Governance Bites #66: AI in the boardroom, with Dauniika Maclean

In this episode, Mark Banicevich asks Dauniika Maclean about artificial intelligence, particularly large language models (LLMs, such as GPTs), in the boardroom. He asks about the risks of their use, and how to mitigate them. He asks about time saving. Mark also asks about board software, and how they are using AI. 
Dauniika Maclean is a professional company secretary, and a Chartered Member of the Institute of Directors, with her own business called Board Administration Services Ltd. She is company secretary for NZ Health Group, Unitec and Auckland Grammar School. She also has experience as a director. 
Visit: https://boardadministrationservices.com/
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Transcript

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Kia ora koutou, everyone. I'm Dauniika Maclean from Board Administration Services. We are a business that provides bespoke governance for boards through contract board secretaries. We're experts in minute taking. We help with shaping up board papers, creating work plans, helping to create board charters, skills matrices. Really, anything that a board might need in that administrative function. I am a company secretary, and I've been a board secretary, and I've been doing that for over 15 years now. I'm a Chartered Member at the Institute of Directors, having done my company director's course with them. I am an Affiliate Member of the Chartered Governance Institute of New Zealand, and I sit on the local board of a school here in Auckland. Today, we're going to talk about artificial intelligence [AI] and boards, and board software. We are going to dip our toes in the AI world. Hi, welcome to Governance Bites. My name is Mark Banicevich, and as you just heard, I get to spend some more time with Dauniika Maclean. Dauniika, thank you very much again for your time. Thank you for having me. A really popular topic at the moment is artificial intelligence. It's invading everything since the rise of ChatGPT, I guess a little over a year ago, it really exploded, didn't it? Yeah. So, it will be an interesting topic to get into. It's a very fast-moving topic, and I think probably a lot has changed even since I spoke to you a couple of weeks ago and said, "Let's do an interview around AI." Right. So, we'll talk about it as it is today, but you know, preface that by saying it may change. It might be out of date in two weeks. Yeah, absolutely. One of the most common forms of artificial intelligence that is most accessible is the large language models [LLMs] such as GPTs, which I looked up is "generative pre-trained transformers". ChatGPT being the most common. They offer tremendous efficiency gains. How have you used them or seen them used by boards? Yeah, well, I think before I touch on that, it's not just AI; it's the generative AI - Yes. - that we're talking about, of course, because AI has been around for a long time, - The 1950s.- but generative AI has really come into its own recently. Computers have caught up with the concept of artificial intelligence, I think has been what's happening. Yeah. I think so, and now companies all over the world are seizing it, and are integrating it into their software and platforms. So, I think, you know, you're probably using it without even knowing in a lot of areas just in your day-to-day. But I think certainly for today's conversation, we'll focus on those large language models like ChatGPT or Google Bard Yes. - is where I've really, I've used and dipped my toes the most. Right, okay. So, how have you used them, or how have you seen them used by boards? Yeah, sure. So, they're great at consuming information and pulling out key details. You can, as a director, provide them with an article that you want to read but it's 27 pages long and just give it to ChatGPT and say, "Can you please give me the highlights from this article?" and it'll produce them for you instantly. You know, taking a lot of data and saying, "Can you extrapolate these into graphs for me?" It'll do that for you. So, really good at that kind of processing of information from a director point of view. There's software that'll help to take meeting minutes and notes and look at actions that have been done in the meeting. They're really great for, probably not board meetings, but you might be doing project steering committees or internal management meetings. They can be really helpful where you don't need a formal set of minutes. They're really cool. I've certainly been using it as an administrator for doing all sorts of things. Helping to streamline things, managing my calendar, producing policies. It's incredible at. You just kind of, at a glance, - It is good, yeah. - when you're doing a work plan, getting all of the dates, and public holidays, and school holidays, at the click of your fingers, it'll just produce all that information for you. Yes. It's very good at first drafts. Yeah. I don't think I'd ever use, certainly not yet, the output from a GPT and say,"That's my final document." You want to read through and have a look at it. No, no. But very, very strong, as you say, for things like policies, other templates like that. It can produce these pretty solid templates. Absolutely. Like in a draft, you're always going to have to apply reason and make sure that it makes sense and has the correct information that you need and adapt it to your own company. But certainly for drafting, it's incredibly fast. And for summarising. One of the ways that I've been using it now is off the back of these, when I pop the video up into YouTube, it