How are boards of directors approaching enterprise AI and AI
adoption in the enterprise? And what should boards do about
members who don't understand technology?
Let's get into it on CXO Talk number 866 with Adriana
Karaboutis. She's an independent board
member across multiple industries who has also held
senior leadership roles at companies like Dell, Biogen, A,
National Grid. Where are we in terms of
adoption of AI in the enterprise?
What are what are you seeing right now?
It is different by industry and different by company, but one
thing that is absolutely consistent, it is permeating and
growing by the day. Current state of adoption I
would say is different by industry.
Tech and software clearly leading the path.
It's part of the fabric of what they're doing, Virtual
assistants, chat bots, AI driven cloud services, etcetera.
Financial services, another industry way up there relative
to their adoption around fraud management, using it to check
algorithms, healthcare being pressured and using it quite a
bit. And then you see some of the,
and you also have retail and manufacturing and then you see
some of the, I wouldn't call them laggards, Michael, but I
would call them a little bit slower to adopt your regulatory
environments or governments and you know, maybe some of the
agricultural components or industries in agriculture in
terms of adoption inside the companies.
In other words, as these companies and industries are
trying to drive AI and really become consumers of it,
internally, you still have about a 104040 ton split where it's
10% experts, 40% kind of people that are experimenting or in the
novice phase, and then 10% that are actually still very reticent
to adopt. They're the laggards.
Oh, we shouldn't use this, shut it down, etcetera.
Some of that coming from lack of education or, or understanding
of it, I would say, and some of it just coming from an abundance
of being overly conservative and cautious.
So there's quite a spread. But one thing's for sure and
it's what I said at the start, the the adoption is going faster
and faster and faster. We're moving quickly, Michael.
When we talk about large organizations, what do you see
as the drivers of AI adoption and also the obstacles or the
roadblocks? The drivers is around
competitive pressures companies, especially public and private
companies, I shouldn't say especially public, but companies
are always looking to do more with less to have higher
quality, higher cost, customer satisfaction, employee
satisfaction, returns for shareholders.
So all the stakeholders are looking for better, more
improved, etcetera. So those pressures that cause
you to look at tools and capabilities that will help you
achieve that. And so that's some of the
drivers. And as peers in industries adopt
more of these tools and are able to actually show more capability
and more of the outcomes that we're looking for, then that
drives competitive pressures to all the companies in that
industry to stay abreast and continue to improve.
Some of it is around newer products and offerings.
Some of it is around, you know, getting a better bottom line,
which is cost efficiency, reduced SGNA costs, etcetera.
Some of the roadblocks is around, it is changed and there
is just human nature and reticence to adopt.
Michael lack of skills and understanding of the tools and
technology. Risk aversion and boards in
particular have a big, big role to play around risk management
and making sure that the company is within what we call risk
appetite and that anything that is adopted or happens stays
within that risk appetite. Whether you're talking about
cyber etcetera, and in particular with artificial
intelligence and tools, there's ethical issues, there's privacy,
there's security, there's ensuring there's no bias and
fairness, etcetera. Regulatory compliance, legal
compliance, all of those things are huge and, you know, could be
seen as roadblocks to overcome, but certainly slow, slow us down
in our thinking and sort of our foray into artificial
intelligence. Andy, you talk a lot about risk.
Of course, AI is all about innovation, and innovation
implies something new that's changing and that's different,
which of course is risk. And so as a board member, how do
you see this balance? Boards are around governance and
ensuring the company has the right strategy.
Management teams do day-to-day operations and execute the
strategy. So as board members, we concern
ourselves with do we have the right strategy in order to meet
our stakeholder commitments and the outcomes that we want,
right. And so we, we have a unique
position. It's not overlapping with
management. It augments management.
There's a trust and a relationship and A and A and a
collaboration that needs to happen with management.
Many have heard the expression noses in and fingers out that
sort of is the layman's expression for a board.
In other words, we ensure we govern, we oversight, etcetera
and we ensure that risk management is, as I said before,
within an appetite level that we that that we set for the
company. So in that sense, boards
increasingly recognize the impact of AI and everything that
we do should be in line with our business strategy, our
regulatory requirements, our legal requirements, etcetera.
And so we always make sure that how a management team is going
to execute to deliver a strategy is within those parameters.
Can you dive into that tension between the desire to make use
of that technology to achieve the organizational objectives
and strategy versus the restraining factors due to the
risks? I'll use a comparison that
should make it clear. Sports teams don't just play
offensive plays, they have defensive plays.
