45. Fernanda Torre: Governing in the Age of AI and Sustainability:

Fernanda Torre is a recognized expert in sustainability-driven innovation and CEO of the consultancy Next Agents, whose mission is to create value for people and the planet—both now and into the future. She is also the co-founder of One Global Action, an international initiative that fosters capacity-building and collaborative innovation to tackle major sustainability and ESG challenges.

Fernanda serves as Chief Operating Officer and co-founder of the Boards Impact Forum, the Nordic chapter of the World Economic Forum’s Climate Governance Initiative, where she co-leads training programs on Board Oversight of Sustainability and Responsible AI for Value Creation.

She is the co-author of the book AI Leadership for Boards: Leading Responsible AI for Value Creation, published by Springer Nature, which explores how boards can shape innovation, risk oversight, and strategic renewal in an AI-powered world.

Fernanda is affiliated with the House of Innovation at the Stockholm School of Economics and teaches at the Stockholm School of Entrepreneurship (SSES), where she leads programs on strategic innovation, foresight, and entrepreneurship.

With an award-winning background in graphic and experience design, she has worked across industries and institutions, including Stora Enso, the Stockholm Resilience Centre, and Karolinska Institutet. She holds an MBA with distinction (President’s List) from SSE, an MFA in Experience Design from Konstfack, and a BA in Graphic Design from the University of Porto.

Transcript

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Welcome everyone to the Total Innovation Podcast. As our as always, I'm your host, Simon Hill. Today we're stepping into a space that I think is becoming increasingly critical. But if we're honest, it's still pretty underdeveloped in most organizations. And that's the role of leadership at the very top when it comes to AI. Because whilst a lot of the conversation around AI is happening at the operational level or within innovation teams, transformation teams, IT, the reality is that the biggest decisions, the ones that shape strategy, risk, and long-term value, are sitting at board level. Or at least they should be. And the question is, a board's actually equipped for that? I was at a dinner recently with a board member from Alphabet, formerly the chief financial officer at Goldman Sachs. So not exactly short on experience. And what struck me was how hands-on he was with the technology. Before that dinner, he was in his hotel room building agents. He is experimenting daily, still operating, still learning. And he made the point that for him, this is not optional, it's essential, not just personally, but to actually be effective in his role on the board. And it really got me thinking how many boards around the world look like that? How many board members are actually building, testing, engaging, versus well, reading the pack and turning up? In pre-conversation ahead of this episode, and I've known today's guest for quite a few years. So we got into the detail pretty quickly. One idea really stood out to me, and that's this tension between supervision and guidance. I guess a fundamental question of what is a board there to be, particularly in this new era. The idea that most boards are still set up to oversee and control, but not necessarily to actively guide in this new AI-driven transformation world. And that gap is where a lot of the real risk and also the real opportunity sits. So today we're going to unpack that. We're going to unpack what good looks like when boards where boards are falling short and what needs to change. Alongside that, we'll be diving into a new book that tackles this head-on AI Leadership for Corporate Boards, leading responsible AI for value creation, and exploring the frameworks and the research that sit behind that. And joining me to do that, a longtime friend, a wonderful person, is the amazing Fernanda Torre. Fernanda, welcome to the Total Innovation Podcast.

SPEAKER_01 2:36

Thank you so much, Simon. It's a pleasure to be here.

SPEAKER_00 2:40

It's always a pleasure, Fernanda. It's always a pleasure. We tried to do this in person. We're both notionally in Stockholm and failed miserably. So here we are online on a nice, a nice sunny Stockholm Day. Fernanda, and I mentioned the book which you co-authored, which is here on the shelf behind me. But let's start with a little bit of a background to you. Tell us what led you to this moment, both in terms of writing the book, but but generally from a career perspective.

