AI Leadership for Boards – The Future of Corporate Governance 3/3

F. Torre, R. Teigland, L. Engstam

Part 2.

5/ Boards for AI Leadership

  • The promise is simple: having AI can disrupt the market, drive growth and manage risk.

  • MK: I can’t copy the tables and recommendations due to copyright :(

  • Obviously, the tool is a 2x2 table with the following axis:

  • Y: Guiding AI Operational Capability (see above): none, planned / piloting, operational, advanced, differentiating, leading.

  • Same data points for X: Supervising AI Governance Capability.

  • The tool still doesn’t provide an answer as to why the Board and not the company should drive these activities.

6/ Beyond Competence to the Future of Board Work

  • Indeed, entire Boards can’t be proficient in AI, so having a technology / innovation committee consisting of the people capable of digging deeper and supervising the activities is a good idea.

  • Boards should be aware of the potential of the AI technologies for their firms: will the staff be made redundant as a result (retraining and new jobs within the firm will be needed), or will the job tasks be augmented with AI (minor training and new compensation structures may be needed)?

  • There’s a gender diversity concern, too: many new jobs involving AI require STEM knowledge and skills, and in many countries women have been disadvantaged in this respect.

  • The book makes a mention of AI helping nomination committees to find new Board members and assessing the current Board members’ skillsets, but these tools shouldn’t be solely relied on.

  • It’s not clear how AI may help small-to-medium companies in identifying their capital spending patterns (not enough data); there are moderately successful implementations of AI predicting churn and employee morale. Analysing market data and spotting changes in customer preferences has been done for decades, and it’s not very clear what additional value AI can bring to the table.

  • The book lists two examples when AI bot became a Board member; this looks nothing more than a publicity stunt, and in 2019 one of the firms canned the initiative (something the book conveniently failed to mention). Another firm no longer lists their AI bot in the list of Board members. MK: be very critical of examples coming from the consultants who want to convince you of a bright future.

  • NLP (natural language processing) tools can analyse the Board meeting proceedings (in verbal and written form) and draw conclusions thus increasing transparency. [MK: one wonders if this will be allowed by Boards themselves, and my guess is that no, it won’t.]

  • Using AI for decision making can have unexpected legal implications since, for instance, a Board member has to be a natural person.

  • MK: Then the book goes on to list the cliché recommendations for Board’s attention (more thinking about the future rather than controlling, think of stakeholders, not just shareholders, etc.)

7/ Conclusions

  • MK: The entire book literally has the content of one page blown up over 83 pages.

  • AI implementation poses a serious risk for non-IT firms in regulated industries (finance, healthcare).

  • That’s it. Not the best $15 I’ve spent in my life.