Everyone knows that AI is impacting the way offices operate and how work gets done. But exactly how that is playing out and what it means for corporate strategy isn\u2019t always easy to pinpoint. Earlier this month, I went to a media day at McKinsey & Company\u2019s New York City headquarters to listen to leaders talk about the way that this technological revolution is playing out.<\/p>\n
Alex Singla, a senior partner at the firm and global leader of its QuantumBlack AI program, said that many of their clients choose to work with McKinsey because of their overall viewpoint on AI: It\u2019s used for a complete business reimagination of processes, workflows and domains, to solve actual business problems.<\/p>\n
But when you\u2019re reimagining business, it impacts many things about the workplace. Alexis Krivkovich, a senior partner and co-leader of the firm\u2019s global People and Organizational Performance practice, said that AI isn\u2019t just tools that help you do your job better; they should be replacing significant amounts of what people do. According to McKinsey\u2019s internal research, 60% to 70% of the work being done in an average organization today can be automated. Singla said that doesn\u2019t mean that jobs are going to be eliminated and replaced\u2014even entry-level positions commonly held by recent graduates. However, he said, those who can use AI are going to be more likely to get the jobs in the first place.<\/p>\n
\u201cIt\u2019s not like we\u2019re not hiring McKinsey business analysts,\u201d Singla said. \u201cWe\u2019re augmenting the way they work with AI tools to make them more effective, and focus on the things in which they add value: ambiguous problem solving, communication skills, change management\u2014which, at least today, AI is not replacing those types of problems.\u201d<\/p>\n
What AI can do, the analysts said, is flatten and streamline structures needed to make decisions. With complex decisions that cross different company silos, it\u2019s possible with AI to quickly gather the necessary data and compress meetings to actually talk about the decision, instead of taking up time coordinating who will find what and where and how it will be analyzed.<\/p>\n
Delphine Zurkiya, a McKinsey senior partner and leader of the QuantumBlack program in life sciences, added that AI also excels at boring things that companies should do but don\u2019t have the people for, like verifying contracts to ensure that everything is correct. This type of verification could yield immediate ROI, and would also require that a person ensure the analysis is accurate.<\/p>\n
Krivkovich said that executives and leaders need to be open to the transformations that AI could bring to the company, knowing that the technology could change value propositions. Singla agreed.<\/p>\n
\u201cThe best leaders that I see working in the digital and AI space have both inspiration and humility,\u201d Singla said. \u201cWhat I mean by that is they have inspiration, in that, to Alexis\u2019s point, they have a bold ambition that says, \u2018We\u2019re going to transform this business, this workflow, or the entire enterprise.\u2019 They set this aspiration to get a rallying cry around the organization.<\/p>\n
\u201cAt the same time, they have some humility to know that this is a relatively new technology and there\u2019s newness in regards to how it\u2019ll drive impact to the P&L, how it will impact employees,\u201d he continued. \u201cThat nobody knows exactly what the implications all are.\u201d<\/p>\n
Corporate boards are also trying to figure out the implications of AI on company operations and strategies. I spoke with Dylan Sandlin, cybersecurity and digital content program manager at the National Association of Corporate Directors, about how boards tend to engage with AI and how executives can work with those perspectives. An excerpt from our conversation is later in this newsletter.<\/p>\n
This is the published version of Forbes\u2019 CEO newsletter, which offers the latest news for today\u2019s and tomorrow\u2019s business leaders and decision makers. Click here<\/a> to get it delivered to your inbox every week. President Donald Trump takes a question before signing executive orders in the Oval Office establishing the “Trump Gold Card” and a $100,000 fee for H-1B visas.<\/p>\n Andrew Harnik\/Getty Images<\/p>\n H-1B visas, commonly used by companies to allow specialized foreign workers with college degrees to stay in the U.S., are about to get much more costly. A Friday night proclamation<\/a> from President Donald Trump hiked the annual fee for the visas to $100,000\u2014up from $780 for employers who petition to receive the visas for their employees, or $215 to be selected through a lottery. There\u2019s an annual cap of about 85,000 H-1B visas for private companies, and the program is used by many U.S. tech companies.