SPEAKER_01 3:06

Yeah, absolutely. Sometimes I have real difficulties my background and how I uh how I why I'm here, even because my background is actually in design, uh, as a graphic designer and an experienced design. So it does seem like it's it's a bit of a jump, but I don't think it is, because in my mind, innovation is really the red thread between everything that I do. And um a few years ago, uh I uh I had been working with leadership programs for the Swedish Institute. I had been creating some leadership programs for um um Baltic Lab, for example. And then because of that, I was invited to kind of be part of creating this really cool program for the Stockholm Resilience Center, which is a very prestigious research institute uh coming from Stockholm University, looking into um the resilience of social ecological uh systems, uh, ecosystems. And um, the idea was to create a leadership program between resilience of these uh uh of these ecosystems um and uh exponential technologies. So, how can we use exponential technologies such as AI or or or um blockchain or robotics, or in order to really tackle the biggest challenges we have when it comes to to sustainability, to climate. So this was 2014, I believe. And so I saying this now, it seems like I've at first I sound old. So let's let's pretend that was 2024. But then it also seems at that time it felt like AI was already such a hype already. And now looking back, it's like, no, it wasn't. But nevertheless, that was really when I started looking into AI, also from a very much a leadership perspective, right? And also one of the side tracks that came from uh this collaboration with the Stockholm Resilience Center was this very cool, very early days manifesto called the Biosphere Code. It was a manifesto for sustainable algorithmic development. So, really, how can we develop algorithms with having the biosphere as a major stakeholder? So, you know, fast forward to where we are now, that really gave me the foundations to understand AI and to really be interested in AI from a both a value creation perspective and also really a leadership perspective. So in 2018, we started this research project. So it was um me, Lisa Lot Engstam, that's it in many different boards, and uh Robin Teglan, that is now professor in Chalmers, we started this research project trying to understand how boards should make better decisions on businesses that had AI components in them. How could boards guide this? Um so so this research has been going on since yeah, 20 2018, uh and leading to the present and leading to this book and leading to the work that I'm doing with Boards Impact Forum. Um so quite a lot has quite a lot has uh has happened since. Um yeah, so I think that that's that's that's good for for uh for an introduction.

SPEAKER_00 6:39

Well, I think it is, and I'm I'm not gonna let you off the hook, not because it makes you old, because you're not old, but because I think the the decade plus of research and learning and experience pre-hype from an AI perspective that has gone into this is actually really important grounding for the conversation that we're going to have. There's a lot of quasi-experts out there who've popped out of the woodwork that maybe haven't necessarily done a lot of the foundational thinking around all of this. But this question around leadership and particularly boards is really pertinent, right? And as I said in my introduction, the the strategic elements to this, both from an opportunity and of a risk, have to start at board level. But clearly, and you know, the research in the book and others identify that there's a problem there. So what did what does the book show us? And I guess what what what led to the book needing to exist, right? What is this, what is this problem that you that you see?

SPEAKER_01 7:34

Yeah, that you saw. Yeah, absolutely. So since 2018, so from the beginning of this research, so then I started working a bit more closely with boards, first with this network called DGoti, and then uh with this organization, Boards Impact Forum. So um Boards Impact Forum is the chapter for the Nordic countries from um the Chapter Zero Alliance, um, coming as a collaboration with the World Economic Forum. So we created this organization here in the Nordics, and and and and what we do day in, day out is to talk to board directors uh across the Nordics, but also internationally. There's always a lot of interest uh from board directors from other geographies into the Nordic governance uh model. So we we always have uh very interesting discussions with both kind of Nordic and international board directors across very many different topics, uh mostly related to sustainability, climate, nature, and very much AI. And it seems very clear for anyone that that starts following a bit what's what's on what's top of mind for a board director are the issues related to compliance. Why? Well, the the liability, right? That's what you're liable for. You can go to jail, you know, if it comes to that due to due to these kind of compliance issues. So traditionally, there has been a really big focus on the supervision part of the work of uh of a board that really has been the main focus. Furthermore, if you look out there in terms of the kind of support that board directors get into their work frameworks, etc., either they come from management and they're kind of slightly adapted, but they're really towards management, or they come from uh this background of compliance. You know, it it developed from um uh auditing uh um businesses or law firms, or so very much the compliance mindset. Now, the challenge is the world is changing so much, and the world has been changing so much that just compliance, just making sure that you tick the boxes, is really not enough to set the strategy and the vision for any organization, really. I think that this is across the board to many different industries. We're not just talking about tech here or just talking about, for example, banking that is very high, highly regulated. It's really across the board. So it's becoming increasingly relevant for boards to get out of their comfort zones from just the supervision world and start dipping their toes into innovation, to development of these capabilities in organizations.

