Episode Summary
In this episode, Aarti Samani has a candid conversation with Dr. Shefaly Yogendra, an independent board director with an impressive background in financial services, higher education, and corporate governance. They dive into the critical issue of AI’s role in corporate governance and how boardrooms are adapting to emerging technologies, geopolitical tensions, and climate change. Dr. Yogendra shares her unique perspective on the interconnected nature of today’s global risks, the evolution of board responsibilities, and how AI is both a challenge and an opportunity for leaders worldwide. Whether you’re an executive, a board member, or just curious about how AI is shaping corporate decisions, this episode offers insights you don’t want to miss!
Key Topics and Takeaways
AI and Corporate Governance: How AI is transforming boardroom conversations and the role of directors in governing these changes.
The Role of Board Directors in a Dynamic World: Exploring compound risks, from geopolitical conflicts to environmental impacts, and their influence on corporate strategy.
Age vs. Ability to Learn: Discussing the relevance of diverse age groups in boardrooms and the importance of lifelong learning.
Boardroom Culture and Psychological Safety: Creating an environment where challenging conversations about inclusion, technology, and risk can thrive.
Transitioning from POC to Production with AI: How executives should navigate proof of concept to full-scale implementation, even without clear ROI.
Balancing People and Profit: The challenge of managing talent transformation in the age of AI without creating societal disruption.
The Elephant in the Room – Job Automation and Redundancy: Addressing fears around AI-driven job losses and the potential societal divide.
Board Leadership and the Unknown Unknowns: Preparing for the future through effective horizon scanning and leveraging diverse knowledge in the boardroom.
Resources
1. Navigating The New Era For The NED: A Report from Norman Boradbent
2. Boardroom’s Role In AI Governance: A Report from National Association of Corporate Directors.
Key points from NACD report:
1. Approach emerging technology as a strategic imperative, not just an operational issue.
2. Develop collective, continuous technology-specific learning and development goals.
3. (Re)align board structure and composition to reflect the growing significance of technology as a driver of both growth and risk.
4. Demand frequent and forward-looking reporting on technology related initiatives.
5. Periodically assess the organisation’s leadership, talent, and culture readiness for technological change.
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Quotable Moments for Social Media
1. “It’s no longer a luxury to view risks in isolation; they are all interconnected and compound.” – Dr. Shefaly Yogendra
2. “AI is not just a technology—it’s a strategic asset that will determine the long-term success of your business.” – Aarti Samani
3. “Our job as board directors is to govern for the long-term success of the business, and that means understanding AI’s opportunities and threats.” – Dr. Shefaly Yogendra
Transcript
Aarti Samani: Hello and welcome to *Beyond the Algorithm*. I’m your host, Aarti Samani. I work with executives and board directors on AI strategy and AI fluency programs. I also run awareness workshops on AI risks with a particular focus on deep fakes and social engineering fraud. I talk about it a lot as well at conferences, at corporate events, and here on this show. The focus of today’s episode is AI and corporate governance.
This episode is critical for any leader who wants to understand how AI impacts not just their business, but the broader social landscape. As AI becomes more integrated into our daily operations, the pressure on board directors to understand and govern its use grows exponentially. A Deloitte survey of C-suite executives recently indicated that training board members about AI is considered as important as re-skilling the workforce. And almost half of them cited education for board members on AI as a very high priority. AI is not just a technology or a tool anymore. It’s a strategic asset that influences everything from your company culture to its long-term sustainability. Now, surveys and stats are aplenty, but what is the ground reality?
To explore these questions and get an unfiltered view of corporate boardrooms, I have a very interesting guest with me. She’s an accomplished individual with extensive experience as an independent board director and chair within financial services, higher education, and engineering. She’s very articulate, very well-spoken, sometimes outspoken, and does not shy away from calling out system gaps or inefficiencies. Passionate about creating a sustainable and equitable society for the generations to come and works very hard globally to make that happen. It is my privilege and delight to welcome Dr. Shefaly Yogendra. Dr. Yogendra, welcome to the show.
Shefaly Yogendra : Thank you for having me, Aarti. It’s very good to be here.
Aarti Samani : Now, Shefaly, you serve on a number of boards, including Witan Investment Trust, Temple Bar Investment Trust, JP Morgan US Smaller Companies. You chair several committees, including ESG, remuneration, and management engagement. You were an independent governor of London Metropolitan University. You have three degrees. You’re an educator, advisor, and a coach. This is an impressive body of work. Please tell us about your journey.
