Corporate boards thrive on diversity. For years, well-governed organizations have known that their strategies are best formed through differences in thought, experience, and opinion. Traditionally, that diversity has been functional. Having members who were strong in different areas of the business (e.g., finance, marketing, M&A) provided a solid base from which to discuss the most important of matters. In recent years, diversity has branched out to include race, sex, and general background, adding life experiences and sociological perspectives to the power of the boardroom. But upon what will the next wave of diversification be based? Interestingly, it will be a combination of both function and “personal” perspective. It will be first through the understanding of and eventually in the form of artificial intelligence.
For the next ten years, AI will come to dominate corporate activities. Almost every aspect of a company’s operation will be touched by AI. From mapping markets to creating products to helping customers to hiring employees, AI will either do the work, or it will be the primary tool used by human workers.
Unfortunately, though, today’s corporate boards cover technology – at best – through the topic of digital security. That’s it. How do we protect our trade secrets and our customers’ privacy? How do we keep hackers out of our servers? That is the woeful extent of technology discussions in today’s board rooms, and it must change.
Let’s look at Amazon. In 1994, they were a bookseller squarely in the crosshairs of Barnes & Noble. How did they succeed? By fundamentally looking at how they can use technology to a) get closer to their customers and b) decrease the amount of time that products aged in their warehouses. The result? A $1.8 trillion market cap in 2024.
How about Domino’s? In 2004, this household name was $1.7 billion in debt and quickly on its way to seeking protection from its creditors. How did Patrick Doyle turn the company into one of the world’s most successful franchises? By doing the same thing that Jeff Bezos did in 1994 –using technology to a) get closer to their customers and b) create operational improvements that create competitive advantage.
That is tech-enabled strategy, and 30 and 20 years ago, respectively, it took world-class, visionary CEOs to make it happen. Today, though, most organizations are anything but tech-enabled, and boards cannot rely on history-writing CEOs to make it happen. Technology is simply moving too fast. The boards themselves must understand that they do not have another 20 years to tech-enable their organizations because AI will be exponentially more disruptive than data management and e-commerce.
In the cases of Amazon and Domino’s, their technological advancements manifested in online apps, robotics, and analytics. The companies today that will have a chance of leading the market in ten years will have much more complex technologies that they will need to harness. With the launch of ChatGPT, the world collectively saw the future demise of any industry where you could put a box around a data set that was traditionally analyzed by humans. Law. Finance. Radiology. Journalism. Any role with “analyst” in the title. These will all go away or at least shift substantially. If there is a corpus of knowledge that people analyze to create value, AI will be able to perform that analysis cheaper, faster, and better than humans ever could. Law will grow more standardized with fewer people, investment banking will see companies valued with a fraction of the staff, and even work as arcane as drug discovery, where vast libraries of chemical structures are manually manipulated to create new drugs, will be as foreign to us in the future as using an abacus or an aqueduct is now.
The solution to the problem, though, is simple: Step 1: Ensure that your CEO is maximizing current technologies to improve both operations and the customer experience. Step 2: Ensure that your CEO is establishing competencies for using AI across all areas of the enterprise. Step 3: Add AI competencies to your board to ensure long-term competitiveness.
Oh, and Step 4: be prepared to eventually add a seat at the board table for AI itself.
