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AI - Rethinking business | Karen Silverman · The Better Boards Podcast Series

• 0:02
  SPEAKER_01: AI, rethinking business.
• 0:04
  SPEAKER_01: AI and generative AI is capturing the headlines.
• 0:09
  SPEAKER_01: We know it will bring an era of rapid change, new opportunities and new risks.
• 0:15
  SPEAKER_01: The cost structure of expertise and repetitive tasks will shift fundamentally.
• 0:20
  SPEAKER_01: Existing security protections against spoofing and phishing are now vulnerable and employees are wondering what it all means for them.
• 0:29
  SPEAKER_01: Developers of generative AI acknowledging the risks, asking for governments and companies to lean in on regulation, governance and controls.
• 0:39
  SPEAKER_01: So what should boards and directors be thinking about all of this?
• 0:43
  SPEAKER_01: And importantly, what should they be doing now?
• 0:47
  SPEAKER_01: I'm delighted to talk with Karen Silverman.
• 0:50
  SPEAKER_01: She dedicated her work to the practical aspects of technology governance, strategy and policy, and how all of that intersects with corporate governance.
• 1:00
  SPEAKER_01: She is a global innovator at the World Economic Forum and contributor to the Business Roundtable, as well as many corporate and non-corporate organizations around the world.
• 1:11
  SPEAKER_01: Welcome to the Better Boards podcast series.
• 1:14
  SPEAKER_01: I'm Dr.
• 1:14
  SPEAKER_01: Sabine Demkowski, founder and managing partner of Better Boards.
• 1:19
  SPEAKER_01: We make the boards of the most ambitious organizations more effective.
• 1:23
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• 1:28
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• 1:36
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• 1:53
  SPEAKER_01: To fulfill our mission, we give a voice to all who care about creating better boards.
• 2:00
  SPEAKER_01: Karen, thank you so much for contributing to the Better Boards podcast series.
• 2:05
  SPEAKER_01: It is my pleasure to be here.
• 2:06
  SPEAKER_01: What a cutting edge topic we have this time.
• 2:10
  SPEAKER_01: You know, you and I were chatting in the preparation for this podcast and you were talking about the major implications of AI and particularly generative AI And I was sharing with you that I haven't seen AI really on many agendas.
• 2:29
  SPEAKER_01: And you were really surprised about that.
• 2:31
  SPEAKER_01: Let's start actually there.
• 2:33
  SPEAKER_01: We're reviewing boards.
• 2:34
  SPEAKER_01: I'm seeing these board agendas and it's not really at the top of it.
• 2:39
  SPEAKER_01: So what is your view?
• 2:41
  SPEAKER_01: What do boards have to consider right now?
• 2:44
  SPEAKER_00: So it's really interesting to hear that you're not seeing it on the agendas yet.
• 2:48
  SPEAKER_00: One of the things we are hearing is that there's a lot of chatter about it and there's a lot of inquiry starting to generate at the board level and obviously at the management level.
• 2:58
  SPEAKER_00: What boards need to be looking at right now is on some level very existential and in some levels it's sort of mechanical specifically.
• 3:06
  SPEAKER_00: But at the existential level, these technologies in particular, they're calling generative versions of them, are likely to dramatically impact cost structures sort of across the business, right?
• 3:19
  SPEAKER_00: Because how we value and pay for expertise, how we automate repetitive process, all of that's going to change both in terms of what business is willing to pay for on the inbound side and what they can charge for on the outbound and sales side.
• 3:36
  SPEAKER_00: So it's going to have both Cost impact and revenue impact in a pretty profound way.
• 3:42
  SPEAKER_00: If it's not on the agendas yet, needs to get put on those agendas.
• 3:46
  SPEAKER_00: And not only does it need to get put on the agendas as a reported item, it needs to get put on the agendas as a deliberative item where boards are encouraged to get informed, ask questions, interrogate management about how they're using the technologies, how they're thinking about the impact on business at the most fundamental levels, how they're managing the new sort of categories of security risks that come along with some of these technologies, things that touch directly on business continuity and success as we've been traditionally measuring it.
• 4:24
  SPEAKER_00: So I'll pause there.
• 4:25
  SPEAKER_00: I really truly believe these are questions that need to be surfaced in a strategic conversation, not just in a compliance conversation.
• 4:34
  SPEAKER_00: I
• 4:35
  SPEAKER_01: mean, the last thing our listeners always want to hear what they should do.
• 4:39
  SPEAKER_01: I mean, in a way, you know, the agenda items are so many, so rich.
• 4:44
  SPEAKER_01: You know, we have supply chain disruption.
• 4:47
  SPEAKER_01: We have ESG.
• 4:49
  SPEAKER_01: We have cost of living crisis, et cetera, et cetera.
• 4:52
  SPEAKER_01: You name it, it's there.
• 4:54
  SPEAKER_01: There are so many things that should be on the agenda and can't be because time is limited.
• 5:00
  SPEAKER_01: This one is profoundly different because it's transformative to how business is done.
• 5:07
  SPEAKER_01: So...
• 5:08
  SPEAKER_01: If we can raise some awareness with this podcast to, hey, if you put one thing on the agenda or make it part of your strategic discussion, this should be probably it, or?