Shefaly Yogendra : Thank you, Aarti. You make me sound more fun than I might be. I started with my first degree in engineering, after which I went to study management. When I was studying engineering, my interest was in symbolic AI. So way back then, I was interested in AI as such as a tool for business and as a technical tool.
But my journey into management then took me into corporate venturing where I built a career building small businesses, new businesses within the ambit of a very large multinational technology conglomerate. And after that, for various reasons, I ended up working with a very broad range of stakeholders: investors, regulators, policymakers, small businesses, scale-ups, startups, and large businesses.
My role in corporate venturing gave me a view of the wholeness of a business. So, for example, when I launched a new brand and a new product category, I was responsible for the revenue, for the sales, for the marketing, for the people, the size of my team, what everybody did, how they were held accountable, what their KPIs were. So I have never had the luxury of just looking at a business from a very narrow functional lens.
Later, when I worked with all the different kinds of clients that I described, I understood the stakeholder landscape much better. So today, when I serve on all these boards, where I chair various committees, etc., I bring all of that perspective—not just an understanding of the business as a whole entity with its connective tissue and how various pieces function and don’t function, but also whom we are serving by virtue of being board directors.
So every day, I bring that experience and that training to bear in my boardrooms. And every day, through the interactions that I try and influence, shape, and persuade, I’m shaped by them as well.
Aarti Samani : Very interesting. It’s great that you have a holistic view from your training, from your experience, from your individual reading, your personal development, and that keeping the forefront of the mind of whom you’re serving plays a very important role in boardrooms. Now, we are living in times like we’ve never lived before. Geopolitical issues are kicking off left, right, and center. Climate change and the environmental impact of various human actions are creating a big issue. And AI has entered our consciousness for the past 18 months, coming up to two years now. How is this landscape—this very dynamic and fast-flowing continuum—impacting the boardrooms today in terms of governance?
So it presents certain opportunities, but it also presents risks. So help us understand how the boardroom governance process has changed as a result of the environment that we are operating in.
Shefaly Yogendra : At the moment, I serve on a lot of listed boards, and one of our reporting requirements in communicating with our shareholders is to talk about emerging risks. In every board, there is a lot of conversation about what risks are emerging. It is no longer a luxury to say any risk operates in isolation. They are all interconnected, and they all act upon one another. Most boardrooms are now very cognizant of and discussing actively compound risks acting on their businesses.
For instance, there is a very large iceberg designated as 23A moving in the middle of an ocean. When it melts, there may be pathogens released, potentially leading to pandemics. We have just experienced a lockdown during a pandemic, and many people are still reeling from the psychological impact of that. Furthermore, the WHO has already warned about monkeypox.
Businesses must now be resilient to a range of impacts coming from various frontiers. When the Russia-Ukraine war started, countries had to shut down operations in Russia, affecting business revenue, income, and employees. The question is, what is the requirement for businesses to take responsibility for these situations? These conversations require imagination, empathy, and an ability to keep track of what’s on the horizon and coming down the pipe so that nothing takes us by surprise.
Shefaly Yogendra : Businesses now have to be resilient to a swathe of impacts coming at them from various frontiers. When the Russia-Ukraine war started, countries had to shut down operations in Russia because sanctions were imposed. That’s a pretty big impact to have on a business’s revenue and income and employees—people who are working for that company in Russia. What is the requirement for the business to take responsibility for that?
These conversations are not easy or simple. They require quite a lot of imagination, a lot of empathy, and the ability to keep track of what’s coming down the horizon and what’s coming down the pipe, so that nothing is a surprise. Now, I know it sounds like a doomsday scenario, but that’s the basic minimum requirement in the boardroom to be an effective director today. No longer do we have the luxury of focusing on a narrow market or a narrow sector or a narrow function. We have to do both the zoom-in and zoom-out at pretty quick speeds at times, and know what effective actions can be taken and what actions are in our power to take in order to look after our various stakeholder interests. That’s how I would describe how boardrooms have had to change in the last few years at a pretty quick clip.
Aarti Samani : Yeah, so it’s a level of foresightedness, a level of understanding of the interconnected, interdependent landscape that we are operating in at a global level. It’s not just a myopic view of the organization or the sector that you are serving in. Now, it sounds like hard work, right? And it is hard work. That’s why it’s not easy to be a board director. So, the average age of an S&P board director is 63 years old with a sizable population in their 70s. And a large proportion of these board members come from finance and accounting backgrounds. What is the propensity of this population or this community now to learn, to adapt, to keep up with the change, to really skill themselves to be on a continuous development or learning program so that they are able to serve and govern to the extent that they need to?
