What Boards Need to Know About AI
The questions boards are going to have to ask themselves with regard to artificial intelligence are similar to those they would ask in the face of any large opportunity investment: Why are we spending all this money? What’s the economic benefit? How does it impact our people and our long-term competitiveness. Answering these questions requires expertise in technology. But you can’t just simply add a tech expert to the board and count on him or her to keep the rest of the board up to speed. Boards shouldn’t be intimidated by AI. Members don’t need to have degrees in computer engineering to understand the technology behind AI, just like they don’t need to be CPAs to understand the company’s balance sheet. When evaluating if a project is right for their company, boards should feel confident enough to say when something doesn’t make sense.
Being a board member is a hard job — ask anyone who has ever been one. Company directors have to understand the nature of the business, review documents, engage in meaningful conversation with CEOs, and give feedback while still maintaining positive relationships with management. These are all hard things to balance. But, normally, boards don’t have to get involved with individual operational projects, especially technical ones. In fact, a majority of boards have very few members who are comfortable with advanced technology, and this generally has little impact on the company.
This is about to change, thanks to machine learning and artificial intelligence.
More than half of technology executives in the 2019 Gartner CIO Survey say they intend to employ AI before the end of 2020, up from 14% today. If you’re moving too slowly, a competitor could use AI to put you out of business. But if you move too quickly, you risk taking an approach the company doesn’t truly know how to manage. In arecent report by NewVantage Partners, 75% of companies cited fear of disruption from data-driven digital competitors as the top reason they’re investing.
The questions boards are going to have to ask themselves are similar to those they would ask in the face of any large opportunity investment: Why are we spending all this money? What’s the economic benefit? How does it impact our people and our long-term competitiveness?
Answering these questions requires expertise in technology. But you can’t just add a tech expert to the board and count on him or her to keep the rest of the board up to speed. Having served in that role, I have found it to be at best a useful half-step. Relying on a single techie is no replacement for having a full board mastering at least a basic understanding of AI and its disruptive potential.
Every board’s comfort level is going to differ depending on the industry. Manufacturers well understand how robots can free up people to do higher-order work by taking on repetitive and potentially dangerous jobs. Hospitals and health insurers are starting to deploy AI widely, but big successes have been elusive. By contrast, the financial services business is ripe for disruption by AI.
