Artificial Intelligence and Business Strategy
In collaboration withBCG
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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 launches, mergers 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.