Everyone says they need to appoint a board director who is an AI expert, right? In fact, I disagree. There is no need to appoint an expert. You need to be smarter about AI. But be careful – if you don't take AI seriously, the outcome can be devastating. Here's why:
1. AI is not just a “technical problem” – it's a CEO problem
Most boards mistakenly view AI as a technology-only issue and encourage management to delegate to CIOs or CTOs. A big mistake. AI impacts everything from operational excellence to customer experience.
In fact, a recent survey revealed that 74% of global CEOs fear unemployment within two years if they can't provide measurable, AI-driven business benefits. This requires practical engagement, strategic oversight and clear accountability. Delegating AI strategies to CIOs and lacking the literacy of connecting board dots, CEOs risk making strategic decisions, losing their competitive advantage and ultimately eroding shareholder value.
Your job is not to add a single AI specialist. It is to ensure that CEOs are directly responsible for AI-driven decision-making and are competent.
2. AI literacy beats AI specialization
There is another reason why CEOs are very concerned about their ambiguous AI strategies. Their board doesn't really know how to assess the quality of their strategy. That's a problem. Because it opens up to the incentives of managed management.
AI is complex, but the board does not require a PhD in Machine Learning. You need sufficient literacy to critically evaluate a company's AI strategy. Invest in board workshops, external advisors, and informal AI education sessions. AI literacy ensures that the board can ask tough questions and protects your company from costly and reputational failures.
Beyond mere understanding, AI literacy cultivates a culture of informed skepticism. An informed director can actively challenge assumptions, scrutinize proposals, and request clear and practical explanations from management. This critical surveillance is essential for effective governance in an AI-driven business environment.
3. Experts may be too small
AI experts can talk about circles focusing on algorithms and machine learning, but can AI be directly linked to business strategy and shareholder value? In many cases, the answer is no. The board thrives with experienced generalists who understand the broader business impact. A better choice? Director who has successfully integrated technology into his growth strategy before.
The real challenge is to integrate AI expertise into the organization's core business model. There are more powerful cases for appointing people with a successful track record of building their business using AI, machine learning, or data analytics. These individuals should have the ability to meaningfully apply management experience and technical skills to a business context and utilize connections to improve business outcomes. Think of the technology and data business executives who have had to synthesize a wide range of customer trends and organizational capabilities into profitable and sustainable companies.
Experienced generalists who understand how AI intersects marketing, operations and finance bring valuable perspectives. They can find opportunities and threats that pure engineers may miss. Rather than looking for deep specialists, the board should cultivate directors who can navigate these strategic intersections, ultimately improving long-term business performance.
If you're just looking for a way to reduce costs, hire an AI consultant.
4. Ignoring the hidden dangers of AI is devastating
Do you think deepfakes are exclusively for internet memes? It's wrong. Even fake job seekers who use AI-driven misinformation, sophisticated fraud schemes, and AI-generated avatars have real consequences. If your board is actively learning about these threats and doesn't guarantee the company to them, you're actually causing trouble.
AI-related security risks evolve quickly, faster than traditional cybersecurity measures. For example, social engineering scams using AI-generated voices or deepfakes have waned millions of businesses. DeepFake technology has also been used to impersonate corporate executives, leading to significant economic losses.
The board must actively understand and address these risks to protect the organization's assets and reputation. The board should continue to walk actively into these developments, ensuring that appropriate management, awareness training and response strategies are implemented and updated regularly.
5. Regulation nightmare awaits those who are not ready
Have you heard of data issues with “Russian Nestor Dolls”? Data from third-party integrations may quietly sneak into AI models and not even allow legal use. The price of such an accident can be in just 7 or 8 figures or more. This is a shareholder-led ouster of board appointees.
Another problem is that I call the “baked cakes you can't bake”. Imagine a scenario in which a customer exercises “right to be forgotten.” However, technology investments are forced to use models that are directly trained on their customer data, and to abandon the multi-million-dollar AI model because they cannot isolate personal data. AI literacy will predict and navigate these regulatory minefields, avoiding massive fines and legal battles.
The regulatory environment surrounding AI is still developing, with new laws continuing to emerge throughout jurisdictions. From heavy fines to serious reputational damage, the consequences of failure to comply is that the board maintains information. AI literacy allows directors to understand these changing regulations and actively implement robust governance frameworks to ensure compliance.
Conclusion: Forget the AI Specialist Board Member. Invest in AI literacy instead. The board must be well versed in overseeing the strategy, managing risk, and demanding accountability from the CEO.
The AI revolution is here. Make sure the board is ready.
