Insights

Data and AI in the Boardroom: Governance & Supervision

Tempo de leitura: 6 minutes

January 2021

Today’s wealth of available data and arsenal of analysis tools allow boardrooms to make more informed decisions, with AI and new technologies helping administrators to chart a course, get to the bottom line of scenarios and create value. However, Hans Spaan, Associate Director at ORTEC Data Science and member of Supervisory Boards, believes that technology alone won’t do the trick. Good governance and supervision require a keen eye from the outside-in, the ability to translate what is happening in the world to one’s own company, and cross-sectoral insight and understanding. First and foremost, however, they require vision.

This article on Governance & Supervision is the second part of our series on Data and AI in the Boardroom and is powered by Hans Spaan, Associate Director at ORTEC Data Science and member of Supervisory Boards.

Dato5 jan 2021
ORTEC

Companies have to think about the role they play in their business network

Spaan is a firm believer that decision-making without a clear-cut vision will lead to value destruction. As he sees it, vision means interpreting what is happening around you and incorporating it in your business strategy. “How do you view the world and what does that mean for you as a company?” In today’s exceedingly complex world, this is still the core task that leadership faces. The data flows between the various links of business networks are constantly increasing, so a vision on the value of these data and the ‘machinery’ used to process them - algorithms - is absolutely vital. In portfolio decisions such as investments, divestments and acquisitions, the profitability of the assets in question is a key valuation basis.

Spaan remembers how Microsoft acquired LinkedIn for $26.2 billion in 2016. "At that time, LinkedIn had 100 million active users per month, so Microsoft ultimately paid about $260 per monthly active user. Was that a reasonable price? It’s a fiendish question. But it’s a question that board members will have to answer more and more often, because data and forecasting models have started playing an increasingly important role in value creation and value delivery across the board.”

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“Customers want more convenience.”

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Inform and inspire

Executive Boards and Supervisory Boards should have an overarching vision on data and AI, says Spaan. "They need to be aware of the possibilities, the trends and the risks.” It is incredibly important for a board to keep thinking outside-in, he believes, by identifying trends and assessing how they could affect the company. It will then have to make choices and devise scenarios in case those choices turn out to be wrong.

Assessing the relevance of trends and the speed at which they emerge requires a keen eye. “Across all sectors, you can see that customers want more convenience”, Spaan has noted. “Businesses and consumers expect more from services, fueled by the many opportunities offered by technology. Companies have responded to this in various ways. Just as Netflix and Spotify offer viewing and listening suggestions and health apps provide lifestyle advice, companies can also share advice to promote optimal machine use, based on benchmark data obtained from connected assets.

On top of that, the networked economy is rapidly gaining in size. Take the emergence of data-driven supply chains, increased cooperation in regional supply chains and digitization in healthcare, for example. Companies like ours can help assess the quality and provenance of data, and third-party experts can also assist in the fair and ethical use of data in the value chain. If they have an international scope, bring a broad point of view to the table, and have the necessary practical experience, they can be a valuable source of inspiration for executive boards and supervisory boards. In board sessions, for example, they can show how the world is changing from the perspective of data, which the board can then use to fine-tune their vision.”

ortec

Hans Spaan, Associate Director at ORTEC Data Science and member of Supervisory Boards

"Where convenience, experience and efficiency meet, the supply chain changes."

Unprecedented technological possibilities

The exceptionally large leap in data availability and computing capacity offers unprecedented new possibilities. According to Spaan, companies should ask themselves what consequences this will have for their business model. “Companies have to think about the role they play in their own ecosystem. What can they offer their customers and who will pay for it? And what will they pay you with? If you’re taking payment in data, how will you put them to good use? If you offer data and technology services, what value are you creating and for whom? What’s in it for the user? It can be a complicated question to answer, but that is why thorough industry knowledge, combined with a fresh new look at potential ways to improve convenience, experience and efficiency are indispensable in decision-making. Technology is pointless if you don’t know who you’re trying to reach and how you can reach them, and that’s where management can play a significant role. There is no reason that technology experts should not be managers, but they must have an eye for users.”

In R&D, technological innovation can be a tool to find out how an organization can meet needs and solve problems. Exploring what will be needed to scale up to large-scale production, though, will require a more expansive view. Spaan emphasizes that realizing what innovations can do for a company and when they should be embraced does, ultimately, require vision. “Some things can take longer to become established, and you may have to take that time. We can distinguish between technology push and market pull: supply also creates demand. One of the things you can do is foster acceptance, and you will sometimes find that real-world developments can further accelerate this process. The lockdown, for instance, has given a huge boost to meal and grocery delivery services. “The most bullish forecasts for online grocery services have taken three months to materialize, not five years.” (Source: Michiel Muller, FD 25/9/20)

Network organization Uber is currently traveling a bumpy road, but it knows that people still need an efficient mobility system to get from A to B. Realizing that their vision has not changed, Uber refuses to let go. Technology is an enabler of change in the transport system, it’s just that nobody knows what that change will look like and when it will arrive. "Where convenience, experience and efficiency meet, industries change.”

ORTEC

Hans Spaan, Associate Director at ORTEC Data Science and member of Supervisory Boards

"Retail knowledge cannot be transplanted directly to healthcare but there are many lessons to be learned."

Cross-industry insights

The boardroom makes all the difference when it comes to a company’s continuity, portfolio of activities, investments and divestments, and the composition of the executive team. It is the responsibility of the Supervisory Board to put together a competent team that works well together. As Spaan sees it, this also requires a vision on information technology. “You can’t expect members of a Supervisory Board to take a deep dive into technology - that’s simply not their role. Supervisory Board members should, however, be keyed into developments in the field of data collection and data-driven value delivery. They also have to know the risks involved with using information technology. Armed with this knowledge, supervisory board members must be able to interface with the board of directors and carefully supervise the ecosystem in which the company operates.”

User behaviour and laws & legislation for technology can differ wildly from industry to industry, so cross-industry insights will never harm you, Spaan believes. “Healthcare, for instance, has a lot to learn from online retail, where companies have amassed a wealth of experience in setting up supply chain networks with information technology and in effecting customer engagement. “Retail knowledge cannot be transplanted directly to healthcare, but I think there are many lessons to be learned if you’re willing to give it serious consideration. As the same information technology is used in myriad different industries, data science experts can be a valuable discussion partner for board members and supervisory board members across sectors.”

About the author

Hans Spaan is Associate Director at ORTEC Data Science and has Supervisory Board roles. With his extensive background in change management, he contributes to business transformations, and he supports organizations to focus on the value delivery of data and analytics business cases. He believes that people and culture are key enablers for growing into a data-driven organization.

Connect with Hans
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