Once you cut through the hype, the rapid advancement of AI presents big challenges for businesses. Whilst Boards like to use phrases like “future-proofing”, we have to ask: can Boards actually future-proof their organisations in the age of AI, especially when the very nature of AI’s evolution remains uncertain?
The Promise of AI: A Catalyst for Growth and Innovation (and a Moving Target)
According to a recent Egon Zehnder survey, a staggering 95% of CEOs anticipate significant and systemic shifts in the coming decade, with disruptive technologies like AI at the forefront. CEOs view the responsible regulation of these technologies as a major opportunity for collaboration, underscoring AI’s potential for value creation and sustainable growth. At AI Governance we see every day how AI is being used by businesses to predict, personalise, and automate in ways that are giving them real insights and advantages. It’s crucial to acknowledge, however, that AI development is not a linear progression. As a 2024 report from the Stanford Institute for Human-Centered AI (HAI) indicates, AI capabilities are expanding at an exponential rate, making long-term predictions highly speculative. This rapid evolution makes it exceptionally hard for boards to prepare for what they don’t fully know.
The Board’s Challenge: A Knowledge Gap, Shifting Priorities, and the Fog of Uncertainty
The problem is that many boards are not adequately prepared to use the AI we have today, let alone what might come next. Outdated structures and mindsets can hinder directors from prioritising emerging areas like technology and disruption alongside traditional concerns about risk and return on investment. AI Governance research shows that many board members lack sufficient knowledge about the potential and risks of AI. This is a critical gap that needs to be addressed urgently. The Egon Zehnder survey supports this, highlighting the need for boards to develop the right skills matrix and diverse composition to effectively leverage AI.
The urgency for board-level AI literacy is underscored by McKinsey’s report into generative AI adoption which found a dramatic acceleration in generative AI adoption, with businesses rapidly moving beyond experimentation. However, alongside this surge, the report found that governance and risk management were emerging as paramount concerns, with companies struggling to establish effective frameworks for responsible AI deployment.
This is compounded by the ethical and regulatory grey areas surrounding AI, which are constantly evolving. As the European Union’s AI Act demonstrates, regulatory landscapes are shifting, demanding continuous adaptation from boards.
The Case for AI-Focused Board Development: Bridging the Gap, But Acknowledging Limitations
- Expertise is Essential, But Needs to be Agile: Boards need diverse perspectives and expertise to accelerate business transformation. In our board engagements we start by checking board members’ understanding of what AI is (and isn’t), the different types of AI, and then look at potential use cases. Gaining expertise like this for board members is a continuous learning process, not a static achievement, as the technology is changing so fast.
- Strategic Leadership in the Face of Ambiguity: Boards must be equipped to ask the right questions and foster clarity on how their companies can leverage technology to drive sustainable growth, even when the answers are unclear. It’s not enough to simply manage the risks; boards need to understand how to capitalise on the opportunities. AI Governance highlights the need for boards to discuss how to govern AI from the start, considering ethical implications. Boards should also invest time in scenario planning and flexible strategies to account for unforeseen AI developments.
- Informed Decision-Making with a Dose of Humility: Once they have more directors equipped to understand AI, boards can engage in more informed discussions and make better strategic decisions. This means understanding data, ethics, risks, and establishing appropriate governance, whilst also acknowledging the limitations of current knowledge.
If you want to increase your board’s capability in these areas, we recommend you hold a Board Development session which includes:
- Identifying what to predict, personalise or automate, while understanding the limits of prediction
- Understanding data requirements and sourcing data with integrity, with a focus on data security and privacy
- Addressing ethics and risks, and agreeing on AI governance, with a focus on transparency and accountability.
The Verdict: Proactive Adaptation and Continuous Learning Are Essential, Not a Guarantee
While the challenges are real, and the future of AI is inherently uncertain, boards can significantly improve their preparedness. We know we’re biased (!) but the results our clients get from Board Development sessions convinced us that these sessions should be a priority for every board. These sessions are not just about understanding the technology itself, but also about fostering a culture of continuous learning, critical thinking, and ethical awareness. By investing in AI literacy and embracing a proactive approach to adaptation, boards can enhance their resilience and navigate the complexities of the AI age. There are no guarantees however! The very nature of AI’s rapid and unpredictable development means that future proofing is an ongoing process, not a final destination.