So in order to win the game, you go on offense and defense, right
offenses. We tried things new.
We looked at technology to help us meet or exceed our business
stated goals and objectives. And interestingly enough, when
board directors were asked by an organization called North
America Corporate Directors, what are the trends they worry
about most? Tech, AI and cyber, we're in the
top six along with geopolitical, climate, et cetera.
So given that when we think about that, we we worry about it
in a defensive play to ensure that as I said before, we're
staying in position in order to stay within risk appetite.
We also want to leverage those tools and we want to see our
companies and management leveraging the tools to
accelerate and or meet of the business strategy.
So there's the offensive and the defensive.
It's a 360 degree wide angle lens and it's critically
important that boards don't fall into one which could if it's
offensive, you could end up with a lot of privacy regulatory
etcetera issues or the other where we're trying to preserve
our way. We lock everything out.
We don't let we say we don't want to bring, for example,
generative AI tools into the company or machine learning,
earning artificial intelligence because we don't want to run the
risk. Nobody ever cost cut or risk
avoided their weight of prosperity.
So there is that balance and informed decision making is
critical, making sure that parameters are understood for
how is a company using AI? Do they have a group that says
we're looking at the use cases for what we want to do, What are
the risks of the use cases and what are the benefits of the use
cases? Those are very important things
for management and in large scale applications for boards to
worry about as well. So it's that balanced, informed
decision making, offensive and defensive place in order to win
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We really have extraordinary shows that are coming up, great
discussions and you should be a part of it.
Folks. You know, to some extent it
sounds like the the time of the beginning of social media.
There needs to be a a kind of more thoughtful, in depth
approach that addresses the reality of how people live and
work. Technology is ubiquitous.
We've heard that before. It is.
We're led by what individuals do.
I would say a great proportion of the population now, at least
in the US are using, you know, ChatGPT, Dali, We've seen
students at school, you know, you using this to write papers,
etcetera. The exposure is there.
Therefore, when people go to the office, we don't turn that off,
right? And we look for tools enabled by
the tech organization, etcetera to be able to help deliver the
outcomes. I fundamentally believe people
always want to do the right thing, but they want to be
helpful and they want to be productive and they want to
deliver the outcomes or I should say, and they want to be
helpful, productive and deliver outcomes.
These tools enable that. So organizations need to say yes
and how versus no because right. And so how do you, and again, it
goes back to my offensive, defensive play, but within these
larger organizations, how do we deliver the capabilities to use
generative AI to create new content, right?
Text to photo, to create, you know, illustrations that could
help new products, new services. So unfortunately, regulatory
lags behind sometimes the infrastructure of these large
companies, which is important by the way, to be able to renew and
refresh so that you've got good clean, concise date, not
concise, but good clean data accessible to be there.
All of that has to be in place. And so we need to think about
these tools are here, they are coming in.
If we don't enable them within the enterprise, you know, the
worst of all worlds is where people take data.
And I'm not saying anybody's done this, but we did see it
some years ago in with Samsung, you know, hopefully done it
inadvertently where people take data to the outside into these
tools to either create code or get insights and then bring it
back in. You have now exposed potentially
companies secure, secure information and confidential
information to the outside. So it has to be how do we bring
in not how do we create steel walls so people can't access
these tools, you know, for a period of 10 or 20 days.
I mean when I was at one of my former companies, I said we're
going to lock down for a period of 10 or 15 days.
But we let the workforce know this is coming.
We just need to bring in our own instance to ensure that we keep
the security and the safety end. And by the way, that is a really
important point, Michael. Communication on how, when, how
far, which data is available, etcetera, is super important
because absent communication, employees may not know what they
can or can't do or what they should or shouldn't do.
And so all of that is critically important.
I really like the not defaulting to know for so many years,
enterprise technologists, CIOs, just simply the default answer
if somebody wants something new is, well, no, we can't do it.
And then later, you know, we can take a look and see, well, maybe
we can do it, but but the default is no.
And so I really like your approach.
Why don't we jump to some questions from LinkedIn and
Twitter. There's a bunch that are coming
in and I encourage everybody who's watching ask your
questions because literally when else will you be able to ask
somebody like Andy Karaboutis pretty much whatever you want.
So take advantage of it. OK, So the first question comes
from Isaac Sokolik, who actually will be a guest coming up very
soon on CXO Talk. And he says, where are the
board's mindsets today on AI? Is it a gold rush for
competitive advantage or are they looking for pragmatic ROI?
Or how are boards relating to AI?