SPEAKER_00 10:48

So I think that that segues us quite nicely into the core thesis of the book. I think it is the core thesis anyway. Um this sort of distinction between supervision and guidance. But maybe before I take us there, um, and I think this walks us in anyway, I was thinking about the subtitle of the book, right? So AI leadership for corporate boards, great, right? Pretty clear. Ron Seal does what it says on the tin, but the subtitle of leading responsible AI for value creation, and you're just talking about those, that that value creation piece, really. Um, and you spoke earlier about the the biosphere as a major stakeholder in decisions. And so this this topic of responsible AI. Um, I mentioned in again previously, like I just spent time in the valley. There's a very big distinction. One of the kind of big takeaways I took from that that trip was the European angle, the European lens on responsible AI and the Silicon Valley lens, I'm gonna call it the American lens, the uh the Silicon Valley lens on responsible AI are very different, right? And so, um, and they and they come loaded with their own risks, but if you're gonna layer it into the second part of the subtitle, value creation, in a world that's moving so quickly, the juxtaposition in that and the strategic challenge in that from a board and an executive level kind of left us all scratching our heads as CEOs, right? It's like, well, how how much do we push on the risk button? Because that's where the you know the businesses coming out of the valley are on this, almost with a be damned what happens after afterwards um approach to it, right? Um, and you know, we've seen massive amounts of value creation, particularly in share price values, off the back of that attitude, even in a pre-AI era, right? So I guess I'm I'm talking a little bit before we get into this guidance of supervision is what is your what was the logic behind the subtitle? Um, and what is your angle and your perspective on it um from a you know the responsible AI piece balanced with the value creation piece?

SPEAKER_01 12:50

Um yeah, a great question. And I think it's really, really good of you to to to dive into that subtitle. Um, quite a lot to unpack. So, first of all, the reason why we wanted to be very explicit about value creation is because um organizations are not going to change if they do not see the reason for that change, right? So there has to be that value creation, I believe at least. Uh, and I think that all of us uh that that were behind this book believe in that, that innovation, value creation, this corporate renewal is really the main reason why an organization would do something. And there's a certain element of everything that has been happening in the last years since you know the launch of Chat GPT and kind of Gen AI, and that has been very much around just jumping into the wagon and start exploring, start um playing with AI. And I'm and I'm talking not at an individual level, but at an organizational uh level, right? So um we we collaborate uh uh, for example, with Stephanie Werner from MIT, um, and uh they have a really interesting AI maturity model with four levels of maturity, where kind of the first two are still within this realm of playing with AI and kind of piloting, exploring, and then the last two are really when you change your ways of working and you are in the forefront kind of the future of AI. The first two models, the first two levels, I'm sorry, actually show negative growth and negative profit. And it's only on the third and the fourth uh level that you start having that positive impact in the organization. But this really requires a change in the way of how you work. It it is about changing, changing the changing the processes. It's it's so it's very much about this organizational change of um of AI that AI brings to an organization. What we have been seeing this far, in my opinion, is that these years, the years that we have been through, have been the years that we have really been focusing on these first two levels: playing, piloting, exploring, etc. And as we move into this third level, then the responsibility part becomes quite acute. If this will impact the way how you work, if this is going to be embedded in the organization, across the organization, not just uh um within within a sandbox in an organization, not just skunk works. If to have the the return of investment, to have the growth, to have the profitability, you really need to embed it in the organization, then it's key that you are addressing it from a responsible perspective. It's key that you are involving the boards so that you have that um so that you you you have that guarantee. And and this is where this this balance between supervision and guidance also comes, because you need that supervision, because you need to make sure that you have a responsible AI. But if you don't develop the AI, then you have nothing to supervise. So it's very much this uh this balance. Um and I think it's of course really interesting to have that experience of being in uh in Silicon Valley at this moment. Um but I think that there's also something about, and this might be just my wishful thinking, um, but there is something about making sure that you do things right. The the reputational risk is is just so big. The risk for cyber attacks, uh the risk for um uh so I I'm not I'm not even talking just about uh compliance here. I'm really talking about impacting the business very directly. And I think that uh uh uh a shift that we have been seeing now in the first months of the year also point to that, where you see investors very much trying to diversify their portfolios going from just high-tech, uh high-growth tech companies and AI to these halo assets. So these very much um uh uh you know investing in um infrastructure, investing in energy grids, investing in assets that are going to be very low risk of becoming obsolete in the near future. So maybe maybe it feels like the hype is is a bit dissipating a bit, and now we are getting real. We were we were we were in a love relation, we have been in a love relation with AI. It's that initial we're in love with AI and everything is beautiful, and now it's kind of you know, let's let's go into a serious relation. And then you start to be interested. You know, does the guy have a job?

