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    Are we prepared to govern AI?

    Accountability Artificial Intelligence Corporate Governance Ethics Guest Post Performance Sustainability Value Creation
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    Guest blog: Dr. Cletus Kadzirange (GBS Oxford University, United Kingdom)
    By now, almost everyone has heard that artificial intelligence is revolutionising the commercial world. In addition to creating customer insights and automating procedures, it offers advice on hiring, pricing, and medical diagnosis. Around board tables, the atmosphere is frequently positive—AI is quick, intelligent, and full of potential. 
    While boards are positive about possibilities, are they prepared to govern AI?
    This is a governance question, not a technological one. The most progressive boards are starting to realise that monitoring AI requires far more than a digital strategy, because AI has the potential to affect reputation, social license, compliance, ethics, brand, and more besides. Questions boards should consider centre on accountability, transparency and long-term risk management:
    • Who is at fault when AI fails? This is a question of accountability. Apple's credit card algorithm made headlines in 2021, when it was revealed it gave women much lower credit limits than men with comparable financial backgrounds. Apple blamed its banking partner, Goldman Sachs. Regardless of who is at fault, boards cannot afford to wash their hands. Instead, they need to lean in, consider who is responsible for the performance and outputs of the AI systems and satisfy themselves everything is OK. Before systems behave in unpredicted ways (and they will), boards should check escalation processes and remedial procedures. Accountability is not about assigning blame, but about having foresight, to not only minimise the possibility of unintended outcomes but also respond well. The best companies embed clear accountability lines and practices during the design and implementation of AI systems, to facilitate good governance responses downstream.
    • Is it possible to see inside the black box? This is a question of transparency. Understanding AI's conclusions can be a challenge, even for the people who designed and trained the system! However, businesses that cannot explain the workings of their AI systems are coming under great pressure from consumers and authorities who want greater openness. Consider COMPAS, the system used by US courts to determine recidivism risk when sentencing criminals. Investigative journals discovered the system was skewed against black defendants. When challenged, the corporation that built the system refused to reveal the inner workings, citing trade secrets. Predictably, public disapproval and general suspicion rose sharply. The lesson here is that transparency is a reputational issue as much as a technological one. Boards should ensure management understands how AI systems work, and that credible non-technical explanations are available if required.
    • Are we ready for the new wave of regulation? This is a question of long-term risk. Regulation of AI is advancing rapidly. The Artificial Intelligence Act, which was ratified by the EU in March 2024, established stringent requirements for high-risk systems. A Presidential Executive Order signed in October 2023 moved the US in a similar direction. Provisions such as these expose businesses that cannot exhibit moral AI practices to the risk of fines, legal action and, even, system usage prohibitions. Boards can get ahead of the regulatory curve by regularly reviewing their AI policies against current and proposed regulations, and by calling for reports to confirm that systems are fair in use. 
    AI is no longer a back-office technology. Already, it has emerged as an important enabler, influencing operational, strategic and reputational performance. Consequently, boards that ignore AI as someone else's problem may be blindsided. Boards need to ask questions to ensure AI literacy is adequate, risks have been well-assessed and that governance practices are fit-for-purpose. This is not a matter of dreading the unknown: it is about providing effective steerage and guidance.
    Has your board discussed AI governance in a genuine, systematic way yet? It not, it might be time to get started.
    About Dr. Cletus Kadzirange:
    Cletus is a pracademic in corporate governance and company law who consults, trains and writes on various aspects of corporate law, directors' duties and governance. His specific expertise lies in implementing forward-thinking governance frameworks and sustainable practices that foster long-term value and ethical stewardship.
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    Navigating fog: The board as your compass