Software tech companies, I think are rushing for advantage.
No question. We're taking a look whether it's
the Microsoft's, the the Googles, etcetera and and
beyond. They're really taking a look at
how they can leverage AI for competitive advantage.
And I would imagine that the board conversations are full of
discussion around the opportunity as well as the risk.
But on that topic, as you move into what I would call the more
traditional businesses, I think the discussions are still
happening and some board members are quite bullish around what
are the advantages, what can we use, how can it help us.
That's the big thing. How does it help us top line,
bottom line, customer sat, employee satisfaction, you know,
job availability, etcetera. But it's an intellectual
curiosity that is actually something that I think is
necessary of any board member. And so the conversations are
there. Most boards are asking for more
training in some of the more traditional businesses, training
and understanding. Now, they don't need to
understand, you know, how you ingest data and all of the bits
and bytes, but they do need to understand the fundamentals
around, you know, what are the prerequisites.
As I said before, your infrastructure needs to be
simplified. Your data needs to be available.
And by the way, this is a huge opportunity for the, you know,
technical CIOCTOS in the room figure out and practice your
game on how to communicate because boards are asking for
the education. Please don't bury them.
Stroke us in a bunch of tech speak around neural networks,
etcetera, practice your game to really be able to explain these
the, the, the technology, the capability, the risks and how we
could help your specific company and industry.
That may be the difference between true success and what
I'll call quick, faster success and versus a prolonged sort of
realization of value. So Isaac, it varies is what I
would say. I really want to emphasize a
point you just made around the importance of simple,
straightforward, clear communication and how important
that is. Absolutely, Michael, you know
what my teams would would recognize and probably smile at
the next phrase I'm going to make.
I always say, please start me with the forest before you take
me to photosynthesis, right? So understand the big umbrella,
even if when it's explaining artificial intelligence, it's
the overarching umbrella. And then there's machine
learning and there's, you know, all of the categories they
generative AI, gentic AI, et cetera.
And so when you take a board that is noses and fingers out,
that has to really figure out and synthesize a lot of
information, comprehend it and come into insight, they need to,
you have to ask yourself, what do they need to know?
And you know, what do they need? What do they need for informed
decision making? And so that's a big capability
that, you know, I'll put my CIOCTO hat on.
We as technology people need to work on in order to help the
boards be supportive and be able to balance that offensive, you
know, with defensive play. You know, I just this morning
saw a segment from an interview with Sam Altman, the founder CEO
of Open AI, and he said that among startup founders, 1
consistent trait among every single successful founder is the
ability to summarize and express what they're doing in 25 words
or less in a really clear way. Absolutely right.
You know, call it the elevator pitch, call it the, you know, in
10 seconds you've lost my attention call, you know,
whatever it is, but be very clear.
And you know, there's the old advantage of what do I want to
say versus what do others need to understand?
And by the way, who are they? That's super important.
So I can't emphasize enough and and it's with any big
breakthrough tech or any big concept, even if it isn't tech,
you have to be able to really communicate what are we trying
to do? You know, how are we going to do
it? And then I'll quote Simon Sinek
and connect people to the Y, right.
And so that doesn't, that doesn't change for board members
either. Let's jump to the next question
from LinkedIn and keep your questions coming on LinkedIn and
on Twitter. And this is from Deepak Adina
Reyana. And Deepak says, how do you
measure the success of AI initiatives at the board level?
And what metrics or indicators do you rely on to ensure these
technologies are delivering both value and alignment to the
company's long term vision? As with any initiative, major
program or effort or transformation that we do at,
you know, a major, bigger, big or small companies, there is an
expected outcome. And when you embark on something
like this, which is a huge investment for the company from
and I don't just mean you know monetary, but resource culture
change, effort, discomfort, etcetera, there's an outcome
that's expected. So measures are very simple.
Trident 2 return on investments, return on equity, return for
what we said we're going to do. How do we measure the successes
we're going KPISI know these are not, you know, big and sexy and
different, but they're fundamentally when we're doing
something that's that big of an investment, what is the return
we expect? And are we getting it in the
time frame in which we expected, right.
So being able to measure your KPIs, your outcomes and output,
the output steps to get to your outcome, etcetera, none of those
things have changed. I wish I could give a a fancier
answer than that, but fundamentally that's what we
look for. But very important to be clear
at the outset, what are we getting for this?
And sometimes there are hard measures most often and
sometimes there's also soft measures or soft outcomes, I
would say improve satisfaction from employees.
Those are real, they're important.
