future of work

AI in the Boardroom: The Next Realm of Corporate Governance

Just as artificial intelligence is helping doctors make better diagnoses and deliver better care, it is also poised to bring valuable insights to corporate leaders—if they’ll let it.

At first blush, the idea of artificial intelligence (AI) in the boardroom may seem far-fetched. After all, board decisions are exactly the opposite of what conventional wisdom says can be automated. Judgment, shrewdness, and acumen acquired over decades of hard-won experience are required for the kinds of complicated matters boards wrestle with. But AI is already filtering into use in some extremely nuanced, complicated, and important decision processes.

Consider health care. Physicians, like executives and board members, spend years developing their expertise. They evaluate existing conditions and deploy treatments in response, while monitoring the well-being of those under their care.

Today’s medical professionals are wisely allowing AI to augment their decision-making. Intelligent systems are enabling doctors to make better diagnoses and deliver more individualized treatments. These systems combine mapping of the human genome and vast amounts of clinical data with machine learning and data science. They assess individual profiles, analyze research, find patterns across patient populations, and prioritize courses of action. The early results of intelligent systems in health care are impressive, and they will grow even more so over time. In a recent study, physicians who incorporated machine-learning algorithms in their diagnoses of metastatic breast cancer reduced their error rates by 85%. Indeed, by understanding how AI is transforming health care, we can also imagine the future of how corporate directors and CEOs will use AI to inform their decisions.

Complex Decisions Demand Intelligent Systems

Part of what’s driving the use of AI in health care is the fact that the cost of bad decisions is high. That’s the same in business, too: Consider that 50% of the Fortune 500 companies are forecasted to fall off the list within a decade, and that failure rates are high for new product launchesmergers and acquisitions, and even attempts at digital transformation. Responsibility for these failures falls on the shoulders of executives and board members, who concede that they’re struggling: A 2015 McKinsey study found that only 16% of board directors said they fully understood how the dynamics of their industries were changing and how technological advancement would alter the trajectories of their company and industry. The truth is that business has become too complex and is moving too rapidly for boards and CEOs to make good decisions without intelligent systems.

We believe that the solution to this complexity will be to incorporate AI in the practice of corporate governance and strategy. This is not about automating leadership and governance, but rather augmenting board intelligence using AI. Artificial intelligence for both strategic decision-making (capital allocation) and operating decision-making will come to be an essential competitive advantage, just like electricity was in the industrial revolution or enterprise resource planning software (ERP) was in the information age.

For example, AI could be used to improve strategic decision-making by tracking capital allocation patterns and highlighting concerns—such as when the company is decreasing spending on research and development while most competitors are increasing investment—and reviewing and processing press releases to identify potential new competitors moving into key product markets and then suggesting investments to protect market share. AI could be used to improve operational decision-making by analyzing internal communication to assess employee morale and predicting churn, and by identifying subtle changes in customer preference or demographics that may have product or strategy implications.

The Medical Model: Advances That Have Enabled AI in Health Care

What will it take for boards to get on board with AI supplements? If we go back to the health care analogy, there have been three technological advances that have been essential for the application of AI in the medical field:

  • The first advance is an enormous body of data. From the mapping of the human genome to the accumulation and organization of databases of clinical research and diagnoses, the medical world is now awash in vast, valuable new sources of information.
  • The second advance is the ability to quantify an individual. Improvements in mobile technology, sensors, and connectivity now generate extraordinarily detailed insights into an individual’s health.
  • The third advance is the technology itself. Today’s AI techniques can assimilate massive amounts of data and discern relevant patterns and insights—allowing the application of the world of health care data to an individual’s particular health care situation. These techniques include advanced analytics, machine learning, and natural language processing.

As a result of the deployment of intelligent systems in health care, doctors can now map a patient’s data, including what they eat, how much they exercise, and what’s in their genetics; cross-reference that material against a large body of research to make a diagnosis; access the latest research on pharmaceuticals and other treatments; consult machine-learning algorithms that assess alternative courses of action; and create treatment recommendations personalized to the patient.

