11/19/24, 5:28 PM How AI Can Help Leaders Make Better Decisions Under Pressure

Decision Making And Problem Solving

How
MakeAI Can
BetterHelp Leaders
Decisions Under
Pressure
by Mark Purdy and A. Mark Williams
October 26, 2023

Illustration by Beatrice Caciotti

Summary. More and more businesses are turning to AI-powered technologies to

help close the data-insight gap and improve their decision-making capabilities in
time-critical, high-pressure situations. These technologies encompass a wide range
of tools,... more

Business leaders and managers face increasing pressure to make

the right decisions in the workplace. According to research by
Oracle and Seth Stephens-Davidowitz, 85% of business leaders
have experienced decision stress, and three-quarters have seen
the daily volume of decisions they need to make increase tenfold
over the last three years.

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Poor decision making is estimated to cost firms on average at least

3% of profits, which for a $5 billion company amounts to a loss of
around $150 million each year. The costs of poor decision making
are not just financial, however — a delayed shipment to an
important supplier, a failure in IT systems, or a single poorly
managed interaction with an unhappy customer on social media
can all quickly spiral out of control and inflict significant
reputational and regulatory costs on firms.

Against this backdrop, more and more businesses are turning to

AI-powered technologies to help close the data-insight gap and
improve their decision-making capabilities in time-critical, high-
pressure situations. These technologies encompass a wide range
of tools, including virtual assistants, virtual and augmented
reality, tools for process discovery and task mining, and an array
of data analytics and business intelligence platforms. Recently,
there has been tremendous interest in generative AI or large
language models (LLMs), a whole class of algorithms that are able
to ingest vast tracts of data — text, numbers, software code,
images, videos, formulas, and so on — understand their
probabilistic structure, and create summaries, answers,
simulations, and alternative scenarios based on these data. Well-
known generative AI models include OpenAI’s ChatGPT, Google’s
Bard, Meta’s Llama 2, and Anthropic, but there are many more.

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This article addresses three critical questions faced by decision-

makers in using these technologies: 1) In what contexts are AI
decision-making technologies likely to be beneficial? 2) What are
some of the challenges and risks of using these technologies? and
3) How can business leaders effectively benefit from these
technologies while mitigating the risks?

How AI Systems Can Improve Decision Making

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AI-powered technologies can drive faster and better decision

making in at least three main ways: real-time tracking and
improved prediction of on-the-ground business developments,
virtual role-play to train workers in life-like business scenarios,
and emerging generative AI tools that can answer questions and
act as advisors and virtual “sounding boards” for decision makers.

Improved tracking and prediction

With increasingly fine-grained data coming from technological
tracking of supply chains, firms can now understand where their
raw materials and inputs come from, who produced or supplied
them, and whether these inputs have been produced and sourced
in an environmentally friendly and ethical way.

Consider the case of Unilever, the consumer goods giant. The

company deployed an array of next-generation technology to spot
emerging signs of deforestation in its sprawling palm-oil supply
chain, especially in the critical “first mile” between farm and mill
where the risks of unauthorized production and deforestation
tend to be concentrated. For industrial users of palm oil — a
staple ingredient in food manufacturing, cosmetics, and fuels —
deforestation in far-flung supply chains is an ever-present
environmental risk. To get better insight into on-the-ground
conditions, the company uses anonymized analysis of mobile
phone signals to trace the flow of palm oil along its various
branching networks, helping to identify any unauthorized or
anomalous sources of supply. AI analysis of satellite imagery can
also pinpoint sudden or unexpected changes in the forest canopy,
providing real-time alerts to managers of potential deforestation
risks so that they can take preventive action.

Seaports are also turning to AI-enabled technologies to

orchestrate and streamline decisions, improve operational
performance, and ameliorate environmental impacts. Managing a
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seaport involves thousands of decisions each day: scheduling just-

in-time ship arrivals, determining safe water levels, managing
volumes and flows of container traffic, ensuring sufficient loading
and unloading capacity at terminals, making safety calls, and so
on. The margin for error is small, and AI can help keep errors at
bay.

The Port of Rotterdam, for example, has pioneered PortXchange

Synchronizer, a platform that assembles data from multiple
sources — vessels, shipping operators, public data, and AI
forecasting applications — to provide a real-time “dashboard”
view of every aspect of a vessel’s port call. The platform is being
used by seaports across the world — from Felixstowe in the UK to
Houston in the U.S. — to optimize decision making and long-term
planning around port operations and infrastructure.