So if we state them and do what we say and say what we do,
that's where we look at these outcomes.
And sometimes an outcome could be learning and saying only, as
I said earlier, 10% of the organization is expert.
We want to get to 20. That's an outcome.
So it might not be monetary, but it is, you know, along the scale
of what we said we want to do in order to adopt something that
could then provide stronger returns.
And this is from Cheryl Folks, Bendy.
And she has a question about this relationship between
management and the board, especially when it comes to AI.
And she says this following on Deepak's question, are you even
measuring AI initiatives discreetly or leaving that to
the management team and sticking to business outcomes that AI
might be a component of? When the initiatives are big and
the investment is significant, or once again it's a significant
change, like we're trying to drive a different culture,
organizational, you know, adoption of AI.
The board will get involved and we will take a look at it.
And you know, overall we look at the maturity of artificial
intelligence. What we don't do is go in and
look at every artificial intelligence initiative and say
how are each of these going percentage wise and things like
that. That's for management to do.
Again, I can't emphasize enough day-to-day operation and
execution of initiatives to deliver on the strategy is the
job of management. The Board assesses the risk, the
Board assesses the progress to commitments and the outcomes,
etcetera, as it relates to sort of, you know, the big
overarching business strategy of the company.
It's a clear distinction, but it can also be murky at times.
And, and how do you decide when you need to kind of drill in
more? Because at some point, you know,
the board member may have to get involved, you may be able to
offer advice or you know, if there could be many, many
different reasons, how do you balance that?
How do you make that choice? I get asked a lot about, you
know, when do you know the difference and when to do it.
It depends by company and by board, right?
And it depends, it's steered by risk, right?
So if it's not big enough to, for a board to, to, to, to worry
about in comparison to other things on the agenda or
happening, it's a very subjective, when is it time?
You know, there a lot of people ask me how often should the
boards get a review of AI initiatives?
I don't know. It depends on are those AI
initiatives integral and core to achieving the business strategy
on the table. If that's the case and there's a
time frame and a dollar amount and an importance level to it
because it's, it's the pivot point that would that needs to
be done to get us there, then I would say the board visits it
quite a bit. But if it's not and it's sort of
then we could get it in a pre read or we could get it just in
an update or it could be infrequent.
So it depends. I wish I could say there was a
recipe behind it, but there isn't.
Yeah, I can imagine there these are complex issues that will
vary according to the company culture and the situation.
That's right. In general, we're because we do
track, are we staying abreast of technological advancement?
So even if there isn't a specific initiative, we, we do
we need to ask leading questions like how is the adoption of AI
tools? What are we using it for?
What are some of the use cases that we're going after?
Is it inventory management, for example, and you know, in a
retail space, are we using it to monitor manufacturing quality
and adaptive learning? Certainly if you're in the auto
industry, the autonomous vehicle, I would say those
boards are probably, and I'm not on an automotive board.
So it's an opinion, but I would say those boards are probably
talking quite a bit about the artificial intelligence that is,
you know, self learning around autonomous driving if they have
autonomous vehicles. So again, it's it is a very
subjective to the industry and the company.
This is from Arsalan Khan. He's a regular listener to CXO
Talk and he that says this, he says as tech becomes more and
more a part of our lives, do boards need a tech advisor only
or a permanent tech board member who is fit to do this?
The CIO, the chief digital officer, the CTO.
So if you can address that. And I think it also gets to the
larger issue of technology capability on the board.
The board of directors have what's called a skills matrix
and I would say all public company and I think private
company as well, boards have these.
And a skills matrix is around a company assesses what do they
need, what are the capabilities they need in their board.
So for example, financial literacy, financial expertise is
one of the metrics, right? It may be sales and marketing,
it may be product development, etcetera.
On the skills matrix, more and more we are saying
cybersecurity, digital transformation, etcetera.
I suspect we're going to start saying tech savvy, artificial
intelligence and a a deepening of that.
To have a token member on a board that says there is our
digital tech person is a start, but it's not sufficient in my
opinion because technology impacts every part of companies,
whether it's from, you know, customer satisfaction
measurement to product development to it is ubiquitous.
So in my opinion, we have to have tech savvy board members
sort of permeating the board. That doesn't mean that they need
to know how to do microprocess, you know, programming or that
they need to, you know, do a Python program.
But what it does mean is they need to be abreast.
We need to be abreast of what are the technological
advancements, how do they disrupt, how do they augment,
what risks do they pose, what opportunities and benefits for
our company and industry. And that broad based technology
as I call it, I think is imperative if not for every
member of the board, for majority members of the board.