• 5:19
  SPEAKER_01: I
• 5:20
  SPEAKER_00: think so.
• 5:21
  SPEAKER_00: You can either put it on the agenda or you can ask it as part of every other agenda item, right?
• 5:27
  SPEAKER_00: I mean, I think when you are reviewing financial performance, it would be reasonable to ask questions around how AI is going to impact that for the good and as a risk factor.
• 5:40
  SPEAKER_00: When you're looking at supply chain, you could ask how AI is going to impact that.
• 5:45
  SPEAKER_00: in any number of directions.
• 5:47
  SPEAKER_00: So I think it's actually easily integrated as part of conversations boards are already having, but the nature of the conversations may need to change to accommodate much more resource ingestion where boards can ask questions and get smarter and get informed as to how AI can impact these different elements of the business.
• 6:10
  SPEAKER_00: I think putting it on the agenda as its own item also has some utility, but really thinking about it as integrated into the rest of the business is a really good start.
• 6:20
  SPEAKER_01: But before directors can ask clever questions and can probe, they need to get up to speed with the topic.
• 6:28
  SPEAKER_01: So the first question is probably, what can boards do now to get their directors up to speed on AI?
• 6:35
  SPEAKER_00: The first thing they can do is ask them to do that and start giving them access to resources, both internal and external, who are watching the technologies, not just in general, I mean, it's very hard to keep up kind of at a broad landscape level, but help them understand which technologies are gonna impact their businesses and in what ways, right?
• 6:58
  SPEAKER_00: And so create some contextually relevant sources of information that boards have access to both when they're operating in committee And when these questions occur to them in the course of their business, their ordinary lives in business, because what often happens is these questions come up because they read an article about something else or they have a conversation with a colleague in another industry and a question emerges.
• 7:25
  SPEAKER_00: We're going to need to sort of ready on demand resources for directors to start integrating these questions into their regular thinking.
• 7:34
  SPEAKER_00: That is not necessarily an internal organizational function that could very well be an exercise.
• 7:39
  SPEAKER_00: So why does it matter now?
• 7:47
  SPEAKER_00: Because there
• 7:51
  SPEAKER_01: are so many competing topics on these agendas.
• 7:58
  SPEAKER_01: Why do almost every business has to really embrace it and start thinking about it, integrating it into their strategy, etc.?
• 0:00
  UNKNOWN: ?
• 8:08
  SPEAKER_00: I think the urgency around this is a byproduct of how quickly these new technologies are coming online and getting integrated to workflows.
• 8:18
  SPEAKER_00: So the uptake on, for instance, ChatGPT, it had like 100 million new users within, I guess, three months of its release.
• 8:28
  SPEAKER_00: So the adoption rates are through the roof.
• 8:31
  SPEAKER_00: Right now, when we say adoption, that's a strong word.
• 8:34
  SPEAKER_00: People are experimenting with it.
• 8:36
  SPEAKER_00: People are learning to use it.
• 8:37
  SPEAKER_00: They're learning what it does well and what it doesn't.
• 8:40
  SPEAKER_00: And I think that the rates of uptake create some urgency, but also it's creating a level of anxiety you know, sort of the workforce and the customer base that needs to be dealt with, whether it's warranted or not warranted, it's there.
• 8:54
  SPEAKER_00: It creates a risk of disinformation and sort of what I call the looming authenticity crisis that we're about to confront, which is that the ways and assumptions we make about what is authentic and what is not is largely based on what we see and what we hear.
• 9:10
  SPEAKER_00: What we see and what we hear is now gonna be easily spoofed and replicated by these tools.
• 9:16
  SPEAKER_00: And we're gonna have to go through a period of very uncomfortable uncertainty about relying on information sources that previously we've been able to rely on.
• 9:26
  SPEAKER_00: And all of that is going to be disruptive to how business gets done.
• 9:30
  SPEAKER_00: All of that is going to threaten the productivity of teams that are finely tuned for work.
• 9:37
  SPEAKER_00: So what can boards really do about it?
• 9:57
  SPEAKER_00: You know, at the biggest level, what boards can do about it is lean in.
• 10:01
  SPEAKER_00: To your point with the top of the conversation, you're not seeing it on the agendas yet, right?
• 10:06
  SPEAKER_00: So we need to put it on the agendas, not wait for management to decide that it needs to be there and kind of wedge it in.
• 10:12
  SPEAKER_00: It's really lean in, ask questions about where these technologies are being used within the organization, for what purpose and to what end on the affirmative side.
• 10:22
  SPEAKER_00: ask what is being done to defend against foreseeable risk on the defensive side, and understand that this belongs in the category of strategy and risk management as much as it belongs in the category of compliance, which I think is how many organizations have been treating it up to now.
• 10:40
  SPEAKER_00: You're sort of waiting, you're watching regulations develop across the world, waiting to see what that's going to require of them.
• 10:47
  SPEAKER_00: All of that remains important, but the real questions they should be asking are much more around What is how are we developing those?
• 10:55
  SPEAKER_00: What are we doing to govern those to protect against sort of known and knowable risk?
