0:08

Welcome to the Leadership Lounge, a place

0:10

to kick back and listen as our

0:12

experts dissect some of the biggest questions

0:14

leaders face today. I'm Emma

0:17

Coom, Leadership Advisor in our London

0:19

office, and today we're revisiting the

0:21

topic of AI. Since our

0:23

last episode on the topic in November

0:25

last year, AI has morphed from a

0:27

border and buzzword to a business imperative.

0:30

In that time, leaders have had varying

0:32

success with the technology, while some

0:34

have sprinted ahead, others remain at the starting

0:36

line. In today's episode, we aim to help

0:39

you understand how you as a leader can

0:41

not only keep pace with AI, but set

0:43

the pace. So, why is

0:46

AI a leadership issue? What

0:48

skills are important to help you unleash

0:50

the potential of AI? And how

0:52

do you overcome barriers that might be preventing

0:54

you from acting? Our experts

0:56

are here to share the latest insights

0:59

they've been hearing from leaders on the

1:01

front line about how to navigate the

1:03

ever-evolving and complex AI landscape. But

1:06

before we dive in, remember to

1:08

share any burning questions you want

1:10

our experts to answer by emailing

1:12

redefiners at russelrennels.com. We look forward to

1:14

hearing from you. We'd first

1:16

like to welcome Tuck Rickards, Leadership

1:18

Advisor from Russell Reynolds' Associate San

1:20

Francisco office, into the conversation. He

1:23

has been counselling senior leaders on digital

1:25

transformation for over 25 years, so we're

1:28

really looking forward to getting his perspectives

1:30

on the topic. Tuck, welcome to the

1:32

lounge. Oh, very glad to be here. Thank

1:34

you. Tuck, undoubtedly, I'm sure many

1:36

of our listeners will be thinking, I

1:39

don't need to worry about AI. That's

1:41

a problem for my tech department or

1:43

my CTO or CDO to solve. So,

1:45

why is there such a big misconception

1:47

that we see across C-suites today? Emma,

1:50

I think that's a great and

1:52

timely question. We have many

1:54

of our clients asking who

1:57

should own AI and The

2:00

answer, I think, is everyone should own

2:02

AI. And the reason

2:04

is that this is not

2:07

about technology, but end-to-end

2:09

business transformation. And

2:11

that's not a solo endeavor. So

2:14

of course, you need the CEO and the leadership

2:16

team and the board to work

2:19

together on a new direction for the company.

2:22

But if you're a functional leader in

2:24

the business, it's important you think about

2:26

not just how AI changes what you

2:28

do, but how you do it. So

2:31

if you're a marketer, how do you think about

2:33

getting more closely connected to the customer? You

2:35

know, kind of an HR leader to me really

2:37

needs to create kind of a learning organization and

2:40

new skill sets. It's really

2:42

incumbent on everyone in the organization to

2:45

think about how do you use these new tools in

2:48

your day-to-day work and

2:50

be doing so in kind of a modern way. Exactly

2:53

that, Tuck. AI transformation is a

2:55

collective challenge for leaders to solve.

2:57

It's not about the success of

2:59

an individual function in this area,

3:01

but it's about organizational-wide success. And

3:03

this is why it has to be a priority area

3:05

for every CEO. I think it's very

3:08

different to the digital transformation we would talk about 15

3:10

to 20 years

3:12

ago, when a new app is being rolled out

3:14

and a certain department can

3:16

own it, develop it, and then roll

3:18

it out seamlessly across the organization. And

3:21

it should work end-to-end. AI

3:23

is iterative. It can do some things really

3:25

well, but there are lots of things it

3:27

can't do so well because it's working on

3:29

predictive technology and large language models. And

3:32

so we have to educate each other constantly

3:34

on what it's getting better at and what

3:36

the pitfalls are, what we need to be

3:39

wary of. I recently spoke to one of

3:41

my colleagues, Fawad Bajwa, leadership advisor and global

3:43

AI practice leader at Russell Reynolds

3:45

Associates, about this. And he

3:47

was clear that AI transformation starts with

3:50

the CEO. He said,

3:52

unlike the role of digital transformation, where

3:54

you may have had someone you delegated it

3:56

to, the responsibility of AI

3:58

transformation, Land Square, on your

4:00

lap as CEO. I think

4:02

that's such an important lesson to remember.

