The GenAI Transformation: Perspectives on Leadership

The GenAI transformation is the technological phenomenon of our generation. On Udemy Business, the US-based consumption of ChatGPT learning surged 5,226% in Q1 2023 alone. This surge highlights the growing importance of learning GenAI skills to keep up with the scope of the change we are seeing in the workplace.

Generative artificial intelligence (generative AI) refers to advanced AI systems that can create original content, such as text, images, code, and designs, based on the data they are trained on. Unlike traditional AI, which focuses on analysis and prediction, generative AI produces new material, enabling new ways of working, learning, and innovating. Throughout this report, we’ll refer to it as GenAI for consistency.

No other recent phenomenon is likely to have as much impact on how we work and how we live. “A megatrend with systemic, existential implications,” according to PwC, GenAI is “poised to transform business models, redefine work processes, and overhaul entire industries [1].” While some roles, industries, and regions might be affected more than others, every employee will feel the tremors of these seismic shifts. This means that no other topic is more pivotal for today’s leaders.

Measuring the impact of AI on leadership

To measure how leaders are meeting the challenge of adapting to GenAI and advancing business objectives in their organizations, we launched a public survey in January 2024 that gathered more than 2,500 responses from employees across industries, levels of seniority, and company sizes. We asked for their perspectives on the role of their leadership team in navigating through GenAI transformation.

We dive into the survey findings in this report, looking at the overall and segmented data results to shed light on how employees in today’s organizations are thinking about what they need from their leaders when it comes to GenAI.

Leadership through GenAI transformation is essential — and our leaders are falling short

When a change to the workplace has implications as profound and far-reaching as the GenAI transformation, organizational leadership will play a key role. And employees understand this. The majority of the employees we surveyed believe that their leadership team is critical to this change, but that their leaders haven’t mastered some essential elements required for the organization to navigate through it and come out ahead.

The importance of effective leadership

Thanks largely to GenAI, as many as 30% of all work hours in the US economy could be automated in the next seven years, according to McKinsey [2]. At the same time, there will be considerable advantages for those who are able to harness GenAI effectively in their work. They should be able to focus on more strategic tasks and objectives, leaving more mundane and repetitive work to GenAI.

Leaders will need to decide where they want to take their companies and how GenAI can help them get there. Doing so has the potential to produce concrete business outcomes; a recent Deloitte survey found that most organizations are initially targeting more immediate benefits, such as increased productivity and efficiency, and reduced costs [3]. A smaller group of organizations reported targeting more strategic outcomes, such as greater innovation and growth. Companies that lean into GenAI to drive innovation may be able to enhance products and services or generate new ones, redesign employee and customer experiences, and enable new business models and ways of working.

Making these kinds of changes will require a cohesive strategy, realistic planning, and above all, upskilling and reskilling employees en masse to enable them to leverage GenAI in their work. For these reasons alone, effective leadership is critical  for the success of GenAI initiatives.

When we polled employees on how important the role of their leadership team would be to the success of their GenAI initiatives, the response was unequivocal. The overwhelming majority of employees — a full 88% — recognize the importance of effective leadership in successfully launching GenAI initiatives at their companies.

A lack of confidence in leadership’s readiness for GenAI transformation

The employees surveyed understand the important role leadership must play in navigating GenAI transformation, many of them lack confidence in their ability to do so. While our survey found that 55% are somewhat confident to very confident that the leadership team at their company is ready to lead them through this transition ahead of the competition, this leaves a full 45% who are not confident that their leaders have the skills needed. When it comes to belief in their leaders’ readiness, fewer than half (48%) believe that their leadership team is ready to lead successful GenAI initiatives.

In part, this is because many employees are daunted by the arrival of GenAI, the perceived effects it may have on their jobs, and the recognition that their leaders may also be feeling the same.

A recent survey of US employees from EY identified growing anxiety among employees when it comes to GenAI’s role in the workplace [4]. As GenAI is used more widely in work, anxieties have actually increased, with 71% of employees voicing concerns. Almost half (48%) are more concerned about AI than they were a year ago. Where leaders are unprepared and trying to catch up to the speed of GenAI transformation, it is negatively impacting their teams’ confidence in their readiness. It will be an essential hurdle for all leaders to counter employee anxiety and lack of confidence in order to guide their organizations through successful GenAI initiatives.

These indicators are warning signs for organizational leaders. As PwC states, the primary challenge for C-suite leaders hoping to prioritize transformation is that they have to reinvent their organizations, but: “Without the support and energy of all their people, these efforts will fail [5].” All employees have to be brought along on the journey — and have to buy into the journey — in order for GenAI transformation to be a success.

Leaders need to communicate the strategy and acknowledge the difficulties

Why are employees lacking in confidence and doubting their leaders’ readiness? Part of the answer is in how well-prepared their leadership team appears to be when it comes to the complexities and risks of GenAI initiatives. These new tools are powerful and transformative, but the risks they present also need to be honestly addressed and mitigated upfront. 56% of survey respondents do not view their leadership team as equipped to manage the ethical issues and risks that broad GenAI usage necessarily creates for any company.

Another key to the negative perception of leadership when it comes to GenAI initiatives stems from communication. Employees who took the survey ranked their leaders’ communication of company GenAI strategy and initiatives lower than any other area measured. 58% report that leadership is not communicating well with employees about their companies’ GenAI strategies and initiatives.

Leaders are standing between a rock and a hard place. They are caught between what PwC calls “the need for prudence and risk mitigation and the importance of moving quickly to grab emerging opportunities [6].” But they will only navigate this passage successfully if their employees are bought into the mission. Communication of a clear and compelling vision, as well as a realistic assessment of risk and reward, is essential for this to happen.

This is especially true when it comes to a transformation on the scale of GenAI, which will leave virtually no employee untouched. While as many as 69% of CEOs in PwC’s Annual Global CEO Survey report that they plan to invest in technologies like AI this year, another survey from PwC finds that only 21% of employees believe that they will gain new job opportunities from the GenAI transformation [7]. The solution to this imbalanced perception is more effective communication from leadership, and explaining how AI can make employees’ jobs better and not replace them.

Learn how to lead GenAI transformation with Udemy Business

The GenAI transformation is redefining what effective leadership looks like. As this technology reshapes industries and workflows, leadership determines whether AI becomes a competitive advantage or a missed opportunity.

Across our findings, employees made their expectations clear. They want leaders who communicate openly, acknowledge challenges honestly, and guide their teams with confidence and care. They want transparency, not perfection. And they want to see a strategy that balances innovation with responsibility.

To uncover more of the insights on how to lead the GenAI transformation, download the full report. You’ll learn more about:

• GenAI readiness across roles and how it affects middle management
• How enterprises are paving the way for GenAI adoption
• How technology, finance, and professional services industries are leading in GenAI readiness

Sources

1. PWC: “Reinvention on the edge of tomorrow”
2. McKinsey Global Institute: “Generative AI and the future of work in America”
3. Deloitte: “Now decides next: Insights from the leading edge of generative AI adoption”
4. EY: “How organizations can stop skyrocketing AI use from fueling anxiety”
5. PWC: “Rewiring the future of work”
6. PWC: “Reinvention on the edge of tomorrow”
7. PWC: “The Leadership Agenda”