Shefaly Yogendra : I’m hearing two different threads in your question, Aarti. One thread is about age, the average age of a board director in the boardroom. The other thread is about learning, the desire to learn and how to learn. I’ll address them separately if that is okay with you because I do feel they can be different variables.
Aarti Samani : Yeah, please.
Shefaly Yogendra : First of all, we are experiencing a very strange kind of ageism already, and the only place it seems that’s welcoming or accepting of older people is boardrooms. A friend of mine, Rebecca Robins, has just written a book about five generations in the workplace. And we are essentially seeing those alleged five generations in the workplace. So, we really have to perhaps note the age but not consider it the only thing somebody is bringing to the table. What they bring with that age is important.
And I would say there was a point in time when I had an executive job where my youngest colleague was 23. And I had my first FTSE 250 board where my oldest colleague, I think, was 77. I may be wrong, but he was in his 70s. So that was the range of ages I used to deal with sometimes within a week. There were conversations in the 20-something year-olds when they were playing at the pool table in the office about, “Will AI automate our jobs?” It was a symbolic AI company that I was the chief operating officer of, so it was a natural conversation.
My conversations with my board colleague, who was in his 70s, were very interesting because he used to want to know what different generations think. He had been running and had been in charge of a very large business for a good 50 years in his life. He had 50 years of experience. He was more or less unruffleable. Nothing sounded like it was new to him because he had seen high-interest rate environments. He had seen an oil price crisis. He had seen various wars happening here and there even when he was younger. His generation had come into being after the Second World War or during the Second World War.
It is very useful to have the benefit of people who have seen various economic cycles in the boardroom. That said, one of the reasons why we assemble boardrooms, which are diverse not just in terms of ethnicity and gender (which is the first thing people think about when we use the word diverse), but also in terms of age, experience, lived experience, and skill sets, is because we need different perspectives.
Shefaly Yogendra : Which sector do they come from? Do they have a perspective that this company might benefit from? So, assembling a board that actually has true diversity of lived experience and cognitive abilities is one of the key powers that we can actually bring to the boardroom table.
Now I come to the point about learning. We all learn from each other. I mentioned in our opening conversation that every day, I bring my experience to the boardroom, but I am shaped by the interactions and the discussions we have. One of my favourite go-tos is, “Nobody steps in the same river twice because it is not the same river, and it is not the same man or woman.” Learning is essential because things are changing. New developments are coming at us pretty fast. Things like ESG— I recall that the first triple bottom line project I worked on was in 2009. Fifteen years later, we now use a three-letter term, ESG, and I chair ESG at Harmony Energy Income Trust Board. Things are the same, and things are different. And somewhere in the middle, we need to find how we learn.
The key challenge is not that people don’t have the ability to learn. The key challenge is that often people come out of large corporate jobs where it was easy to access training, and it was easy to get someone to pay for it. When you are a non-executive director, you are that island that John Donne said nobody was. You have to be responsible for your own learning so that you remain relevant. You have to source it. Some boards may have training budgets; some boards may not have training budgets. But if you’re interested in your relevance as a board director, you have to invest in your own training. I think those are the key challenges in terms of mindset shift, rather than where one could go to learn for new emerging technology trends or ESG trends.
That said, I’m currently designing a tech-for-non-tech directors course, which is essentially to address this gap. If you don’t know where to start, there has to be a starting point. And then from there, the possibilities are infinite and endless.
Aarti Samani : Yeah, that’s a very good point that it’s the propensity and the innate desire to learn and keep yourself relevant because the infrastructure is not available to you as it would have been in an executive director role. Tell us what kind of training or what kind of fluency programs or literacy programs. I shy away from calling them AI literacy programs, although I hear it a lot in the market because non-executive directors are not AI illiterate, right? They are just probably not as aware as they should be or could be. So, what does that training look like?
Shefaly Yogendra : I appreciate that you don’t say AI literacy, because if you were to draw a parallel, that would be like teaching somebody the alphabet rather than helping them deploy the vocabulary into writing maybe poetry. So, it’s a very different skill. I appreciate that very much.
I think the key thing with AI that I see is that people are equating a tool such as ChatGPT to AI, and I think that’s a fundamental category error. So any program that is about upskilling board directors to understand the challenges of AI should first gently tell them that a tool is not the technology. A tool is the front end of a technology. And this is where my engineering thinking is helpful because the backend is complicated, and the front end is simple. But when you govern, when you oversee as a director, you must understand what the backend is capable of because what we are seeking is accountability.