4:04

We'd now like to welcome Dana Landis,

4:06

another one of our leadership advisors from

4:09

the San Francisco office, into the conversation.

4:11

Dana, welcome to the lounge. Thanks so

4:13

much for having me. I'm excited to

4:15

be here. So Dana, what about other

4:17

leaders across the organization who don't sit

4:20

on the C-suite? What role do they

4:22

play? Well, I think it's important to

4:24

understand that any big transformation, especially AI,

4:27

which is really new

4:29

disruptive technology, has

4:32

to start at the top. But the

4:34

other layers of the organization are also

4:36

really, really important. And that's because the

4:39

change will really come from the people

4:41

in the organization at all levels. And

4:44

so to really help people kind of

4:46

lean into the change, to bring experimental

4:48

mindset, to be open and curious

4:51

to what that might look like,

4:54

it requires that managers allow

4:56

for that kind of experimentation

4:58

and exploration. It also

5:00

means that they're giving time and

5:02

space to try things out, to

5:04

try and fail, to

5:06

get a little relief from sort of

5:09

immediate deliverables. It's about

5:11

creating space for people

5:13

to cross-team, to

5:15

experiment, to think big. And

5:18

that takes some of the pressure off, and

5:20

that allows people to really lean into the

5:22

change and see what's

5:25

possible. And I think your point,

5:27

Dana, about giving people that breathing space

5:29

to be creative and think outside of

5:31

the box is so critical. I also

5:33

think it's really important to create time

5:35

and space for agile working sessions, where

5:37

leaders can share learnings about the technology

5:40

and what is and isn't possible. And

5:42

a quote that I read that ties

5:44

really nicely to this point was from

5:46

Microsoft CEO, Satya Nadella. He

5:48

shared that to succeed in the ever

5:50

developing tech world, one needs to stay

5:53

humble, stay hungry, and exhibit a growth

5:55

mindset. To succeed in AI, you need

5:57

to have an appetite for continuous learning.

6:00

learning and experimentation. You need to be

6:02

comfortable admitting that you don't know at

6:04

all. As we've mentioned, it's hugely important

6:07

to blend a dual approach of top-down

6:09

mandates with a culture of experimentation.

6:11

The problem that our global leadership monitor

6:13

found is that only 35% of leaders

6:16

agree that their

6:18

organization has forward-thinking leadership who align

6:20

resources to harness the power of

6:22

AI. That sounds like a

6:24

huge amount of missed opportunities to me. Dana,

6:27

what skills are important to hone to

6:29

help leaders unleash the potential of AI?

6:32

One is around understanding the

6:34

markets, the financials, how

6:37

things are changing out there, ability to

6:39

see around corners, lean into ambiguity. But

6:42

you also have to think about the

6:44

people's system because you're leading an organization

6:46

through a change curve, and you've got

6:48

to bring people along with you. And

6:51

it's important to understand there's a lot of

6:53

change fatigue in the system. There's a lot

6:55

of anxiety and fear. This is a really

6:57

disruptive technology, and people are uncertain about where

6:59

this is headed. And so

7:01

leaders who are able to address that

7:04

and offer a real vision and some

7:06

clarity about where this is all headed

7:09

helps to unleash some of

7:11

that interest, curiosity, energy

7:13

from the rest of the organization. And

7:15

if you tie that vision to something

7:17

that people can understand and get behind

7:19

and rally around and align around, it's

7:22

much more powerful. One CEO

7:25

we're working with really tied the

7:27

AI revolution into revolutionizing

7:29

their customer service and customer experience.