produces automatic subtitles, and the YouTube automatic subtitles aren't great. There's no punctuation. There are very few capital letters, although if there are, they're in random places. And you pop it into ChatGPT and say,"Punctuate this using New Zealand, or British English," is what I ask for, "without changing any words," and it very quickly goes through and does that. Yeah. It saves me a couple of hours per video of subtitling. Yeah, and I think we've talked about before, it's very good at adapting to different languages as well, including Te Reo [Maori language]. Yes. It can pick up phonetic- sounding words and turn them into the actual Te Reo words without any input. Which is amazing, isn't it. Like it's already trained. Yeah, and that's the beauty of the generative part of it. So, one of the key risks with GPTs is around the confidentiality of information. So, with the confidential information that you're dealing with from the boardroom, how do you manage that confidentiality risk? Yeah. So I would never give any confidential information to a ChatGPT or a Google Bard of any kind. So, if you are using it to summarise a conversation, to help you do minutes or something like that, I would always cleanse those notes before putting them in there. So, you know, redacting any, you know, - Company-specific information. Exactly. Company names. Any identifiable information, names, anything that you could use to tie back to the company, I would remove. Do you use the free version or do you have a paid version? I have a paid version. Yeah, right. Which also gives you some additional strength around confidentiality. But, you know, as you say, still worthwhile, absolutely taking some care. My trust is not quite there yet. Understandable. You know, it's when you don't completely understand, and I'm certainly no expert in terms and conditions, I just err on the side of caution. Yes, absolutely. I know, sorry to interrupt you, I know that you can get the enterprise version, which gets embedded on your desktop as a company, and it's not open. It's completely closed. Yes. I think if you have that, then you could start putting some safeguards in and start to use it with a bit more company information. Right, yes. The enterprise version,- Yeah. - that would be the key thing to consider. And read the terms and conditions and have a good, have a pass over it. Just, yeah, understand it. And not just by checking the terms and conditions into ChatGPT and asking for the key points. No. Do you see any other risks associated with the tools? Yeah, I think there's natural bias that can be introduced by the information that you're feeding it. You can't always rely on it to give an unbiased view. Certainly, the information that it provides is not always factual. So, you do need to, as we talked about, sense-check those things. You know, I think there was an early example of a lawyer that had used it to present a court case, or something along those lines, and it hadn't correctly interpreted the law. Yeah, well, I think as you say, they're a generative form of technology, and ChatGPT in particular tends to make things up. Bard, I've found, on the other hand, quite often it takes its time to think and then compose. Yeah. And I think it will quite often put its sources in, as well, which can be quite useful. Yeah, but again, you have to check those sources. Yes. I've asked for sources before, and they've provided a link, and the link goes to a 404 page. Right. You know, they take a lot of creative licence in some of their answers. Yeah. Yeah, so be very careful when you're relying on those. That is one of the other key risks that I would see in a GPT, is the risk of relying on the information, and it not being correct. Absolutely. So, if there's anything you don't know, fact-check it. Absolutely, fact-check. I think my advice would be just don't rely on it. Use it, like you said, as a first draft, as a starter for ten, and then use your own wisdom to kind of apply to what it's talking about. Yes, yes, right. How much time do you save using these tools? Oh, so much time. Well, it depends what you're doing. There are some things that are still very manual-focused that you need to do yourself. But I look at what I did when I started 15 years ago, and would be compiling board papers into a combined PDF with blank pages in between, and then printing it out, and then binding it, times 12 copies. Yes. Versus today, where you've got board software that you can just drag and drop papers in. Drop the PDFs into. It automatically creates an agenda. Yes. You know, it has an action tracker, it has a decision register. We've gone from a two-day process to an hour-long process. It's just incredible. And even things like, as you were saying before, having a 27-page paper that you want to pass on to the directors, but you don't want to give them 27 pages, - Yeah, here are the highlights. - you can get a one-page summary, and it's very, very quick to perform those sorts of things. Yes. Very fast. I save, in terms of subtitling the videos from these conversations, probably half of the time. So, it's a huge time-saving, but as you say, you've got to be careful with it. Yeah, and then you do have to factor in the time that you use checking everything as well. Are there any other artificial intelligence tools that you've used or seen used in the boardroom? Yeah, so some of the board software programmes are using AI now, within the software. BoardPro has an agenda creation tool. You can go in and say, "I want to add another agenda item," and it takes you to a library of things. That's powered