In learning about AI, board directors, like executives, have to understand what these various tools and technologies floating around using large language models, deep learning models, etc., are capable of doing in our business, for our business, and indeed, to our business. If you’re not quick to move, it is possible that somebody else might take advantage of an opportunity arising in your space. An incumbent might arise overnight and make your business irrelevant. So knowing what the technology is, what it is capable of, how much of it is relevant to your business and to what extent, and how do you bring accountability and oversight to it so that you can direct in a forward-looking way on the strategic path. Because remember, our job as board directors is to govern for the long-term success of the business.
The long-term success of the business is our main job, so we have to look at AI not as a backward-looking thing, not as a conformance-seeking thing, but as something that’s going to underpin and drive performance for a business and ensure its long-term success.
Shefaly Yogendra : The fluency programs that we are talking about need to be multifaceted in helping directors understand what it is that they are trying to derive accountability from.
Aarti Samani : Right. Okay. So, what are you trying to derive accountability from and therefore what data is available? What is the backend? What is the front end, the capabilities, the market landscape that your particular organization is operating in? So it’s actually pretty much what an executive director would do, right? They would look at the market landscape, understand the internal capabilities, and how to get competitive advantage. And the difference here for non-executive directors is that they are distilling this information and asking questions that prompt thinking for the executive team in order to then take actions and next steps.
Shefaly Yogendra : Yes. In terms of accountability, in some contexts more than others, we need explainability as well. This brings us to black box AI, where A led to B, but what happened on the pathway is not always clear. Those checks and balances, those guardrails must be understood because that’s what the board is trying to elicit by way of understanding from executives who are in charge of implementing whatever new technology is emerging in the context of the business.
Aarti Samani : And how deep do you go in or out? How much do you zoom in or out? Because as a NED, it’s very easy to get into your executive mindset sometimes and keep going, keep going, asking all the questions. At some point, you have to kind of zoom out and accept what the executive team is telling you. But how, as a non-executive director, do you discern whether the responses you are getting are satisfactory and therefore, yes, we are good to go now, or further prompting or further probing needs to happen in order to make sure we are getting the risks, the opportunities, the untapped potential, etc., and therefore guiding them further?
Shefaly Yogendra : One of the interesting things that we use in the board director space is that our job is “nose in, claws out.” It means almost like keeping your hands behind your back and just sniffing around and asking questions. Knowing that is very important to check ourselves so that we are not doing the executive’s job.
One of the exceptions to this might be when you’re on the board of a charity, which may be a small or medium-sized charity, where they don’t always have the ability to get the best possible talent from the market. There may indeed be a gap in the executive team’s skills coverage, and it is not uncommon for small to medium charity directors to occasionally step in and help in a more executive-type capacity. But in all other capacities, we really shouldn’t be doing the job, because we are paying the executives, sometimes many times over as a multiple of their director fees, to do the work.
The questions that I would suggest we consider asking, especially when there’s an emerging tech and nobody fully understands it, are: What is this technology doing in your business? What are you trying to achieve by way of outcomes? What would happen if this technology were to malfunction, misfire, or otherwise cause damage that you have not foreseen?
Understanding the relevance in application is the more important consideration than understanding how the technology works. All the questioning that board directors do is, essentially, an art form. You have to ask questions to elicit understanding rather than to incite the other to throw more jargon at you. The term that I use for this kind of questioning is trying to understand the “connective tissue” of the organization.
What I mean by that is: you know, I have tight hamstrings. I’ve always had tight hamstrings. I only notice them when there is an uphill road from a little further from my house. When I go up, my tight hamstrings give me shin splints. That’s when I notice my hamstrings are not working optimally. It is when we try and do some stretches, we realize that our hip flexors are tight. These are the connective tissues we don’t even think about until we reach a breach or failure.
In an organization, similarly, there is an invisible connective tissue of how work really happens versus how you think it happens. A good example of that in action was when everybody got sent home to work remotely. Somehow companies didn’t crash, collapse, or burn. What was going on there? There was a way that organizations worked that kept them working.
Shefaly Yogendra : I think understanding that connective tissue is our job. And all questioning must really be in service of that. To your point, when do you know you have asked enough and this is the answer you can rely upon? Being able to trust the executives, while knowing that we operate in an environment of information asymmetry, is a necessary hazard of the job. But until we are content, we don’t have to stop asking questions. Striking that balance is an act of seeking dynamic equilibrium. On some issues, you will ask more questions. On others, you can say, “Right, okay, I understand this relates to something we discussed the last time.” To that extent, being an engaged and prepared board director in terms of understanding the business you are overseeing is essential to functioning and being an effective board director.