7:31

This is something that people can

7:33

get behind. They understand that direction.

7:35

And then it's easier for them

7:37

to understand what their role is

7:39

in helping to shape that future.

7:42

So there's an anchoring to a longer

7:44

term vision and a vision that's meaningful

7:47

to other people and a

7:49

willingness to be flexible about how you get

7:51

to that end. And that's where

7:53

we see a lot of tech transformations fail.

7:55

When leaders are unable to bring the entire

7:58

organization along on the change journey. The

8:00

leaders who would do well are

8:02

those who understand that effectively managing

8:04

change is one of the key

8:06

skills for successful AI transformation. Beyond

8:08

this, we also know skills like

8:10

adaptability and curiosity are incredibly important.

8:13

These capabilities form part of

8:15

our AI Quotient Framework, which

8:17

measures whether organisations have transformation-ready leaders

8:19

at the helm. We'd now like

8:22

to welcome Dan Cullen, Leadership Advisor

8:24

from Russell Reynolds Associates Singapore office.

8:26

Dan, welcome to the Leadership Lounge.

8:29

Thanks for having me. It's a real pleasure to be

8:31

here. So Dan, often we

8:33

think about AI in the context of

8:36

technology adoption and implementation in a business.

8:38

But what many leaders are learning is

8:40

that first and foremost, AI is a

8:42

leadership issue. Can you explain why?

8:45

Transformation is much more about humans

8:47

than it is about technology. Over

8:50

time, technology is going to completely transform

8:53

the way companies run, potential

8:55

for growth, new revenue streams,

8:57

and bring operational efficiencies. But

8:59

it also provokes significant issues

9:01

related to disintermediation and business

9:04

risk. Leaders need to navigate

9:06

this, and the time the

9:08

markets provide to senior leadership for managing

9:10

this navigation is shortening. AI

9:12

won't be actually a quick fix. It

9:14

will involve significant longer-term planning and

9:17

cost, not necessarily immediate cost savings.

9:20

And therefore, change management skills are

9:22

critical. We know change management

9:24

isn't easy. It takes time. It takes

9:26

proper stewardship. And one CEO we

9:28

spoke to on the topic of AI said,

9:30

at the end of the day, business

9:32

is about people. If you

9:34

think about AI as a change initiative

9:36

on steroids and then add regulations and

9:39

risk on top, it's going

9:41

to be a leadership challenge. It's

9:43

not an isolated technology challenge. Yeah,

9:45

you're right, Dan. And I do think

9:48

that's why this moment can feel overwhelming

9:50

for many leaders. And frankly, everybody's on

9:52

a learning curve. I'd like to now

9:54

turn back to you, Tuck. We recently

9:57

held several AI Leadership Lab roundtables with

9:59

high-tech companies. profile CEOs who shared

10:01

how they were embracing AI. What

10:04

do you think are the benefits for leaders

10:06

if they're successful in capitalizing on the potential

10:08

of AI? Dr. Peter Salgo I

10:10

think clients are beginning to see

10:13

the huge potential benefits of AI

10:15

on their business, but it's early.

10:17

And we've recently

10:19

held 10 CEO events

10:22

on the topic of AI and

10:24

leadership. And we've talked to CEOs

10:26

across industry sectors from consumer to

10:28

healthcare to financial services. And

10:31

in consumer, we're hearing stories around

10:33

how you can create content and

10:35

marketing in a fraction of the time

10:37

with much more impact. We're hearing

10:39

in healthcare, for example,

10:41

how do you accelerate and automate

10:43

claim processing in ways that really

10:46

is more efficient and saves money.

