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Building AI Trust: The Crucial Role of Explainability

2024-11-26

Artificial intelligence holds the promise of significant economic gains and positive social change worldwide. In 2024, the adoption of AI-powered software and platforms has surged, but so has the trepidation. McKinsey research shows that 91 percent of respondents doubt their organizations' preparedness to implement and scale AI safely and responsibly. This doubt is understandable given the novel risks posed by generative AI, such as hallucinations and inaccurate outputs.

Why Trust is the Foundation for AI Adoption

To capture the full potential value of AI, organizations must build trust. Trust is essential as it leads to the adoption of AI-powered products and services. If customers or employees lack trust in AI systems, they won't use them. Understanding how AI-powered software works and how its outputs are created increases trust. In a McKinsey survey, 40 percent of respondents identified explainability as a key risk in adopting generative AI, yet only 17 percent were working to mitigate it.

Enhanced AI Explainability (XAI): The Key to Building Trust

XAI is an emerging approach to building AI systems that helps organizations understand their inner workings and monitor output objectivity and accuracy. By shedding light on black-box AI algorithms, XAI increases trust and engagement among AI tool users. This is crucial as AI initiatives move from early use case deployments to enterprise-wide adoption.

Why Invest in XAI: Getting ROI

In an uncertain AI landscape, organizations must consider the benefits and costs of enhancing AI explainability. Leading AI labs like Anthropic are betting on XAI as a path to differentiation. Enterprises also need to meet stakeholder and regulatory expectations. Demand for XAI is rising, with global AI regulations imposing transparency requirements. Organizations need methods to provide visibility into AI model building and testing. XAI is a set of tools and practices to help humans understand AI model predictions and content. It requires investments in tools, people, and processes.

Operational-Risk Mitigation through XAI

XAI enables early identification and mitigation of potential issues in AI models, reducing operational failures and reputational damage. For example, financial services companies use AI in fraud detection but often struggle to understand their systems. Explainability helps them fine-tune systems and introduce human oversight.

Regulatory Compliance and Safety with XAI

XAI ensures AI systems operate within frameworks, minimizing compliance risks and protecting brand integrity. In human resources, explainability ensures fair hiring decisions. It helps organizations understand why models make certain decisions and avoid bias.

Continuous Improvement with XAI

XAI supports the ongoing refinement of AI systems by providing insights into their functioning. It helps developers debug and improve systems to align with user and business expectations. Online retailers use explainability to improve recommendation engines.

Stakeholder Confidence in AI through XAI

XAI shifts the focus from AI model technical functioning to users, fostering a human-centric approach. In healthcare, it helps doctors understand AI systems, driving confidence and adoption.

User Adoption Boosted by XAI

XAI helps organizations monitor model output-user expectations alignment, increasing adoption, satisfaction, and top-line growth through innovation and change management.

XAI as a Human-Centered Approach to AI

Organizations need to understand diverse stakeholder needs and align explainability efforts. Stakeholders include executive decision makers, AI governance leaders, affected users, business users, regulators/auditors, and developers. Different stakeholders require different types and formats of explanations. AI explainability is like a bridge between engineers and end users, with AI-savvy humanists in the middle.

How XAI Works and Available Techniques

The XAI community creates new explainability techniques. They can be grouped based on stakeholders' intents and goals along two dimensions: when the explanation is produced (before or after training) and the scope (global or local). Post-hoc methods analyze trained models, while ante-hoc methods refer to intrinsically explainable models like decision trees. Global explanations help understand model decisions across all cases, while local explanations focus on specific decisions.

How to Start with XAI

Organizations should build cross-functional XAI teams comprising data scientists, AI engineers, domain experts, compliance leaders, regulatory experts, and user experience designers. They should establish a mindset of builders, engage early in the idea shaping process, define clear objectives, develop an action plan, measure metrics and benchmarks, select or build appropriate tools, and monitor and iterate.As enterprises rely more on AI-driven decision making, transparency and understanding become crucial. Trust is the key to responsible AI adoption, supported by pillars like explainability, governance, information security, and human-centricity. These pillars will enable AI and its users to interact harmoniously and deliver value while respecting human autonomy.

Some individuals discover their life's purpose at a young age. Take Leonard Riggio, the chairman of Barnes & Noble. He stumbled upon his calling when inspired to open his first bookshop. This led to a revolutionary transformation in the bookselling realm as he established book superstores. Through strategic pricing, an expanded selection, ingeniously designed spaces, and cozy cafés, he managed to attract customers and boost sales, leaving his competitors envious.

