BizTech Law Blog

Corporate Leadership Considerations in the Age of AI

It is no surprise that generative artificial intelligence (“AI”) is changing the way companies all over the world operate. Some are embracing it with open arms and finding consistent opportunities to integrate AI into the workplace. Other businesses have found themselves at a standstill in terms of incorporating AI into their preexisting tools and technology, wondering whether embedding AI into their systems is a necessary step to stay relevant or one that may take them away from their company’s goals and values.

These big questions are not necessarily easy to answer, but corporate boards are undoubtedly being faced with AI oversight demands and the need for employee AI use regulation. Below, we discuss governance considerations corporate leadership may take into account in this ever-changing technological landscape generative AI has created.

1. Determining the Level of Leadership Oversight

Whether you manage a limited liability company, a nonprofit organization, or a public or private company, you likely owe some duty of care to your business in such a role. Typically, depending on your state’s laws, it is expected that members, managers, officers, directors, trustees, and shareholders act with the same level of diligence as a reasonably prudent person would in similar circumstances. As technology continues to evolve, understanding AI and its benefits & risks could become a critical responsibility of a business’ leadership team. Narrowing the scope of that duty could be a difficult determination to make, though, as AI technology touches various departments of a typical company (e.g., finance, product development, risk management, human resources, employee management, supply chain functions, etc.).

It may not be very practical to require an entire board of directors of a corporation to become AI specialists, for example. However, if you are a start-up technology business, this may be a requirement you would like to ask of those in governance.

Assess whether your business would function better if all members of your leadership team understood AI pros and cons at a base level, or whether this task is better suited to a specific committee that could share its narrower findings with the greater group. Determining who in leadership should be expected to follow trends, news, rules, and regulations related to AI and to what degree of specificity is a worthy consideration for any company.

2. Considering the Practical Implementation of AI

Weighing the benefits and consequences of embedding AI tools into a business’ preexisting systems is a personal choice that will vary by each company and the industry it operates within. A company’s members, managers, officers, directors, trustees, or shareholders should consider the following for its individual entity before making drastic shifts to utilizing AI technology in day-to-day functions:

• Are there routine and repetitive activities at present within your organization that an AI tool could relieve so employees can focus their efforts on more elevated, complex tasks?
• Could the implementation of an AI tool enhance customers’ service expectations or experiences with your business?
• Will the integration of an AI tool result in more accurate responses, insights, or forecasts than your business’ current methods?
• Will embedding AI into your company’s daily practices remove a necessary human element to certain tasks?
• Where does the AI tool you are considering integrating into your systems pull its generative data from? Are there confidentiality concerns to consider?
• What is the likelihood this AI tool will catch mistakes and be prone to more accurate outputs than a human?
• How will necessary human oversight continue to be implemented into your business’ practices, despite the integration of this new AI technology?

These questions are intentionally broad, and something each business should continuously reconsider given the pace of change related to generative AI technology. Corporate leadership may decide to revisit prompts like this regularly at meetings and gatherings to ensure their use of AI does more good than harm for its business. Conducting thorough internal audits can significantly help ensure that AI tools are truly benefiting your company and not merely creating an illusion of technological advancement.

3. Assessing Your Company’s Brand and Audience

As organizations are pressed to embrace AI, it is equally important for leadership to weigh not just the opportunities AI technology brings, but also the long-term implications for its particular brand and its audience of consumers.

For example, a business that presents itself as environmentally-conscious may consider whether the utilization of large language generative AI models that have a negative environmental footprint make sense for its reputation. It is known that deploying large language AI models requires vast amounts of electricity, contributes to carbon emissions, and can strain water resources through the cooling demands of data centers. From an Environmental, Social, and Governance (“ESG”) perspective, this raises critical accountability questions for some environmentally-friendly businesses that are seeking to implement innovative AI technology into their business models.

Leaders of such organizations may be called to address these risks to avoid reputational harm, investor skepticism, and scrutiny from customers. Incorporating AI considerations into ESG reporting and evaluations may make a lot of sense for a company touting environmental stewardship.

Likewise, businesses in more artistic industries may have to ask a deeper question: does the utilization of AI in our practices align with who we are as a brand? For companies rooted in human creativity – music, literature, film, photography, and other forms of art and high-touch client services – AI may dilute what makes them unique. In such spaces, leaning too heavily on automation can erode authenticity, alienate core audiences, or send mixed signals about values. Corporate leadership of businesses in such industries should assess the pressure to innovate versus the need to stay true to originality and its individual company’s identity.

Though there is much opportunity on the horizon with AI, there is also time to take cautious, context-aware approaches to the implementation of it in the workplace. Corporate leadership should keep the aforementioned considerations in mind to ensure AI supports its business’ mission. Knowing who on a corporate governance team will be responsible for overseeing these conversations and considerations will be a critical step toward maintaining the balance between innovation and brand-management. Through such a holistic approach, businesses leverage AI’s benefits & consequences while preserving their core values and unique identities in the process.

At Foster Swift, we are committed to staying informed of advancements in the legal landscape regarding AI and copyright and keeping you updated on such developments. If you have any questions about these matters, please feel free to contact an attorney in Foster Swift’s Business or Technology practice groups for more information.

Categories: Artificial Intelligence (AI), Copyright, Technology