10:48

So there's real use cases of these

10:51

productivity improvements. And when you think

10:53

about promoting team productivity, we've

10:55

recently done some research that shows that

10:57

74% of leaders

11:00

are excited about the potential for

11:02

those near term productivity impacts. What

11:05

I think we're excited about from

11:07

a leadership transformation perspective is the

11:10

data also shows that 58% of

11:12

leaders believe that AI has the

11:15

potential to create new revenue streams.

11:17

So there's a really interesting recent

11:20

research piece by BCG on HBS,

11:22

looking at the impact of AI

11:25

on knowledge workers. And

11:27

they took a group of BCG consultants

11:30

and the group that used AI

11:32

in their work were 25% faster

11:34

and completed 12% more

11:37

tasks than those that were not using

11:39

AI. That's a meaningful,

11:41

meaningful difference in productivity and

11:43

output. What I found particularly

11:45

interesting with this study, Tak, is that

11:47

significant improvements were recorded at all ability

11:50

levels. So even those who used AI

11:52

who were deemed high performers were much

11:54

faster and more efficient. So

11:56

Tak, we've looked at the benefits that AI can

11:58

provide, which area If you look at

12:01

this BCG and HBS study, it showed that

12:03

in the area of kind of complex tasks,

12:07

such as triangulation of complex data, things

12:09

that need a lot of interpretation, there's

12:13

really still an important need for a human overlay. From

12:16

my perspective, I really like the language that

12:18

Microsoft's using in describing AI as a

12:22

co-pilot for your business. I

12:25

really think of how

12:28

leaders supercharge their

12:30

own capabilities and integrate kind of AI into

12:32

their daily activities to be more efficient and

12:34

accelerate impact. And I think that's something leaders

12:36

need to keep front of mind. I think

12:38

it's important for teams to connect on AI

12:40

regularly to share what they have found about

12:42

its capabilities and its limitations. For

12:45

example, in that study you referenced, yes,

12:47

there are huge productivity improvements, but

12:50

for the first time, there

12:52

were huge productivity improvements. But for

12:54

tasks that were outside the frontier

12:56

of AI capabilities, but where the

12:59

consultants were unaware, they used AI

13:01

and actually it was 19 percentage points

13:04

less likely to produce the correct solutions

13:06

compared to those without AI. So

13:09

we are still really quite ignorant as to

13:11

what AI can and cannot do well. And

13:14

learning collaboratively, working collectively as teams is

13:16

absolutely critical to try and solve for

13:18

some of this. And thinking

13:20

about the topic of this episode, I

13:22

listened back to last year's Redefiner's episode

13:25

with Microsoft vice chair and president Brad

13:27

Smith. And his point on

13:29

AI and the need for human overlay really

13:31

resonated with me. He shared

13:34

that AI beats humans, but

13:36

humans and AI beats AI.

13:39

I think that was a really impactful statement for leaders

13:41

to bear in mind. And for any

13:43

listeners who haven't yet listened to this episode, you can

13:45

find a link to it in our show notes. I'd

13:47

like now to talk a little bit about why some

13:50

leaders aren't taking action when it comes to AI. When

13:53

we asked leaders where they were

13:55

in their AI implementation journey as

13:57

part of our global leadership monitor

13:59

research, one in three leaders. stated

14:01

that they hadn't taken any steps

14:03

to implement generative AI. We've seen

14:05

what happens when organizations fail to

14:07

act. Take Blockbuster. They were an

14:09

organization that failed to pivot when

14:11

streaming technology changed how consumers access

14:13

media, which ultimately led to its

14:15

demise. Dan, what do you think

14:18

is preventing leaders from acting? And

14:20

how do leaders overcome this fear

14:22

of inaction? Ultimately, AI

14:24

is really complex. You're

14:26

navigating risks related to privacy, ethics, all

14:28

the different legalities involved. It can make

14:30

leaders stop and ponder, and frankly it

14:33

should. There is a fear of failing

14:35

or making the wrong move from the

14:37

worries about the implication for the business.

