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Generative AI will profoundly impact how we work and how organisations operate. My podcast partner has said that it is the most dramatic change we have seen since controllable electricity. Yet, in our board evaluations, we see little about the systematic integration of AI in the agendas of boards. What questions do Directors need to ask in the boardroom?
In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner of Better Boards, discusses the questions boards need to ask about AI with Professor of Management Practice at Harvard Business School Joe Fuller.
"Companies are asking entirely the wrong questions"
Prof Fuller feels many companies are still asking the wrong questions. Too many firms look at AI as a super SaaS product. It's not, and that misunderstanding is limiting them in preventable ways. Instead of asking, "How can this make my current process more efficient?" Professor Fuller feels companies need to ask, "How do I build the processes to make the most of this technology?" That shift captures the astonishing breadth and potential of AI.
"It's very important that boards and management go on a learning journey together"
According to Professor Fuller, management and boards need to work together to demystify AI for their employees. AI is the subject of a lot of spurious reporting and a lot of rumors. Worse, while some 60% of workers feel AI will change the world of work, only 25% of workers feel it will affect them. That's a level of disconnect Professor Fuller feels will catch many people by surprise.
"For a board not to be asking these questions and, through their dialogue with management, learning how to ask better questions, I think, is a rather important abandonment of their responsibility"
AI has many positive applications, but it also brings with it risks. Who owns those risks, tracks them, and is held accountable for them? Professor Fuller feels boards can play an essential role here, helping set up governance structures and models of use to protect and serve the company's operations.
"If you have a lot of data, that's a huge natural advantage with AI. And so the question becomes, how quickly can I train that data?"
Professor Fuller feels success with AI has two parts – the amount of data available and how fast that data can train your AI into a useful state. Companies that use AI and keep pace with updates could end up with a permanent competitive advantage.
"The skills we're going to be looking for will change as this technology becomes firmly rooted in business processes and provides management with the types of insights and data that were often unavailable to them in the past"
Professor Fuller notes that what companies will be looking for in top talent and for board members is changing. Responsive technology trained on historical data has the potential to replace traditional time-linked credentials and make tenure in a role less valuable.
The three top takeaways for effective boards are:
1. AI is as important a development in business as we've seen in the last 200 years. It will drive a permanent, critical transformation as impactful as the steam engine or controllable electricity.
2. It's changing rapidly, and while there is a learning challenge, companies have to view this as an unbelievable opportunity to create a competitive advantage.
3. AI is a very powerful tool. We hope it will be used for good but boards need to be mindful of what a powerful tool can do in the hands of bad actors, and guard against that risk where possible.
