• HR Analytics
  • Harpreet Singh
  • AUG 21, 2017

Reinvention of the CLO as a Digital Leader in the Age of Artificial Intelligence

Digital Transformation and AI

Intel’s Andy Grove used to say that “Only the paranoid survive.” The saying was meant as a reminder of the need to be prepared to constantly adapt to the incessant changes in the high-tech industry. Today, the specific paranoia-inducing trend that will have a cross-cutting impact in business is the increasing role of artificial intelligence technologies in digital transformation strategy. Whereas information technology has long made it possible to coordinate different labor forces in integrated global supply chains, artificial intelligence is now making it possible to actual completely replace large segments of those labor forces with algorithms or robots who will never be accused of sexual harassment, have no health care costs, and do not file law suits. The appeal of AI and its savings in terms of cost and hassle is self-evident. The job of Chief Learning Officers will be dramatically impacted by this trend as it is they who will be responsible for upskilling their workforces to adapt to new extremely challenging realities as part of a comprehensive digital transformation strategy so that their companies can both survive and thrive in this new era.

We are at the beginnings of a revolutionary digital transformation that will impact the fundamental nature of work as we have come to know it. As stewards of the human capital that will remain critical to continuous competitive advantage, Chief Learning Officers will have to take the lead in working with CEOs and other senior leaders to effectively facilitate the transition to a new era for their organizations. What are the strategic characteristics of this new digital era and how will it impact CLOs? In the 1980s, information technology innovations like  the personal computer started to provide us with the tools to conduct traditional information processing tasks faster, more efficiently and more accurately. Workers were empowered and their productivity enhanced as never before. Then information technology evolved such that it facilitated the coordination of global supply chains which in turn enabled workforces in China (manufacturing) and India (services) to become rapidly integrated into an increasingly global economy. We have now reached the third phase of digital transformation wherein the way that we work will be dramatically changed as technologies such as artificial intelligence, machine learning and automation become increasingly embedded in our day-to-day work lives. The implications of automation on China will likely lead to great reductions in employment opportunities in manufacturing for its workers. But here in the developed world, it is artificial intelligence that will have the greatest impact as it transforms service industries such as finance, insurance and high-tech that have remained anchored in the US, Europe and Japan.

The challenge of digital transformation in the era of artificial intelligence brings with it enormous opportunities but unfortunately few business leaders are acting with appropriate urgency. Chief Learning Officers must take the lead in helping to reshape their organizations so that this latest technological disruption does not have a destructive impact. How do the best digital leaders operate? According to SAP’s Digital Transformation Executive Study, there are few companies that qualify as leaders in the digital transformation arena, but those that do are characterized as follows:

  • They do not see enterprise-wide digital transformation as a single, end-goal but as an evolving, continuous journey.
  • They view the unification of the corporate culture such that it incorporates a digital mindset as the foundational element of digital transformation. To make that happen, many use purpose-built project teams to rethink entire business models and avoid siloed, piecemeal changes.
  • Not surprisingly, the best companies focus on transforming customer-facing functions first as they view the customer experience as the gateway to a successful digital transformation.
  • They heavily invest in next generation technologies, particularly Big Data, Analytics, Artificial Intelligence, the Internet of Things and Machine Learning.
  • Above all, they are talent driven, as they invest heavily in recruiting and training a workforce to meet the new challenges posed by AI-driven Digital Transformation.

The results of these efforts are both symbiotic and impressive. 71% of those surveyed by SAP report that digital transformation efforts actually make it easier to attract and retain talent; 47% are seeing a positive impact on training and education; and 5x more leaders report that their digital transformation efforts have changed their talent management efforts. But it is the impact on the bottom line that is most important. Digital transformation leaders are three times more likely to report high levels of value creation from digital transformation; 85% say that their efforts have increased market share; 80% say that it has increased profitability; and a 23% increase in revenue growth is expected over the next two years. The impact is evident so the challenge for CLOs is to learn how to become a digital leader in the Age of Artificial Intelligence.

While automation is projected to replace large swaths of low-wage manufacturing workers in developing countries such as China over the next decade, artificial intelligence is the technology that will most impact the world of work in the countries of the developed world. This is in large part because we are moving from mass production to mass personalization and AI greatly facilitates this process by making it easier to gather the data that is necessary to create a highly individualized customer experience. But exactly what do we mean by the term artificial intelligence? According to Peter Norvig and Stuart Russell, as the define it in their 1995 book Artificial Intelligence: A Modern Approach, AI is the defining and building of intelligent agents that receive percepts from the environment and take actions that affect that environment. In other words, the defining characteristic of AI is the ability of machines created with the technology to respond independently to the world around them without the direct control of a programmer. Machine learning, which is the ability of software to improve its own activity by analyzing interactions with the world around it, is the fastest-growing category of AI.

