By Dr Sabine Dembkowski1
1Managing Partner, Better Boards Ltd
Successful AI transformations start with visionary leaders who understand how to deploy technology as part of a broader strategy to future-proof their organizations. It is clear that organizations need to be prepared or face inevitable decline. Boards are being challenged to play their part in providing oversight and governance of the efforts involved in defining and delivering an AI strategy, along with the accompanying organizational transformation. Analysts and experts are clear: boards “must”, “should” and “have to” embrace AI.
But are they doing so?
The reality is that AI seldom makes it onto the agenda of traditional, legacy organizations. The call to embrace AI is far from being the only demand placed on boards these days. They are also grappling with the ever-increasing complexities of governance, environmental and social issues, and the integration of a diverse set of stakeholders, geopolitical risks and challenges. The agendas of boards are not merely full; they’re overflowing.
Being a board member is so much more than a job and is often part of the overall identity of the individuals who serve on boards. The preservation of this identity takes centre-stage and will be defended under any circumstances, and at any cost. The smallest perceived threat to that identity can trigger the fight-or-flight response.
As people, we are hard-wired to preserve the concept we have of ourselves by defending the boundary and justifying and reinforcing what’s inside the boundary of the concept-of-self. This is true both at the individual and group level; the principle is the same. And while it might not always be obvious to those with a digital mindset, AI is a big threat for those that sit on the boards of legacy organizations.
Few members of boards of legacy organizations have deep insights and understanding of state-of-the-art AI solutions for all the working processes within their organizations, and fewer still will be able to claim that they have provided oversight and governance of the development and implementation of a successful AI strategy. AI challenges all known conventions; nothing less than a complete process and reorganization around AI will do.
Embracing AI means that board members need to be willing to challenge everything they themselves have contributed to within their industry. Embracing AI means that members of boards will need to ask, learn and rely on the experience and expertise of a generation that is beyond the confinements of their professional networks.
The fear of falling into the same traps as their peers who burned their fingers with ad hoc, opportunistic and ill-conceived AI initiatives has to be weighed against the need to expose themselves to the unknown, and to the risk of failure and public criticism for having approved budgets for something they cannot fully grasp. In short, it’s a tall order.
The fight-or-flight response manifests itself in a vast array of behaviours, not all of which are logical. As a result, any demands couched in terms of “must”, “should” and “have to” are unlikely to convince members of legacy boards that the time to embrace AI is right now.
What can be done to encourage boards of traditional, legacy organizations to embrace AI? Legacy boards who have successfully embraced the AI call to action tend to focus on a 5-Point Action Plan.
Essentially, this involves focusing on, and continuously developing, the innate strengths of board members and by so doing, minimizing the negative effects of any perceived weaknesses. Strength-based management techniques are at the heart of leadership development programmes around the globe, yet, curiously, remain underleveraged in the boardroom. Once individual board members understand which strength they can bring to the table, specific board roles and responsibilities can be shaped, and the result is an increased openness and willingness to discuss specific knowledge gaps on the board.
Directors need to understand how AI solutions can add value at all levels of the organization. Ideally, the programmes should be practical and led by practitioners who provide insights into what has worked in different contexts.
Chairmen and company secretaries are often reticent about asking their non-executive directors for additional time to attend special educational programmes, yet non-executive directors almost unanimously welcome such initiatives and happily make time for them.
When talking about the composition of the board, people immediately think about women on boards, but it is so much more than a gender issue and goes to the heart of ensuring that boards are really diverse in their thinking – embracing different thinking processes, as well as digital and technical expertise. Once core members have understood the strength and resources diversity and inclusion bring to the table, there is frequently an increased willingness and openness to really change the composition of the board.
An AI Council can provide the board with the know-how and expertise it needs to effect organizational transformation. The AI Council is an advisory body1 with a board-level mandate to ensure that company strategy actively anticipates, and keeps pace with, AI advances. The AI Council also drives AI acumen and foresight in the organization, drives efforts to establish clear and adequate governance of AI development and application, safeguards against any risks and ensures that AI practices are ethically and fiscally responsible. The overarching goal is to ensure that shareholders, customers, employees and society overall benefit as fully as possible from the company’s strategy to embrace the benefits of AI. The AI Council is also a good incubation facility for future board members.
When a board starts to embrace AI, it will have a ripple effect throughout the organization. Any steps a board takes – and the perceived benefits of such undertakings – are worth being integrated into the organization’s overall communication campaign.
Embracing AI is a tall order for members of boards of legacy organizations. AI is perceived as a threat that can trigger a fight-or-flight reaction in many board members. Simplistic arguments that place demands on boards in the form of “must”, “need to” and “should” imperatives with regards to embracing AI unfortunately are not always enough to elicit the desired response and behaviour.
The 5-Point Action Plan outlined in this chapter is a demonstrated safe route for setting boards of legacy organizations on the right course for successfully embracing AI.
Internationally, there is progress to adopt a more coherent cross-border AI governance network. In May 2019, 42 countries signed an accord which committed to common AI principles. Even though China did not endorse the principles, it is developing its own framework. The UN, OECD and Council of Europe have all formulated their own AI goals. In April 2019, the European Commission published AI guidelines. Growth in the EU AI market has been dominated by the Nordics, France and Germany but overall is more fragmented because of heterogeneous resources and regulation.
Today, global political leaders have choices to make. It will be interesting to see which countries continue to adopt an inward-looking, and almost protectionist, nationalistic stance with regards to building AI capability compared to other countries which may be more inclined to leverage the existing institutional framework for international cooperation. Regardless of the stance adopted, the geopolitical landscape is sure to be heavily impacted by national AI strategies, although the future consequences of today’s decisions are far from clear.