There is much discussion about AI, especially after the launch of Chat GPT, the first available generative AI system.
There is much discussion about AI, especially after the launch of Chat GPT, the first available generative AI system. When recording this podcast, Chat GPT is about one year old. It is clear that 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 Joe Fuller. Joe Fuller is a Professor of Management Practice at Harvard Business School, Co-Head of the Harvard Business School Managing the Future of Work Project, Co-Head of the Harvard Project on Workforce, and the co-founder of the Monitor Group, now known as Monitor Deloitte.
Some of the key takeaways of the conversation include:
“In addition to making people more productive, the data is very, very definitive that this is going to make their jobs more interesting”
Generative AI is the most rapidly growing internet-based service in history. It has a remarkable capacity to learn and to drive innovation. Professor Fuller feels that even with as much as has happened so far, we’re all just beginning to understand what this will mean for the future of work, for companies, and governments.
One thing that is clear is that AI systems can make people in a variety of roles more productive. Experiments reveal low-level performers can jump up to high performers, and top performers can become even more productive. With AI removing the dull and routine tasks many people dread, it opens the door for people to do more interesting work.
“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. Boards and management teams that can correctly view AI as a revolutionary technology instead of an augmentative technology will do better with appropriate governance and counsel for their firms.
“It’s very important that boards and management go on a learning journey together”
According to Professor Fuller, companies 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 rumours. 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.
So, even though management teams and board members are used to leading from positions of established expertise, when it comes to AI, everyone needs to go on a learning journey together. It speaks directly to issues of future board effectiveness and ongoing board development – boards need to engage with management about AI, building a comfort in the dialogue and a shared familiarity with how AI is impacting their particular business.
“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.
“Harnessing the shared knowledge and insight the large consultancies have is really a very appropriate thing for companies to do”
It’s very, very hard for a company to develop a robust set of best practices around AI on its own, notes Professor Fuller. To him, it is highly appropriate for boards to lean on the expertise available in the broader marketplace. Technology companies, of course, are eager to share what they know and what they’ve learned with AI. The large consultancy groups are also incredibly useful resources at present.
Why so is it now? Large consultancies see how AI is being implemented across multiple types of businesses and in a huge variety of scenarios. So, boards can lean on them for increased speed in building their own internal best practice guides, governance structures, vendor management, and risk management plans.
“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.
If you have more data and move at the same speed as your next biggest competitor, or even faster, you’re getting smarter before they’re getting smarter, says Professor Fuller. The caution companies are adopting around implementing AI is thus something of a competitive danger.
“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. However, there are several boardroom skills that this change will elevate.
One skill is the capacity to identify, nurture, and evaluate human talent because advancing people purely on their technical skills is likely to become a less relevant basis for promoting people. Professor Fuller also thinks the capacity to bring excitement about new things to the boardroom, as opposed to a dedication to espousing the wisdom gained in a career alone, will be another more valuable attribute in the future. Finally, the rise of AI will make discernment around data valuable. AI is good at blending data in ways humans haven’t previously imagined. Still, AI outputs need a human interpreter with great business judgment, great values, and a practical understanding of how the tangible world works to lead companies to good decisions and confidence in the decisions being made.
The three top takeaways from our conversation are:
- 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.
- 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.
- AI is a very powerful tool. We hope it will be used for goodbut 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.
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