Shefaly Yogendra : Whether it is dealing with AI, whether it is dealing with data or a cyber-related breach, we have to understand what we are overseeing.
Aarti Samani : Mm. Yeah, yeah. So if we turn this around on its head a little bit, so what you described there is asking the line of questioning on how the technology is impacting your business, what it is doing in your business, the ultimate goal, etc. What about organizations that are not adopting AI or executive teams that haven’t yet—those that are in a bit of a “rabbit in the headlights” state at the moment and haven’t yet embraced AI because it’s just too big to think about, too big to deal with? They don’t understand enough because their business is not necessarily a technology business. They may not have the right staff, skill sets, or resources in place.
As a board of those types of businesses, what is the board’s role in that scenario? Is the board’s role to encourage the executive teams by probing them, by asking questions, to think about AI? Is it to force them? Is it to guide them? How do you bring them into this AI sphere? Because personally, I don’t believe that this is optional anymore. If people are running a business, every business will be an AI business very soon. So, how do you prepare those executive teams who are not yet on the journey?
Shefaly Yogendra : I would say the role is to catalyze conversation, and for that, the prerequisite would be that there is a culture of safety and openness in place. I know that this will sound like an unrelated example, but how does a board have the first conversation about inclusion and diversity? It’s a difficult conversation. You sound people out. You try and understand your colleagues’ perceptions, perspectives, fears, excitement, and what drives them about certain topics. You find out what you have in your executive team and in your boardroom. You find the people who align with the idea that something needs to be done about a strategic matter.
You choose a forum. You could ask for a deep dive. You could ask for an AOB (any other business)—a conversation you catalyze in the any other business section of the meeting or on a strategy day. There are multiple different forums, and it really depends on how engaged you are and how much you care about the business that you will push something forward.
The other thing to remember is, as you mentioned, risks and opportunities. There are risks, of course—people are afraid to take on new things that are going to cost them money, upset some people, or make some people too excited, leading to the risk of organization proprietary data being exposed to public engines, and all this kind of stuff. But there are also opportunities. So, the first thing is to understand what are the risks and opportunities that are relevant—back to the word relevance—that are relevant to your business. Looking around, talking to other people.
I’ve seen in my experience of advising, etc., various ways of handling it. There were organizations that battened down the hatches and said, “Nobody’s going to use anything. We will first have a conversation.” If it is possible in your organization, do it. It is possible that some people are already stealthily using something, and your IT department knows. If there’s a culture of openness, somebody will come and tell you that this is happening.
How do you then decide to protect your organization? Do you have the guardrails in place? If you think back to when social media was new, many senior executives thought this was something their teenage children were supposed to use, not them. It was very interesting. I used to do literacy workshops and conversations for senior executives. I had to literally point out to them that when a young employee, in an environment of BYOD (Bring Your Own Device) policies, sits outside eating a sandwich near the fountain in front of their office and tweets about your organization—what can you do?
You don’t have any social media policies in place. You don’t have control over those devices. You don’t have control over what they do in their lunchtime. But you only need control in such situations if you are worried about what they are doing. And if you’re worried, why aren’t you doing something about it in the first place? Right? Putting policies together, putting guardrails together, having a conversation in the organization, making people aware that there are risks you expose our organization and our data to. So how about we are all in it together? Let’s get going.
When something comes at you at speed, it’s very difficult to have those conversations at speed. Organizational agility, a pre-existing culture of safety, and somebody who actually understands what they’re talking about serving with you on your board—all of those things help. But they are not easy conversations. That said, I’ve seen multiple flavors of how people are doing it, and it’s quite interesting. We all learn from each other.
Aarti Samani : Right, right. But this is interesting because AI is not just a technology or a tool, like I said at the beginning. It impacts culture. It impacts everything about the business now. You make a great point about a culture of psychological safety and trust that really not only eases or lubricates communication between board and executive teams but also more widely within the organization.
Aarti Samani : Now, one thing I hear a lot in the market is that we’re doing some POCs where we have a sandbox environment. We’re trialing out a few use cases on where AI can help our business. But we haven’t crossed the bridge from POC to production because we don’t know the ROI of this, and we do not know how to justify the ROI to our board directors. Just help us understand: What would a board be looking for in this instance where the executives genuinely don’t know what the ROI will be? There may be a perceived ROI—they can make some informed or educated guesses—but really there is no way because there is not enough historical information or data available. But they want to cross that aspirational bridge from POC to production and really embrace the technology. How do they justify to their board the investment of economics, time, and human resources required for this?
