Corporate Balance in the Face of Accelerating Technological Change

The imperative to adapt to changing technological landscapes is a permanent fact of business life.  But today, the pace of that change has greatly accelerated — particularly in the domains of artificial intelligence and blockchain technologies.  Seemingly every week brings new announcements about significant AI-related initiatives.  Most recently, Meta reportedly launched its multi-billion dollar investment in a “superintelligence” team to drive the development of advanced AI, and OpenAI recently announced its $6.5 billion acquisition of iO to develop AI hardware.  Millions of white-collar workers are already using AI tools weekly.  And on the blockchain side of the ledger, alongside notable progress toward long-delayed legal clarity is a pronounced trend toward institutional adoption — everything from the incorporation of bitcoin into corporate treasurystrategies and the popularity of crypto exchange traded products, to the burgeoning adoption of stablecoins and traditional financial institutions’ forays into real-world asset tokenization.

Below are some key considerations for boards of directors to ground their footing in this time of accelerating technological change:

*   Remaining informed is a must.  While the charge of oversight remains the North Star for boards, and directors themselves need not necessarily develop individual expertise, boards should ensure clear visibility into the core technological tools in use by the company and its competitors, as well as critical workflows that could be materially affected by technology and other salient market developments.  Directors are entitled to rely on appropriate repositories of such information in management and qualified experts.

*   Risk oversight is paramount.  New technology brings new risks.  To name but a few, in the case of AI salient risks include hallucination and privacy and data protection issues, while blockchain technology presents some distinct cybersecurity and AML challenges.  Boards should understand the principal risks posed by adoption of specific new technologies, work with management to develop an appropriate oversight framework, and document a record of considering these risks with diligence and care.

*   Recognize efficiencies, but maintain sobriety.  New technology offers potentially far-reaching efficiencies, such as the increasing capabilities of AI agents and the associated prospect of streamlining some organizational functions.  But these benefits should be weighed with real care, particularly as AI and blockchain technology are maturing in important respects and caution is in order in the face of market hype.  Indeed, too dramatic an embrace of a new technology itself may pose the risk of suboptimal path dependency in the face of rapid market changes.

*   Maintain values while pursuing value.  Boards should consider in a balanced manner the effect of technological adoptions on important constituencies, including employees and communities, as opposed to myopically seeking immediate expense-line efficiencies at any cost.  The paradigm of stakeholder governanceremains the critical lens for the cultivation of long-term value in corporations.