Governance and Global Responsibility

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The Board and Artificial Intelligence (AI) with an Eye on
Ethics
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ACLIMA: How to Responsibly Use Generative Artificial
Intelligence (AI) to Build a Green Business

Birmingham Business School

MSc International Business

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Aclima – how to responsibly use generative AI to build
a green business

• Net zero goals are transforming the global economy, creating significant growth potential for
advanced sensor technologies.
• Aclima is pioneering an entirely new way to diagnose the health of our air and track climate-changing
pollution.
• Led by Davida Herzl, Aclima has developed and commercialized sensor technology and links it to
professional analytics software that translates scientific measurements into environmental
intelligence used by governments, companies, and communities.
• AI could allow them to operate with greater flexibility and minimal intervention from government or
regulatory bodies with the intension to promote innovation and economic growth while ensuring
operational effectiveness.
• Aclima’s board needs to make strategic decisions about how to use advanced sensor technologies to
improve efficiency and speed in gathering and analysing big data points around the world.
• Could real-time and local information help policymakers and businesses to make better and faster
environmental decisions, and help citizens to play more actives roles in the world transiting to Net
Zero?
• The case considers a use case for the responsible use of generative AI to improve organizational
effectiveness and explores strategies to catalyse the company’s focus on the responsible use of
generative AI. 2
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By the end of this case study of Aclima, you should be able to

• Analyse generative AI as a use case for

creating business value targeted toward
improving organizational effectiveness
and mitigating risks.
• Evaluate strategies a CEO may consider
to catalyse their company’s focus on
generative AI.
• Evaluate the effectiveness of the board’s
engagement in digitalization with
emphasis on generative AI and provide
recommendations to spur high-quality
engagement and debate of strategy in
the board.

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When evaluating the board’s effectiveness then ask three questions:

1. Does the board understand the

industry’s dynamics well enough?
2. Has there been enough board–
management debate before a specific
strategy is discussed?
3. Have the board and management
discussed all strategic options and
wrestled them to the ground?

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conceptualize how the board can add value to their business's digital transformation

5 questions bords should ask for how they can add value to their
companies’ digital transformation
(Huber et al., 2021b)

1. Does the board understand the implications of

digital and technology well enough to provide
valuable guidance?
2. Is the digital transformation fundamentally
changing how the business (and sector)
creates value?
3. How does the board know if the digital
transformation is working?
4. Does the board have a sufficiently expansive
view of talent?
5. Does the board have a clear view on emerging
threats?

(Sarrazin & Willmott, 2016)

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conceptualize how the board can add value to their business's digital transformation

1. Does the board understand the implications of digital and technology well
enough to provide valuable guidance?

• Developing the board’s ‘digital quotient’

isn’t about turning directors into proficient Google's AlphaGo AI narrowly beats the world's top hu
man Go player - SiliconANGLE
technologists but to understand the
implications of technology and digital
on the business and sources of
revenue.
• For instance, artificial intelligence (AI)
can enable a huge leap over standard
approaches in terms of delivery speeds,
costs, and quality – often by a factor of
10 and in one special case 100 to 0
• This allows the board to test strategy
for new markets, products, and business
models (see at much greater speeds,
and at lower costs.

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conceptualize how the board can add value to their business's digital transformation

What best practices can you recommend to a board to ‘be clear about the
implications of technology’…often ‘digital technology’

• Firstly, onboarding new directors by diving into their target hire’s actual experience in
digital transformations and rigorously review and finetune how they fit with the
company’s digital strategy.
• For example, a retailer was looking to speed up its digital enablement and brought an
executive onto the board who’d recently done exactly that for another retailer, upending an
industry in the process. Another retailer looking to better integrate the digital logistics of its
e-commerce and brick-and-mortar operations targeted someone with exactly that top-
management experience and expertise.
• Secondly, train board members in programs led by external faculty or top technologists
from the company that focus on the business implications of key technologies and
methodologies. The point of this kind of training isn’t to build up digital skills but to shift
mindsets:
For example, a board member coming out of a learning session said that only at that
moment did he realize that digital transformation wasn’t a chief information officer (CIO) or
chief technology officer (CTO) responsibility, but a CEO one.

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conceptualize how the board can add value to their business's digital transformation

2. Is the digital transformation fundamentally changing how the business

(and sector) creates value?

• One of the board’s main roles in digital

transformation (DT) is to push company
leadership on business models and value
creation and capture.
• In the context of a DT, there are three vectors
of value:

a) Scale - is the new value big enough?

b) Source - where is the value coming from?
c) Scope - are we thinking long term enough?

Source: Huber et al., 2021a; Huber et al., 2021b

‘Five Questions Boards ‘Should Be Asking About
Digital Transformation’

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conceptualize how the board can add value to their business's digital transformation

2a) Scale – is the new value big enough?

• A common problem with digital

transformations is that digital
aspirations often are not bold enough
• Often companies settle on plus 5 or
10% based on last year performance;
• As a rule of thumb, digital initiatives
should change more than 20% of
operating profit.
• Thus, conversations at board level must
include the ways digital will change the
business model

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conceptualize how the board can add value to their business's digital transformation

2b) Source - where is the value coming from?

• A problem is that too many board

conversations default on how tech can
improve efficiency and costs,
• meaningful savings, but digital can be a game
changer when it comes to generating new
sources of revenues,
• For instance, research into cloud economics
shows that as much as 75% of the $1 trillion at
stake in cloud will come from business
innovation.
• Thus, boards need to push management to
develop a granular understanding the
company’s real sources of competitive
advantage and how the transformation
leverages these advantages to deliver
significant new sources of revenue.

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conceptualize how the board can add value to their business's digital transformation

2c). Scope – are we thinking long term enough?

• A problem is that investment horizons

at many companies tend to be too
focused on the short term.
• For many companies facing short-term
pressures, this long-term focus can
be particularly challenging
(especially in capital markets) since
digital transformations cost a lot while
promising cash-flow and revenue
payoffs that won’t arrive till much later.
• By developing a clear view of long-
term value, however, the board can
press the business to make the
multiyear operating-expenditure
and capital-expenditure spend
Enduring Ideas: The three horizons of growth | McKinsey
that’s necessary to capture that
value.

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conceptualize how the board can add value to their business's digital transformation

The model categorizes growth opportunities into three horizons with

distinctive characteristics and objectives.

• Horizon 1 focuses on optimizing

core business activities to
generate cash and maintain
market position.
• Horizon 2 encourages
organizations to explore new
market segments and innovative
offerings while preparing to
scale them.
• Horizon 3 is about scouting and
nurturing future growth
opportunities that could
fundamentally alter the company's
competitive landscape.

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When evaluating the board’s effectiveness in dealing with generative AI ask
four questions:

1. How will generative AI affect our

industry and company in the short
and longer term?
2. Are we balancing value creation with
adequate risk management?
3. How should we organize for
generative AI?
4. Do we have the necessary
capabilities? Technology, talent and
organizational culture

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Learnings from today’s lecture, ‘what I take away’

• Today I learned something I did not

know before, which is…
• …but also…
• …as well as…

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