And you know, it's at one point many years ago on another board,
someone said, well, thank goodness we have Andy on this
board because she's watching out for that.
Well, that I'm not sure that that is, you know, it may be
back then, but it's certainly not the right mindset now.
So tech savvy is really important.
And again, I'm going to reiterate, not everybody needs
to go get a degree in computer science or computer engineering,
but being abreast, staying in soon intellectually curious,
learning, etcetera. I myself have joined, you know,
the advisor of the awesome company called I cream tree dot
AI. It's an artificial intelligence
company that helps even though I have a computer science degree
and I'm tech savvy, but you know, it's out there helping
augment human intelligence for utilities industries.
That's how I stay abreast. So even people that have the
degree can be not tech savvy. So it takes, you know, I'll use
it, takes a village. That's how I feel about it.
What about the stereotype of board members who are old
school, have very little comfort or understanding of technology,
who are used to having secretaries maybe in the past?
Who don't have the background? What?
What do you do if you're a board and you have esteemed members
who are in that situation? I'm an optimist and a glass half
full, but I I would say they're retiring because the pressures
are such that you can't really. And I'm honored and pleased to
be on the boards I'm on because I hand on heart don't see that.
But I think they're retiring because they you just cannot be
an advocate for and do your duty of loyalty and duty of care that
you need to do as a board member if you refuse to sort of stay
abreast of your inner industry and the technology that could
impact it. All right, so that problem is a
problem that is taking care of itself over time, essentially.
That's my view, yes. This would be an excellent time
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the time. So this question is from Chris
Peterson. He's another regular listener,
and he says for those mature AI adopters, how do they measure
positive and negative impacts of the tool and product choices
that they make? Tools and product choices are
not a decision for the board. So I will just say right off the
bat, the board may ask questions of, you know, why did you bring
an instance of Chat GPTN or Dolly or, or, but it, it is not
a question for the board. As for management and what they
choose to adopt, I, you know, I can assume and believe that they
make that determination based on the benefits, the availability,
the costs for sure. And that is something, you know,
boards will ask. It's how much we're allocating
and, and the cost of, of AI tools, the risks and the
openness. Is it open source or is it not?
So for companies that are doing that, and I apologize, I'm, you
know, sort of going between what the board would do and what
management would do. I assume they're doing, you
know, balancing the equation as we did whenever we bought other
kinds of tools around all of those parameters, commercial
relationship viability, durability, you know, as I said
before, price performance, etcetera.
Here's a question from Lisa Pratico.
And she says AI used everywhere is showing a negative impact on
sustainability with energy and water consumption.
Our boards or to what degree are boards concerned about balancing
the use of AI against negative ESG outcomes or to ensure that
with that there are positive ESG outcomes?
As with any new technology, Lisa, there is what I call
swings and roundabouts. And so boards recognize that
while we have our ESG commitments and they remain
strong and we want to adopt the new technology, we have to
monitor and understand both. And there may be a time where
one is, you know, sort of, you know, usurping the other.
But we monitor and we see growing pains and in this
technology is inevitable. And so we I can't say that we
sit and measure this is how much AI and compute power we're using
and this is the offset. But we are in general terms
watching that as board directors because we have ESG commitments
and we have commitments on how to improve and do more with with
less and provide better offerings.
So it's not a one for one, but I think in the rounds it will all
come back to we have a wide angle lens and a 360° view on
these things. Andy, as a board member, you
don't directly have your hand on the rudder of a ship.
You are giving guidance and then there are then management is
actually steering the ship in a in a more direct way.
Is that frustrating for you at all, the fact that that you have
this indirect role in terms of what the organization does as
indirect role as opposed to a very direct leadership
management role? When I stepped down from my last
operational role, people said are you retiring?
And I said, no, I'm rewiring. And good friend of mine actually
coined that phrase, so I won't take credit for it.
And when you rewire, you realize that you're going into a
different set of roles. And by the way, I've been doing
boards for 10 years. So it wasn't sort of, I stopped
full time and went into boards. I've been doing them since 2015.
But you, it's a different role. And with every new role, you ask
yourself, what is my accountability, What is my
responsibility? What is it that I'm bound to
have? You heard me say duty of
loyalty, duty of care, etcetera. And how do I best do that to
show up well into my boards. Now, I will tell you, I went
through growing pains. I've been quoted as saying if I
could go back to my first board, I would give them all an apology
because it was that transition of management where I wanted to
know why are you doing this, etcetera to, you know, abort
your position. I'm going to use your boat, your
boat analogy. It was an excellent one.
