Vice Chair, Board & CEO Services, Global Leader, CEO Succession Practice
Boards Get Smart (or Try to) About AI
Not many people would teach a teenager to drive in a brand-new $3 million Lamborghini. A Honda or Toyota would be a much safer option to learn the art of driving and the rules of the road.
To some degree, it’s that kind of thinking that smart firms—and even smarter boards—are applying to the rise of generative AI platforms like ChatGPT. Leaders are dying to put the pedal to the metal, so to speak, but need more knowledge and practice. And while few boards of the past would have involved themselves in the intricacies of deploying a new technology, a growing number today feel AI is too transformative to take lightly. As Jane Stevenson, vice chair in Korn Ferry’s Board and CEO Services practice and global leader of the firm’s CEO Succession practice, sees it, AI requires a “higher and higher level of trust and collaboration between the CEO and the board.”
With the economy still stagnating, for instance, experts worry that leaders will rush to deploy AI in order to goose short-term profitability at the expense of long-term business prospects. In one recent survey, for instance, executives said they were moving forward with ChatGPT, despite knowing it’s error prone. That’s where a board needs to step in, says Stevenson. “Judgement is going to be critical in striking a balance between opportunity and control,” she says.
How firms should invest is another topic directors are considering. As Stevenson notes, most of the talk about AI centers on the cost savings it produces. Not as frequently mentioned are the costs of its development and deployment. Nearly 6 in 10 executives say their company has bought or plans to purchase a generative-AI tool this year, and 20% of companies surveyed use five or more such tools already. But is that the right strategy?
The technology raises a series of high-level questions. What does the business require from an external partner? Would building an internal AI platform serve the business better? What areas of the business are being targeted? How will that impact jobs? “AI is not one-size-fits-all,” says Paul Fogel, sector leader for professional search and software at Korn Ferry. “You don’t just roll it out and call it a day.” Fogel says it’s critical that boards be regularly updated on investment strategy, for instance, and suggests they encourage leaders to think in terms of “small rollouts” to evaluate where and how people already work best with AI, and where training, educating, and upskilling workers is still needed.
As CEOs look to ramp up the use of generative AI, experts say smart boards are being proactive about confronting thorny moral and ethical questions around people, purpose, and social impact. To protect client information, for instance, some firms have decided to ban ChatGPT altogether, while others have put guardrails on its use until it’s better understood. A recent Korn Ferry report also found that more boards are forming tech committees to address concerns around the governance, regulation, risk, and security of AI.
Alan Guarino, vice chairman in the Board and CEO Services practice at Korn Ferry, says the challenge for boards and leaders is to figure out how to make AI additive as well as transformative. “The good news is management and boards have time and are working together to get their arms around AI,” he says.
For more information, contact Korn Ferry’s Board and CEO Services practice.