Session 8: How CEOs in the Industrial and Natural Resources Industry are Adopting AI—and Their Top Lessons for Success

RRA experts and leading CEOs in the industrial and natural resources industry share lessons on how to unlock the vast potential of AI.

Three key takeaways from our conversation with CEOs whose organizations are actively piloting, adopting, and implementing AI technology.

How CEOs in the industrial and natural resources industry are adopting AI

01. For productivity and efficiency. Attendees focused on how AI could help with the downsizing of mundane or routine tasks, as well as reducing engineering complexity. Several CEOs spoke of the advantages of using AI to forecast machine maintenance, or to help machines self-diagnose problems. Pattern recognition, predictive production and inventory management, and reduction in the time and cost of R&D were also referenced as key AI opportunities.

02. To gain competitive edge. CEOs spoke of how AI provides the opportunity to free up resources and dollars for better innovation or customer service. As one shared: “The biggest impact of AI is on internal productivity. That will allow us to shift dollars to developing products and services for customers. Those who can do that shift sooner will get a competitive advantage.” Or, as another said: “The most important part of this is that the amount of technology we now have to improve reliability for our customers is as high as it has ever been.”

Key lessons from CEOs whose organizations are actively adopting AI

Our attendees shared the opportunities, challenges, and lessons they faced when implementing AI across their organizations.

Lesson 1: One of the greatest risks of AI is not moving fast enough

The group discussed how AI-powered transformation delivers not only opportunities for their organizations, but also risks. A top concern was cybersecurity, with CEOs sharing that the very characteristics that make AI powerful, such as its ability to process large amounts of data, can also create vulnerabilities that cyber attackers exploit. As one CEO said: “It looks astonishingly real that AI will be a cyber risk topic very soon.”

Regulatory complexity was another concern. While regulations around ethical and responsible AI are still being written, there were fears that government efforts to regulate the technology may become overbearing. “There is a risk that governments will over-regulate the situation, so we’ll need a ton of compliance people to try to understand the intricacies of laws and policies,” one CEO said. Another CEO agreed, sharing: “What I see is that Americans innovate on AI and then Europeans regulate it before it’s even here.”

However, CEOs believed that the greatest risk of AI was inaction. As one said: “The risk is that if you are not part of this, your competition will surpass you, so you better get on board and get in front of it.” Some did caution that organizations need to be careful around being a first mover in the AI space—and that while you would have an advantage of being first, you run the risk of making large and costly mistakes, putting your reputation as an “AI driver” at stake. Yet, overall, attendees were clear that AI was an opportunity not to be missed.

Lesson 2: AI is not just a technology challenge, but a leadership challenge

CEOs also discussed the importance of thinking beyond AI adoption as a technical implementation and infrastructure challenge. While the group agreed that prior digitization efforts were critical to unlocking the benefits of AI, they also recognized that AI transformation was first and foremost a leadership challenge. As one CEO said: “At the end of the day, business is about people. If you think about AI as a change initiative on steroids, and then add regulations and risks on top, it’s going to be a leadership challenge, rather than a technology challenge.” 
There was recognition that AI adoption and implementation starts at the top—led by an AI-informed CEO. As Jens-Thomas Pietralla, co-lead of Russell Reynolds Associates’ Global Board & CEO Advisory Partners Practice and member of RRA’s Industrial & Natural Resources sector, said: “AI is something that’s been here for a while. But the acceleration that we have recently experienced—and that will undoubtedly be with us for years to come—means that we as leaders need to find answers on how to adopt this fast and at scale.”

The group spoke about the importance of functional teams breaking free from siloes to work together in a networked manner. Without this, there can be no meaningful transformation, they said. Key strategies included investing in personal learning, distinguishing hype from practical applications, and fostering a culture of innovation and cross-functional collaboration. “The challenge for the CEO is making sure that the interplay across all functions is a lot better,” one CEO said. “You’ve really got to understand how everything comes together and that puts a lot of emphasis on the leadership ability of the CEO.”

There was also a recognition that curiosity and a high learning quotient (LQ) will be critical leadership skills in an AI age. As one CEO shared: “The large language models that are now available to the public were only published 1.5 years ago and thousands more are being developed right now. It is only just starting. We have no idea what’s coming at us. So, what we need is fascination, innovation, curiosity, and continuously trying to learn and understand what’s going on.”

Lesson 3: Leaders need to blend top-down mandates with a culture of experimentation

While AI implementation needs to be led from the top, there was recognition that CEOs must also foster a culture of experimentation across their wider organizations. As one CEO shared: “Innovation is so quick that we want to encourage small teams to experiment as quickly as possible without too much corporate direction. We want to promote it from the top down, but the action has to come from down below.”

The group discussed how it was critical that CEOs extinguished fear around the technology. Tristan Jervis, co-lead of RRA’s Technology Sector, shared how employees at one company had felt that AI was something that was “being done to them.” So, the CEO changed tack and promoted experimentation across the organization. “It has completely removed the barriers around protectionism and the management of data,” he said.

Ultimately, the goal is to lead top-down mandates while also ensuring innovation flourishes across the organization. As Tuck Rickards, a leadership advisor at RRA, said: “One of the terms that we hear a lot in our conversations with CEOs is "organized chaos." CEOs need to unleash experimentation and learning across the organization, while also bringing together a systems view around AI, so you can be thoughtful in bringing the full team ahead.”