Everyone’s saying you need to appoint a board director who’s an expert in AI, right?
I disagree. You don’t need to appoint a specialist; you just need to get smarter about AI. But beware—if you don’t take AI seriously, the consequences could be catastrophic. Here’s why:
1. AI Isn’t Just a “Tech Issue”—It’s a CEO Issue
Most boards mistakenly see AI as a tech-only issue and encourage the executive team to delegate it to the CIO or CTO. Huge mistake. AI impacts everything—from operational excellence to customer experience.
In fact, A recent survey revealed that 74 percent of global CEOs fear job loss within two years if they fail to deliver measurable AI-driven business gains. This means they need hands-on involvement, strategic oversight and clear accountability. CEOs who delegate AI strategy to their CIOs—and who lack the literacy to connect the dots for their boards—risk making poor strategic decisions, losing competitive advantage and ultimately harming shareholder value.
Your job isn’t to add a single AI specialist; it’s to ensure your CEO is directly accountable and competent in AI-driven decision-making.
2. AI Literacy Beats AI Specialization
Theres another reason CEOs are so worried about their “ambigious” AI strategies: their boards don’t actually know how to evaluate the quality of their strategies. That’s a problem, because it opens the company up to misaligned management incentives.
AI is complex, but your board doesn’t need a PhD in machine learning. You need enough literacy to critically evaluate your company’s AI strategy. Invest in board workshops, external advisors and informal AI education sessions. AI literacy ensures the board can ask tough questions, protecting your company from expensive, reputation-damaging missteps.
Beyond mere understanding, AI literacy fosters a culture of informed skepticism. Directors who are well-informed can proactively challenge assumptions, scrutinize proposals and demand clear, actionable explanations from management. This critical oversight is essential for effective governance in an AI-driven business environment.
3. Specialists Can Be Too Narrow
While an AI specialist can talk circles around algorithms and machine learning, can they tie AI directly to your business strategy and shareholder value? Often, the answer is no. Boards thrive with experienced generalists who understand broader business implications—not narrow technologists. The better choice? Directors who’ve successfully integrated technology into growth strategies before.
The real challenge is integrating AI expertise into the organization’s core business model. There is a stronger case for appointing someone who has a successful track record of using AI, machine learning or data analytics to build businesses. These individuals must have executive experience and the ability to apply technological skills meaningfully to business contexts, leveraging their connections to enhance business outcomes. Think of executives in the tech and data businesses who’ve had to synthesize broad customer trends and organizational capabilities into profitable and sustainable enterprises.
Experienced generalists who understand how AI intersects with marketing, operations and finance bring invaluable perspective. They can spot opportunities and threats that pure technologists might miss. Rather than seeking deep specialists, boards should cultivate directors capable of navigating these strategic intersections, ultimately enhancing long-term business performance.
If you’re just looking for a way to cut costs, then hire an AI consultant.
4. Ignoring AI’s Hidden Dangers Is Catastrophic
Think deepfakes are just for internet memes? Wrong. AI-driven misinformation, sophisticated fraud schemes and even fake job candidates using AI-generated avatars have real consequences. If your board isn’t actively learning about these threats and insuring the company against them, you’re practically inviting trouble.
AI-related security risks evolve rapidly, often faster than traditional cybersecurity measures can counteract. For example, social engineering scams using AI-generated voices or deepfakes have successfully defrauded companies out of millions; deepfake technology has even been used to impersonate company executives, leading to substantial financial losses.
Boards must proactively understand and address these risks to protect the organization’s assets and reputation. Boards must actively keep pace with these developments, ensuring appropriate controls, awareness training and response strategies are implemented and regularly updated.
5. Regulatory Nightmares Await the Unprepared
Ever heard of the “Russian nesting doll” data problem? It’s when data from third-party integrations quietly sneaks into your AI models—data you might legally not even be allowed to use. The price tag for an accident like that is more than just a seven or eight-figure sum—it’s a shareholder-led ouster of the board appointees.
Another problem is what I call the “You Baked a Cake You Can’t Unbake” problem. Imagine a scenario where customers exercise their “right to be forgotten”—but your technology investments use models that have been directly trained on that customer data, forcing you to toss out multimillion-dollar AI models because personal data can’t be separated. AI literacy helps you anticipate and navigate these regulatory minefields, avoiding massive fines and legal battles.
The regulatory landscape surrounding AI is still developing, with new legislation emerging continuously across jurisdictions. The consequences of failing to comply—ranging from hefty fines to severe reputational damage—make it crucial for boards to stay informed. AI literacy ensures directors understand these shifting regulations and can proactively implement robust governance frameworks to ensure compliance.
The Bottom Line:
Forget the AI specialist board member. Invest in AI literacy instead. Your board must become savvy enough to oversee strategy, manage risks and demand accountability from your CEO. The AI revolution is here—make sure your board is ready for it.
