How Disruptive Technologies Can Lead to Better Boards

By the Nasdaq Center for Board Excellence’s Board Best Practices Insights Council: Jessica N. Grounds, Chief Executive Officer, Corporate Directors Forum; Kaley Childs Karaffa, Head of Board Advisory, Americas, Nasdaq; Jerusha Stewart, Chief Executive Officer, Take Your Seat; James Beasley, Head of Board Advisory, EMEA, Nasdaq; and Coco Brown, Founder and Chief Executive Officer, Athena Alliance

Boards contend with external inputs on a scale that can be difficult for any one director to hold expertise on a singular issue. But the emergence of new technologies presents an opportunity for board members to develop a pattern of learning, engaging and decision-making that will help them become better board members. Ideally, this will also strengthen an entire board’s capacity to address innovations. Below, governance leaders share key areas that board members may consider as they face disruptive factors, using artificial intelligence (AI) as a case study. 

Become Educated on the Relevance of Disruptive Technologies

First coined by academics at Dartmouth University in 1956, the definition of AI continues to evolve as does the understanding of its capabilities and applications, from leveraging computers and machines to mimic the problem-solving capabilities of the human mind to enhancing machine intelligence that can learn to autonomously make decisions. Today, AI’s capabilities and reach impact societal norms and ethical boundaries on a global scale. What began as a university research program awakened a general acceptance that AI is the present and future.

AI’s impact is already evident across a variety of domains. From advancements in healthcare to employee engagement assessments, legal writing and computer coding, AI is demonstrating its pervasive nature and is poised to revolutionize aspects of business and society. AI-powered surveys can help monitor employee sentiment, providing valuable insights for organizational well-being and performance enhancement. The incorporation of AI can also help automate routine tasks, provide real-time monitoring and even predictive capabilities. In the legal sector, generative AI can streamline the process of research and assist with document drafting, allowing legal staff to focus time and energy on more complex matters.

Artificial intelligence is also influencing the digital landscape for board members, and it has the potential to revolutionize it. This is not all together unfamiliar if one recalls the iPad. First introduced by Apple in 2010, the iPad transformed how board members access materials and manage tasks between meetings, bringing about significant changes in their roles and responsibilities and making them more efficient. Its creation enabled and catalyzed development in myriad complementary technologies including board portals. Now, the advent of AI technologies is fueling the ability to process and optimize large amounts of information and data in record time. 

Becoming better educated should start with tackling relatively easy and understandable tasks with AI to gain practical experience and knowledge. It can be helpful to get exposed to new ways of thinking by adjusting social media feeds to track the latest ways AI is being applied and expanding reading lists appropriately. Another facet is becoming knowledgeable on how the company is already employing AI functionality across business operations to build a comprehensive understanding on how AI can benefit organizations. This is a critical ingredient for boards to help guide positive impacts, long-term success and the competitiveness of the organization.

Develop a Growth Mindset, Realize You Don’t Know It All 

With the current accelerated rate of change, board members can no longer afford to take a backseat as passive observers. Directors should proactively look to decipher the implications of disruptive technologies, leveraging their power of oversight to anticipate risks and unearth opportunities. With this, boards should not lose sight of the importance of engaging in active dialogue and seeking expert guidance. This will often mean taking time to identify and learn from external expert counsels or engaging in independent research. Fostering a culture of curiosity and growth among board members will pave the way for informed strategies that leverage AI for competitive advantages. High performing boards will add value to their companies’ stakeholders by asking the right questions so they anticipate the risks and opportunities that AI can bring.

To begin, here are some suggested questions to ask in the boardroom:

• What are the leading ways companies are using AI technology now? Consider competitors and industry adjacent leaders.
• How is our company using AI technology today? In which functional arenas?
• How could these technologies build efficiencies in our work? 
• How can we utilize AI to look further down the road?
• How can AI assist the board in testing assumptions, verifying information, and augmenting better decisions?
• What markets are currently closed to us that could be opened by leveraging AI?
• What are the limitations of this technology? 
• Where is the board and management on the AI learning curve?
• What lessons can we learn from exploring/applying previous disruptive technologies?
• What is it that we don’t know that we don’t know about this new technology?

In any landscape, but particularly in a rapidly changing one, board members play a crucial role in steering their companies toward sustained success. To effectively navigate the changing tides of the market, board members must approach change with a deep desire to understand and embrace growth and innovation. It is essential to cultivate a mindset that recognizes the significance of continuous learning and adaptation.

Consider Accountability and Ethical Parameters 

No director nor board will be able to discern all aspects of AI’s potential impact. That said, this technology is still built by humans, so leaders should have a human approach and be accountable for its actions. This is why it is necessary to establish a foundation of knowledge to help navigate making informed decisions around its implementation and use. Considerations must be given to aspects such as ethics, promoting fairness, privacy protection, transparency and accountability.

AI’s algorithms can process enormous and complex sets of data. It can identify patterns, detect anomalies, and even provide pre-emptive insights such as flagging potential ethical breaches, fraudulent activities or changing market dynamics. This can lead to both increased efficiency and a prudent use of resources. It can also foster greater accountability, more transparency, responsible governance and an enhanced customer experience. From a board-level perspective, the outcome is more agile, adaptive, and strategic for decision making, allowing board members to ask the right questions of management and proactively identify risks and opportunities, which is a key responsibility of a board member.

Some questions related to ethics and accountability may be:

• How do we develop safety standards around this technology?  
• Who provides oversight over what AI produces for our company?
• What are the possible unintended consequences?
• How will we monitor AI to understand if it is substantively altering how we define or pursue our corporate purpose? 
• Is management providing sufficient resources to oversee?
• What new risks are now present with this technology and how we are using it?
• What kind of guardrails have worked in other areas of our business?
• How do we ensure we don’t lose nuance in our decision-making?
• Have we identified pathways to curb bias when instituting AI frameworks?

Conclusion

Investors, regulators, and stakeholders alike are demanding more from boards with respect to steering their organizations towards sustained success in the future. 

Boards can do this by focusing first on educating themselves. Understanding the implications of the technology and current trends are key. Next, boards must adopt an open and curious mindset, acknowledging AI is a broad and complex landscape with a history of significant leaps forward. Recognizing and embracing that AI is here to stay is critical. Procrastination can be detrimental to a company's long-term success. Lastly, boards should create frameworks and forge conversations around the ethical implications of how the technology will be used and who is accountable to monitor its advancement. All companies will be impacted by a variety of factors, and robust risk assessment is key.

Hopefully, this approach (and the questions shared) can give more insight into how artificial intelligence could and should be used to create a board culture of learning, engagement and accountability — beneficial elements to any effective board of directors.

For more leadership insights and educational resources, join the Nasdaq Center for Board Excellence—a convener of board and executive leaders dedicated to strengthening corporate governance in the boardroom and beyond. Join our community.

The views and opinions expressed herein are the views and opinions of the authors and do not necessarily reflect those of Nasdaq, Inc.