How AI and predictive analysis are becoming an integral part of the boardroom
The role and impact of artificial intelligence (AI) in businesses is growing exponentially. However, from the vantage point of companies’ boardroom, it might still be considered the least harnessed revolution which has the greatest impact on enterprises today.
For most companies, AI has permeated into their business models, products, and services devoid of any intervention from the senior management. Almost 60% of organisations are presently working to include AI in their offerings. Be it in finance, retail, transport, or any other industry for that matter, AI is making inroads at every juncture possible.
Technology leaders are driving acceleration of AI majorly to improve the state of affairs across different segments and sectors. Slow and gradual incorporation of AI into products and services means to enable executives to assess the feasibility of the technology introduced, test the resultant ROI, and include the learning derived.
On the bright side, AI has given organisations the opportunity to learn through swift experimentation but on the other hand, there are certain questions that the adoption of AI without much strategic vision has raised – questions about sustainability, risks involved and the responsiveness of the staff.
How companies can bring AI into the boardroom
Companies have their primary components – people, assets, and history – which are labelled as the corporate genome. To effectively incorporate AI into the corporate thread, organisations will have to develop a practical genome model, which can be done in the following ways:
- By creating a body of data by mapping the corporate genome of multiple companies and combining this data with their economic output
- By developing a way for quantifying the individual company so as to assess its effectiveness, competitiveness and possible trajectory by comparing it with the larger database
- By using AI to recommend a quintessential course of action which could improve the organisation’s overall performance — like introducing changes within capital allocation
Just like physicians and medical practitioners leverage patient data for creating individual medical solutions unique to every person, similarly intelligent systems based on AI will help boards of directors and CEOs understand more accurately the strategies and investment instruments that can provide limitless growth and value in a highly competitive marketplace.
Boards and executives with apt competencies and refined mental models will have a real edge in figuring out how to best use this new information available at their disposal. As technology grows exponentially, business leaders and boards are often lagging behind, limiting the organisation’s growth.
AI will extend a favourable opportunity to small-sized tech start-ups to reach larger figures with innovative and more relevant solutions, thus bypassing organisational heavy-set processes. Several companies today are entering into collaborations with tech start-ups for co-creating products to access cutting-edge solutions using versatile and cost-effective means. As this happens on a larger scale, organisations’ procurement experts will have to cater for processes to help start-ups reach organisational expertise.
The superior capabilities of AI
The boom in artificial intelligence has led to predictions that it is likely to be on the corporate board of directors by the year 2026. The transformative and revolutionary capabilities of AI have been utilised extensively in the healthcare sector since the onset of Covid-19.
However, the tremendous potential of AI to overhaul the corporate boardroom landscape has remained unexplored till now, especially in India. Algorithms achieve a designated goal learning from data sets and the data that is used in the process determines how input variables are placed to predict the exact value of the output variable.
Machine learning systems easily adapt to alterations in data sets over a period of time as they identify new and different patterns to further refine past predictions.
Algorithms can improve accessibility of erstwhile communication channels by rectifying the information asymmetry in virtual boardrooms. With the help of AI, an enormous amount of data can be processed. Algorithms are very useful for reading and comprehending the nitty-gritty of investment strategies and offer appropriate recommendations for reducing risks.
AI has potent ability to break down complicated decision-making procedures in a way that the warning signs can be identified with greater ease, especially in the case of financial audits.
Consultative processes are central to decision-making and AI can significantly increase transparency in these processes. It can assist in mining critical data such as particulars of the related party transactions, mitigate human errors in the process, and enhance the efficiency of directors.
AI is likely to neutralise the issues of the virtual corporate boardroom and facilitate the functioning of directors so that they are better able to perform their respective roles. The utility of algorithms allows the board to make disclosures on time for the interests that various stakeholders hold. AI tools are also quite often used for keeping a tab on the threat of hostile takeovers in all the volatile sectors by surveying and analysing market data.
AI algorithms further act as a stimulant to the role of independent directors as well. The Indian corporate ecosystem is characterised by shareholding patterns that are highly concentrated in promoter-controlled enterprises. Independent directors are the gatekeepers who monitor the daily affairs of their companies so that minority shareholders aren’t kept in the dark, oblivious and subject to oppression.
AI lightens the onerous burden placed on independent directors to be well-versed with company matters and assists them in the discharge of their official policing function. If algorithms are relied upon with passing time, they can also come in handy to mitigate the pressures of succession planning in the unfortunate and unsuspected event of a health exigency that can undermine and paralyse the regular functions of the board.
Summing it up
On the face of it and at the outset, the case for an AI-based boardroom is powerful: machines can gather vast amounts of data and information and, in turn, make decisions based on intricate algorithms. In addition, certain technological progressions have given some algorithms the comprehensive ability to learn.
Cognitive technologies – like machine learning and deep learning – are becoming increasingly reliable and accessible day-after-day. And hence, it can be said without doubt that AI will play a bigger role in the boardrooms in the time to come.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)