“The pace of technology change is increasing, and you must reevaluate your digital strategy and priorities. Frequently. You will always be transforming, and your organization must establish transformational practices as essential core competencies.”

It’s been just over two years since I finalized the Digital Trailblazer manuscript, my book of stories and 50 lessons for people leading digital transformation initiatives. These were my remarks in the book’s preface, and I wrote it well before genAI took the world by storm.

Over the past several months, I’ve been researching and writing about genAI’s impact, including articles on copilots, genAI’s impact on software development, how data governance is evolving because of genAI, and where low-code and no-code platforms are releasing new AI capabilities.

And those are just my AI articles from the last two months!

GenAI: Leaders must push organizational boundaries

I’ve been thinking about the 2-3-year impacts of genAI on digital transformation strategies, leadership skills, and staffing. Productivity has been an early business genAI benefit, but the next wave of innovation and future of work improvements will require even smarter and more aggressive leadership to deliver growth from AI-enabled innovations.

TCS recently released a report on AI optimism and the future of how we work, in which 90% of futurists are optimistic about the changes AI will bring. The report also states that 75% of futurists anticipate AI adoption will enable small businesses to expand into new markets and reach a broader customer base.

My reaction is, yes, those are possibilities, but only if organizations make significant changes to how they cultivate digital leadership (i.e., Digital Trailblazers) and how aggressively they develop transformational core competencies. These competencies include building product management practices, establishing agile continuous planning, pursuing more no-code citizen development capabilities, and becoming a more data-driven organization.

I am optimistic about the possibilities of using GenAI. However, I am pessimistic about whether many organizations will make the necessary adaptations fast enough to compete in the AI era. GenAI is introducing several fundamental changes, and below are three emerging leadership trends that I believe company executives must discuss and adjust to in their strategic plans.

3 Emerging leadership trends driven by genAI

1. Organizations will need more Digital Trailblazers but fewer employees

Digital Trailblazers will be needed to ask questions, understand market trends, develop strategies, and lead transformation initiatives. Companies will have new rounds of transformation to plan for with every significant AI  innovation – and there will be added pressure to accelerate delivering business value.

My conclusion is that organizations will need more Digital Trailblazers with strong business acumen and empowerment to experiment.

But the tea leaves also suggest that many businesses will reduce their numbers of employees for several reasons:

• AI is driving productivity improvements
• Employers aren’t funding and creating enough time for skill development
• Companies struggle with change management

Companies will look to lighten the load of their ships by reducing headcount, with the potential benefit of cost reduction and easier-to-implement change management programs. One report shows that CEOs expect a 5% headcount reduction in 2024 because of genAI, a trend I believe will continue for the next few years.

2. Organizations will need more strategic partners but less outsourcing

A second impact of AI, ML, and automation is reduced headcount in outsourced BPOs such as call centers, customer service functions, and data processing services. But, organizations will need more advanced skills, especially in technology, marketing, and some operational areas.

Where organizations fail or elect not to invest aggressively in their own employees, they will likely compensate by investing in and developing strategic partnerships.

Combining this with my first point – Digital Trailblazers will partner more and likely work with fewer employees when planning and implementing driving transformation initiatives. But, they will need strong change management skills to drive the targeted outcomes, and employees will feel more pressure to learn new ways of working.

3. Digital Trailblazers succeed with better quality experiences

My third conclusion is that genAI will drive an era where consumers have too many buying options, many of them with mediocre experiences and questionable quality.

OpenAI and other AI-first companies champion speed to market and tolerate risks, especially in learning how end-users will leverage genAI capabilities. Many of these companies have also raised troves of cash and developed advanced DevOps capabilities to support experimentation. Even when they make mistakes, they can quickly correct them or market a new capability so that customers tolerate some blunders.

Most companies don’t have the culture, risk tolerance, or funding to adopt these strategies. Instead, companies will set higher expectations of their Digital Trailblazers to deliver better quality experiences. It will require Digital Trailblazers to have strong business acumen, anticipate market needs, and understand customer expectations.

Couple my predictions with a more hybrid working force (another trend the TCS futurists believe will increase because of AI adoption), and organizations will see dramatic shifts in their leadership and operating models.

My question is, who will transform fast enough? Will CXOs and Boards get it, or will AI drive experimentation without fundamental transformation?