Can AI do better than your board? That theory is already being tested

Nearly 80% of boards know little about AI, despite its meteoric uptake in the workplace. Associate Professor Massimo Garbuio of the University of Sydney Business School says it’s a missed opportunity to solve board-level challenges.

Boards face ever-increasing challenges in balancing the demands of shareholders with the governance of executives. Directors feel overstretched; the pace at which digital technology is evolving means knowledge and expertise rapidly become outdated, and individuals are susceptible to both internal boardroom politics and group think, leading to outcomes based on maintaining harmony over effective decision-making. 

 How does AI help solve these board-level challenges? 

“At the moment I’m noticing a lot of conversations on AI in the workforce, but conversations about AI in leadership and in the boardroom are only starting to emerge,” says Massimo Garbuio, Program Director, Executive MBA, The University of Sydney Business School. “But the reality is, AI can replace a board of directors.”

Entering a new era

AI’s strength ventures far beyond an ability to summarise board documents. It can augment board capabilities, particularly in information processing by providing deeper and more effective data at speed.  

It also enhances core board functions, helping executives with strategic resource provisioning and leading to better interactions with management. In a recent global survey of boards and C-suites, 57% see AI’s key role as governance and ethical use, while one in three believe risk and opportunity management is a key tenet. 

AI can also be used to dive deep into personal performance and participation. Garbuio’s EMBA students recently experimented using AI to analyse project meetings. 

Their data reviewed each student’s participation, knowledge and contribution to discussions, underscoring its potential use as an external coach. 

AI on your board

AI is already transforming corporate boardrooms. Around 8% of global boards have appointed AI specialists as new board members. Others like International Holding Company, a publicly-listed investment firm based in Abu Dhabi, have taken the next step, appointing Aiden Insight as an AI board observer. 

Aiden is a digital tool providing real-time updates to the board. Another platform, Zeck, moves board decision-making from passive reviews to gathering information during meetings. 

“The big question is this: At what point is AI better than a director, or better than a board at oversight, on what management does? And at what point will shareholders trust AI more than a board of people? We’re very close to that inflection point,” Garbuio says. 

So how can directors stay ahead of the curve? Education is part of the answer, he says, but directors also need to “get their hands dirty” and use AI regularly and securely if they want to truly understand the impact of the technology and how fast moving it is. Individual time-poor directors, especially those on several boards, need to learn to effectively converse with AI, to question and seek information.  

Directors who learned how to learn again bring more sophisticated insights to boardrooms. Boards also need to carve out time to increase their combined knowledge about AI’s opportunities in a range of areas including governance, strategy, legal, transparency and analysis. They also need to take the time to understand AI’s potential risks, including bias (related to gender, geographies or culture) and the vulnerability of proprietary data. 

Learn more at sydney.edu.au/emba