Four questions boards need to ask around generative AI: McKinsey

As board members continue to discuss the use cases of generative AI in their business, they need to ask some pivotal questions to their organisational leaders before implementation begins.

Generative AI has the potential to increase efficiency and productivity in the workplace, reduce costs and potentially create new growth.

But the knowledge and understanding of the technology is still relatively low.

As leaders’ optimism continues to grow over generative AI, a new McKinsey article highlights the four questions boards need to ask their c-suite four questions AI before implementing the technology.

Firstly, boards should be wondering how generative AI will create short-term and long-term impacts within their industries.

Any AI strategy requires the understanding of short-term and long-term risks.

Generative AI is tipped to impact marketing, product development and customer service first, but that doesn’t mean companies outside those industries shouldn’t underestimate generative AI in their sphere.

McKinsey authors wrote that while no one can predict the full implications of generative AI, considering them is important.

“How might the competitive environment change? How might the business benefit, and where does it look vulnerable? And are there ways to future-proof the strategy and business model?” They said.

The second question board members should ask is if they are balancing value creation with adequate risk management.

Generative AI brings forth new innovation streams which have captivated business leaders however, caution must also be applied when considering these new streams.

“Companies will therefore need to understand the value and the risks of each use case and determine how these align with the company’s risk tolerance and other objectives,” the authors write.

Thirdly, boards need to ask how they will organise generative AI.

Given the speed of developments within generative AI and the risks it raises, businesses must have a coordinated approach as they cannot be in “pilot mode” forever.

McKinsey suggests company leaders should consider appointing a single senior executive to take responsibility for the oversight and control of all generative AI activities.

“A smart second step is to establish a cross-functional group of senior people representing data science, engineering, legal, cybersecurity, marketing, design, and other business functions. Such a team can collaborate to formulate and implement a strategy quickly and widely,” McKinsey said.

The last question boards should ask is if they have the necessary capabilities.

To stay afloat with generative AI, organisations need to be up to date with technology, talent and culture.

McKinsey said a modern data and tech stack will be the key to success in using generative AI. Companies also need to ensure their talent can work with generative AI and understand the ins and outs of technology.

A company’s culture will shape how well it will succeed with generative AI. If a company can adapt to change and challenges, McKinsey predicts, it will prosper with generative AI.