Three Steps Companies Can Take to Bring AI Into the Boardroom

A similar course will be required to achieve the same results in business. Although not a direct parallel to health care, companies have their own components—people, assets, history—which could be called the corporate genome. In order to effectively build an AI system to improve corporate decision-making, organizations will need to develop a usable genome model by taking three steps:

  1. Create a body of data by mapping the corporate genome of many companies and combine this data with their economic outcomes;
  2. Develop a method for quantifying an individual company in order to assess its competitiveness and trajectory through comparison with the larger database; and
  3. Use AI to recommend a course of action to improve the organization’s performance—such as changes to capital allocation.

Just as physicians use patient data to create individualized medical solutions, emerging intelligent systems will help boards and CEOs know more precisely what strategy and investments will provide exponential growth and value in an increasingly competitive marketplace. Boards and executives with the right competencies and mental models will have a real leg up in figuring out how to best utilize this new information. While technology is growing exponentially, leaders and boards are only changing incrementally, leaving many legacy organizations further and further behind.

It’s time for leaders to courageously admit that, despite all their years of experience, AI belongs in the boardroom.

Barry Libert is CEO of OpenMatters, a machine learning company, and a senior fellow at Wharton’s SEI Center. He tweets @barrylibert. Mark Bonchek is CEO of Shift Thinking and a faculty member at Singularity University. He tweets @markbonchek. Megan Beck is CIO at OpenMatters and a research fellow at Wharton’s SEI Center. She tweets @TheMeganBeck.

Originally appeared on MIT Sloan Management Review. Reproduced with permission from the author.

There Are 4 Futures for CMOs (Some Better Than Others)

There are some new faces these days in the boardroom. They have new titles like Chief Customer Officer, Chief Revenue Officer, Chief Digital Officer, and Chief Experience Officer. These executives have responsibilities we might expect to reside within marketing. That leaves Chief Marketing Officers with a decision—do you see the rise of these roles as an opportunity or a threat? Our conversations with marketing leaders suggest that CMOs are indeed at a crossroads with four potential paths:  up, over, down, or out.

The reason for these new roles is that we’re entering a new era of digital transformation. Over the last decade, most companies’ digital agendas have focused largely on technology—moving to cloud-based software, modernizing IT infrastructures, adding digital channels, and digitizing business processes. These efforts have enabled operational efficiencies, cost reductions, and greater agility, preparing companies for the next phase of digital transformation: driving growth. So leaders have turned to what ultimately drives growth: creating value for the customer and using new technologies to transform the customer experience.

Today’s consumers and business buyers have more choices and higher expectations than ever before. They want companies to be more human:  to remember who they are, know what they like, and use that understanding to help them achieve their purpose. For companies, this requires an unprecedented level of integration and coordination across every business unit, from sales and marketing to customer service, and across physical and digital channels. This poses a deep challenge to companies organized by product and function rather than a customer-centric model like experience and value.

Marketing faces a particular challenge since customer engagement has traditionally been considered its domain. However, many of the most vital points of interaction are often not owned by marketing. To meet the organizational need for integrated experiences across business units, many CEOs have created new roles like Chief Digital Officer, Chief Experience Officer, Chief Customer Officer, or Chief Growth Officer. This expansion of responsibility for customer engagement beyond marketing raises questions for the future role of the CMO.

We can see the four pathways for CMOs (up, over, down, or out) already playing out in the marketplace in our observation of recent moves within and between companies.

The first two paths, up and over, occur when CEOs make the shift to a customer-focused growth strategy, and CMOs step up to drive enterprise-wide transformation around the customer experience.

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1. UpCMOs are promoted into new roles.

In this path, CMOs take on a new title and position, with responsibility for the end-to-end customer experience and other growth-oriented functions.