    Accountability Change Corporate Governance Decision Making Leadership Performance
    I had the very good fortune to be in Boston recently, a brief visit to respond to a couple of enquiries ahead of the main reason for visiting the US East Coast, which was a keynote contribution at the International Corporate Governance Network annual conference in New York. When told Thomas Doorley III, the founder and now emeritus chair of Sage Partners, of my travels, he was quick to suggest we should meet up.
    Tom is a generous man. We have known each other for nigh on a decade now. I always come away from our conversations feeling enriched having sat with him and listened. So, when he spoke of his new project, a podcast series entitled, "Navigating the fog of change", and asked if I would sit with him, an affirmative response came easily.
    Our conversation, which explored the role of boards in times of great change, including the critical 'compass' role, is now available on the Sage Partners' YouTube channel.
    I'd be gratified if you would listen in. It'll cost you 29 minutes, that's all! And, once you've listened, if you have questions or comments, please feel free to reply below, or get in touch with Tom or me. ​
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    Who controls your board’s agenda? Who should?

    Accountability Corporate Governance Decision Making Effectiveness Governance Performance
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    I had a fascinating conversation yesterday, with an esteemed board chair I have known for some years. Our wide-ranging exchange saw us dip into several topics of mutual interest including family and my recent 'elevation' to grandfather-hood; an upcoming advisory engagement; the importance of ongoing education for directors, especially in relation to 'soft skills'; techniques to chair a board meeting well; and board agendae.
    During the flowing conversation, Robert (*) said he had recently chaired a meeting in which a couple recommendations within what he called the “QuarryGroup Report” (a board/governance assessment that I completed last year) were to the fore. 
    Referencing the recent meeting, Robert said the agenda was packed, and that management had put up many papers to support the agenda items and ensure directors were well informed on what it deemed pertinent matters. He added that the meeting agenda was too full for meaningful discussions, let alone informed decisions. When I asked how he handled the situation, he referenced the QuarryGroup report. He said three items stood out as having strategic implications for the business and decided that is where the board should spend its time. He spoke with several directors after the board pack was issued and, in board alone time immediately prior to the meeting, confirmed the three items would take precedence. Through this action, Robert asserted control over the board's meeting. Management had proposed an agenda and prepared papers based on what it had thought important, which is OK, but Robert and the board had a different perspective.​
    Some readers may wonder about Robert's actions. Is it reasonable for a board chair to propose ignoring items or altering an agenda? Surely, management understands the key issues that need attention better than the board?
    I suggest the guiding principle to inform a response is this: The role of the board is to govern (to steer, to guide, to pilot). And, if the board is to have any hope of providing effective steerage and guidance, directors need to understand their role, and they need to apply their minds to the major issues and opportunities that lie ahead and make decisions accordingly. For this, the board needs to drive the agenda and ask management to prepare reports accordingly. Research shows that if this does not happen, the likelihood of the board influencing the performance of the company is low.
    When I asked Robert how compliance reporting and historical performance was handled (the board's 'control' role), he calmly said, "That is what committees are for." I smiled, for I was in agreement.
    What are your thoughts on this? Does the principle described hear apply everywhere? 
    (*) name changed.
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    The [high] value of white space

    Decision Making Ethics Monday Muse Performance Teaching Tough Questions
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    When was the last time you stopped and thought about your work, your contribution and the value you offer others? Are you adding value, or simply occupying space? 
    Most leaders say taking time for self-reflection and to think is important, if high performance is to be sustained. But many do not follow through. Instead, they remain 'on': making lists, completing tasks, checking emails, and responding to social media feeds—all in the name of getting things done. Some even speak, proudly, of workaholism and busyness. Such behaviour is lauded in many modern societies. But is 'always on' and busyness conducive to high performance? Or is it a delusion? What of personal and professional relationships; of curiosity; of gaining new insights; of becoming a better person?
    Allocating uninterrupted time—white space—for reflection, thinking and dreaming is critical if organisational leaders (especially board directors!) are to have any hope of contributing well. 
    The idea of dedicated white space was an anathema for me through the first half of my career. But as I got underway with my doctoral research (circa 2012), something changed. Gradually, the guilt I felt when stepping away from my desk when I was stuck subsided: the act of changing neural activity (from sitting staring at a problem, to going for a walk or riding my bike) often had the effect of helping clear the mental block I had been struggling with!
    Since completing my doctoral research in 2016, I continued to prioritise white space, as follows:
    • Early morning (0530–0700, six days per week), to read inspirational texts, news feeds and topical articles.
    • Daily walks, to activate my cardiovascular and musculoskeletal systems.
    • Evening (a 60-minute block before retiring for the night, at least five nights per week), to read what a close friend calls 'brainy books'—books on philosophy, psychology, neuroscience, human nature, history and trekking, but also the 'great books'. 
    • Long-haul flights have become precious white spaces too, because I am left alone to do what you want. I keep a pencil and paper to hand, and record my thoughts (often my best ideas!)
    None of this makes me good, or any better than anyone else. However, my dedication to allocating white spaces and holding them sacrosanct has seen me become more curious. My mind seems to have become more malleable too. Hopefully, my contributions have become more valuable as a result—but this is best assessed by others, not me. 
    Does the idea of white space resonate for you? If so, would you mind sharing your experiences, so others can benefit from them?
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    On complexity, pathways and outcomes

