Imagine you’re sitting on the board of a thriving global corporation in the year 1980, before anyone had ever heard of a Chief Information Officer. How could you possibly imagine what lay ahead?
Personal computers. The World Wide Web. E-commerce. Social networks. Smartphones. Big data.
Companies that were quick to grasp the power of each historic advance often gained unprecedented competitive advantage, while others made farcically bad technology bets, suffered ignominious data breaches, and watched helplessly as tech-savvy competitors hijacked their markets.
In 2019, artificial intelligence (AI) holds comparable potential to disrupt and reshape the world. AI is already delivering more impact, more quickly than many anticipated. And the sweeping potential of AI creates one of those rare instances when one can say “It will change practically everything” and not be remotely hyperbolic.
Your board has a clear fiduciary duty to proactively consider AI’s manifold implications for the future welfare of the company and its shareholders. That clear duty, combined with the historic portent of AI, more than justifies forming an AI council without delay.
What, why, who, and how
What: The AI council is an advisory council with a board-level mandate to ensure that company strategy actively anticipates and keeps pace with AI advances. The AI council also drives efforts to establish clear and sufficient governance of AI development and application, ensuring that AI practices are ethically and fiscally responsible.
The AI council maintains a holistic and forward looking view of AI, encompassing long-term as well as near-term considerations. Its overarching goal is to ensure that shareholders, customers, employees, and society overall benefit as fully as possible from the company’s expanding embrace of AI.
Why: AI is already opening an array of previously unimagined opportunities for both the use and abuse of technology. Shareholders implicitly rely on your board to ensure that the company is taking full advantage of the former, while steadfastly safeguarding against the latter.
Specific imperatives that merit sustained AI council attention include:
- Leadership. The AI council assesses and drives development of AI acumen and foresight within the board and in the executive team.
- Competitive advantage. The AI council initiates and (with top leadership) shapes strategy for accessing and applying AI to create competitive advantage. This includes identifying the best mechanisms toward that end — i.e., capital investment, M&A, joint ventures, and strategic partnerships.
- Risk. The AI council anticipates and proactively safeguards against the significant vulnerabilities that advancing AI may create in terms of privacy violations, security breaches, and unintended negative consequences, such as the suspected cause of two catastrophic Boeing 737 Max 8 aircraft crashes. Another key risk is AI’s tendency to mimic and amplify human bias — for example, in automated talent recruiting and screening — which can lead to discrimination litigation as well as inaccurate operating assumptions. The AI council also leads efforts to stay ahead of government regulation, particularly by avoiding the kinds of privacy abuses and data privacy failures that tend to trigger public outcry and regulatory backlash.
- Ethics. The AI council actively monitors ethical ramifications arising from AI and ensures the board issues appropriate and timely policy guidance. Illustrative considerations include implicit bias, how AI could negatively impact current members of the workforce, and “interaction transparency” (the right to know when one is interacting with a machine).
- Corporate social responsibility. The AI council champions AI initiatives to supercharge company efforts to improve societal health, education, sustainability, environmental protection, and other CSR priorities.
Who: The AI council should blend sitting directors with expert outsiders. If qualified company personnel are available, they might also be included. Most importantly, the board should think expansively, creatively, and realistically about the caliber of insight and expertise required across emerging and maturing technologies, AI ethical and social implications, AI risk management, and tech-driven M&A.
Regardless of their backgrounds, all individuals serving on the AI council must demonstrate an ability to look beyond the horizon to foresee not only pending AI innovations, but their implications as well.
How: I know of no board-level council that is A) focused on the strategic ramifications of AI, and B) tackles the full range of responsibilities described above. Google’s ill-fated Artificial Intelligence Ethics Board, for example, was not explicitly a board body and had a narrower mandate: “to audit Google’s ethical standings when it comes to machine learning and AI products.” In contrast, the envisioned AI council is part of the board, has a comprehensive mission, and is more clearly business oriented. While ethics falls within its purview, the AI council is not an ethics board. In short, this is uncharted territory.
Building an AI council
While there are no clear models to emulate, Google’s experience does illustrate that your board must be careful as well as highly purposeful in shaping its strategic response to AI. Here are a few suggested principles for how to proceed:
Make the AI council integral to the work of your board. The AI council should only pursue missions explicitly owned by the board. Further, its recommendations and actions must be closely woven into the overall company strategy and your board’s ongoing company oversight. The role of the AI council is not to relieve the board of responsibility for staying ahead of AI disruption. Rather, it is to accelerate and enhance the board’s effectiveness in fulfilling that responsibility.
Avoid grandstanding. Convey to investors, customers, employees and others that forming an AI council is a responsible and necessary thing to do — nothing more and nothing less. Avoid any communications that may be misconstrued as hype or shallowly jumping on a trend.
Continue to delegate appropriately. The AI council must work only at the board level, while overseeing the relevant work (e.g., execution of an AI talent strategy) of the company’s leaders and functions.
Pursue tangible business outcomes. The effectiveness of the AI council should be gauged, above all, by its contributions to safeguarding and building shareholder value.
Just as it was once easy for many boards to believe digital advances were of only marginal importance to their companies, some boards today might still assume that AI is an immediate and urgent strategic concern only for tech companies. History suggests otherwise. AI is a game changer — not just for tech companies but for everyone. That is why your board needs an AI council.
Arjun Sethi is a partner at global strategy and management consulting firm A.T. Kearney, where he serves as Vice Chair of the Digital Transformation Practice. He is based in New York and can be reached at Arjun.Sethi@atkearney.com.