AI can potentially unlock three big issues in the boardroom: onboarding new directors, monitoring the firm and addressing groupthink.
I just finished another run of the corporate governance program here at Columbia Business School. The topic du jour was of course AI and what the firm’s strategy should be with respect to technology and AI. I want to talk about a different topic- can boards use AI to address two endemic issues- boards rely on management for information to evaluate management and the social reluctance to raise elephant in the room issues in the boardroom? AI, with appropriate guardrails, has huge potential to make progress in this regard.
Onboarding new directors
In my experience, new directors have a hard time fully understanding the business model of the firm they are on the boards of. Incoming directors who are finance types will likely review the firm’s 10-K and proxy statements to get a sense for whether the strategy of the firm, as stated, is working as manifested in financial statements. The non-finance types will likely look at the firm from their functional vantage point. Incoming directors who are technology folks will look for the firm’s technological vulnerabilities. The marketing folks will look for pressure points in the firm’s brand proposition, product mix and advertising campaigns and so on.
Would it not be amazing to place all these different functional viewpoints and the questions they would ask at the fingertips of any new incoming director using AI? That is, we can come up with a series of prompts, informed by these diverse perspectives, to enable the incoming director to get a 360 degree of the firm. The best part of the suggestion is that this can be done using publicly available financial statements if the board position is at a public company.
Tracking new information about the firm
The other challenge for extant directors is to stay abreast of the news, 8-Ks, chatter, or sentiment about the firm between board meetings. GPT5 is an amazing scraper and compiler of public information about the firm. Many of the news articles and blogposts about the firm may be noise and a waste of time for the board. But questions about the board’s awareness of the external signals that might be fatal to the firm often arise, after the fact, when firms fail. SVB is an example.
Using AI to identify negative sentiment between board meetings could have helped. Even if relying on AI could address 10% of the cases where such questions arise, the initiative would be a success. Again, I am asking for reliance on public data. AI use on board deliberations is potentially complicated as corporate secretaries would probably object to using Microsoft Copilot and the like to track board deliberations.
The groupthink problem
In my view, groupthink, or the social difficulty in raising awkward but important questions on boards, is a serious problem. Hedge funds do this well by designating one member of the investment committee as the rock thrower or a red team captain. Most human beings are uncomfortable with even playing the role of a designated rock thrower. AI could potentially step in here. We could design prompts to get the machine to play the role of a rock thrower to ask the tougher questions. This use of AI may require guardrails to make sure that board materials are carefully guarded inside the ringfence of the firm.
A milder version of this application may be to use AI to identify dissenting opinions about the firm, via short seller positions, their reports, sell or even hold reports issued by analysts, doubts about the firm’s strategy, or its growth trajectory or its addressable market or the speculative nature of its valuation or even the opposite possibility of relative under-valuation and so on.
These are a few initial thoughts. I am sure others will likely come up with even more creative ways to leverage AI to improve the quality of board monitoring and mentoring. In sum, AI can collate massive data about the firm and serve the role of a dissenter. That new capability could contribute materially to improving the board’s ability to serve as a steward of the firm’s capital and reputation.