by, I think, ChatGPT. There's OnBoard, which is another type of software that creates an agenda using AI based on past meetings that you've had. It doesn't clone it; it actually looks at what happened over the last XYZ term. Creates a draft agenda for you. Creates a draft agenda for you, based on what you might have done historically, - Wow. - which is really cool. Then there are the minute-taking softwares that I talked about. Microsoft Teams, Zoom, and Google Meet have all got that transcription service embedded within them now. They're going a step further, giving you those summaries. Summaries. There are softwares that do that specifically. The market-leading ones are Otter.AI and Fireflies, are the ones that I've used, which are quite good. You can plug that into an online meeting, or you can actually set it on the table with your phone to listen. And it'll create that transcript, it'll give you a summary, and it'll point out any actions that it's picked up. You can train it to understand people's voices, so it starts to know who says what. It's actually really good support for if you're doing board minutes. So it'll actually go back and reference and say, "Well, that's what they've interpreted that as." I wouldn't ever use it as the minutes. Minutes, no. But for internal meetings, it's great. Where you might not necessarily have a formal minute, but you want to be able to refer back and say, "This is what was discussed, and these were the points." Yes. Yeah. Yes. And while the verbatim record is never a good thing to have to read through, - No. - producing summaries, producing action lists, and those sorts of things are tremendously valuable. But again, don't rely on it; you want to ensure everything is there and do some fact-checking. Yeah. It's always going to get better; everything's constantly improving in this world. But they still can't interpret every word that you say as what was actually said. Yes. I don't know if you find that in your transcripts. Sometimes the, YouTube's automatic transcript is not too bad in terms of picking up words. Anytime you both talk at the same time, it'll have trouble. Sometimes, it's certainly jargon or foreign language. It's actually pretty good with the New Zealand accent, though, which is quite pleasing. In fact, with most accents that I've experienced, it's pretty good with those. Just for some reason, no punctuation. I don't understand why it's just one big long sentence. Tell us about the board software. You've mentioned a couple already. What are the market-leading tools, and broadly, what do they do? You've mentioned already, producing an agenda, and drag and drop PDFs to produce a board pack. Yes. So the main ones in New Zealand are Diligent, BoardBooks, BoardPro, Stellar Boards, and OnBoard. My favourites by far are Diligent and BoardPro. Diligent is at that enterprise corporate level, and BoardPro is at the SME, not-for-profit level. They revolutionise the board processes. It's a secure central point of information that all directors, and executives, and secretaries can use and access. It'll produce the board packs within there. Everyone can log in securely to access those, so board packs aren't being circulated - Yes. - via email and can't be, you know, intercepted and hacked. The benefit of having those action trackers within the software is that you can go in and edit as a director. You can go in and add your own edits to them, you can close them off, they automatically send out reminders. So that just takes an entire workload off the board secretary. There's those decisions registers, so every time the board approves anything or has a resolution, has out-of-cycle resolutions - Yes. - e-resolutions, those are all captured, and there's a searchable database of those decisions. You can print that out and say,"These were the decisions that were made in the year"or the month," or, "I want to find that time we did that dividend," and you can search those. Right. It's a record of all the past board meetings you've had. All the minutes. Again, those are all searchable as well. You can go into the database of the board papers - Wow. - and find the marketing report from XYZ. Where you talked about this. And I take it directors can have their own copy of a board paper and annotate it? Yeah, yeah. And draw all over it? Yeah. So their annotations and notes are confidential to them, individual to their own login. No one else can access those. Yeah. Both those softwares, they can go in and delete their notes, if they want to, at a later time. But they are accessible only to them. Yeah, brilliant. The other benefit they have is there's a full audit trail. If you're constantly updating papers in the board pack or you've made changes to minutes, everything is recorded: every version, when it was uploaded, when it was changed. Yeah, right. You can even use BoardPro to look at who has opened the board pack. Right. Have all the directors read the papers? Have all the directors read the papers prior to the meeting? Make sure you've read your papers because the board secretary knows. Yeah, right. And probably you can also see for how long they've opened the board pack as well? It doesn't tell you that. It doesn't tell you which pages they've looked at, but it'll tell you whether they've opened the email, whether they've clicked through, and whether they've opened the board pack. Right. Does it also have - we were talking earlier about some of the specific documents that must be lodged in the case of, for example, paying a dividend. Are those included in the software in some way, or are they having to be manually