The Power of Personal Experience

Former Warner-Lambert CEO Melvin Goodes joined the pharmaceutical company in 1965 and found similar inspiration. While working to stabilize the struggling drugmaker, he faced criticism of the cholesterol-reducing drug Lipitor. But Goodes took matters into his own hands by trying the drug himself and was motivated to share the positive results with financial analysts. This decision proved to be a turning point as Lipitor became the world's best-selling drug, generating an astonishing $2 billion in sales. 1: Melvin Goodes' act of trying the drug demonstrated his commitment and belief in its efficacy. It showed that sometimes, personal experience can be the key to unlocking great success. By sharing his positive results, he was able to build trust with the financial analysts and gain their support. This, in turn, led to the remarkable success of Lipitor. 2: The story of Melvin Goodes serves as a reminder that in the business world, innovation and determination can lead to extraordinary achievements. His willingness to take risks and go against the norm helped him turn a struggling drug into a global phenomenon.

Hewlett-Packard's Trailblazer

Hewlett-Packard executive Roy Clay Sr. faced discrimination that initially hindered his professional growth. However, he remained undeterred and persevered. Eventually, he became Hewlett-Packard's first Black executive and led the team that built HP's first computer. His story is a testament to the power of resilience and determination in the face of adversity. 1: Roy Clay Sr.'s journey was not an easy one. He had to overcome the barriers of discrimination and prove himself in a male-dominated industry. But his unwavering commitment and leadership skills allowed him to achieve great things. His success opened doors for other Black professionals and inspired them to pursue their dreams within the company. 2: By becoming the first Black executive at Hewlett-Packard, Roy Clay Sr. set an example for future generations. His leadership and innovation played a crucial role in the company's growth and development. His story is a source of inspiration for all those who face challenges in their careers.

Stanford's Feminist Advocate

Frances Conley, Stanford's first female surgical resident, fearlessly protested the promotion of a sexist colleague. Her actions inspired other women to share their own stories, and Stanford responded by encouraging her to remain on staff. Although she was not embraced by her male team, she was highly respected by the patients and female medical students she inspired. 1: Frances Conley's courage in standing up against sexism was a significant moment in Stanford's history. Her actions showed that women have the right to be heard and respected in the workplace. By sharing her story, she empowered other women to fight for their rights and pursue their careers. 2: Despite the lack of acceptance from her male team, Frances Conley's impact was undeniable. She became a role model for future female medical students and showed them that they can make a difference even in a male-dominated field. Her story is a reminder of the importance of gender equality in all aspects of life.

Since the Business Roundtable's redefinition of a corporation's purpose five years ago, the landscape of stakeholder capitalism has evolved. CEOs now face the challenge of managing a diverse range of relationships through proactive communication. This article explores the key attributes and strategies that set the world's best CEOs apart in their stakeholder engagement efforts.

Unlock the Power of Stakeholder Engagement for CEOs

Expanded: Embrace your role as the bridge to the outside

In recent years, CEOs worldwide have found themselves on the public stage, expected to have views on various issues. Herbert Hainer, former CEO of Adidas, realized the importance of being on the front line with external stakeholders. To make the most of this platform, CEOs need thorough preparation, reflecting on their leadership journeys and understanding their organizations' unique positions. For example, companies where CEOs listen to frontline employees are 80% more likely to implement better working methods. Innovative leaders also look outside their organizations to understand the competitive landscape and learn from successful communication strategies.

Distinctive: Become the storyteller in chief of a singular, proprietary narrative

The CEO's role is unique in integrating perspectives into a distinctive narrative. Start with the Who and Why - communicate who the CEO is, their leadership journey, and what they aspire to achieve. Personalizing messages enhances their power. For instance, an automotive company CEO shares a story about a car crash to emphasize safety. The Why refers to the organization's purpose and contribution. High-performing companies are twice as likely to define their purpose to resonate with employees. By understanding stakeholder mindsets, CEOs can build more enduring relationships. We often find that CEOs underestimate the importance of the Who and the Why and need to focus on self-reflection.

Growth oriented: Empower a team of ambassadors to articulate the company’s story

While some messages come from the top, CEOs should create a team of leaders to carry and cascade the core narrative. Richard Davis, former CEO of US Bancorp, believes in having equal voices and storytellers on the management team. Communication skills need to be cultivated; organizations that train executives to engage with external stakeholders are more likely to succeed. By embedding communication as an institutional capability, CEOs can speak through their teams. For example, at a technology company, the COO focuses on the What and the When, while the founder and CEO concentrates on the Who and the Why. Investors, customers, and suppliers can also amplify the company's story.

Engaged: Maintain a consistent communication drumbeat, even during crises

CEOs spend 30% of their time with external stakeholders and need to prioritize. A best practice is to have a yearlong view of stakeholder management tasks. When deciding which stakeholders to engage with, strategic questions should be considered. Strong relationships are crucial during crises, and organizations that emphasize social responsibility are more likely to respond effectively. However, taking a public stand comes with risks. Effective CEOs know that galvanizing stakeholders around the organization's mission is essential, even if it seems less urgent. During crises, leaders need to show both strong and empathetic leadership.In the five years since the Business Roundtable's redefinition, stakeholders' voices have become more influential. Organizations and CEOs have the opportunity to deliver value to all stakeholders. An effective communication platform shifts the CEO's posture and approach, enabling them to cocreate a more impactful future with their stakeholders.