By Hans-Petter (”HP”) Dalen
AI literacy has become a critical leadership competency, enabling executives to assess risks, opportunities, and ethical implications of AI adoption. Closing the skills gap ensures responsible integration, drives productivity, and aligns AI with business strategy. Leaders who cultivate literacy can future-proof operations, foster innovation, and guide organisations through transformative change.
Today, nearly every organisation is experimenting with artificial intelligence (AI) — yet how many have mastered its effective use?
Recent research shows that 60% of leaders report an AI literacy skills gap within their organisations, underscoring the urgent need for education. This gap is not just technical — it is strategic. AI literacy has become a core leadership competency, enabling executives to make informed, ethical, and effective decisions in an AI-driven world.
What AI literacy really means for business leaders
AI literacy is about more than understanding what AI can do. It’s the ability to question outputs, recognise limitations, and assess implications for strategy, operations, and culture. Importantly, it is everyone’s responsibility, not just that of executives. Those who work with processes day-to-day often have the clearest insight into where AI can create value. Empowering them to identify opportunities and shape AI solutions ensures adoption is practical, effective, and fully aligned with organisational goals.
But it exists on a continuum. At one end lies awareness – recognising AI’s capacity to automate tasks or generate insights. At the other is deep expertise – overseeing responsible implementation, assessing ethical risks, and anticipating organisational impact. Most leaders sit somewhere in between: intrigued by AI’s potential but unsure how to deploy it effectively.
This gap matters. Without a foundational understanding of how AI can and should be used, blind spots emerge, leading to inefficiencies, missed opportunities, or reputational risks. Embedding AI successfully requires literacy at the top: leaders who can identify where it adds value, align it to business goals, and ensure it is applied responsibly.
AI’s impact on workforce strategy
AI is already reshaping how organisations operate, from automating routine tasks to transforming recruitment and employee engagement. Two-thirds of the 3500 senior leaders across Europe and the Middle East who responded to a recent IBM and Censuswide survey reported already seeing significant productivity gains from AI at their organisations.
Leaders who lack AI literacy risk mismanaging this opportunity — creating resistance, talent gaps, or misaligned strategies. For example, generative AI and workplace assistants can enhance productivity and employee experience, yet misinterpretation or oversight can introduce bias, privacy, or governance risks. Understanding these dynamics is essential for leaders to integrate AI responsibly through clear guardrails and human oversight.
Bridging the literacy gap
To harness AI’s full potential, leaders must align learning and development initiatives with business objectives. Building a culture of AI literacy — where curiosity, critical thinking, and ethical awareness are encouraged — ensures that AI is viewed as both a competitive advantage and a responsibility.
AI-literate leaders know when to automate, when to apply human judgment, and how to evaluate the return on investment. They understand how AI can enhance productivity, predict outcomes, or improve the employee and customer experience — without losing sight of the human factor.
Without this understanding, AI adoption often remains superficial, and leaders will struggle to capture tangible metrics which show its true value and impact on operations. To deliver lasting results, organisations need systemic integration — embedding AI intelligently into strategy, operations, and talent management.
IBM as Client Zero: Embedding AI literacy from within
At IBM, we treat AI literacy as a leadership and cultural priority through our Client Zero philosophy — becoming the first user of our AI products before they reach the market. This hands-on experience helps leaders understand how AI works in practice, its limitations, and the ethical considerations involved.
Initiatives such as the watsonx Challenge, which trained nearly 170,000 employees to design AI agents, and the AskHR agent, which supercharged our HR chatbot to handle 11.5 million interactions in 2024, have strengthened AI literacy across the workforce. Leaders and employees alike report greater confidence in applying AI responsibly and making informed decisions about adoption and oversight.
By testing internally, we can also reduce privacy, accountability, and governance risks – while ensuring leaders gain practical knowledge to guide the organisation effectively.
The leadership imperative
Closing the AI literacy gap is no longer optional – it’s a leadership imperative. Executives who can critically assess AI’s risks, rewards, and real-world implications will shape the next era of business transformation.
As AI continues to redefine work, commerce, and society, the depth of a company’s leadership literacy will directly determine its ability to innovate, build trust, and future proof its operations.
Leaders who commit to continuous learning and ethical integration will not only unlock AI’s full potential but also guide their organisations responsibly through one of the most profound technological shifts of our time.
Hans-Petter (”HP”) Dalen
