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Interview with Prof. Dr. Sita Mazumder on the role of the Board of Directors and artificial intelligence

Prof. Dr. Sita Mazumder

Sita Mazumder is Professor of IT and Business at Lucerne University of Applied Sciences and Arts. She serves on the Board of Directors or the Supervisory Board of several Swiss and Austrian Companies like Helsana, Palfinger a.o. She is also a member of the Swiss Federal Electricity Commission.

Deloitte: You have many years’ experience in the area of digital transformation and have recently collaborated with journalist Wilma Fasola on a book about artificial intelligence (available in German) . What can companies learn from the ideas you explore in the book?

Sita Mazumder: The book is a conversation between ChatGPT (in its spring 2023) version and several individuals, including not only Wilma Fasola and me but also Mathias Binswanger, David Bosshart, Daniel Diemers, Christoph Holz, and Marisa Tschopp. It takes a bird’s-eye view of the various issues that artificial intelligence (AI) raises, such as whether AI is going to replace or dominate humans and whether we shall all be living in the metaverse in future. We wrote the book for a broad readership – people who have been following media coverage of AI for many months but may not have had much to do with it – and intended it as a guide for anyone who is concerned about the trends in AI and wants to explore a range of different opinions and perspectives.

The ideas the book explores are not directly transferable to individual companies’ situation or business model; instead, the book offers an accessible way of finding out more about AI and what it can do. AI is changing all our lives and will continue to do so. It is also changing the way in which companies must operate both internally and externally if they are to succeed and sustain that success.

Deloitte: So which trends in digital transformation and, particularly, artificial intelligence will be relevant to businesses in 2024? And what challenges will companies be facing?

Sita Mazumder: It’s always difficult to make predictions, but it seems certain that technological advances will continue to impact more and more on every aspect of our lives. AI is developing at an unprecedented pace. It’s not just the speed with more and more roles are being automated, though: AI’s astonishing deductive and autonomous capacity is also breaking new ground. Just formulate the right prompt, and AI will code a program, put a presentation together or write an article for you. That’s already history, though, and what it can do is expanding all the time. Just as we were going to press with our book, Google launched its new AI model, Gemini, which it says will be even more powerful in some areas than OpenAI’s ChatGPT. This opens up the competition and means that every Board and every senior management team now really needs to get to grips with the technology and its specific uses. The scope of how AI can be used will, of course, vary from one company to another, so Boards and management teams need to take a tailored view of its relevance to their company.

The opportunities opened up by this technology offer potential for efficiency and effectiveness but also new ways of creating value – the core role of any company. But while AI is highly innovative, the sheer pace of its development also poses risks: the growth in cyber crime and data protection concerns are just two examples of that. Any technology is a tool and, like other traditional tools, can be used either positively and constructively or with the intention of doing harm. New regulation is being put in place in an attempt to prevent harm, such as the EU’s Artificial Intelligence Act (AI Act).

Deloitte: You serve on the Board of Directors or the Supervisory Board of several leading companies. Are those Boards currently discussing trends in artificial intelligence and, particularly generative AI, such as ChatGPT? If so, what conclusions have they reached?

Sita Mazumder: All the Boards with which I am familiar are indeed having this discussion, but their responses differ widely. There’s no value judgement there – it just reflects the diversity of business models and the fact that different companies are at different stages in their development.

The most important thing is for Boards to stay abreast of technological change and to deepen their understanding of it. They need basic expertise on technologies such as AI if they are to monitor and evaluate their impact on the company’s business on an ongoing basis. I find that Boards vary widely in terms of that digital understanding. But we operate in a digital age and we live, work, produce and consume in radically different ways from just a few short decades ago. I think we are all aware of companies that failed to acknowledge the issues or were too slow to do so, with the result that market-leading products or even entire businesses went under in a very short time. Failing to discuss trends in AI is simply not an option.

Deloitte: So how do you see the role and responsibilities of a Board of Directors in relation to artificial intelligence, both now and in the future?

Sita Mazumder: The Board is the company’s top-level strategic body and operates as an architect, as it were, building a business model that will (the company hopes) equip it for long-term success in the digital age. This means that the Board’s core responsibility is to design and implement successful strategy. In this context, AI is not an end in itself but a digital tool. And it is also a resource. If Boards are to fulfil their statutory responsibilities, they need expertise in how AI is changing both the internal and external operating environment and must apply this expertise to assessing the scope and risks involved in using AI for strategy design and implementation.

To be clear, AI is just like any other specialist area within the company: not every Board member has to be a specialist in the digital area, any more than they require specialist expertise in finance, risk management or human resources. But giving Board members basic knowledge and empowering them, coupled with some specialist input, is the best recipe for long-term success in tackling the challenges posed by AI. Boards may be tempted simply to delegate these issues to the operational management team or to wait to see if all the hype dies down, but I think that is not just risky but also negligent. Digital is a matter for strategic decision makers – and I use the term ‘digital’ deliberately rather than lumping AI in with IT more generally.

Deloitte: What advice do you have for Boards and Board committees that lack the expertise to tackle AI or are finding it difficult to manage?

Sita Mazumder: The first and most crucial thing is to acknowledge that your Board is facing difficulties or does not have sufficient expertise in AI – and to identify why. That might sound obvious but it’s also human: analysing ourselves is always the first step to dealing with any new challenge. Are there obstacles your Board needs to overcome or fears it needs to address? Or has the Board been too slow in interpreting the signs of the times?

The solution is usually a mix: different companies will take different views and set different priorities. Boards can, for example, build up their internal expertise by appointing one or more experts in specialist areas, including AI. External input can also be useful in helping Board members develop their basic digital skills, and many Boards have mechanisms for doing this, such as dedicated training days for members. And of course, individual Board members can undertake CPD. But if a Board is lacking the specialist expertise to manage major and strategically relevant projects, it should seek the help of external consultants and advisers. An external perspective combined with internal insights is often very fruitful. Making up for inadequate digital skills within the Board is not quick and easy, but the first step is always an analysis of the Board’s digital and, specifically, AI skills.