    Accountability Corporate Governance Decision Making Effectiveness Governance Leadership Performance Sustainability Value Creation
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    I have had the good fortune of time in South Africa this week, as a guest of GovernEx, a board advisory practice. To have been invited to interact with hundreds of directors, executives, academics and political leaders, to listen, learn, and offer insights has been invigorating.
    South Africa is a dynamic society. In the 31 years since nation-building was restarted (May 1994) much has changed. Black South Africans comprise over eighty per cent of the population; they now dominate the middle class. Efforts to build an inclusive society, whereby circa 63 million people can participate, have produced much fruit. But some cracks are visible: extremes (of wealth and poverty, in particular) remain; guidance introduced to enable and empower has become prescriptive over time; corruption is apparent in some quarters; and, in some cases, the pursuit of inclusion has delivered little more than a power shift, from whites to blacks. The situation is complex, of course, and hope springs eternal. But hope is hardly a strategy.
    South Africa’s political leaders have recognised the situation, and they are responding. The President, Cyril Ramaphosa, together with an entourage of business, community and sporting leaders, met with the President of the United States a few days ago. The G20 summit will be held in South Africa in late 2025. Business leaders have told me of their desire to move beyond various codes and constructs that have devolved to now impose more cost than benefit in many cases. Their question is telling: “Tick-box exercises for what benefit?”
    My sense is that great courage will be needed, if business leaders are to step beyond the pathways and structures that served the nation well in the early years but now seem to have become hindrances to further progress. Those I have spoken with this week are not without courage—and they have been excited to explore alternate pathways to secure better outcomes, amongst these the Strategic Governance Framework. The challenge now is one of deciding: whether and how to act.
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    Helping boards govern with impact, in the USA

    Conferences Corporate Governance Effectiveness Governance Performance Speaking Engagements
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    This is an invitation to US-based directors and chairs who want to move beyond cookie-cutter and tick-box approaches to corporate governance and board work: I'll be visiting the East Coast in July, and would be glad to meet to offer insights to help lift your board's effectiveness.
    One of the enduring joys throughout my life has been to serve. Whether it be confidential conversations with board chairs; advising boards or regulators; delivering keynote talks; leading director education workshops; or writing, the call to support directors and executive leaders in their efforts to realise organisational potential is compelling. 
    Already this year, I have accepted invitations to contribute in Southern Africa, Australia, Eastern Europe, and Central Europe. Now, I am delighted to add North America too. In July, I will return to the USA, to deliver a keynote at the International Corporate Governance Network conference.  
    Alongside the ICGN conference, I am available for private meetings with boards and ​directors based anywhere on the East Coast. The dates are July 14–16th, and July 21–23rd. 
    Yes, it will be summer, but what better time to take stock? To explore options, get in touch today.
    (*) The ICGN conference (July 17–18th, in New York) is 'the' conference for leaders across the institutional investor, sovereign and superannuation fund, and board/governance communities. This year is the 30th anniversary of ICGN's founding, an important waypoint to consider the role and impact of boards and shareholders; approaches to board work; shareholder and stakeholder interests; sustainability; enduring performance; and 'doing the right thing'.