<\/p>\n The fee hike fits with the Trump Administration\u2019s pushback on immigration. In August, Commerce Secretary Howard Lutnick said the program is a \u201cscam that lets foreign workers fill American job opportunities,\u201d and Vice President JD Vance has accused tech companies of laying off American workers to apply for H-1B visas.<\/p>\n At this point, it\u2019s unclear<\/a> how and when the fee hike will take effect, though a White House official told Bloomberg it will only be for new H-1B applicants, not those who already hold the visas. But the policy is already making waves. Deedy Das, a partner at the venture capital firm Menlo Ventures, said the added fees could keep the brightest global talent from working in the U.S., and \u201cif the U.S. ceases to attract the best talent, it drastically reduces its ability to innovate and grow the economy.\u201d<\/p>\n According to federal data, Amazon employed the most workers (10,044) using H-1B visas as of June 30, followed by Tata Consultancy Services (5,505), Microsoft (5,189), Meta (5,123), Apple (4,202) and Google (4,181). The new fee disproportionately affects<\/a> talent from India\u2014about 73% of H-1B applicants approved in FY 2023 were Indian born, and the subcontinent has been the biggest beneficiary of the visas every year since 2010. In early trading on Monday, stocks of global Indian companies\u2014including Tata and Infosys\u2014dipped, but mostly rebounded by midday. U.S. tech companies, including Amazon, saw slight losses on the markets, but nothing too notable Monday morning.<\/p>\n ECONOMIC INDICATORS<\/p>\n Federal Reserve Chair Jerome Powell speaks at the news conference following last week’s meeting of the Federal Open Market Committee.<\/p>\n Chip Somodevilla\/Getty Images<\/p>\n For the first time this year, the Federal Reserve\u2019s Open Market Committee voted last week to lower interest rates. By a near-unanimous 11-1 vote, members took rates down<\/a> a quarter point to between 4% and 4.25% from the 4.25% to 4.5% range they have been at since last December. The lone dissenting vote was brand new member Stephen Mirran, who favored a larger half-point cut.<\/p>\n Despite President Donald Trump\u2019s constant rallying for large interest rate cuts, the calculus behind the reduction has been a difficult one. The Fed has a dual mandate: Keeping inflation under control and maximizing employment. With pervasive economic uncertainty across all sectors, inflation has been sticky and persistent at 2.9% in August, and unemployment reached 4.3% with much slower job growth than expected. \u201cIt\u2019s a challenging situation when our goals are in tension like this,\u201d Federal Reserve Chairman Jerome Powell said at a press conference<\/a> after the meeting.<\/p>\n There will likely be two more small rate cuts this year, but this first one will start having positive effects<\/a> on businesses immediately, writes Forbes senior contributor Rohit Arora. It will be cheaper for companies to borrow money, accelerating investments that have long been in the planning stages. And lower rates mean less money spent on debt service\u2014meaning companies can reallocate some of those funds\u2014as well as potentially more spending power for consumers. For consumers<\/a>, mortgage rates are likely to fall\u2014meaning the potential of more activity in the housing market and all of the businesses that are lifted by it. Rate cuts tend to send down yields for Treasury bonds as well, which also tends to reduce borrowing costs for credit cards and business and vehicle purchases.<\/p>\n FROM THE HEADLINES<\/p>\n Demonstrators protest the suspension of the “Jimmy Kimmel Live!” show last week outside the El Capitan Entertainment Centre, where the show is broadcast.<\/p>\n CHRIS DELMAS\/AFP via Getty Images<\/p>\n Last week, ABC indefinitely pulled<\/a> late-night show Jimmy Kimmel Live off the air after what sounded like veiled threats from FCC Chairman Brendan Carr, raising accusations of federal government interference in free speech. Kimmel, who has long been a critic of President Donald Trump and his political movement, made comments on his show last Monday about Trump followers trying to distance themselves from the accused killer of conservative podcaster Charlie Kirk. Following these comments, Carr called<\/a> for ABC to take action against Kimmel and suggested that the FCC might, saying, \u201cWe can do this the easy way or the hard way.\u201d<\/p>\n Local TV station owner Nexstar, which owns several ABC affiliates, said before the network\u2019s announcement that it would pull Kimmel\u2019s show. But Nexstar is in a precarious position. It\u2019s currently seeking regulatory approval from the FCC for its proposed $6.2 billion acquisition of local station owner TEGNA\u2014which also would require the FCC to change its rules limiting a single entity to reaching 40% of U.S. households.