14:39

There is certainly a lack of understanding,

14:41

and we know that leaders are overwhelmed

14:43

by the belief that they need to

14:45

do everything, but they don't. And

14:47

I think that's a common misconception, Dan, that

14:50

leaders need to be fluent in AI. I

14:52

recently read something really impactful in a

14:54

book titled, A Digital Mindset, What It

14:57

Takes to Thrive in the Age of

14:59

Data, Algorithms, and AI, by Paul Leonardi

15:01

and Sadal Nili. In the book, they

15:03

share that anyone can become savvy in

15:05

AI if they adopt the 30% rule

15:07

from the world of linguistics. So I

15:10

think this is really interesting. It's saying

15:12

that if non-native speakers are to succeed

15:14

in global organizations, they only need to

15:16

know 30% of the words that

15:19

native speakers use. And they

15:21

believe that the same goes for AI. You

15:23

don't need to be an expert, but to succeed, you

15:26

do need to have 30% fluency and

15:28

a handful of technical topics to develop a

15:30

digital mindset. And having a

15:32

digital mindset is so important for every member

15:35

of your organization, not just the CEO or

15:37

C-suite. So we've almost reached the end of

15:39

the episode. But while I have you

15:41

here in the lounge, I wanted to ask you all

15:43

one last question. You're speaking to

15:45

global leaders every day who are experimenting with

15:48

AI. Based on these

15:50

conversations, what single piece of

15:52

advice would you offer to leaders embarking

15:54

on their AI transformation journey? Dana,

15:57

let's get your perspective first. I

15:59

think it's- really important to think about what problem

16:02

you're trying to solve and have some focus

16:04

there. It isn't that you

16:06

sort of bring AI in across the

16:08

organization. If you identify a

16:11

place where AI can really

16:13

help unlock some efficiencies or

16:15

shift the business, that's a great place

16:18

to start. And it helps people understand

16:20

how this works, what the impact might

16:22

look like, and get them thinking about

16:24

where else this can be applied. And

16:27

Dan, what about you? You need courage

16:29

and bravery to reimagine the longer term

16:31

of your business. You need

16:33

top talent in your C-suite who can

16:36

work together to quickly answer, pivot, and

16:38

build, but also stay the course on

16:40

the transformation agenda. And finally,

16:42

Tak, what's your advice? There's

16:44

so much noise around AI right now.

16:46

I think it'd be really easy to

16:49

dismiss this as a fad or a

16:51

thing. And I think

16:53

that's a big mistake. I think at

16:55

whatever level in the organization you're in, you

16:57

can help chart the path forward in a

16:59

new way for the company, or you can

17:01

be kind of one of those

17:03

early adopter leaders on the team that really, really

17:06

will make things happen. So my

17:08

advice would be embrace the moment. Thank

17:10

you to all of you for sharing your perspectives

17:12

with us today. So our time

17:14

in the lounge has come to an

17:16

end. In 30 seconds, this is what

17:18

we've learned. AI transformation is more about

17:20

humans than technology. It takes proper

17:23

stewardship, and it takes time. AI

17:25

isn't a solo endeavor. Everyone

17:27

in an organization is accountable for AI

17:30

and its progress. The most

17:32

successful organizations are those that give

17:34

employees the breathing space from their

17:36

day-to-day deliverables to experiments. And

17:38

you don't need to be fluent in

17:41

AI. But you do need to have

17:43

a base level of understanding to succeed.

17:45

And that goes for your entire organization.

17:47

If you have any topics or burning

17:49

questions you'd like us to cover in

17:51

future episodes of Leadership Lounge, then get

17:53

in touch. Email your questions to redefiners

17:55

at russellreynolds.com. You can find us on

17:57

LinkedIn and follow us on X at

17:59

RRA on LinkedIn. leadership. You can

18:01

also find us on Instagram at

18:03

Redefiner's podcast, and you can also

18:05

now subscribe to our YouTube channel.

18:07

Until next time, goodbye!