At Dick’s Sporting Goods, Lauren Hobart was promoted from CMO to President, while at KFC, CMO Kevin Hochman became President and Chief Concept Officer. At Dick’s Sporting Goods, Chairman and CEO Edward Stack attributed Lauren’s promotion to the importance of driving “omni-channel consumer engagement” across the enterprise. Elisa Steele at Jive Software, Jay Farner at QuickenLoans, and Susan Lintonsmith at Quiznos have even gone from CMO to CEO. This is a break from the traditional paths of finance, sales, and operations to the top spot.

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2. Over: CMOs take over new responsibilities.

In this path, CMOs keep the same title, but are given responsibilities over other areas affecting the customer experience such as e-commerce, product, customer service, and digital transformation.

At Airbnb, CMO Jonathan Mildenhall is driving the company’s evolution to an end-to-end travel brand by reinventing “experiential marketing.” Alison Corcoran moved from CMO of Staples to CMO of DentaQuest, gaining responsibility beyond brand and customer engagement. She’s also responsible for digital transformation and the overall direct-to-consumer business. According to CEO Steve Pollock, the expanded scope of Alison’s role was in order to provide “a holistic, integrated experience” to their 24 million customers.

When the CEO and CMO aren’t well aligned, CMOs face less promising paths.

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3. Down: CMOs lose influence and authority. 

CMOs can find themselves on a downward path for a variety of reasons. Some research indicates that CEOs hold CMOs responsible for disruptive growth more than any other position in the C-Suite. Yet CMOs don’t feel they are positioned to disrupt the status quo or achieve aspirational growth.

Sometimes the CEO sets the growth agenda but CMOs either aren’t interested or don’t have the skills to go on and reshape the customer experience and drive organizational change. In other scenarios, the CMO is interested, but the CEO doesn’t see their role as being more than running campaigns and generating leads. In this case, the CEO may bring in a new role over marketing.

For example, Coca-Cola—widely regarded as one of the top marketers in the world—recently eliminated the role of CMO and replaced it with a Chief Growth Officer. The previous CMO was known for his focus on campaigns and was thanked for “improving the productivity of marketing” and leading a “resurgence in the quality of advertising.” In contrast, the CEO explained the leadership changes as necessary to “respond to the fast-changing needs” of customers, employees and partners and to “transform our business for the future.”

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4. Out: CMOs leave the organization.

CMOs move out of organizations for many different reasons. Sometimes they don’t fit with the direction the company is going, as was the case with Coca-Cola. Sometimes it’s because CEOs want their CMOs to drive growth and transform the experience, but don’t give them the mandate, resources, or span of control to do so. Eventually, the CMO serves as a convenient scapegoat when the company doesn’t deliver on its growth commitments.

In those cases CEOs are ahead of their CMOs. But we more often see CMOs who are ahead of their CEOs and boards. They want to drive growth around the customer experience, but can’t get their CEOs to recognize the need, or—if they do see the need—to commit the political or financial capital to back the CMO leading the transformation.

In the case of Coca-Cola, Jonathan Mildenhall was previously SVP of Marketing at Coca-Cola. He left in 2014 to pursue a transformation at Airbnb. Now Coca-Cola is replacing its CMO to bring what appears to be the kind of thinking that Mildenhall has brought to Airbnb. We are left to wonder if Coca-Cola had moved Jonathan up or over sooner, perhaps he might not have felt the need to move out.

We expect the next few years will continue to see a lot of shuffling around in the C-Suite as companies turn their attention to growth, recognize the insufficiency of incrementalism, and place the customer experience at the center of their transformation.

In order to move up and over, CMOs need to foster new perceptions and expectations across the enterprise. Most marketers recognize that marketing is much more than running campaigns and managing brand identity. But the rest of the organization doesn’t know this yet, including most CEOs. CMOs need to define a broader vision for marketing as the orchestrator of the customer experience and prove that marketing is not a cost center but a revenue generator.

This requires a new set of skills for many CMOs, particularly around leading transformative change. CMOs often find it challenging to get their peers, boards, and sometimes even their own teams to understand the importance of customer experience and then to change how they think about it. It’s even harder to get people to commit resources, change incentives, and make the hard decisions to become truly customer-centric.

