AI and machine learning get talked about so much these days that one would think they are on the agenda of every company, but they are not—or at least not many companies are doing anything about it.
Earlier this year, consultancy company EY carried out a survey and invited respondents such as the members of the Directors’ Institute Finland and the upper operative management of Finland’s 500 largest companies. EY designed the survey in cooperation with the Chairman of the Board of Nokia Corporation, Risto Siilasmaa. According to the results, about a third of companies make no use of AI or machine learning in their internal operations. About one-fifth of companies make no use of AI or machine learning in external operations and have no plans to do so.
So it seems that when it comes to AI, many companies are still in the locker room putting on their shoes while some are at the starting line and still other are already hitting their stride in the first curve.
Harnessing AI for Corporate Management
Change is on the way, however: over 95% of the respondents believed that their companies would be using AI and machine learning internally in some way by 2020. This means that the next couple of years should be quite busy on this front.
As far as internal functions go, AI could be useful in management or even board work.
A quite well known example of the use of AI in corporate management is Hong Kong based investment company Deep Knowledge Ventures, which started using an AI application called VITAL in its board a few years ago. The company says that they don’t make a single investment decision if VITAL doesn’t support it. The founder and CEO of the company Dmitry Kaminskiy says that the application has lived up to its name: without its help in analysing investment targets, the company would have invested in over-hyped projects and may even have gone under.
Another example has been getting attention closer to home here in Finland. Tieto Corporation adopted an AI application called Alicia T to support the decision making of the management team of its Data-Driven Businesses unit. However, based on media coverage at least, AI applications like VITAL and Alicia T are still quite rare.
The possibilities provided by AI can also be examined through the lens of the requirements that the Finnish Limited Liability Companies Act sets for company management, i.e. that the management must promote the interests of the company with due care. Boards fulfil this duty of care when they make a logical decision or take other action taken based on proper information and have not been influenced by any conflicts of interest when doing so.
AI could prove particularly helpful in the gathering and analysis of data. It could also be possible to delegate some routine tasks to an AI to free up the management’s time for more important things.
Be Aware, Keep Up
It would be an exaggeration to claim that company boards would have an obligation to use AI, but it is a good idea to keep AI on the agenda. ‘Develop or be left behind’, is how Reaktor’s Director of Artificial Intelligence Hanna Hagström summed up the situation for C&S. Risto Siilasmaa is on the same wavelength, ‘the only way to achieve a competitive edge is to be quicker than everyone else’, he said in connection with EY’s survey. Corporate management would be well advised to keep their antennas raised and actively think about how their company could benefit from AI and what kinds of application AI could have. Of course, it is important to keep in mind that new solutions always bring costs and new kinds of risks.
There is one significant limitation to the use of AI in boards of directors: in Finland, AI applications cannot be appointed as full board members. The Limited Liability Companies Act does not explicitly state the board members must be natural persons, but that is only because this has been taken for granted. This issue has previously been discussed in connection with whether a legal person could service as a board member, as is the case in some countries. Today, the global discussion has moved on to whether an AI could be a full board member and what kinds of legal challenges such membership would entail. For the time being, however, it is clear that whether or not a board uses AI, the responsibility for any decision rest with the people who made it