Implementing AI in your business requires following the 80/20 rule of ‘fluid’ organizations

As CFOs determine the use cases for investing in AI, a major element to consider is how the technology will fundamentally shift the company’s operating model, including the workforce.

A new article published in the Wharton School’s business journal, “Disruption or Distortion? The Impact of AI on Future Operating Models,” offers insight on how to integrate AI into the fabric of an organization’s operations and strategy. 

The authors make some interesting points. For starters, organizations will need to chart their own AI-transformation journey by prioritizing a “fluid” or “adaptive blueprint” over “brittle hierarchical” company structures. “Fluid organizations follow the 80/20 rule, able to respond to 80% of predictable events while remaining flexible enough to navigate the 20% of unforeseen challenges,” according to the article. 

Some companies are aiming to have more flexibility with AI and machine learning use, Workday’s (a CFO Daily sponsor) recent C-suite Global AI Indicator Report finds. Forty-three percent of respondents said they’re making progress this year in ensuring the business is agile so resources can be reallocated at speed and scale as needed. And 35% said they’re removing bureaucratic processes that slow decision-making. The findings are based on a survey of 2,355 senior business executives

A data-driven culture

One of the authors of the Knowledge at Wharton article is Hamilton Mann, group VP of digital marketing and digital transformation at Thales, a global technology and security provider. Mann also teaches about digital transformation as a senior lecturer at INSEAD, HEC Paris, and EDHEC Business School. CFOs play a key role in AI implementation, Mann says, especially from a data-driven culture perspective.

“By championing data-driven decision-making processes, CFOs can embed the importance of data throughout the organization, a foundational step for AI adoption,” he tells me. Finance chiefs can design and monitor KPIs related to AI initiatives and ensure they line up with broader business goals, Mann says. 

Also, in technology upgrades, the CFO should align with the CTO and the CIO and prioritize training programs to “foster a culture of continuous learning,” he says.

An ‘AI-first future’ requires a culture shift

For some companies, digital transformation has been an ongoing process, even predating the pandemic. Typically, companies saw the need to “double down on digital literacy and deep technology” to reach their goals, according Mann and co-author Scott A. Snyder, a senior fellow at Wharton, and chief digital officer at Eversana, a life science services platform. But they suggest the era of AI has changed the game to mindset over skill set when aiming to meet company objectives.

“Rather than cultivating an army of data scientists and programmers, companies need to evolve their culture to embrace continual experimentation,” according to the report.

Mann and Snyder argue that an “AI-first future” is as much about culture as it is about advances in technology. This means when applying it into the broader objectives of the company, ensuring it aligns with human values and positive societal impact.

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Patrick Edwards was promoted to SVP, CFO, secretary and treasurer at Shoe Carnival, Inc. (Nasdaq: SCVL), a retailer of footwear and accessories, effective Sept. 25. Edwards has served as the company’s chief accounting officer and secretary since 2021, and VP and controller since he joined the company in 2019. Before joining Shoe Carnival, Edwards served in increasing roles of responsibility in finance and accounting during his 18-year career with Vectren Corporation.

Tiffany Sy was named CFO and treasurer at Industrial Logistics Properties Trust (Nasdaq: ILPT), effective Oct. 1. Most recently, Sy was CFO and treasurer of Tremont Realty Capital and Seven Hills Realty Trust. She has served in finance and accounting leadership roles at The RMR Group. Before joining RMR, Sy held leadership positions in accounting at AlerisLife Inc. and Bank Rhode Island.

Big deal

New data and analysis from S&P Global Market Intelligence finds the total volume of debt issuance by non-financial U.S. companies in 2023 is on track to surpass the total volume for the whole of 2022. Year to date through Sept. 14, $505.03 billion of debt has been issued, compared to $519.77 billion in all of 2022. Companies with credit ratings of BBB- or above rose to $6.106 trillion by the end of the second quarter, up from $5.561 trillion in the same quarter a year earlier, according to S&P Global Market Intelligence's analysis. 

Courtesy of S&P Global Market Intelligence

Going deeper

Fortune's Well section has published its second annual list of innovators shaping the future of health. They’re doctors, scientists, entrepreneurs, and advocates on a mission to create a healthier and more equitable world. The 13 honorees have had major accomplishments over the past year and are using their influence to increase health and wellness access.

Overheard

“It is a staggering amount of money. In my 20 years, I can’t think of a tenant paying [so much] to give back space they don’t occupy.”

—Matthew Saperia, analyst at Peel Hunt, told the Financial Times, regarding Meta ending its lease on a central London location 18 years earlier than expected. Surrendering the space comes at a cost: £149 million ($181 million)—the equivalent of seven years of rent.