SPEAKER_00 18:30

Exactly, exactly. And I'm sort of resisting the temptation because I think you and I could go deep into the rabbit hole of just this responsible AI piece, and um, in a separate chat, I'll debrief you on some of the I guess more optimistic and and also more dystopian versions of of that discussion that came out during my time, my time in San Francisco. But um let's just let's dive a little bit more into this topic of the distinction between supervision and guidance. Like I think we've got I'm gonna focus on the board aspects, right? And I I'm gonna ask you two questions really. Like, why are boards what do we mean by this distinction between supervision and guidance? But I think more fundamentally, and this will, you know, this will come out in this discussion as well, like it's the pace of change is so quick. The boards I feel like are in general not like the Alphabet CF, you know, and former Goldman Sachs CFO. They are not like the operators inside the businesses that are picking up these tools and playing around with them. They're quite lagging in many ways in their understanding and ability to have really informed discussions around this. And so I guess this is a bit of a a bit of a sort of it's it's great to have this distinction between guidance and supervision, but how the hell are the boards going to do it, right? If they don't really understand the topic.

SPEAKER_01 19:56

Well, yeah, I I think it is a statement.

SPEAKER_00 19:58

Maybe I'm being too mean.

SPEAKER_01 19:59

Maybe they're all no, I think I think you are right in many ways. And and I think that that that um clarification between the two is also a statement that we're doing in the book, and and it's a statement coming from this research. And if you go around and ask uh board directors out there, you know, is is innovation part of the board's work? I there there would still be quite a few direct board directors that would say, no, it's not. It's not part of our about our work. So it is a statement to say it and to clarify it. Um so what we did is to create these two pillars, one of guidance and one of supervision. And then we were also looking into what's included in these pillars. So within guidance, we have kind of data and data governance, we have innovation and the innovation that is possible within AI and ecosystems. So, kind of how you work with your ecosystems partners and the capabilities needed to do that, that uh to create value for the organization. The other pillar, the one on supervision, is in a way a mirror of this. So you also have data, but it's more kind of the kind of problems that you have with that data. It's the biases, uh, transparency, explainability, you know, then you start to understand, okay, you can see something both from a value creation perspective, but a bit the risks related to that, to that aspect. And then we we look into cybersecurity and we look into ecosystems also. So when you start working with partners, with others outside of the traditional borders of the organization, then this is also an entry point. It's also a risk. There can be data that is corrupted that you're getting from these stakeholders. It can be an entry point from a cybersecurity perspective, it can be a reputation. Risk, and then how do you govern not only your organization, but you kind of have to extend this governance to your partners within this ecosystem? So I think that when and the reason why we give this explanation about what's included is that then I think that it becomes very clear for boards, for board directors, oh, okay, that makes sense. If you have data and data is an asset for the organization, yeah, it makes sense that we can that that we govern it. So what's the governance from that data? If we have um big investments going into innovation and AI, we need to govern. I mean, no, as immediately as you start explaining what's in inside these elements, I think it becomes more clear for boards, although maybe at face value, one could say, no, no, but everything that has to do with guidance is really management uh work. There's this there's this expression that is that describes the board work being um noses in, hands out. So that you should be kind of curious and and try to understand what's happening, but you're not really doing anything. But I think that in many ways AI um blurs this very clear distinction between what is supervision and guidance because it's so it it it it it really works uh in in the organization. It creates power imbalances. Yeah, I I think where decisions are made, who owns certain aspects of sorry, I think we we lost a slight connection.