• 11:01
  SPEAKER_01: If you would put it in different buckets, is it a risk issue, a compliance issue, a strategic issue?
• 11:08
  SPEAKER_01: Yes,
• 11:10
  SPEAKER_00: but I would start with probably risk, strategy, compliance in that order.
• 11:16
  SPEAKER_00: And at any point in time, compliance could sort of leap to the front, but I would not expect that that's going to answer the harder questions.
• 11:23
  SPEAKER_00: One of the interesting things is that, you know, we were saying businesses have to do things, right?
• 11:27
  SPEAKER_00: And they have to make decisions and they have to allocate resources and prioritize objectives and risks and figure out ways to do that sensibly in the context of their business.
• 11:38
  SPEAKER_00: Regulation is never going to answer that question.
• 11:40
  SPEAKER_00: And so understanding that that point alone is probably a really important first step.
• 11:46
  SPEAKER_01: Right.
• 11:47
  SPEAKER_01: Yet
• 11:51
  SPEAKER_00: another issue to worry about.
• 12:16
  SPEAKER_00: issues intersect with one another and they impact one another and sorting out for your organization how security risks or security considerations run in alignment or intention with other parts of the business.
• 12:32
  SPEAKER_00: becomes much more important.
• 12:34
  SPEAKER_00: So I think one of the resource layers that certainly boards need, and frankly, management also need, is how to integrate better than we do in this sort of siloed structures, key opportunities, key risks, key resources.
• 12:49
  SPEAKER_00: And that is work that every organization is learning how to do right now.
• 12:54
  SPEAKER_01: Company secretaries will have to figure out which agenda items should be canceled in order to squeeze in this item.
• 13:02
  SPEAKER_00: Well, and it's hard because it's not only raising something in.
• 13:06
  SPEAKER_00: We have to pick up the pace at which we look at, for instance, strategic planning and risk planning, right?
• 13:10
  SPEAKER_00: You can't do that once a year and sort of let it sit and expect that what you decided 12 months ago is relevant.
• 13:18
  SPEAKER_00: So building in more agile communications, but also decision-making is important.
• 13:22
  SPEAKER_01: Yeah, absolutely.
• 13:23
  SPEAKER_01: It will be very, very challenging because it's so quick.
• 13:27
  SPEAKER_01: It's so fast.
• 13:28
  SPEAKER_01: It's a rethink of structures and processes to really accommodate this.
• 13:33
  SPEAKER_00: Right.
• 13:33
  SPEAKER_00: And all at the same time with uncertain landscape.
• 13:37
  SPEAKER_00: So I think as I say, sort of leaning in and planning for agility is going to be important.
• 13:43
  SPEAKER_00: And we've seen consequences for companies that have sort of made long-term bets at the wrong price, you know, in the US banking sector, for instance.
• 13:51
  SPEAKER_00: And so coming up with strategies that accommodate the dynamic nature of the economy is and of all the inputs to the economy, right?
• 14:01
  SPEAKER_00: That's what's sort of interesting too.
• 14:03
  SPEAKER_00: And these questions are being asked in education settings, in academic sort of research settings, in professional services companies.
• 14:11
  SPEAKER_00: So every industry is struggling with this in some way.
• 14:14
  SPEAKER_00: It's not confined to any particular sector, I would say.
• 14:18
  SPEAKER_01: So on this jolly note, what are the top three things our listeners should take away from this podcast?
• 14:25
  SPEAKER_00: that it's going to be very interesting and very complex.
• 14:28
  SPEAKER_00: You know, I guess what I would say is these tools which promise sort of ease and efficiency when they're being marketed are really going to require, particularly of leadership, sort of a heavier cognitive load and more thinking, more work, more questioning.
• 14:43
  SPEAKER_00: So takeaway is sort of lean into that lean into the change and think about how the values of an organization are going to align and guide organizations through periods of surprises.
• 14:57
  SPEAKER_00: To do that, creating space to both become educated and to deliberate in addition to make determinations is going to be important and keep curious and expect the change.
• 15:11
  SPEAKER_00: I think part of what is holding people back is we're still processing our surprise.
• 15:16
  SPEAKER_00: We need to get beyond our surprise to real leadership in this moment.
• 15:21
  SPEAKER_00: And there's a huge role for leadership too, which is going to be setting the tone and the capabilities and capacity of our employees, of our customers to manage this change.
• 15:33
  SPEAKER_01: Karen, thank you so, so much for contributing to the Better Boards podcast series.
• 15:38
  SPEAKER_01: It was my pleasure.
• 15:39
  SPEAKER_01: Thank you for having me.
• 15:40
  SPEAKER_01: How can we help you and your board?
• 15:43
  SPEAKER_01: We at Better Boards are always delighted to hear from you.
• 15:46
  SPEAKER_01: If you are interested, Get in touch.
• 15:49
  SPEAKER_01: If you would like to hear more about our work, if you would like to see a demo of our platform, or if you are interested in a topic that we should cover in one of our podcasts, reach out.
• 16:00
  SPEAKER_01: You can best do so using the email info at better-boards.com.
• 16:06
  SPEAKER_01: Thank you for listening.