It’s worth the effort. The most customer-centric companies are the ones outperforming their competitors and raising the bar on customer expectations, whether digital natives like Amazon and Netflix or established leaders like Sephora and Starbucks. But it takes more than simply saying the words “customer-centric.” The challenge is moving beyond the notion of customer-centricity as getting customers to do what fulfills the company’s purpose, to getting the company to do what fulfills the customer’s purpose.

For those CMOs who aspire to move up and over rather than down or out, the job is increasingly to be a catalyst for change, engine for growth, and orchestrator of experience. It will require strong alignment with key stakeholders, new models of leadership, and a new playbook for success. Given the changes underway, every CMO should be asking themselves, “Which path am I on?”

Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Shift newsletter and follow Mark on Twitter at @MarkBonchek.

Gene Cornfield is Managing Director at Accenture Interactive, where he helps global organizations transform their customer experiences, organizations, and business outcomes.

Originally appeared on Harvard Business Review. Reproduced with permission from the author.

Creating Cultures of Innovation— A Perspective from the Heart

Creating Cultures of Innovation— A Perspective from the Heart

Emotional intelligence is a real, and really important, factor at play in any business which employs and serves human beings. Leaders are learning how to leverage the impact that emotional intelligence—sometimes called “soft skills”—has in business, from individual careers to organizational culture. Articles on the subject are no longer relegated to fringe publications or social sciences, in fact mainstream business journals like ForbesHarvard Business Review, and FastCompany have been talking about it for several years. The thriving conscious capitalism movement, the emergence of B Corps , and sold-out conferences like Wisdom 2.0 are all further evidence that more and more professionals and companies are taking the human element of business very seriously. This means that not only is the industrial age model of treating people like machines an outdated one, but companies who aren’t engaged with their employees and customers on a human level are at a competitive disadvantage in an increasingly networked world.

Healing the Wounds of the Assembly Line with Feedback Loops and Doctrine

Healing the Wounds of the Assembly Line with Feedback Loops and Doctrine

Often, the focus on the ideal of the cross-functional, interdisciplinary, extroverted worker results in questions being asked which the average employee is insufficiently skilled to answer. In her book Quiet, Susan Cain cites the example of one of her research technical interviewees' recollection of a 'murder board,' a panel of decision-makers whom engineers had to face in order to get their new ideas considered for funding and other resources. One can imagine a hard-faced panel of besuited men tearing down the brilliant if meek engineer with the smug expressions of a young MBA grad: "What's your marketing plan!," they might shout, "

Autonomy and Acceptable Failures: The Need for Doctrine

Autonomy and Acceptable Failures: The Need for Doctrine

Autonomy, especially in and around U.S. businesses, is a tricky concept. Autonomy is valued very highly in our culture, but the challenge of finding a way to hand off acceptable amounts of control takes a lot more work than most leaders or employees realize. Few companies have the patience or budget for mistakes which occur when a more-autonomous goes wrong, so they choose not to grant autonomy in the first place, or revoke it at the first sign of trouble. Understandably, the constant conflict of employees who need autonomy and leaders who need accountability plagues most organizations. 

Creatives, Non-Linear Thinkers and So-Called Misfits

I was recently asked to weigh in on how to support the creative worker. It's a broad, almost-impossible question: how does one even begin to categorize such a person? So I chose to respond by focusing on the elements of the workplace which enable creativity, both culturally and structurally, to support the rise of good ideas and ease for those bringing good ideas to light. 

Social Enterprise as a Listening Tool

Social Enterprise as a Listening Tool

And what I would say is that there is a unique opportunity right now for companies to, as a first step, to start to embrace the social enterprise—because what that does is that gets the value of the human component quantified, and from there we start to make decisions, we start to put in structures that are not 100% based on just what the profit and revenue growth are. Those things become an end, an outcome.