CEO decision-making in the age of AI: 5 lessons this CEO learnt from the IBM IBV study

IBM Institute for Business Value (IBV) recently released an extensive report on the pressures CEOs face with decision-making in modern times and the impact (both positive and negative) generative AI presents in the decision-making process. It’s not only a highly informative study, it’s also deeply interesting.

The risks around decision-making have risen significantly over time for CEOs – not just financially or operationally, but personally, as the tolerance for mistakes or missteps has fallen sharply. Even CEOs with the most supportive teams and shareholders around them feel the pressure – something I can relate to.

The idea has always been that technological advancements should make decision-making easier for us. More tools and more data provide more insight, surety, and clarity. Or do they? Is there such a thing as too much data – or too much reliance on it?

AI is a new beast altogether, and no one can yet say exactly what impact it will have on businesses or the role of Executive teams. I think a quote from one of the CEOs who participated in the report puts it best: “Generative AI models surprise, impress, and scare us, all at the same time.”

This report is one of the most comprehensive looks at how CEOs are responding to AI and the evolving challenges and pressures they’re facing. It looks to provide direction for CEOs and executives on the intersection of AI, data, and decision-making, based on the inputs of thousands of CEOs globally and the habits of highly effective decision-makers.

Reading through the study, five key points stood out to me as lessons on building a better understanding of AI and creating more confidence around decision-making that I want to share here…

1. AI is a polarising subject that senior leaders can’t agree on

There is certainly pressure to embrace and implement AI regardless of your industry – it’s almost an ‘act now, or you’ll already be behind’ mentality. However, the report shows many misalignments across businesses about whether they should or, perhaps more importantly, are ready, to implement generative AI.

CEOs are the ones leading the charge towards AI, with 74% agreeing that their team already has the skills and knowledge to incorporate new tech, including AI. However, only 29% of other executives agree.

The reasons behind this vast difference in opinion are less clear. The pressure to act, adapt and be seen as proactive could definitely be one. There could also be a hint in the next point – that fact that it’s seen as the measure of a successful business.

2. AI can’t be ignored – but can it be trusted?

75% of CEOs believe that the enterprise with the most advanced generative AI will ‘win’. If competitiveness relies on AI (or, at least, that’s the belief), that could explain why CEOs are so confident in their readiness to adopt it.

This is likely compounded by the fact that over 30% are already using AI for decision-making and 50% for products and services, which would add a level of certainty (if you believe current success is a measure of future success).

Yet IBM warns that the pressure to act now must be weighed against AI’s potential dangers – including bias, ethics, and safety. At least half of CEOs are worried about the security or accuracy of data and what impact that might have if AI is relied on for vital business decisions.

Despite the uncertainties, businesses are already starting to invest in the technology. To some extent, the possibilities must outweigh the dangers – at least for now.

3. Data is important, but so are people

For me, this is one of the most important and interesting findings in this report:  75% of CEOs use operational and financial data to make decisions, but over 50% also heavily rely on personal experiences and input from other staff – something AI can’t deliver.

When the data doesn’t give all the answers, CEOs need a dependable structure and process they can rely on – including a trusted team around them – to make decisions.

The most effective decisions makers:
– Strongly agree that metrics are driving organisational behaviours
– Say metrics give them a full understanding of organisational performance and health
– Have effective lines of communication with key stakeholders

It was quite refreshing to read how widely agreed it was amongst participants that you can only access so much data, and it can only tell you so much about the decision you need to make. Relying on your own experience and knowledge, and that of those around you, is key to making effective and timely decisions.

When IBM looked at the high-performing CEOs who were efficient and effective in their decision-making, a common theme was both confidence in digital infrastructure and data, and the conviction that most important decisions a CEO makes can’t be made on data alone.

4. Data and workforce challenges are standing in the way

There is no generative AI without data to feed it. Lots of organisations have issues with data management, lineage and provenance, and security. Cleaning up organisational data and fixing shortcomings is an extensive project in itself – before AI is even in the picture.

The report states that “top-performing companies in revenue, growth, and tech maturity focus on data standards and quality in ways that lagging peers fail to.” Ultimately, fixing data shortcomings is unsexy work that needs to be done if CEOs want to gain a competitive advantage.

It looks like data isn’t the only thing that hasn’t had enough consideration. While three-quarters of CEOs say they believe their business is ready for AI, less than a third have considered the impact on their workforce. In fact, more CEOs admit to making workforce changes because of AI than have actually sat down to assess the workforce impact. Is this a case of acting before thinking?

Whether this is an oversight or a lagging process, it is something to watch—particularly as there appear to be significant gaps between CEOs and other senior executives when it comes to their sense of the organisation’s skills and readiness.

5. Use AI because it useful, not because you can

Clearly, there is high pressure to adopt and optimise AI and achieve more effective decision-making. There are lots of benefits, and CEOs are, for the most part, ready to jump in and explore the possibilities.

However, like all new hot things, there is the temptation to find a way to use it no matter the use-case. The “other people are using it, so we should too” mentality can quickly lead to shoehorning technology into business for the sake of it – not for the benefit of it.

What’s important is business outcomes, stakeholders, staff, customers. AI should, among other tools, support faster, more accurate decision making and drive operational improvements – not simply be the single-silver-bullet to an undefined problem.

In summary…

These are just five of many insightful outcomes of the IBM IBV report, which I encourage every business leader to read. I’m sure (as I did) you will see your own similar experiences and challenges reflected in the report’s insights.

I believe that the most important thing to remember as we move forward into a new era of AI adoption, is the intense ethical considerations that come with rapid evolution. Establishing ethical frameworks to guide the design and deployment of AI will be vital to control bias, ensure accountability and transparency, and uphold fairness, and as ethics are not inherently built into AI it is down to CEO’s and business leaders to think through and build this into your own AI adoption projects

Ultimately, it’s clear AI and all it offers (despite the promises) won’t come easy. But does anything good? There is a lot to be excited about, and the more we can learn from each other, the better.

You can read the IBM Institute of Business Value Report “CEO decision-making in the age of AI” here.