SPEAKER_00 23:52

We lost a slight connection there, so I thought you'd I thought you'd froze.

SPEAKER_01 23:54

No, it's no don't don't think I think.

SPEAKER_00 24:34

And maybe what it's actually forcing us to do is step back and think about what are the different assets that sit across the organizational stack and adding new things into those as we go. You talk about data potentially being one of them. Um, I guess you know, in in the board's perspective, in terms of value creation, you're often thinking about what is the what is the defensible moat that the business has. And perhaps those things have changed quite significantly in this era. Things that we thought were super defensible have just been washed away in the stream, right, from for many organizations. Um, maybe in real, maybe not so real as well, right? Like there's a there's a tendency for the money to dictate reality in many ways, i.e., where the money goes, where the values, where the enterprise value is adjudged to be, is where actual value is. That's not to your innovation, to your I to your AI matrix. It's not exactly where the value is now. We think it's where it might be in the future, um, but we don't 100% know that yet. And some of those experiments will fail, some of them will succeed in different parts of the organization. And so I guess the tension I'm playing through my head is is what's the board's role in that really? And how did that and again back to my point in how do we see them manifesting it? Um, because I think many are not well versed enough in the narrative to really understand how to have effective conversations around it.

SPEAKER_01 25:59

Yeah, yeah. Well there I think that there's also different kind of levels of help right now and hindrance, yeah. Yeah, exactly. And a hindrance, exactly, are spot on. So right now, what I'm hearing a lot is that um boards are bottlenecks. So so I would say that maybe there's there's a first level there of the board director, the board themselves, they need to understand AI enough to be able to balance these risks and these opportunities so that they are not bottlenecks. If they are just focusing on the risk, if they just see it from the supervision perspective, then there will be nothing to supervise because you will be frozen. You will not be able to develop anything. Um, I was mentioning Stephanie Werner before, and uh they have also been looking really interesting research, looking into so kind of not just the individual board director, but how many board directors you need to sit in the board with that capability to create impact in the bottom line of the company. And they came to the magic number of three. You need to have three digitally savvy AI savvy board directors in order to create that transformation. Because if there's just one, it's almost like you don't have critical mass. But if you have enough in and um in the board, then it really is able to have that impact. One of the examples that we talk in the book is very briefly, is Philips, for example, and they have in their rules of procedure for the supervisory board that the the persons they recruit for the board need to have that digital saviness, uh, which you know it's so it's a way to address it. We just need to make sure that whoever we recruit needs to have that. Um so I think that there's there's that level, the individual board director, there's the quantity, and then there's this questioning of the board's role, questioning about um the structures and the processes. So one of the parts and one of the aspects that we also address in the book is a bit the foundational aspect about these two pillars, and it is about the boards themselves. The the subject command, for example. Do they know enough about AI in order to be able to command, to be accountable even? And how does that impact their way of working and their structures, etc.? So so there is something there about boards need needing to reinvent themselves, and this can be done through training, through uh experimenting, through building things like the example that you gave. And you know, eventually you just need to look into your nomination committee and um recruit different persons for the board altogether.

SPEAKER_00 29:11

That's what I was gonna I was gonna ask. So, you know, the the book does have some quite practical steps, and I know you've gone and gone on to try and apply those into other ways of of of bringing value and capability forward. But maybe just talk through some of those practical actions that you know, let's say people are listening and they they wholly agree and they're like, okay, so what do we what do we do? Right? Like what's the what's the structure? What does the matrix help us to do? What are the what are the what are the steps can people be taking to go from day zero today or wherever we are, to you know, a different a different shape of that? And probably realistically firing all your board and hiring new ones isn't going to work for lots of people, right? Like that's that's that's probably not the best, the most likely route forward.