Management is driving boat, but the board is overseeing and the
board doesn't come in, you know, way too late to find out.
We thought management was in the Atlantic and they're off in the
Pacific Ocean, right? It could be more, it could be
slight course corrections. What the questions that we ask
and the oversight that we provide are, are we on track
for, you know, have we delivered, is the business
strategy, are the financials the way that we expected them coming
in? And we ensure that we're
delivering to the commitments made and we help course correct.
Whether it's succession planning, whether it's, you
know, looking at the allocation of spends, whether it's we have
to look at competitive pressures and things have changed.
Therefore maybe we need to do a course correction.
So there is the pilot that is piloting or the captain that is
driving, but then there's also the control tower that is
monitoring. And so it the control tower
plays its position, knows what it does, and has to synthesize a
lot of information quickly to be able to be helpful and stay in
the role of the RIN. So staying in the role is a key
part of success for a for a board and individual board
members. Yes, yes.
Mario Garcia asks. He says AI is a game changer,
but aligning strategy with responsibility, that's the real
challenge. What do you think companies are
missing? First of all, understanding the
true power of AI. So education, I don't know if
they're missing, but certainly this is what companies need to
truly understand artificial intelligence capability and
tools and offerings from software and tech companies and
what they could provide. Clear time of initiatives to the
outcomes and the strategy of a company and what it's trying to
achieve. Uber importance measuring and
ensuring that you don't have to course correct cause course
correction is good. Staying with the strategy or
with the tool or capability that isn't working is just throwing
good money after bad and sunk cost is sunk cost.
So there's a clarity of your strategy, the deliverables to
get to your strategy, the outcomes that must happen, the
tools and the, and the programs that are going to help deliver
that and what I call stringing the thread through all of that.
I think if there's anything, and I'll go back to your direct
question of what companies might be missing, it's really
understanding the capabilities of AI since I mean given that
topic and what can or can it not provide for the achievement of
the business strategy of of the organization?
Let's jump to another question, this time again on LinkedIn from
Demetrios Berampas. And he says, and this is a
really good question, he says, do board members face the AI
change as an upskilling necessity or as a more holistic
culture change? It is an upskilling.
As I said before, I think as boards are evolving and sort of
realizing the dramatic change that tech, cyber and AR are, are
bringing, that board skills, board awareness and education
need to also, you know, sort of move commensurately.
It is also a big culture change. It is a culture change within
the company. Technology is now not just for
programmers, right? I'm not going to make a bold
statement and say you never need programmers anymore, but you are
moving further from that direction and away from the
direction of programmers too. Anybody can be a citizen
developer getting the output that they need or or more people
can. I don't want to offend anybody
here on viewership. So I think it's both.
It's the composition, the focus of the board, it's the
composition and focus education and management team, and it is a
big culture change across the spectrum from employees all the
way to the board. And this is a question from
Lizbeth Shaw, who says How are boards helping their companies
address the ethical use of AI and trustworthy AI, especially
since doing so may cut into maximizing profit?
I'm very proud and I'm not, you know, not just the boards that
I'm on, but but most boards ethics Trump's profits, right?
I will just say that it's it is a darn shame when we find the
one or two unicorns that don't, you know, go operate that way.
Ethics Trump's profits. So how do boards ensure ethical
usage Through audits, through reviews, through stakeholder
interviews, through third party assessments?
It's, you know, we do this, you know, on many fronts around
strategy, etcetera, around financial controls.
You know, we have our internal audits, we have the three
stages, first, second, third line of threat vectors of, you
know, financial controls. Well, it's this, it should be
the same. And I would say is turning in
that direction of three lines of defense around AI.
Some big organizations, I believe company Nestle, I
believe does this where they have an AI ethics group.
So the board asks these questions of management and make
sure that these controls are in place.
Do we have an Ethics Committee? What's the latest audit?
Is our data secure? You know, how do we know we
don't have biases in these programs by asking these
questions and forcing sort of that the responses, that's how
we ensure and make ourselves comfortable.
And you know, we look at, we look at data associated with
that, that in fact we're staying ethical.
OK. And on a related question,
Justin Menin on LinkedIn raises again the issue of the critical
role of board involvement in navigating roadblocks to AI
adoption while maintaining an appropriate risk profile.
So can you just elaborate a little bit on this point, which
really is how can boards ensure innovation while at the same
time not taking the ostrich approach and hiding from change?
