Growing investments in Artificial Intelligence (AI) technology have transformed many areas in the business world, especially among high-tech and financial organisations. External spending on AI-related projects went up to $12 billion in 2016.
Companies looking into AI may focus on the potential for automating low-skill tasks, but they are overlooking a major opportunity. Artificial Intelligence can also play a significant role in corporate governance. AI can help streamline decision-making processes, transform big decisions from gut feelings to data-driven knowledge, and better predict the future outcome of such decisions. As such, AI can improve an organisation’s leadership.
Streamlining Corporate Governance
One of the most daunting tasks of any board member is determining which executives to trust. Who has the data to back up their claims, and who is simply giving the board the runaround?
Companies like Salesforce have already started implementing AI tech into their boardroom to help settle disputes. CEO Marc Benioff has “hired” an AI “assistant” called Einstein.
According to “Business Insider,” Einstein accompanies Benioff to all of his meetings. After everyone has spoken, Benioff can turn to Einstein and ask the AI what executives “need attention” and which ones are giving him inaccurate information.
The data gained from AI technology works well as a persuasive tool for other C-level executives or the board. Weeding out the high-level intel is a task most executives and board members abhor.
Yet the tech is simply helping the board to make more streamlined decisions and decide whom to trust.
AI: Data Over Feelings
One of the biggest improvements in your corporate governance mechanisms comes from the evaluation of data. You do not have to rely on a gut feeling or reports that do not have the right information to support specific decisions.
Deep Knowledge Ventures, a VC firm based in Hong Kong, is thought to be one of the first organisations to add an AI to their board. The technology acts as an observer and provides useful analysis and insights for the rest of the members of the board.
The fund focuses on biotech and biomedical projects and uses the AI to steer clear of investments that sound promising, but actually end up being overhyped.
The objective framework in place also provides another perspective on risky business moves. Deep Knowledge Ventures allows its AI to gather information and look at it objectively. The firm now likens the “gut decisions” they once relied on to betting money in a casino.
Being able to disrupt your industry is a benefit in today’s business landscape, but only if that pivot is a good move for the organisation.
AI has shown to predict everything from Supreme Court decisions to Congressional votes accurately. Why should the outcome of a boardroom vote be any different? Accurately predicting the outcomes of mergers, investments, and other major decisions is another task that companies are banking on.
Many companies are also using AI to forecast the outcomes of corporate lawsuits. Avoiding hefty legal fees or investing in the right legal counsel gives a corporation a huge advantage over the competition. It can also address possible governmental push back with a deal or merger, like when the FCC or Supreme Court could block an agreement. AI can simply prepare the board for every possible scenario.
Board Push Back Over AI
Board members may have concerns over automated systems attempting to do high-level leadership tasks. After all, they have spent their entire careers getting into their positions, so they do not want to feel like they are being replaced by something that does not have this vast well of knowledge.
A future approach to AI in the boardroom can be by treating the technology as an augmentation to the board’s abilities. They get a helping hand with tasks that are tedious for a human to track.
Any documents and reports that you send to directors get customised based on their personal and professional preferences. They spend less time getting to the elements most important for their decision-making process, and the AI can speed up this personalisation process. This way, AI can significantly improve corporate governance, but full-scale adoption might be still far away.
Dangers of AI in Corporate Governance
AI is only as good as the data and resources that you give it. If the AI works off of false assumptions or your organisation has poor data quality, then you could be led astray. The underlying infrastructure and data sources need to be sound before the AI can make meaningful contributions to the company. Once again, the phrase “garbage in, is garbage out” counts.
Buy-in at the executive level is another challenge, especially if board members fail to see the AI as a complementary tool to their operations. Explaining more about the type of AI solution you are using and how it operates, can go a long way toward addressing these concerns. This is especially important for people who are not as tech-savvy as the directors of IT and other technology leaders. For some people, AI means the same thing as an autonomous robot from a sci-fi show.
Nevertheless, corporate governance can gain a lot from the deployment of an AI solution when used as an augmentation for high-level talent. Leveraging these solutions is essential for future-proofing your organisation and taking your next steps forward.