Shefaly Yogendra : Several things come to mind, thinking about this very important question you’re asking. One is that the POC (Proof of Concept) units in a closed system environment would have generated some metrics and some proof of value created against the investment made. That is an important metric to hang on to because that is how you make the broader case. However, when you introduce something at scale, you have to take into account all the unexpected—potentially unexpected—consequences of doing that work at scale as well.
You would have seen the study that was recently cited in various media reports. People are reporting more work rather than productivity gains after implementing various large language model tools. Many employees are saying there is more work because of these tools rather than productivity gains. That is not the line that was sold to us. So how do you anticipate, as executives, what could go wrong and mitigate that risk while also looking at the opportunity that it opens for the organization?
The case to boards has to be made by balancing those two, and as long as you demonstrate that you have thought about things, it is our job to help you color in the rest of the picture by asking questions. Contrary to what people might think, boards are not adversarial to executives. They are there to bring scrutiny, but they are also there to help and support, mentor, and bring their experience and perspective to make the company go the distance. The long-term success of the company is our entire job.
Going from POC to production is like any proof of concept moving into wider adoption. You have to make the case in terms of the metrics, but also in terms of the impact on the broader culture and the environment in the company. The challenge here is that because the productivity story and “AI will take our jobs” kind of stories have been around for a while, how do you convince people to actually use the tool if you’re going to use it and roll it out widely?
To that extent, when people say, “We have productivity gains,” I always want to ask, “What are you using the saved time for?” Are you using that time to reskill people? Are you using that to upskill them? Are you going to enable them to make sideways moves into some other role in the company where a whole lot of their collective experiences could be put to new use? Or are you going to run a large redundancy program? Because everybody is thinking about the redundancy program, right?
Executives and boards have to be on the front foot, talking about all these benefits. Where is the catch? What is that catch? How does that impact the company, the customers, and the employees? Being able to talk about it in an informed and empathetic manner proactively would be useful. Taking things from POC to production means crossing these little bridges one by one until you go from A to B.
Aarti Samani : Yeah, yeah. That’s a great point, and it brings me to what I call the elephant in the room, right? There is probably, in the short term, overwork, not productivity gain, while teams are implementing the technology, training, etc., with the ultimate aim of automation and therefore productivity gain, cost reduction, optimization, etc. It’s inevitable that there will be some job losses or a transfer of certain skills, but some employees may not want to learn new skills or be transferred to other types of roles, etc. There is a concern—there is a lot of talk around shrinking organizational sizes and having three-person conglomerates. I’m exaggerating a bit, but it’s not that far-fetched, right? These conversations are very much mainstream.
For me, it is a real concern of creating this polarization in society of a skilled workforce earning very high salaries and then a differently skilled workforce that is now redundant and potentially disruptive. How do we balance a few things? Now, this question probably encapsulates a few different things, but how do we balance people and profit? In that context, then, what should skills or talent transformation programs within organizations look like? How should we be thinking and budgeting for it? And how do we generally avoid creating a deliberately disruptive society?
Shefaly Yogendra : There are obviously different scopes of impact. As board directors, until you actually have these conversations that look at all possible outcome scenarios—the worst possible and the best possible, whichever way you define them—you can’t decide what your reskilling or upskilling budgets would look like, because redundancies also cost businesses money. You may not know that the person you’re making redundant actually understands so much about the organizational history, and if something goes wrong, that’s the only person who can make it work. It does happen, right?
Then there’s our ambit as citizens of the countries and the world that we live in. It worries me that we are creating the two-speed society you mentioned: a small number of people earning quite a lot and progressing, having possessions, and a large swathe of people who are “have-nots,” who are going to be underemployed and therefore disruptive. This is not a sustainable world. A safe and stable society requires people to at least be able to keep body and soul together.
Some organizations probably have more share of voices than others, and this conversation needs to happen at a policy level. Coming back to the board director’s job, within our ambit, we have the power to have these conversations in our own companies that we oversee and look for the most value-creating, value-adding applications of new technology, not just looking at it as a way to cut out the workforce.
Shefaly Yogendra : This is a conversation I’ve been having with various friends loosely over the last many, many years, because we always hear, “There will be mass redundancy.” A typical operating company is like a pyramid: lots of people at the bottom, fewer as you go up, and so on. Most recently, there was a discussion in the Financial Times, I believe, about how juniors in law firms are not required anymore because everyone can use one of the large language model tools.
I was thinking, have you thought about what it will do eventually to your work, to your organization? On one hand, we are entertaining this fantasy of a pyramid whose base is shrinking, and it doesn’t take a huge amount of imagination to know how it will topple over very quickly. But at the same time, we are seeing jobs being created elsewhere. One of the things that’s happening, and this is what happens when you sit in a boardroom, you see all the various moving parts.