There are three main ways that AI will be deployed within corporations and each will have a dramatic impact on how enterprises are organized and the types of training, recruiting and strategic understanding that will be demanded as a consequence. Firstly, assisted intelligence, which is already widely in use, improves what people and organizations are already doing. It could be something as simple as helping you to complete a search term when you are typing in Google based upon you search history. This type of activity involves clearly defined, rules-based and repeatable tasks such as the high-volume ones in automated factory lines and the back-office administrative functions such as billing. The pattern-detection that is intrinsic to the fraud-reduction, and the data cross-checking and verification that are fundamental to financial services can be done much more efficiently and accurately with AI. This will likely lead to either the elimination of or redefinition of increasing number of back-office jobs. For example, there may no longer be a cost-advantage to off-shoring those functions or using outside corporations to conduct them which may lead enterprises to automate that work and bring it in house where that information can be directly controlled.

The second way that AI will have an impact is through augmented intelligence which enables organizations and people to engage in activities that they could not otherwise do. Augmented intelligence fundamentally alters the nature a task and this in turn requires the creation of new business models. A classic example is the recommendation engines of companies like Netflix and Amazon that use machine learning to suggest customer choices based not just on your particular history but on those of the entire audience that uses their platforms. These platforms are highly advanced and require the creation of specialized interfaces unique to a particular company as well as access to huge amounts of historical data both from within the company as well as the industry at large and the customer base. There is a need for training to interpret this data as one of the greatest challenges with augmented intelligence is the impact that it has on senior business leaders since the new business models created give them both new options and new dangers to contend with.

Finally, and most radically, through a technology known as autonomous intelligence, AI will create and deploy machines that act on their own. Nascent examples of this include Alexa, which responds to voice commands but has the capacity to learn new tasks as it gathers more information about the world and the people around it. This is where the Internet of Things will have the greatest impact as each IOT device can both gather data about the world around it and respond to what it is continuously learning in real time. Drones, such as those used by the military and those that Amazon is planning to deploy in the e-commerce arena, are examples of how this technology will be deployed over the next five years. Self-driving cars are being discussed as the greatest example of autonomous intelligence but the liability concerns regarding them will likely greatly delay the deployment of that technology.

Here is how AI may impact the digital future:

In view of the radical, cross-cutting impact of AI, CLOs will have to create internal educational programs to upskill their workforces and train them to interact effectively with the new technologies that will thoroughly impact the world of work.

For CLOs and CEOs, the benefits of AI-driven digital transformation include:

  1. Increased Collaboration: By facilitating better targeted action, AI can produce less friction between internal terms and hence make them more productive.
  2. Workforce Empowerment: AI technologies can be used to produce highly personalized training regimens and to greatly empower workers.
  3. Deeper Data Analysis: AI technologies greatly facilitate a deeper understanding of customers and their behavior.

By increasing the rate of data acquisition and the quality of the data acquired about both employees and customers, AI can eliminate the barriers between employees and customers to ensure a more rapid response to the needs of the latter as market trends change in an increasingly volatile market. The role of CLOs is to continuously upgrade the skills of their workforces so as to keep up with these changes and this will require input from those directly in tune with the impact that AI is having on the world of work.

Companies are not embracing AI at the rate that they should. A critical bottleneck is the lack of trained staff and internal skepticism amongst senior leaders. This is dangerous. Skepticism and slowness concerning the impact of the Internet led firms such as Blockbuster and Borders to be decimated by Netflix, Amazon and the like. There is a real need to embrace the future before one is destroyed by it and this means understanding in concrete terms the strategic implications that AI will have for your business. Likewise, once that understanding is developed, it will be impossible to move forward without adequately trained staff. Experfy can help your firm to address both of these bottlenecks as the company is becoming a thought-leader in this space and critical source of both talent and educational resource in AI.  Experfy provides both an assessment platform to understand the skills gap in a company and a training platform replete with learning paths to address those skills in emerging technologies that are essential to shape a digital culture within the enterprise.

Another bottleneck in the adoption of AI that may provide time for firms to adapt to the new technological realities is the trust issue. Just as it took time for consumers to become comfortable using ATMs to deposit their hard-earned cash so too it will take time for AI  technologies to earn the trust of the masses of people who use financial services. It is during this transition period that the best firms will train their employees to take strategic advantage of AI and related technologies to enhance the competitive advantage of their firms.

Digital transformation is a comprehensive process affecting every aspect of the organization. Until recently, human resources and workforce training has been left out of digital strategy but the deep impact of artificial intelligence and automation on the emerging science of people analytics is changing this. Increasingly, HR and CLOs are becoming mission-critical, particular in human capital-centric industries like high-tech where skill requirements change rapidly and constant upskilling is critical to competitive advantage. To be sure, even as whole job segments will be eliminated, demand for new jobs such as Information Security Analysts and Robot Engineers will boom but all employees and executives will be required to change how they work and their degree of competence in heretofore arcane areas such as Big Data. CLOs will be at the center of facilitating that transition and looking outside the organization to identify new areas for upskilling and competence development as they relate to the specific needs of the organization. We are moving away from the era of mass market credentialing towards the era of continuous learning that is customized to the needs of the organization and the industry in which it operates. Failure to adapt to this era will be costly as it is must cheaper to invest in upskilling the workforce than to write $100 million severance checks and liquidate corporate assets on the cheap. But as with any challenge, the benefits can be immense—not just in terms of enhanced corporate competitiveness--but also in terms of a workforce that feels appreciated and valued because it is being constantly invested in and placed at the center of corporate operations.

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