SPEAKER_01 29:57

Yeah. So um when we we we created this kind of a research and the first version, and we published this first book in 2020. And then since then, what happened is that when we when AI started kind of, you know, again with gen AI, etc., um becoming increasingly relevant, we created a training program for boards. And this training program um is um is uh uh a training program that that we have that different moments of of contact with uh with boards. Um so very kind of um experiential, direct contact with boards, and then what we what we what we've done that was I think pretty smart, if I may, if I may say so, is that we've used that training program as a source for updating the book for this new research. And then as we were finding things in the research, we were bringing it into the training program. So then what we did is that we were, it was very much an iterative process of updating the updating the research because we were immediately testing it out with with these cohorts, with these board directors. So this really made the book become very practical. It's very much about practices, board practices. Um, so for example, one of the things for board directors to get certified in our training, they need to actually provide a list of board practices. What are they going to do in order to implement this in these in their organizations? And then we kind of took those and we were looking into them and finding these patterns that then we brought into the book. So then it's very practical. So one of the very practical tools that we have created and implemented in the book, it's this matrix. And this matrix for AI leadership for boards, it's very much a very simple tool. You have um a Y and an X uh axis where they represent guidance and they represent supervision, and they're somewhere where they meet, you have this leading with the strategic ambition. And then what we have in the book is that we have um guiding questions to all the levels, they go from none to piloting to leading, etc., to all the levels. We have guiding questions to all these levels and to all the sub-areas within the guidance and supervision. So within data governance, if you are in this level, what are the questions? For data governance, if you are in that one, for innovation, what are the questions? For so this provides a very clear, very concrete tool for boards to sit together and have a discussion, an informed discussion about where they are and where they want to go. And boards can do this in different ways. You do it as a group, you do it individually, and then you kind of compare the results, etc. But just those guiding questions are very helpful for boards. You know, boards can just take them and take them directly to management, you know. Okay, we have these questions here. You know, what are we doing around these topics? So it's a very, very practical um, and then we we have more, the last chapter of the book even has some prompts that board directors can play and test. And so so it is with the aim of being a very practical um book to help boards implement this directly. Yeah.

SPEAKER_00 33:42

Why do boards um, and I agree with you on that point, and I think it has to be quite practical. I guess digging into that, um uh board members tend to be quite, you know, confident people, tend to believe very much in their experience and their knowledge and their power. So, where do they tend to overestimate themselves in this topic? And do you see them being as, I guess, earnestly vulnerable as maybe all of us have to be in we don't really understand this, right? And it's moving so quickly that even if I understood a bit of it last week, I'd barely understand it again this week because there's a whole new language.

SPEAKER_01 34:19

I think that maybe the ones that really don't understand it, don't understand it, maybe they're hiding from me. Maybe they they're just not not around or are actively trying to avoid me. But I have seen a huge development, you know, since we started up, for example, this training program from being completely lost to to start to having a good grasp, understanding. And so I think that the level of maturity has been has been changing. I don't know if this is to old organizations, but but the ones that come to us. And one thing that we that we try to do in everything that that we do in our in our contact with with with boards, and I think also in the book, it's that I don't think you can be very prescriptive with boards. I don't think you can say, you know, this is the way to do it, because it it does depend so much on the organization and on the other board members and on the industry, etc., that it's very much around um giving suggestions and inviting for a dialogue. If board directors join a dialogue with their peers and they are able to discuss to discuss these topics, then I think it becomes clear to them what are the next steps. It is true, these are very senior um executives, and I'm not just talking about age, but you know, experienced. And uh I don't think it's super easy to or or or even something that we would wish to to put them in in the point that they feel completely uncomfortable with something. But I think we can be inviting and persuading people to join this journey if we are able to frame it in a good way. And that's a bit what the book tries to do frame AI and responsible AI and responsible AI for value creation, very much with this innovation aspect, frame it in a welcoming way, so that board directors feel that they can join the conversation instead of feeling that they are not um that they shouldn't be there.