If you have ever had the good fortune of dealing with auditors, you will know that the audit market is in a massive talent crunch. They can attract people, but they can’t retain them. If they can retain them, they have to pay them lots of money, which then shows up in client fees, and clients push back. So, there’s an ongoing problem of finding an equilibrium. Many people in operating businesses could be reskilled and go into other roles, such as ESG audit, cyber audit—jobs for which it’s very difficult to find people.
Reskilling and upskilling will have to be essential. The question is, whose job is it? Is it my job as an employer? Is it our job as society? If it’s our job as society, who pays? These are large questions, and as board directors, we are required legally to have some answers to them within the scope of the organizations. But collectively, I think businesses bear responsibility because governments can’t fix everything. Businesses play a large role in how society earns its money, how it consumes resources, and so on. Both must work in concert. I know it is not a great answer, but identifying the problem with all its spiky bits is probably the first step.
Aarti Samani : Yeah, and you make a very important point: identifying the problem with all the spiky bits, but also that it’s not one group’s problem. It is a collective problem, not just a collective problem, but a collective global problem because we will see this, especially in emerging markets. When you and I were preparing for this conversation, you made a great point about the declining birth rate in certain parts of the world and that causing a problem. We have a demographic problem, we will have skills problems, we will have all sorts of issues, and it’s not just the responsibility of the governments but governments, private sector, boards, academia, and society at large coming together to really transform the workforce that is present today and coming up down the line.
Shefaly Yogendra : Yeah, and we did talk about compound risks. There’s a thing in physics—nature abhors a vacuum, right? If there’s a demographic lopsidedness in certain areas, then you combine that with wars and climate change. You get a very different collective of refugees—from climate change, from wars, from countries that can’t create jobs—who will then be interested in seeking opportunities somewhere else, let’s say in social care, or lower-paid menial jobs that still need doing. There will be mass migration. And that will mean that in any given country, even if you operate a business that focuses on a given geographic market, the makeup of your consumer will change, the makeup of your shareholder will change, their requirements will change, and stakeholder demands will change.
Are you thinking about everything two steps ahead to see where the various scenarios can go? As you rightly said, it is all our problem. It is not the problem of that company, that government, or that country. We are connected in many different ways, and it’s a collective problem. At the governance level, board directors look at it in the context of a company, but companies, as we were discussing right at the beginning, are operating in a highly dynamic, highly changeable, complex environment. Those who find solutions move quicker and don’t create many externalities. We didn’t dwell upon the climate change and data center energy consumption externality of the AI tools, but any company that can actually optimize as it goes along will probably retain its competitive advantage in the context it operates in.
Aarti Samani : Yeah, yeah. So let’s talk about some practical issues that you have witnessed and been a part of in boardrooms. You’ve been serving on boards for a number of years. Talk us through some examples, to the extent that you can, in terms of opportunities and risks that you have been a part of dealing with, and what lessons can we learn from that?
Shefaly Yogendra : I should say right at the start that I won’t be talking about any of the boards I serve on or have recently served on. I will draw more upon the advisory work that I do with organizations. One interesting observation that I made through an engagement was how organizations decide to implement or not implement. I briefly mentioned earlier that I’m aware of an organization that decided to shut down access to all these GPT tools and then asked in the company, “What do you think we are going to use these for?” Then they gave groups of people in the company explicit permission to use certain tools and report back on what they found, then had a company-wide conversation, and then said, “Right, this is what we are going to do.”
Shefaly Yogendra : If there’s a better example of relevance-led adoption of something new and emerging, I have not yet come across it. I thought that was very good.
There’s another example regarding executive and non-executive communication. I was advising an executive who was charged with “doing AI”—and yes, I’m not making this up; their role was defined as “doing AI.” They wanted to present to the board, but they thought that the board was not very advanced in their understanding of AI. And who is? We’re all learning. Like climate change, like ESG, AI is a learning journey. The faster we recognize this about each other and ourselves, the better it is for everyone.
The communication was filled with jargon, and if there was a jargon bingo, it would have been completed in the first two or three minutes. So, it was interesting to coach a really senior executive on how to talk about a new thing to an audience whose literacy levels you’re not quite sure about. One thing I was thinking about during that engagement was when I was teaching a course called “Society and Technology” to a class that had engineering students, math students, economics, English literature, physics—all sorts of backgrounds. I had to really choose my language carefully to be intelligible to all my students. Without that, there was no chance of retaining their attention and engagement.
