Harnessing Bottom-up Innovation

Rickards highlights that AI’s transformative impact differs from past technological shifts. “GenAI democratizes technology across entire organizations, empowering individuals at every level.” This accessibility challenges leadership to foster innovation from the ground up within a strategic framework.

AI demands a novel approach, unlike centralized shifts like cloud migration. “Leadership must encourage rethinking and embrace ideas from all levels, investing meaningfully,” Rickards explains. The challenge lies in managing potential chaos by balancing individual innovations with overarching strategy, a task demanding adaptability from C-suite leaders.

AI Transformation: The Four-Step CEO Playbook

Rickards recommends a strategic playbook for AI transformation. First, CEOs should immerse themselves in tech discussions with diverse stakeholders over six to 12 months. “Create an environment for CEOs to engage with stakeholders, systematically exploring tech and transformation agendas,” he suggests. These dialogues should be regular and in-depth with the goal of rethinking the business and framing areas of potential transformation and growth.

Next, CEOs should challenge the C-suite to reimagine their functions enabled through AI and data. “Every team should explore collaboration through data and AI,” Rickards advises, referencing how the go-to-market functions including marketing, sales, and customer success are being transformed through more direct connectivity to the customer. In addition, CEOs need to challenge each of the C-suite leaders to work in a more connected and agile way across functions and to modernize their ways of working as a team.

CEOs also need a board with the skills to constructively challenge the status quo and help see around corners with effective oversight. “High-performing boards should be able to opine on both strategy and operations,” Rickards says.

Finally, Rickards emphasizes the long-term investments in technology and data required to enable AI transformation. As CEOs develop a more forward-looking strategy around AI they often find gaps in their current technology and platforms’ capabilities needed to scale the business.

AI Front-Runners and Followers: Predicting Business Outcomes

Given the massive investments already flowing into AI infrastructure and applications, Rickards imagines there will be meaningful winners in the “AI arms race” such as Nvidia and Microsoft as well as a real shakeout due to the large volume of companies chasing this nascent and emerging market.

Looking at companies across all sectors leveraging AI to drive business transformation, Rickards believes the winners will be those fast companies where the CEO has taken responsibility by orchestrating the most comprehensive learning and experimentation journeys, finding new ways to deliver to the customers, and working inefficiencies out of the system. Rickards anticipates the most immediate impact in data-rich businesses with the potential for meaningful automation and process improvement such as biotech/drug discovery, autonomous driving, smart manufacturing and systems, and consumer digital businesses.

In the long list of questions leaders of large companies should consider, Rickards points to a few as the most critical. “If you’re the CEO of a Fortune 500 company, ask yourself: What is the legacy I want to be handing off in three to five years for this company? Have I engaged my board and teams to think through all the possibilities and to experiment? Finally, am I taking the entire organization on a learning journey, from top to bottom, to build the leadership capabilities needed to win in the future?”

Authors

Tuck Rickards leads Russell Reynolds Associates’ Technology practice and is an Executive Board member at Fast Company. He is based in San Francisco.