SPEAKER_00 36:26

Alienated. Yeah, no, I I agree. One of the things that you said to me, and I've I've said this in a different way, is that AI is not monolithic, right? Like it's tend to be spoken about as I do, I use AI, we are using AI. My product has AI, the business is embracing AI, and it's it's a little bit you know, too generic, or it's not a little bit, it's just gin, it is just too generic, right? It's a little bit like saying I do food or something, right? It's like there's there's all different all different versions thereof, and using the wrong food at the wrong time for the wrong purpose isn't going to move you very far, right? Just to try and push that analogy as far as I can. And so is there, you know, companies may lead in one area and lag in another. They may lead in one area one week and lag in it another week as well. And so, how from a board perspective, in those very sort of uncertain foundations, do you sort of manage that? I guess back to that risk piece a little bit. And maybe this is some of your guidance supervision piece, that the boards think that they're good at AI because they've had they've had success in one area. And that could even be board meeting to board meeting, depending on how frequently you're meeting your getting together. Um, without also just constantly asking, you know, the same question, I guess, as well. It's like, what's happening with AI or how are we doing our AI strategy or something? How do you how do you see that playing out in in a useful value creative way in that interaction between the board and the and the and the the exec level or the operating level of the business?

SPEAKER_01 37:56

Yeah. Uh as you started uh as you started the question, I started thinking about the concept of uh approximate identity. Uh so this was something. See, being a designer actually is useful sometimes. This was something that we talked uh about with um Professor Ronald Jones when I was back in Kunstfach a thousand years ago. And uh he was he used to talk a lot about this idea of approximate identity to describe innovation because sometimes we still don't we don't know. We we don't we just we lack the vocabulary, we we lack the knowledge, it's going somewhere, there's something there. One of the examples that uh Ronald Jones used to use was that the first cars were called uh horseless carriage, because it was still, I mean, if you would call it a car, well, the concept didn't even exist. It was a carriage that was uh horseless. So, and I think that's I'm trying to make a parallel with AI. I think that this relates back to the idea of the maturity. We just don't have yet the maturity in general to be a bit more specific. I think we start seeing that a little bit when we start talking, okay, about a genetic AI, or slowly maybe we start creating the subcategories to make it a bit more clear, but I don't think we are there yet. And of course, this also reflects into how it's implemented in organizations or how the board talks about it, etc. Um quite often then when we we start to be really specific about what we mean by by AI, we very easily go down a very technical path. And this technical path is not it's relevant and it's accurate, but it's not inviting for it's not inviting for for for people to to to jump in. I I yeah, I think that it has to do a bit somewhat with the with the maturity of organize of the organizations. And what as they move from this kind of playing, piloting to scaling, changing ways of working, I think that it's going to become increasingly specific. Okay, this is this specific kind of AI, etc. We're we're probably not there yet.

SPEAKER_00 40:21

I think your design background and your human-centered thinking actually are arguably going to be core skills in this new AI world. So, and I know they're not a thousand years in the making, although maybe the the the the shoulders of giants that you stand on top of maybe maybe are. As as I start to wind us in, and and if there's anything that you think I've not covered, please feel free to sort of weave that into the to the next bit. Um I was gonna ask a big question, which is is the traditional board model just fundamentally broken in an AI-driven world, or is that is that too too much, too dystopian of me?

SPEAKER_01 40:58

I think it is. I think it is. I think that the boards can continue to work how they have been working. I think it's changing. Um and I think that um specifically looking into boards and governance in Europe, I also think that there is a pre-Davos and an after Davos talking about what happened in Davos this year um in January. So I think that there are so many transformations at bay for organizations that are just increasingly acute. It's uh it's climate, it's AI and digitalization, and it's um kind of independence from uh European uh organizations. I I call it this kind of triple triple transformation, it's not just a double transformation. Um and as we both know, the best friend for innovation and transformation is urgency. When you have that sense of urgency, it's when things really start to happen. So we have the urgency, we have the need. How things have been working and how boards have been governing this far is clearly not uh not enough. We we really need to rethink governance. So I'm personally super excited about this topic, and and I'm really I I I love to be in this day and age, to be able to be involved in what's happening. It's it's really fascinating, and and it's definitely going down.

