Today’s program for corporate directors (presented by the New England Chapter of National Association of Corporate Directors at the Mandarin Oriental Hotel) launched with a discussion by CEOs of a large bank, a private company, a public company and BCBS of this topic: how to think about the upcoming year for board-management interaction in the board room? The answer is: there is huge uncertainty in all marketplaces and in technology, this will be a difficult board season, and directors need to be prepared differently from the past.
Specifically, in the past directors could apply directorship skills to consideration of proposed management agendas; today, directors need to do lots of homework to deal with technology and marketplaces in order to be effective. Directors need to educate themselves specifically concerning tech and the business setting of their company before they get to the board-room; it will no longer suffice to show up with general directorship experience, see management’s agenda of topics on the chalk-board, and start directing.
Interesting side-note: my immediately prior post focused on impact of AI on management and thus the focus and learning that directors require to make sure AI is properly used and that management manages staff to remain calm, on the job, and learn new skills focused on use of AI agents. This morning’s discussion admonished directors to be better prepared but did not dive into upcoming staffing demands or training. In fairness, saying that directors must re-educating themselves contemplates such action, but at least at this meeting there was no mention of work-force treatment, training and evolution in light of AI dominance.
Current business uncertainty was treated as exceptionally greater than in the past. CEOs were admonished to bring directors “into the weeds” of all current marketplace and tech problems. That said, interesting differences emerged among the CEOs given their business form. The focus suggested for the privately held company was to understand the disciplines, including but not limited to AI, which can deliver accelerated growth. For a company already public, whether the board will be able to predict best outcomes and whether the cost of achieving same can be financed; the issue for Blue Cross Blue Shield turned out to be sui generis: although as a nonprofit there is intent to distribute in benefits 99-100% of annual income, the incredible growth of medical progress, the cost of delivering it and the impact of good medicine causing people to survive longer (using expensive treatments and pharmaceuticals) puts huge pressure on ability to collect premiums that fund those tasks.
Aside from mention of AI, another factor is the cost of energy. All panelists recognized substantial increase in costs, much driven by climate (interestingly, the private company CEO whose company is in the food industry said that “my window into high energy costs is in the cost of produce to make foods.”)
The CEOs discussed corporate planning time lines; no one thought having a five-year plan made sense given tech disruption, energy costs, rapidity of change and thus lack of clarity as to what needed to be done. One company planned just year to year. Another was trying a three year plan. AI did of necessity get attention in this context: directors should ask about the AI strategy, where it will be used to what end; directors were warned that today there is a bloating of amount of code being produced which complicates some business– anecdotally the tech CEO pointed out that as part of his training there were competitions to see who could write the least amount of code to achieve a certain result. And, lest AI be seen as a cure-all, one admonition: even if 99% of your corporation’s AI can improve performance/profits/service, query how sure can you be that the 1% error is not fatal?
Finally, and this got no discussion, one discordant note expressed in passing by the public company tech CEO: as if uncertainty about AI, the world, energy and the like were not enough of a problem, it is also hard to survive doing business in Massachusetts, as this is not a great place to have your business located. Not explained– you are on your own in considering this comment.