<\/p>\n Media company capitulation to the Trump Administration\u2019s preferences has helped<\/a> pave the way for FCC approval. In July, the FCC approved the long-pending merger between Paramount and Skydance Media after Paramount eliminated DEI programs, paid $16 million to settle a lawsuit brought by Trump complaining about editing of a 60 Minutes interview with former Vice President Kamala Harris, and cancelled The Late Show with Stephen Colbert, another comic who routinely skewers the Trump Administration. For his part, Trump has cheered Kimmel\u2019s suspension, and told reporters<\/a> last week that broadcast licenses \u201cmaybe\u201d should be pulled from broadcasters critical of him.<\/p>\n ABC\u2019s decision has been criticized across the board. Other late-night hosts criticized ABC<\/a> and the Trump Administration for what they called blatant censorship. Six Democratic leaders in Congress issued a statement<\/a> last week saying that Carr \u201cengaged in the corrupt abuse of power\u201d and urged him to resign. Some legal experts said this is an example of jawboning\u2014using official speech to inappropriately compel private action.<\/p>\n Michael Eisner, former CEO of ABC parent company Disney, joined the criticism<\/a> with a post last week on X calling Carr\u2019s move \u201cyet another example of out-of-control intimidation.\u201d His post begins, \u201cWhere has all the leadership gone? If not for university presidents, law firm managing partners, and corporate chief executives standing up against bullies, who then will step up for the first amendment?\u201d<\/p>\n TOMORROW\u2019S TRENDS Dylan Sandlin, cybersecurity and digital content program manager at the National Association of Corporate Directors.<\/p>\n NACD, Getty<\/p>\n When looking at enterprise AI use and strategy, executives don\u2019t control everything by themselves. Corporate boards also play a role in how AI will change the way companies do business. I spoke with Dylan Sandlin, cybersecurity and digital content program manager at the National Association of Corporate Directors, about how boards tend to engage with AI and how executives can work with those perspectives. This conversation has been edited for length, clarity and continuity.<\/p>\n Are boards looking at AI and considering its possibilities differently than executives right now?<\/p>\n Sandlin: From the board perspective, they\u2019re looking at this technology and evaluating it more from the holistic picture of business impact. On the executive side, given their role\u2019s specific focus, they\u2019re going to be much more focused on specifically how AI can impact their function.<\/p>\n What\u2019s valuable in these board conversations is that\u2019s where you can start to connect these dots that aren\u2019t necessarily as readily apparent in the day-to-day operations of the business. Having that holistic picture is where the board is able to provide a lot of value to the conversation.<\/p>\n In terms of how boards are looking at it, there\u2019s obviously an element that is an incredibly rapidly developing technology that evolves day in and day out. Boards are constantly balancing this paradoxical tension. On the outside, there\u2019s this almost-FOMO, this pressure to keep up because there\u2019s so many announcements about companies investing or spending this amount of money on AI initiatives. There\u2019s an understanding that this technology is going to be pervasive across the economy, and you\u2019re going to need to engage with it to keep up and remain competitive.<\/p>\n On the other side of that tension, there is the business impact. There\u2019s an understanding that this is going to implicate change management because when new tools, platforms or systems are introduced, it\u2019s usually with a primary objective of increasing efficiency and reducing costs, which typically pulls in the direction of at some point reducing headcount.<\/p>\n So there\u2019s this kind of paradoxical tension between: You want to do what you need to do in order to remain competitive, but you also want to make sure that you are adopting and scaling these technologies responsibly and in a way that allows for sustainable value creation over the long term. That\u2019s really where the tension at the board level arises. When management engages with the board, obviously they have a mandate of increasing value while also reducing costs. It\u2019s up to the board to really set that direction.<\/p>\n You said that directors have been spending time dealing with AI and how it is used in companies. What are some of the issues that they have been engaging with more, and how do you see those changing in the near future?