SPEAKER_00 42:53

That's what I was gonna close on, actually, is you know, and and thank you. I think this is a you know, this is a paradigm shift moment, and every part of the organization, you know, top to bottom, bottom to top, middle out, needs to think about itself in in a different way, perhaps not changing tomorrow, but definitely changing, right? I think that's that's the other piece of it. But I guess my closing question then is is, and I think you sort of answered it, but maybe not, is does this leave you feeling pessimistic or optimistic from a um I guess from the lens of the board member, right? And the future of the future of the business? Like I said, I left San Francisco, I think feeling optimistic, but scratching my head over certain elements of it. Like where are you? Right, you're a board level looking out at the world with a you know a whole load of change happening. Is it mostly glass half empty or mostly glass half full?

SPEAKER_01 43:44

Yeah. Well, I'm always uh uh an optimist. It's just I'm I'm wired that way. I don't think I can I I'm I I yeah, I think I'm wired that way. Um, and I think it is uh Exciting, uh, everything that is happening. But but there is, like I was saying before, definitely a sense of urgency. Um so I didn't mention this before, but but I can mention it just briefly. I really think that there are so many opportunities when we connect uh climate, specifically climate, also sustainability in general, and uh and AI and the digital transformation. We have actually a book chapter coming out where we are looking into me and Lisilo Tengstam, one of the co-authors from the book, where we are uh looking into ecosystems and the kind of similarities between AI ecosystems and sustainability ecosystems. And I think that there's so much potential to create those modes that you were addressing before, because um AI to a great extent is is is going to become a commodity. What how can we make it special? What is that element that can be really, really specific? And I think that element is really coming from sustainability, from your stakeholders, from your value chain. So that makes me that makes me feel very hopeful and optimist that we can really combine and clump these disruptive forces and address them together. It's a really big challenge. I think Europe is uniquely primed to be able to address those challenges because of our background, where we are in terms of regulation. I I think that this this this is something that is um is really relevant, specifically from an European context and even from a Nordic perspective. It's not easy. It's not easy, and I think it's going to be a long journey until we get there. But I'm definitely hopeful.

SPEAKER_00 46:02

I know you're positively wired, as am I as well. So, Fernanda, thank you very much. I feel like this could have been a five-hour podcast, but it can't be. And so I'm gonna I'm gonna close us off there. And just just quickly, then, where can people find out a little bit more? I'll share a link to the book in the the podcast notes for listeners, but where can people find more about you? And I would actively engage them to come and have an a conversation, particularly to bring you into some of these board conversations as well. But where can they find you find more about you?

SPEAKER_01 46:31

Yeah, absolutely. Um, the the book is widely available in most yeah uh um stores. Um and I think that the best way to get in contact with me is through this organization, Boards Impact Forum. That's also where people can find information about our training program or the associated services that we deliver, or just become a member because our membership is free. So any board director can just be a member and participate uh uh in our events and join our webinars. We have things happening all the time where we are digging a bit more deeper into these uh issues. Um, but I'm an absolute sucker for just talking, discussing innovation, discussing AI and how to implement it. Or so I think LinkedIn is also a very good, and just booking booking uh coffees and and hangouts, it's it's lovely.

SPEAKER_00 47:28

Exactly. Folk can come hang out and have coffee with us in Stockholm anytime if you're in the love it. Um thank you, thank you so much. Congratulations on the book, and um thank you for bringing and sharing these insights with us. I I'm unpacking all kinds of different topics from business model innovation, ecosystems, which we didn't touch much on today. We could have done a whole separate piece on that. But I did a great top, a great another podcast in this series with someone else just on ecosystems. This board topic really piqued my interest, and I think it's absolutely critical for the the all the areas we've just spoken about, but this really kind of responsible value creation. Yeah, I think it's it's a great subtitle. Well done. Um, and thank you for sharing this with us. Lots of practical stuff, lots more practical things that you that you can do, and as always, just a great, great conversation. So thank you very much.

SPEAKER_02 48:20

Thank you for everyone.

SPEAKER_00 48:21

For everyone, thank you for listening. As always, please give us your feedback on the episode, subscribe for future um editions. There's many more coming, and go back and check out any that you may have missed as well. As I said, this season and many more cover all aspects of change, transformation, of course, now AI and all the different angles that we need to be thinking about for board level down. So thank you very much, everyone. Thank you, Fernanda. Until next time. Goodbye.

SPEAKER_02 48:48

What's up, uh oh, uh oh, uh oh, what's up, uh oh, uh oh.