Why directors need to lead on AI strategy

Directors should ensure they anchor the use of artificial intelligence (AI) in the strategy of their organisations, says AI consultant Dr Kellie Nuttall.

There are two schools of thought for boards when it comes to AI – with some seeing the new technology as a governance and risk management problem, and others viewing it as an opportunity, according to Nuttall.

“Over time, as people have become more familiarised with AI, they’re seeing the opportunity and competitive advantage,” says Nuttall. “There’s much more appetite around what use cases are being developed.”

Many  boards are still leaving AI in the hands of the chief technology officer (CTO), but Nuttall says it’s a mistake to think of AI as a tech question only. “This is going to change business models. It’s going to have workforce impacts. It’s going to have regulatory exposure. So this is CEO and board territory.”

Nuttall, who co-designed the AI Fluency for Directors course offered by the AICD in partnership with the University of Sydney Business School, says most boards in Australia are still at the stage of trying to increase their knowledge and understanding of AI.

Strategic priority

When directors consider AI in their organisations, they should start with the context of the organisation’s overall strategic plan,says Nuttall. They need to identify the most important thing the organisation has to do over the next 12–18 months and ensure its AI initiatives are anchored in that strategic priority.

“Too often, we see that organisations can get quite complacent and say, ‘We have 50 different AI initiatives or use cases under development at the moment — isn’t that great?’”

Instead, AI should be driven from the top down. For instance, they might identify fixing their supply chains or shortening call centre wait times and then seeking out AI that can help with those objectives.

Software vendors often offer organisations free AI use cases, claiming for instance that another bank in the US is successfully using their product. However, Nuttall says this doesn’t mean the AI application will be successful in the Australian organisation. That will depend on workforce readiness, the regulatory environment and whether they have the right data. In addition, that specific product might not be appropriate to further the organisation’s strategic priorities.

Ultimately, AI is just another capability to help organisations execute on their business strategy.

Choosing the wrong technology

It is inevitable that companies will make mistakes in their choices about which AI technology they use because AI is moving so quickly, says Nuttall, who has executive director-level experience in the Australian public service and is serving until the end of September as Lead Partner of the AI institute at Deloitte Australia. 

“Having that really strategic focus around what’s most important in terms of our business strategy is a North Star that doesn’t really shift. And you’ll keep evolving it as the world around you shifts,” she says. “If your business is going to survive, you have to keep thinking about what delivering value looks like in the world you’re in at that point in time. AI will keep shifting with it.”

Technology designs and systems are becoming more flexible and modular, so it’s easy to swap out one AI application for another.

It’s important that organisations don’t delay AI adoption for fear of making the wrong choice, she says. The lessons they learn, including their errors, will set the organisation up for a more resilient future than if they were to wait for a couple of years.

How AI can help directors

Nuttall recommends that directors listen to the AI Daily Brief podcast, which runs between six and 15 minutes a day and covers the latest technological, regulatory and geopolitical developments in AI.

Ultimately, AI itself will help directors to stay informed about the technology. Nuttall expects that soon directors will be able to ask an AI application to produce a podcast for them every month that can scrape the internet and cover AI developments relevant to their industry or organisation. Others might prefer to receive a daily email briefing, also produced by AI.

“There’s a real need for board members to understand this is the next general-purpose technology,” she says. “The speed of change is so significant — it’s not just something they can talk about on board agendas once a year. They need to find ways to constantly engage.”

Ultimately, AI itself will help directors to stay informed about the technology. Nuttall expects that soon directors will be able to ask an AI application to produce a podcast for them every month that can scrape the internet and cover AI developments relevant to their industry or organisation. Others might prefer to receive a daily email briefing, also produced by AI.

“There’s a real need for board members to understand this is the next general-purpose technology,” she says. “The speed of change is so significant — it’s not just something they can talk about on board agendas once a year. They need to find ways to constantly engage.”

Multipurpose tool

There are other ways AI can help directors do their jobs, says Nuttall. One is by using AI to screen documents before they arrive in directors’ board packs. AI can ensure the documents are of the right length, that they answer the important questions and are clear in their recommendations.

Directors can use AI in meetings to go back and check on decisions or information from previous meetings, rather than relying on the board secretariat and the delays that entails.

Perhaps most compellingly, AI can provide an objective voice in board meetings. Boards can ask AI for answers on important strategic questions, such as, “If the company launched a particular product, how would Amazon react?” Or “How would customers in the new product’s targeted demographic segment react?”

By doing so, AI can pick holes in a business strategy and identify weak spots the board might not have considered.

But Nuttall warns that although AI applications are 100 per cent confident in the information they supply, they aren’t always 100 per cent right. So answers to strategic questions should be considered as just another input into the discussion.