Human NEDs to trump A.I. and A.I. Directors in the boardroom?
NEWS that a Hong Kong company Deep Knowledge Ventures has taken the plunge to appoint an A.I. Executive Director with actual authority, real powers and a vote to their board, leads some to suggest that a bright algorithmic future might be about to irrevocably transform decision-making on the executive floor as well as inside the C-suite.
Advocates cite compelling advantages^ for A.I. or A.I. Director appointments onto boards of directors that are hard to easily or sensibly gainsay. There are many potential and often needed supervisory benefits that A.I. potentially has over all-too-human and fallible board executives including:
Better information access
Unafraid to question CEO’s and Chairman
Always takes decisions to achieve company not career goals
Improved independence and monitoring
Swifter fine-tuning of strategic initiatives in light of results or market conditions
Less subject to bias
An antidote to group-think, CEO charisma and market sentiment/fashion
Data based decision making
Unable to turn blind eye to risk
Better balance of stakeholder & shareholder interests
More granular decisions not just steering around icebergs
I welcome the arrival of more light and less heat in the decision-making and governance of our executive boards. As a long-time successful investor in innovation and also health technologies, I am keen embrace any business and decision-making benefits that the introduction of A.I. and even A.I. Directors bring to our executive boards. However, I believe better non-executive directors (NED’s) currently trump A.I. Directors from a cost, implementation and availability point of view, ignoring some already exhibit many of the positive attributes ascribed to implementing A.I. in the C-suite.
There continues to be an ongoing and serial reluctance to appoint truly independent-minded non-executives to our UK boards. Doing so can start tomorrow without any need for costly kit, consultancy or programming. To my mind, the best non-execs are experienced, knowledgeable but independent. If appointed, these properly independent directors (I.D.) can deliver pretty well all the benefits claimed for A.I.. Sadly, it often appears the current cadre of Chairmen, CEO’s and executive-directors are seriously unable to overcome their own pale, male and stale coding. Despite a litany of corporate scandals and mis-steps, there really is no reason or justifiable excuse to bet the house on the jam tomorrow promises and power of A.I. Directorships without really trying to upgrade the existing human operating systems. It is worth remembering that the best ID’s are already unafraid to question Chairs & CEO’s whenever the situation merits.
Though the latest digital gizmos are almost irresistible to go-getting boards in search of business growth via magic bullets, newly fashionable ideas or algorithmic panaceas, appointing better more independent-minded non-executive directors rather than A.I. ones is a practical and low cost alternative Chairmen and CEO’s presently resist at their peril. Admittedly the I.D. (or NED) appointee with the brain the size of planet or big data of an A.I. Director has yet to be found, let alone appointed, but many human ID’s already deliver significant advantages to board decision-making that A.I. presently can’t and won’t properly include in its warp-speed analysis and “big data” assessments. Nor are these vital ID (human) attributes always easy to find, specify, programme and replicate. The potential benefits I see of Human I.D. (or better NED’s) versus A.I. are often simple but effective if/when properly executed. Luckily, we are not involved in a zero sum or either-or game here. The corporate governance digital future doesn’t rest with those who have the latest toys or follow the current fad. Instead, these possible futures rest with those executive boards that best marry algorithms and A.I. with the agilities, insights and capabilities thoughtfully appointed independent non-executive directors regularly deliver.
So, what do truly independent directors actually bring to the corporate governance party?
My I.D. human archetype vs. A.I. big data black box algorithms (Corporate Governance Wars release 1.0):
More strategic thinking per unit of data
Cheaper to run
More environmentally sound
Easier to source
Better relationships with stakeholders, government and society
Better diversity and inclusion options
More likely to defy background and programming in decision-making
Subtler assessment and leadership skills
Application of wider register of experience to new scenarios
Image credit: DiliTrust