What Every Leader Needs to Know About AI

Artificial intelligence (AI) isn’t just a buzzword or a technology trend. It’s already reshaping how organizations operate long-term.

Leaders must guide their teams through this shift. However, without knowledge of how AI works and its business implications, senior leaders can’t future-proof their organization’s strategy, talent and culture.

Fortunately, developing this understanding doesn’t mean you need to be a data scientist. But it does mean you need to understand the risks AI could pose in your organization and how to transform these risks into opportunities.

Only then can you lead your organization with the knowledge that AI can work for you.

What AI Is (and Isn’t): A Practical Definition for Leaders

AI is a scientific field. It builds machines and computers that learn, reason and behave in a way that emulates humans.

It’s easy to confuse AI with machine learning and generative AI, but there are subtle differences:

• Machine learning is a branch of AI that shows computers how to learn without being programmed. Think Netflix recommendations based on your preferences or Alexa, Google and Siri responding to your voice.
• Generative AI refers to algorithms that produce content based on the data they have been trained with. Think ChatGPT for text, DALL-E for images, or AlphaCode for programming languages.

For more information on what AI is and isn’t, see our article, What Is AI?

What’s Changing, and What This Means for Leadership

With new AI emerging every day, we no longer question what it can do but instead what it can’t. [1]

Whether it’s analyzing market trends, customer data, or your organization’s internal processes, AI can work with you to adapt strategies in real time. It can analyze complex data at speed, allowing you to make data-driven decisions in a fraction of the time otherwise possible. [2]

Today, AI is changing the face of most industries. This creates a need for leaders to become more tech-aware, curious and adaptable.

Piquing this interest comes easily to many leaders. More than 90 percent believe that AI will create opportunities rather than risks for them, and 85 percent believe it will improve their organization’s capabilities. [1]

However, the excitement may not be the same for team members, with 70 percent of leaders believing AI will disrupt their organizations by 2028. [1] The implication is that jobs could change or even be eliminated. As such, over half of U.S. workers are concerned about the impact that AI will have on the workplace. [3]

With uncertainty about job security rippling through organizations worldwide, leaders now have a responsibility to reposition roles for a sustainable future.

Why AI Is a Leadership Concern

Four key areas where AI creates leadership concerns include the management of team roles, new capabilities, customer expectations, and ethics. However, leaders can implement solutions in response to each of these challenges.

1. Protecting Teams

Guiding a team into the AI era can be a multifaceted challenge. Leaders are having to identify which skills will stay relevant, decide where to invest in reskilling, and redefine roles while working through legal and HR implications.

They’re also having to test how to use AI to improve, rather than damage, productivity and manage organization-wide anxiety about job changes and job security.

2. Creating New Capabilities

Leaders are also at the helm of challenges surrounding new capabilities. They’re facing the risk of competitors gaining market advantage by leveraging AI where they are not.

Meanwhile, they’re also experiencing pressure to invest in AI without clear return-on-investment (ROI) projections.

3. Managing Customer Expectations

Leaders are seeing rising customer demands, such as immediate response times, that may be unsustainable or unprofitable to meet. [4] But they risk losing out to competitors who can meet new expectations if they can’t.

4. Upholding Ethical Practices

Then there are concerns relating to ethics. AI has the power to influence public opinion based on its prioritization of certain products and information. As a result, many leaders are querying its ability to be fair and transparent and fear that it delivers misinformation.

Additionally, leaders using algorithms to make hiring decisions might find themselves unwittingly pursuing workplace bias, discriminatory hiring processes, and unequal access to resources.

This can easily unfold if an AI system has been trained using biased data, such as the concept that nurses are usually women or financial professionals are usually men. [5]

More ethical concerns arise from cybersecurity challenges, which can be prevalent when AI handles sensitive data. Phishing scams and malware can both create security risks – and 87 percent of security professionals have reported AI-related cyber attacks at their organizations in the year 2024-25. [6]

Practical Actions to Build AI Readiness

As you prepare for a future where AI plays a central role in your organization, these practical actions can help you lead with confidence.

Work With Team Members to Future-Proof Their Roles

Acknowledge the threat that AI poses to many job roles in their current form. Next, proactively address team members’ concerns with a transition plan that will support the longevity of their roles.

Training opportunities and clear communication will be crucial as you foster psychological safety throughout your team. [7]

Test and Develop AI Practices Until They Work

When used within the limits of its capabilities, AI can boost an individual’s performance by nearly 40 percent. However, when used outside these limits, AI can weaken this performance by 19 percent. [8]

As a result, it’s critical to invest time and resources into iterating AI processes until they truly build productivity.

Know When to Take the Risk With AI Investments

Although investing in AI can be risky when the ROI is unclear, leaders can decide where these risks are most informed.

Consider which aspect of your organization would benefit from AI most. Perhaps your team is busy working on time-consuming tasks when they could be working on valuable projects? If so, investing in automation could pay off.

However, if your competitors are making more sales because they’re using responsive chatbots and personalized deals, these may be better opportunities for you. [9]

Ensure the Ethical Use of AI

Instead of leaving AI to work alone, appoint team members to oversee the ethical use of these solutions.

Whether it’s avoiding gender bias in hiring decisions, ensuring data privacy, or preventing misinformation, human-centered values are essential to the safe use of AI.

Leadership Starts With Awareness

AI will impact every leader, and it already is, which is why it helps to be proactive instead of reactive to technological developments.

However, using AI as a leader doesn’t always mean you need to learn how to build tech systems. Instead, it may be more useful to respond to AI’s specific implications for your organization and industry.

Whether you’re redesigning roles, making informed investment decisions, or prioritizing ethical practices, your leadership can turn AI into a competitive advantage.

Frequently Asked Questions

Why should leaders care about AI?

AI affects strategy, roles and ethics. Leaders must guide its use to boost performance and protect their teams and brand.

How can leaders support teams during AI adoption?

Provide training, communicate clearly, and develop role transition plans to build psychological safety and confidence.

What are the biggest risks of AI?

Bias in hiring, misinformation, data privacy issues, and cybersecurity threats are major concerns that need oversight.

Where should leaders invest in AI?

Start with areas where AI saves time or enhances customer experience, like automation or personalized support.