The easiest way is we ask the question what will it take, What
will it take to be able to adopt artificial intelligence and AI
tools in order to achieve X outcome or Y outcome?
And if and then the board tries to dedicate resource or helps
management, supports management and dedicating resource or funds
capital allocation to remove the roadblocks to achieve the
outcomes not open-ended though, how do we get AI tools and is
not something the board would say, right.
But if for example, we are saying we want in you know, to
improve inventory management and reduce shrinkage, for example in
a retail company, we would say what would it take to bring
tools and to do that management needs to be prepared and again,
very much a two way St. Michael, but management needs to
be prepared with our infrastructure is legacy.
Here's what we need. This is what it would take, or
these are the tools that we need to invest in or these are the
resources that we need to go higher or get help with, right?
But it's how do we achieve, what are the roadblocks we can help
remove and then setting the support structure up for
management to do that. But again, not just to bring in
AI tools, but to achieve the outcome of what these tools
could promise for the stakeholders.
Correct me if I'm wrong, It seems in a sense what you're
saying is the board's responsibility is to drive the
organizational agenda at the same time balancing competing
forces ultimately? It's to agree to the
organizational agenda and the strategy of the company and then
to see how the board, what is needed from the board to support
removing those roadblocks while constantly monitoring that we
stay within risk appetite. The way that you're describing
it, if I can be totally blunt, it sounds like kind of corporate
speak. That's pretty much what I said.
Or am I missing? What am I missing here?
You missed the risk appetite. OK.
So you said the board will remove things, but the board
will there's a check in. Look, I'll take the corporate
speak out of it and just, I love that you called that out,
Michael, but it is, there's checks and balances.
So it's not. Yeah, go it's again, I'll go
back to what I said 40 minutes ago.
There's an offensive play, but we have to make sure that we
stay within our regulatory, legal, ethical boundaries.
And I'll always repeat that. Sorry that.
Yeah. Very helpful.
So checks and balances is a very essential element of this.
Absolutely, absolutely. So if I, if I'm asked as a board
member, Andy, would you give us your view and opinion on, you
know, ChatGPT And it's great. It's this, it'll do this and
what are we training and we used, you know, 6,000,000 data
sets and all the rest of it. That's fantastic.
But in the same breath, I'm going to say how, you know, what
are we doing to ensure that corporate data does not get out
as we're as we're delivering on this.
I can't emphasize it enough. I know I've said it about 12
times, so forgive me. Well, it's clearly an essential
part of the the board role. And so it's great that you're
emphasizing it. We have a number of questions
left. I'm going to ask you to answer
these really quickly because I want to have time to share
advice on how technology leaders can become board members so
very, very quickly From Twitter, from Arsalan Khan.
Again, strategy without execution is hallucination.
Sometimes execution is a fraction of what strategy
wanted. What do boards do?
We make sure that the plans for execution are sufficient and
enough for to achieve the strategy.
And by the way, some of those are not just tech plans or AI
plans. So this goes to threading the
needle strategy, strategic, you know, initiatives to achieve
that strategy, that outcome execution being in line with
those initiatives to achieve the strategy.
I know I'm very something making it sound very simplistic.
Quite often companies have strategic goals but don't have
the right strategy to achieve them, which means they don't
have the right execution focus and and programs.
But it's it's a thread, the needle.
Let's go back to LinkedIn very quickly from again from Isaac
Sacolic. Are boards diving into how
effective management is in investing in leaders and
employees for training around AI and effectiveness on change
management? Or is this left to be a
management issue? If we have set up the outcomes
and the commitments and the strategy again that we're trying
to achieve, there is a set of capabilities, programs,
initiatives, efforts, culture changes, etcetera that are
deemed that are have been set forth to achieve that you
measure if those things are being achieved.
Boards will not go in and say you know just sort of out Hock,
how many AI specialists do you have?
We will say do we have enough specialists to achieve this?
Do you have the workforce of the future?
Are they located in the right places?
Do they have the right reward mechanism?
Are there objectives aligned? We will ask those questions.
We don't go except for the chief executive.
We don't hire and and you know sort of fire the, you know,
management team etcetera. We have a lot of input, but we
make sure that companies are resourced just the same way.
We make sure that capital allocation on a financial
perspective is done, you know, sufficiently to achieve the
outcomes that we're trying to achieve.
Again, you've got the the checks and balances to make sure that
resources and people are in place who can carry through the
the vision and the strategy of the organization.
It's exactly right again, noses and fingers out, sniffing it,
ensuring that sort of thing we don't execute.
We have a question from Cheryl folks.