So, how you talk about complex topics is not a technical problem—it’s a communication challenge. Out of that engagement, there was also an interesting observation, which I left that executive with: Normally, that executive’s role would be considered a cost center. There are some functions that we look upon as cost centers. But if the AI strategy were to be approved or the pathway to implementing AI tools in their business were to be approved by the company, it would have been the most important thing that executive was going to do in their career and probably in the lifetime of many of their executive peers.
I asked them to ponder more deeply what it would do to the power balance in the executive team, which could completely change whether or not their AI adventure was going to be successful. That was an unexpected question. We have to remember that, in the end, it’s people who run companies, people who build businesses. People are there for a range of reasons: Some are actively serving the vision, some are building careers, some are making money to pay bills. Some people are doing some of the above, some are doing all of the above. How do we take into account the people, talent, and culture issues, and issues of safety—how safe people feel in an organization—while we make these new technologies prevalent across the business, adopt them for doing various things, whether for productivity gains or because you don’t want to be left behind?
To me, those examples stand out more than worrying about how the technology rollout happens because they are essentially about how people take charge when something new and challenging comes.
Aarti Samani : Yes. That inclusive leadership, right? So, bringing everyone on the journey with you, especially in the first case that you cited—how do we bring our people into our thinking and not make guardrails as barriers to AI adoption but actually bring them into the conversation and help co-create those guardrails, etc.? Thank you. Very interesting incidents and experiences, and great takeaways that our audience can learn from.
Aarti Samani : So, we talked a lot about the landscape that we are in today and the changes, etc. How should we prepare for the future, for the unknown unknowns, and things that will change? I genuinely have no idea what to expect in 24 to 36 months from now when we have another conversation. How should executive teams, as well as board teams, prepare for the changes that are to come into our business environments?
Shefaly Yogendra : I think one of the most useful things to do in general is horizon scanning. I know it sounds a bit cliché to say it as if people are not doing it, but there are often times when everybody—and this brings me back to why we make the board as diverse as possible—because we are pulling on each other’s lenses to see what we can learn, what we can see through their eyes. Everybody doesn’t have to experience the same reality or read the same publications or follow the same sort of hobbies.
I’ll expand on the horizon scanning point to say that it’s important to understand what knowledge is available in your room, in your boardroom, because people may be seeing things that you’re not seeing. Without going into specifics, I will briefly mention two things: One, the whole governance story in India, where in any emerging market investment, the risk profile is more like high risk, high return, but there is also a lack of understanding of the governance environment as it were.
If you have someone at the table who keeps a finger on the pulse, engages with businesses in a given emerging market, or has friends leading those businesses, then you need to give cognizance to that. Another small example I’ll mention is that, for various reasons—mainly my interest in comparative politics—I closely follow politics, policymaking, and institutions in many major jurisdictions in the West and emerging markets.
Therefore, sometimes I say things in my boardrooms that may sound completely out there to people, but when they come to pass, at least nobody can say it was a surprise because we had already discussed it.
Shefaly Yogendra : This brings me again to reiterate the point of safety. If a person has to dig deep into their self-confidence to say something slightly out there, then the culture needs fixing. The culture should be one where you can say out-there things as long as you can unpack for others how you arrived at that thought. That is what risk and horizon scanning look like. If the obverse of risk is opportunity, and if we know something ahead, what can we do to prepare? It may never come to pass, but it might come to pass. Unfortunately, some of these stories can’t always be told until a suitable amount of time has passed, but I have a lot of stories that could go into this basket.
Preparing for the future lies in how you horizon scan in the present and what you learn from the past.
Aarti Samani : That’s a great soundbite. Thank you for that. As we come to the end of the show, there’s one thing I ask every guest. As we go beyond the algorithm, what is the one question that should be asked around executive tables and boardrooms but is not being asked?
Shefaly Yogendra : If this organization were to last another hundred years and its history were written, how would you like your successors to read it—whether they are people in your family or your friends’ children? How would they assess your contribution to the history of the organization? Was it disruptive? Was it creative? Was it pathbreaking? Or were you just collecting lunch money in the form of board director fees?
Aarti Samani : I love that because it puts responsibility on the individual but also on the collective group because history is made not by one person but by a group of people acting in a given way at a given point in time. Dr. Shefaly Yogendra, I have thoroughly enjoyed this conversation with you. Thank you so much for sharing your insights, your experiences, and your expertise.
Shefaly Yogendra : Thank you for having me, Aarti. I really enjoyed that conversation. You made me think, and I look forward to listening to my own podcast now. Thank you.
Aarti Samani : Thank you.