<\/p>\n We see a lot of focus on education and awareness about what the technology can do, what’s state-of-the-art and where is this technology going?<\/p>\n In terms of where boards are focused, board members want to know whether or not this technology is going to impact their strategy. Are they strategically viable moving forward? But then there\u2019s a whole host of other things that stem from that. If you\u2019re going to incorporate AI into your strategy, are we going to need to make additional investments in order to operationalize this? Do we potentially need to pursue partnerships or mergers and acquisitions to acquire capabilities that we need, or are we going to develop them organically?<\/p>\n And then there\u2019s also the talent piece. Is our workforce ready for this transition? What type of retraining and skill development do we need? What is our overall workforce going to look like? How do we protect our talent pipeline to ensure that we continue to get strong cohorts of entry-level workers that can be developed into leaders over time, because we want to avoid having a period where we’re not getting talent that eventually stifles our leadership pipeline.<\/p>\n Then the other aspect of the talent piece is you\u2019re seeing all of these gargantuan sums of money being spent on high-level AI talent, primarily amongst the leading labs and AI developers. The conversation that I\u2019m hearing starting is viewing these hires as part of the overall investment, not necessarily overhead. You think about the costs of training a model\u2014it can be incredibly expensive\u2014and if paying upfront a little bit for that expertise can save a lot of money on the training and deployment down the road, it could be worth it.<\/p>\n What advice would you give to executives for working with the board on AI technology, AI governance and charting a path forward?<\/p>\n A lot of directors don\u2019t expect all of the answers right away. There\u2019s an understanding that some of the ideas that executives might have pertaining to this technology can come a little half baked, but then you can have the discussion about it.<\/p>\n I think the focus should always be around displaying to the directors on your board that you\u2019re thinking about this strategically. Ultimately, you can\u2014through a roadmap or some other sort of mechanism\u2014display the impact you see from this technology over the long term or over a reasonable time horizon. Because for a lot of these things, it\u2019s difficult upfront to determine a specific ROI or any sort of return. Focusing on: where does this potentially provide us a competitive advantage is really what the board is going to be focused on. Then, also protecting your core business. How do we make sure that we\u2019re not disrupted?<\/p>\n When you\u2019re engaging with the board on this topic, having that as the ultimate goal and outcome is meeting the board where not only they want to have the conversation, but where the board can provide management the most value.<\/p>\n COMINGS + GOINGS<\/p>\n Cloud computing provider Oracle appointed Clay Magouyrk and Mike Sicilia as its new chief executive officers. Magouyrk was previously president<\/a> of Oracle Cloud Infrastructure, and Sicilia was president of Oracle Industries. They are succeeding Safra Catz, who is transitioning to a role as executive vice chair of the board of directors. STRATEGIES + ADVICE<\/p>\n Actor, environmentalist and supporter of independent films Robert Redford died last week at age 89. His life and legacy leave many leadership lessons<\/a> for today\u2019s executives.<\/p>\n If you\u2019re an entrepreneur feeling trapped by the success of your business, you can get out gracefully. Here are some tips<\/a> from HomeServe founder Richard Harpin about scaling your business, selling it and finding your replacement.<\/p>\n QUIZ<\/p>\n Alphabet-owned robotaxi provider Waymo has been serving the Phoenix airport for some time, and recently got permission from another airport for a pilot program. Which airport will Waymo serve now?<\/p>\n A. San Francisco<\/p>\n B. Seattle-Tacoma<\/p>\n C. Austin<\/p>\n D. Memphis<\/p>\n
\nHUMAN CAPITAL<\/p>\n
\nHow Corporate Boards Are Looking At AI<\/p>\n
\n Beverage and brewing company Molson Coors promoted Rahul Goyal as its new president and chief executive officer, effective October 1<\/a>. Goyal joined the firm in 2001 and was previously the chief strategy officer. He will succeed Gavin Hattersley.
\n Energy infrastructure company Enerflex hired Paul Mahoney as its new president and chief executive officer, effective September 29<\/a>. Mahoney was previously group president of production and automation technologies at ChampionX.<\/p>\n