Artificial intelligence is transforming the C-Level landscape, requiring clear strategic direction, asserts Markus Trost, Partner at Odgers Berndtson. The focus is on anticipating how AI will transform leadership roles across the organization.
A leap in productivity that comes close to that of the industrial revolution is imminent: according to a report by the McKinsey Global Institute at the end of May 2024, rapid deployment of (generative) artificial intelligence could lead to productivity growth of up to three percent per year. The prerequisite for this is that up to 27 percent of the individual activities in all occupational profiles are changed by 2030. In Germany, three million jobs would be affected, which corresponds to seven percent of the workforce.
These far-reaching changes are being met with concern and skepticism, especially by the workforce, but are already in full swing, at least within management levels. More and more C-level positions are emerging there, with the abbreviation “AI” for “artificial intelligence” finding its way into job descriptions. This heralds the transformation, at least at the strategic level.
Generalists versus specialists
Envato/Prototype-Drop
There are many different ways in which companies can integrate AI strategically. One classic approach is to create a new board-level position and search for a Chief AI Officer to oversee a company-wide AI strategy. This approach makes particular sense when AI will have a significant impact on processes and products across different divisions.
Anyone who says, “But AI will definitely have this influence in the long term,” is probably right. Nevertheless, depending on the company, industry and business activity, it may make sense to introduce AI slowly and gradually in different departments. The underlying transformation processes should not be underestimated, which is why a 180-degree turnaround is rarely recommended if the wrong approach to AI has been chosen for the company.
According to the AI Index Report by Stanford University, AI is not anchored in a single department in one in five companies. In another one in five companies, overall responsibility lies jointly with the top management. In three out of five companies, however, responsibility is assigned to a specific department. Half of these companies see the topic as the responsibility of the CTO or CIO. In 40 percent of cases, it is assigned directly to the CEO, and in about one in ten companies, the topic is assigned to the CFO. Based on our experience, we recommend that the Center of Excellence for data and AI be assigned to the CEO.
Furthermore, the figures underscore that an intensive examination of AI as a strategic element of corporate management can also show that a company currently does not (yet) need a CAIDO, but rather a CMDAIO, a CFAIO or perhaps even a CDO to start with.
A wave of new abbreviations is reshaping the C-Level landscape
Envato/Rawpixel
For those who still have to find their way around the new management abbreviations in the C-Level landscape: these refer to the Chief Marketing Data & AI Officer, the Chief Finance AI Officer and the Chief Data Officer. Depending on which of the positions a company wants to fill, they each indicate a very different approach to AI, or a different degree of digitization.
Because another truth is that you can’t have AI without data. Data is the basis for the successful use of the new technology in companies. However, it is not always available in the structured form required for AI to generate added value. For some companies, it is therefore a wise decision to first appoint a Chief Data Officer in order to lay the foundations for the successful use of AI solutions tomorrow. We are currently seeing this strategic step taken by companies, such as financial institutions, for whom AI savings in internal processes are the main focus.
In addition, there is great potential for using AI to combat fraud or in compliance – if the data basis is right. In the future, the position of CDO can, of course, also be expanded into a CAIDO if the skills of the respective candidate allow for the expansion.
Opportunities for AI in customer contact
Twenty20/@thanmano
There is another obvious reason why more and more companies are adding AI to the marketing department and linking it closely to sales. Large digital companies such as Klarna or Zalando have aligned their marketing activities strongly with AI by exploiting the potential of automation. This means that the role of the Chief Marketing Officer is closely linked to the topics of data and AI.
The potential for automation in the finance department is also immense – regardless of the industry in which a company operates. That is why companies here are also beginning to look for a Chief Financial & AI Officer, someone who understands how to implement AI solutions in accounting and controlling in a meaningful way, firstly to automate and secondly to make better use of existing data for forecasts and predictive analytics.
In the long term, financial resources should be used for value-creating dialog with the business – and not for number crunching. This applies even more if purchasing is of great importance to the company or if the dependency on (smoothly functioning) supply chains is particularly high. Here, AI, when used correctly, can provide important impetus.
Conclusion
In short, the topic of data and AI is finding its way into different management roles in the C-Level landscape, depending on the focus of the use cases, and is joining other competencies such as marketing or sales.
Markus Trost heads the Technology, CIO Office and Business & Professional Services Practice Group in Germany, Austria and Switzerland at Odgers Berndtson. He advises and supports clients and candidates on filling management roles in the TMT sector and also in the areas of digital transformation, data & artificial intelligence, IIoT & connectivity and ecosystems. Photo: Odgers Berndtson