Virtual role-play in real-world conditions

Many industries now deploy AI-powered technologies to equip
workers and managers with decision-making skills in a variety of
business scenarios — both the routine and the unexpected kinds.
For new call center employees, perhaps the most testing
experience comes from dealing with difficult, emotional, or
frustrated customers. U.S. telecommunications titan Verizon used
Strivr’s VR technology to immerse trainee customer agents in
virtual environments where they could swap roles with the
customer and see issues from their perspective. This immersive
experience enabled the trainees to make decisions that helped de-
escalate tensions and develop their verbal fluency in interactions
— a key factor in improving customer interaction outcomes.

Many other applications of VR to train people in decision-making

are possible, from policing to health care to engineering design to
utility infrastructure maintenance. The Fort Meyers Police Force
in Florida, for example, uses immersive technologies to help
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officers learn how to make critical decisions in high-pressure or

emergency situations, for example by taking steps to de-escalate
interactions with individuals with mental illness. Other police
forces are using the technology to help officers follow the right
protocols in dealing with road traffic accidents. Similarly,
SOCOM, the U.S. Special Operations Command, is using VR to
train decision-making skills under realistic combat scenarios,
whereas in health care, practitioners are using AI systems to help
them diagnose conditions such as breast cancer, eliminate dosage
errors, and conduct safer surgeries.

Whisperers, co-pilots, and virtual sounding boards

A third area where AI technologies — especially generative AI —
can play an important role in decision-making is as virtual
advisors and sounding boards. We interviewed Konstantinos
Mitsopoulos, a research scientist at the Institute for Human and
Machine Cognition (IHMC) in Florida, who told us:

In principle, generative AI systems can help overcome some of

the problems affecting human decision making, such as limited
working memory, short attention spans, and decision fatigue,
especially when it comes to making decisions under pressure.
Generative AI tools can potentially help decision makers save
time, conserve energy, and free up time to focus on the issues or
questions that matter most.

In health care, for example, AI systems can limit the cognitive

load on clinicians by automatically sifting and synthesizing key
data needed for effective decision making, reducing volumes of
unnecessary medication alerts, and automatically triggering
patient follow-up actions and communications. Many other
applications are possible, from business continuity and crisis
response management, to assessing risk in different types of
financial investments.
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An emerging application of generative AI is the development of

decision “co-pilots” that can assess information in dynamic
situations, suggest options and next-best steps, and complete
tasks. Fusion Risk Management, a Chicago-based company
providing software for managing operational risk, is developing a
generative AI-powered assistant called Resilience Copilot that
uses AI to sift large volumes of operational risk data, identify the
relevant elements for decision makers, and generate executive
summaries, instant insights, intelligent recommendations, and
best-practice improvements. In software development, GitHub
Copilot is using generative AI to provide developers with
suggestions for coding, helping organizations get their software
into the market much more quickly.

Generative AI is also being used to help organizations with

reputation management — for example, through “social
listening” tools that help marketing and social media managers
track online feedback and reviews in real time and make effective
decisions about how to respond. Reputation, a reputation
management software company based in California, provides
real-time monitoring of firm’s online reviews across multiple
social media channels, with real-time alerts to signal negative
sentiment scores, monitoring of crisis events, and prescriptive
recommendations for social media managers dealing with
negative comments.

One of the biggest potential applications of generative AI is in the

checking and testing of ideas, providing a kind of virtual
sounding board. We interviewed Matt Johnson, a senior scientist
at The Institute for Human & Machine Cognition (IHMC) and
former U.S. Navy pilot, who observed:

If used properly, generative AI could function as a really good

teammate, in the same way that I might want to talk through a

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problem with my colleagues even though I think I already have

the solution. It also potentially has a long organizational memory,
which is useful for people who may be relatively new to an
organization and want to find out how issues were handled
previously.
In fact, the “creative side” of generative AI is likely to become
even more important to decision makers in many different fields
and industries in the future. One reason is its ability to create
large volumes of “synthetic data” that can mimic the probabilistic
structure of real-world processes and events, often from very
small samples. Synthetic data can be used to create decision-
making models and scenarios for high-impact events that occur
infrequently — for example, very sophisticated frauds in
insurance that may be missed by human reviewers. Generative AI
can also create privacy-compliant versions of very large customer
data sets, which can then be safely shared for both AI and human-
led decision making. Mostly AI, an Austrian AI company founded
in 2017, has used synthetic data models for better decision making
in areas as diverse as health care analytics, digital banking,
insurance pricing, and HR analytics.

