The Leadership Challenge Behind the AI Revolution

Fiona James-Martin | Carlyle

When Boards discuss AI, the conversation often begins with the technology: which tools to adopt, where productivity can improve and how quickly competitors may move. A more important question is receiving less attention: are the people leading the organisation equipped to make sound decisions in an AI-enabled business? That question matters because adoption and leadership readiness are not moving at the same pace. Many organisations are investing, experimenting and beginning to scale, while governance, accountability and leadership capability are still developing.

The evidence points to a capability gap

IDC’s Enterprise Horizons 2026 study of 800 technology leaders across Europe, the US and Asia-Pacific found that only 5% of organisations had reached transformative use of AI, while 62% remained at a limited use stage.

The Chartered Governance Institute UK & Ireland’s 2025 survey of more than 600 governance professionals adds a UK perspective. 74% were concerned about the accuracy of AI-generated content in corporate reporting, and only 44% said their organisation had policies in place to guide staff’s use of AI, against 46% who said it did not.

The Board-level findings are equally instructive. Understanding the technology itself was ranked the single biggest obstacle for Boards overseeing AI, ahead of managing risk and balancing innovation with ethical use. Enthusiasm for AI is moving ahead of Boards’ own AI literacy, and the disciplines needed to govern it are not always keeping pace.

PwC’s 29th Global CEO Survey reinforces the point. Based on responses from nearly 4,500 chief executives across 95 countries and territories, 42% said the question that concerned them most was whether their company was transforming quickly enough to keep pace with technology and AI. At the same time, 56% reported no significant revenue or cost benefit from AI. The technology is present; the leadership challenge is turning adoption into responsible, sustained value.

The real challenge is leadership, not technology

In conversations with Boards, CEOs and senior leaders, five capabilities increasingly appear central to closing this gap.

The ability to lead through constant change. Change used to be episodic; now it is part of the operating environment. Leaders need to create enough clarity and confidence for people to adapt, learn and contribute, even when the destination is still taking shape. Without that confidence, uncertainty can slow adoption regardless of the quality of the technology.

Governing without pretending to be the technologist. Leadership teams need to understand enough about AI to govern its use: to ask better questions, challenge the answers and set clear guardrails rooted in the organisation’s purpose, values and risk appetite. They do not need to master the technology. Their role is stewardship: understanding how AI supports the strategy, where accountability sits and where human judgement must remain decisive.

Holding the tension between efficiency and ethics. Many of the efficiencies AI offers are commercially attractive but create legitimate questions about fairness, transparency and responsibility. Deciding what should be automated, what should not and why, is a leadership judgement. It cannot be delegated entirely to a vendor, a spreadsheet or the technology function.

Building trust. People will draw conclusions from the choices leaders make about investment, roles, skills and progression. Microsoft’s 2024 Work Trend Index found that 71% of leaders would prefer to hire a less experienced candidate with AI skills than a more experienced candidate without them. The way leaders communicate and act on these choices will shape whether the workforce engages with AI or becomes wary of it.

Establishing clear ownership. AI strategy sits in different places in different organisations: sometimes with technology, sometimes data, people, operations or the customer function. There may be no single universal model, but ambiguity is risky. If AI becomes someone else’s responsibility, the wider leadership team can disengage. Opportunity, governance and accountability need to be shared across the executive table.

The leadership pipeline risk

There is another dimension of the capability gap that deserves greater Board attention: the effect AI may have on the future leadership pipeline.

Much of the judgement senior leaders rely on was built earlier in their careers through analysis, drafting, client exposure, mistakes and the gradual accumulation of pattern recognition. AI is beginning to absorb parts of that work. This creates a difficult question: if entry-level and developmental experiences reduce, how will organisations build the expertise required for more senior roles?

The risk is circular. Experienced judgement is needed to challenge and interpret AI outputs, but that judgement is developed through the very work AI may now perform. Organisations that treat AI only as an efficiency lever could unintentionally weaken the experiences that produce their next generation of leaders.

Workforce redesign in the age of AI is therefore not only a cost and productivity question. It is also a succession, capability and organisational resilience question.

What good looks like

The answer is unlikely to be a universal upskilling programme or simply creating a new role with “AI” in the title, although both may have a place. A stronger starting point is for Boards and leadership teams to address a set of practical questions together:

• Who owns AI outcomes, and is that ownership understood across the leadership team?

• Where must judgement remain firmly and deliberately human?

• Are we investing in leadership capability at the same pace as AI capability?

• How will redesigned roles continue to build experience and judgement?

• Leadership in an AI-enabled world

• What are we doing now to develop the leaders the organisation will need in five years?

These are the conversations we are having with Chairs, CEOs, Investors and other stakeholders. These questions rarely have one right answer, but every leadership team needs to reach a clear position on them. In an environment where the tools are increasingly accessible, differentiation will come less from access to technology and more from the quality of judgement, accountability and leadership around it.

The organisations that create lasting value from AI will be those that develop their leadership capability alongside their technical capability. For Boards and Executive teams, that is where the opportunity now lies.

Sources referenced

IDC / Expereo, Enterprise Horizons 2026: survey of 800 global technology leaders across Europe, the US and Asia-Pacific; 5% transformative AI use and 62% limited use.

Chartered Governance Institute UK & Ireland, The Future of Governance: AI: Transforming Professional Practices, 2025: survey of 620 members across the UK, Ireland and the Channel Islands; 74% concerned about the accuracy of AI-generated content in reporting; 44% aware of organisational AI policies versus 46% not; understanding the technology ranked as boards’ top AI governance challenge, ahead of risk management and ethical considerations.

PwC, 29th Global CEO Survey, 2026: 4,454 CEOs across 95 countries and territories; 42% concerned about transforming fast enough to keep pace with technology and AI; 56% reported no significant revenue or cost benefit from AI.

Microsoft, 2024 Annual Work Trend Index: 71% of leaders would prefer to hire a less experienced candidate with AI skills than a more experienced candidate without them.

Winterberry Group, Outlook for Advertising, Marketing and Data 2026: commentary on the erosion of junior roles and the emerging strategic expertise pipeline gap.