More evenly distributed - How AI is changing how leaders think and make decisions

Artificial intelligence is revolutionising how leaders navigate complex decisions in a fast-paced world. AI-powered tools can augment human judgment, especially for high-volume choices, but increasingly providing insights useful for more strategic analysis.

However, leaders must critically assess AI's strengths and limitations, provide training to optimally combine it with human expertise, and establish governance to mitigate risks. By strategically employing AI to enhance rather than replace human insight, leaders can improve outcomes and resiliency amid disruption. The most effective will master the art of AI-augmented decision-making.

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Signals from the future:

Emerging trends that are likely to drive changes to the way we live, work and do business.

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Focus Issue - How AI is changing how leaders think and make decisions

Artificial intelligence (AI) is increasingly being used by business leaders to improve decision-making, especially in high-pressure situations. Research shows that decision stress and the volume of decisions facing leaders has increased significantly in recent years, leading companies to turn to AI-powered technologies like virtual assistants, data analytics platforms, and generative AI models for assistance. However, questions remain about when these tools are most beneficial, what risks they pose, and how leaders can leverage them effectively while mitigating downsides.

Some research suggests that AI recommendations alone do not necessarily improve human decision-making and can even lead to worse outcomes compared to humans alone. A study evaluating the impact of an AI-based pretrial risk assessment tool found that it did not enhance the accuracy of judges' bail decisions and disproportionately imposed cash bail on non-white defendants. This highlights the importance of critically evaluating AI systems and their potential biases.

Nonetheless, targeted training on how to best utilise AI assistance shows promise for optimising joint human-AI decision-making. Researchers at Northwestern University and Carnegie Mellon University developed a framework assessing the strengths and weaknesses of both human and AI decision-makers to enhance their combined performance. In a child maltreatment screening context, they found that training improved people's ability to critically evaluate AI risk scores and make decisions aligning more closely with experienced professionals. This underscores the value of the unique perspectives humans bring to the table.

While AI assistance alone is not a silver bullet for better decisions, especially if the technology has not been properly vetted for biases, it can be a powerful tool when coupled with human judgment and foresight. The most successful organisations will likely be those that strategically leverage AI to augment, rather than replace, human decision-making capabilities. This will require ongoing investment in AI technologies as well as in training for leaders to critically evaluate AI inputs. By finding the optimal balance between artificial and human intelligence, companies can elevate their decision-making to meet the challenges of an increasingly complex and rapidly changing business environment.

Consider these strategic insights:

  • Train leaders to thoughtfully leverage AI insights: Invest in training for managers and executives on how to critically evaluate AI recommendations and effectively combine them with human judgment and experience to optimise decision-making.
  • Proactively assess AI systems for biases: Before broadly implementing any AI decision support tools, rigorously test and monitor them for potential biases that could lead to unfair or suboptimal outcomes. Partner with experts to mitigate issues.
  • Embrace AI-powered strategic foresight: Build capabilities in AI-enhanced strategic foresight to better anticipate disruptive future challenges and opportunities. Empower teams to leverage these insights for visionary planning.

Deep strategy:

Longer form articles rich with insights:

  • Auditing Algorithmic Risk - MIT Sloan Management Review - Safeguarding AI ethics by auditing and monitoring algorithms to prevent unintended harm and ensure fairness in bureaucratic processes.
  • What happens in your brain when you plan? - Futurity - Insight into how the brain simulates actions before making decisions, highlighting the role of the prefrontal cortex and hippocampus in planning processes.
  • How “Carewashing” Alienates Employees - Harvard Business Review - Authentic employee care trumps superficial wellness perks. Organisations must prioritise genuine well-being strategies to combat carewashing and foster a healthy workplace culture.
  • How to Manage: Executing Strategy - Harvard Business Review - Unlock growth potential by aligning team efforts with organisational goals, fostering communication, and adapting strategies for success. Professional growth through collaborative achievement.
  • Keeping Innovation Alive at a Legacy Organisation - MIT Sloan Management Review - Empower innovation by bridging manufacturing and engineering, fostering autonomous teams for fresh thinking and market-oriented strategies in leadership.
  • GenAI Is Leveling the Playing Field for Smaller Businesses - Harvard Business Review - AI empowers small businesses to navigate crises, develop innovative strategies, and compete effectively against larger competitors.

Business at the point of impact:

Emerging issues and technology trends can change the way we work and do business.

  • Managing the risks around generative AI - McKinsey - Harnessing generative AI (gen AI) requires comprehensive risk management strategies, regulatory adaptation, and a cultural shift to maximise its potential in enhancing risk practices.
  • Tech services and generative AI: Plotting the necessary reinvention - McKinsey - Embrace gen AI to transform tech services, balancing challenges and opportunities for providers to thrive in a $200 billion market.
  • How Gen AI Can Make Work More Fulfilling - Harvard Business Review - Enhancing job satisfaction through task enjoyment and AI support can boost employee retention and engagement, shaping a more fulfilling workplace culture.
  • Three Things to Know About Prompting LLMs - MIT Sloan Management Review - Enhancing LLM performance through polite prompts, contextual information, and assigned roles improves accuracy and reliability of responses. Strategic prompting is key.
  • How AI Is Changing Contracts - r/Futurology - Harnessing AI in contract management revolutionises the efficiency and effectiveness of contracting processes, adding significant value and reducing losses for organisations.
  • Gen AI: A cognitive industrial revolution - McKinsey & Company - Generative AI's transformative potential akin to the historical impact of the steam engine, revolutionising communication, reasoning, and human-AI interaction.
  • The AI-Augmented Leader - Harvard Business Review - AI can enhance leadership by fostering human qualities like awareness and compassion, creating a new paradigm for effective leadership in the digital age.

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