Bendy again, who says What do you look for in a company when
you're considering joining a board?
First of all, is it an industry that I am interested in and can
contribute to? Is it a company that I believe I
could am interested in and can contribute to and can benefit
from my expertise? Is it a board that I can work
with? I look at by name and
background, each board member to see is that a board that I can
learn from and contribute to? Is it an ethical company?
I look at the financials, you know, sometimes they're great.
Sometimes you know, you, you can find opportunity to grow that,
but that's not typically how I the, you know, a key criteria
for, for assessing it. And so through that, you start
realizing, is it a place where if I go play on that field, I
can actually contribute and, you know, give good guidance, good
insight and where my capabilities are needed.
I consider it from my personal experience, I consider it a
duty. And so and some, you know, an
honor, if you will, to be on a board.
And those are the things that I think about.
What advice do you have to business leaders inside an
organization on being effective in working with the board?
So I have seen management teams that try to manage the board and
to some degree there is a level in that collaboration where you
need to manage each other's expectations, etcetera.
But for me it's around collaboration.
What does the board need to do to do their job?
What does the board need to do to be effective at, you know,
their oversight and governance and to help give us guidance?
That's what I would look at as an in a management team.
Quite often we look at board members when they ask questions.
Oh my gosh, the board asked for this.
Relax, right? Why is the board asking?
What is the board looking for? And so just like this is going
to sound very trite, Michael, but just like in a good
relationship, you want to know if someone asks you something,
don't go on the offensive or defensive, but what is it
they're looking for and how do I help achieve that so that they
can help me through oversight to deliver that?
That's how I would view it. So really understanding, trying
to understand the board members perspective.
What do they need, and how can I, as a member of the leadership
or the management of the company, help that board member
achieve whatever it is that they're looking for?
That's right. And it's quite often it's fair
to say, why do you ask? Because it could be something
completely different than they what they might interpret.
It could be just a curiosity, it could be some other, other
reason. Or the board member may say, you
know, I, I can't really divulge or what I just, you know, I, I,
I need to understand this, this bit of information.
But typically we go through CEO for that.
What advice do you have for technology leaders, CIOSCTOS and
so forth who want to become a board member?
Recognize there's no recipe. So if someone says to you go do
this, go do this, go do this, right.
I've seen that quite often it is not a recipe.
There is chemistry to bring people on boards.
There is experiences that that you know certain companies are
looking for. I mentioned capability matrix,
etcetera. But here is what I would
recommend to every tech person, figure out business, understand
if you're going for a particular company or in an industry, start
understanding the industry. Your trade may be technology and
that's what you bring, but you're going on a board from
governance oversight, fiduciary responsibility, your, you know,
financial literacy, etcetera. So hone those skills and bring
yourself, you know, up sort of into that broader umbrella and
lose the tech speak. Quite often we are so impressed
with ourselves on all of the deep technology that we know and
we should be very proud of it. But that is not the level that
boards operate at. You know, occasionally your tech
boards may want to go deep into things, but you really need to
raise your game up a level. You mentioned this earlier can
very quickly. Can you give us an example to
make this point concrete? If I'm a CIACIO and I'm talking
with the board, how much technical detail should I
provide? Enough so that they get the
picture of benefit risk required, you know, dollar
allocation if that's what's being asked for, and so that
they can do their job. So recognize the board's job,
right? Recognize their oversight and
governance. What do they need to know in
order to do their their job well, right.
And so I use a lot and I'll say something else.
I use a lot of analogies and comparisons, right.
You know, we were trying to describe threat vectors and you
know how people can infiltrate what the bad actors do, for
example, on cyber. And so, you know, draw some
analogies. I used to say if you put a lock
on the the front door, but the jewels are sitting on the table,
then not good. So maybe you have a safe and
then you have, you know it under a a, you know, the boards in the
kitchen. That's defense in depth.
So I would explain it in terms that they could.
It's not dumbing it down. It's just relating it to
something they know. That's an interesting point.
It's not dumbing it down, but it's presenting it within the
context of what's important to them and where their focus lies.
Right. OK, well with that we are out of
time. So I want to say an enormous
thank you to Adriana Karabutis, who is a multi industry board
member. She's held senior leadership
roles at large organizations like Dell, Biogen and National
Grid. Andy, thank you so much for
being with us and sharing your expertise with us today.
Thank you, Michael. It's a pleasure being here.
I appreciate you having me back. And a huge thank you to
everybody who asked such amazing questions and who we're who's
watching today. Before you go, please subscribe
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