prepared? No. There's an opportunity for you, BoardPro and Diligent. You get some of those basic templated. Yeah. No, is the short answer. BoardPro, for example, has templates for things like agendas, and minutes, and board papers. But they become superfluous if you're using BoardPro, for example, because that has an automatic agenda within it. Yes. It has minute-taking software within it. Yes. Yeah, right. And you've already mentioned how all these tools are using artificial intelligence to produce things like action registers and draft agendas. Is there any other way that we haven't talked about, that the software are using AI? Not yet. I'm waiting for one of those companies to create some kind of minute-taking software that can listen to the meeting, summarise it, and make my job redundant. But it's yet to happen. I don't know whether it ever will, because it's so nuanced, that minute-taking process. There's a lot out there already, and none of them are meeting the brief to be able to do what board secretaries do. Right. A final question for you. Is there a particular challenge to being a director that you enjoy or that you've had to do some particular learning about, or something like that, that you could share? I think any director, and for myself, it's about learning those obligations that you have, specifically the legal ones. I think a lot of directors can come into it quite naively. They might have been shoulder-tapped or picked because of their industry experience, and they don't necessarily have that governance experience or training. And they come into it without really understanding what your duties are as a director, and the liabilities that you have, if you don't meet those duties and obligations. Where would you recommend that somebody go for a quick understanding of that? Of course, there'd be the Institute of Directors' course. There'd be courses with the Chartered Governance Institute of New Zealand. Is there some place that you would go to, say, just to give a general understanding of sections 131 to 138, the liabilities and so forth? Yeah. I would just start by actually reading the Act, and reading those director responsibility sections. Yes. I think you could probably Google it, and there'll be numerous articles out there that law firms and other companies have produced around what those are. You probably need them. I think, the one that amuses me the most is the director's obligation to use their power for proper purpose (section 133). Because you've got a title that says it has to be used for proper purpose, and then the body of the section says directors have to use their power for proper purpose. Great, thanks. Repetition. Can you explain that? Yeah. So, there's a little bit more behind it sometimes, than what's just in the Act. Yeah. I think you have to take all the sections as one, as well, to really, properly understand that. Yeah, true, they fit together. Well, Dauniika, again, thank you very much for your time. Thank you. I appreciate the conversation. It's a pleasure. I think, really only skimmed the surface of AI and how it can be used. Yeah. But, I think, just, sorry, touching on that, as a director, just understanding what AI is, and, within the company, the effect it might have, so, how you govern AI, in the business, I think is something that people should be really aware of. And it's going to affect everyone. So, if you're a director, don't put your head in the sand. You need to go out there, and you need to learn about it, you need to learn about how the company's using it, how the company's governing it, and if there are policies in place for the use of AI. That's are really good point. Do staff understand, you know - The risks and so forth. - the risks and the complexity? Are they putting confidential information into ChatGPT, for example? Exactly. What are the company's policies around the use of it? And I think in that position, blanketing, saying, "No, you can't use it", is probably a big weakness. Yeah. I know of companies that actually require their staff to use it, like, 30 times a day, to get really familiar with it, because of the opportunities that exist. Yeah. But making sure it's being used safely. You've also got tools like Microsoft's Copilot, that is now available. Some companies, in fact, the company that I work for is doing their own, the IT [information technology] team are doing a robust review of Copilot before giving us all access to it. But I'm dying to have access to Copilot. Yeah. Having policies in place, making sure that the company is using it well, considering how artificial intelligence could affect the company and its industry over the next 5 to 10 years. Very important discussions for the boardroom. Yeah. Another interesting area is ownership of the information that's produced. If you are putting a prompt in to get a policy out, did you write that policy? I think you get into that area more when you start producing images and videos. But again, it's - And songs, with Suno[.com]. Who owns it? Yes. Who wrote it? Yeah, very much. Definitely something you want your legal team to look at before you rely on any of the output. Oh, it's a huge ethical point, as well. It is. And, I don' t think there’s any precedent yet. You don't know yet. It's all so fast evolving. Well, thank you, Dauniika. You're welcome. I'll look forward to catching up again soon. Yeah. While I ponder all of the stuff we've talked about here. Yeah, it's pretty exciting. We can talk about it again in six months, and it would have completely changed. That's true, true. I'll look forward to seeing you next episode.