Imperatives for Building Human-Machine Trust

While AI systems are being used increasingly to support, and in
some instances supersede, human decision-making, challenges
and risks abound. These risks include issues of potential bias,
ethics violations, data-provenance concerns, and accuracy, to
name but a few. They also raise some pointed questions for
businesses investing in such technology. As a decision maker,
when do you trust the machine over the human? What are the
conditions for effective human-machine collaboration? How does
existing human expertise and judgement enter the equation?

Our research and experience suggest four imperatives for

business leaders:

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Be domain-specific
While generative AI models can in principle be applied to a vast
range of decision-making situations, they are likely to be much
more effective when applied to discrete problems using well-
defined organizational or market data. As Matt Johnson explains,
“Generative AI generally works better the more specific or well-
defined the area of human knowledge or expertise is, where there
is some kind of underlying model we can target — so for example,
in niche areas of marketing or in financial market decision
making, or in development of software code where there are vast
amounts of open-source software code available.”

Pay attention to the experience curve

Research indicates that the skills and experience profiles of
workers — whether they are experts or novices, or somewhere in
between — makes a big difference in how they interact with AI
technology and the expected impacts. In general, experts tend to
rely heavily on experience and intuition, using machines to sense
check or suggest alternative options. Experts can also be less
proficient with new technology if they have been in a field a long
time. Novices can use AI to “learn the ropes” and get faster
exposure to a range of different scenarios, but need real-world
practice to prevent over-reliance on machines. Skill levels,
experience, organizational knowledge, and proficiency with
technology are all factors that business leaders will need to
carefully calibrate in designing AI skills strategies and
applications.

Maintain expertise currency

While organizations may be tempted to see generative AI as a
short-term route to automation and cost savings, the longer-term
risks of worker and organizational deskilling are real. As Matt
Johnson puts it, “Maintaining expertise currency is crucial to

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using AI effectively and avoiding the dangers of worker

deskilling.” Drawing on his U.S. Navy pilot experience, he
observes: “Even pilots sometimes need to turn off the autopilot
and manually land the aircraft. Simulators are great for practicing
things you don’t want to do in actual flight, but you can’t
maintain your skills just on a simulator. You need to do the thing
itself … and it’s the same for using AI in business and
management contexts for decision making.”

Ask the right questions…in the right way

Generative AI is giving rise to a new discipline called “prompt
engineering” — in essence, how to structure questions and
prompts to AI systems to get the best possible answers.
Researchers have shown that experts in specific domains
generally tend to be much better than beginners or those in other
domains in phrasing questions to get useful input — for example,
by setting out the relevant factors to be considered, the key
parameters, what to leave out, and the format of desired outputs.
With many organizations now running “citizen AI” programs to
democratize AI usage across general business functions and
users, leaders will need to invest significantly in prompt
engineering skills across their enterprises.

...
Business leaders and managers today have more data, coming
from more sources, than ever before. Paradoxically, however, the
data deluge has only intensified the pressures on executives to get
critical decisions right. AI tools can lighten the cognitive load and
improve decision-making effectiveness in many ways: improved
tracking and simulation, realistic practice in virtual settings, and
real-time AI-powered decision advice. But, to realize these
benefits, organizations must approach human-machine
collaboration with their eyes open, paying attention to the

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strengths, weaknesses, and limitations of AI systems. Most

importantly, human decision makers must continue to develop
their own skills, expertise and judgement, so that they can use AI
in the right way while mitigating the risks.

MP
Mark Purdy is a thought leader and advisor on
issues at the intersection of economics,
technology and business. He is Managing
Director of Purdy & Associates, an independent
consultancy focusing on economic and
technology policy issues.

AW
A. Mark Williams is a Senior Research
Scientist at the Institute of Human and
Machine Cognition in Florida. He has
previously been a full professor at leading
universities in the UK, U.S., and Australia.

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