E-Paper
Need for future-relevant governance
This article is authored by Shefaly M Yogendra, independent board director.
“The next trillion-dollar company will likely have five employees”. This was said at a recently concluded thought leadership forum. This would be made possible by the wider adoption of Artificial Intelligence (AI) and other technologies that can empower small, even non-collocated, teams to build new products and services with far fewer resources with AI agents assisting and enhancing workflows, and sometimes running them end to end, with or without a human in the loop.
In other words, we are in uncharted spaces where technology-enabled micro-entrepreneurship will become the engine of economic growth.
These micro-enterprises, with sizeable valuations, will require new, future-relevant governance; the structures, methods, and people currently shaping the strategic direction and holding leaders accountable for their decisions may not fit the bill.
Future-relevant governance will operate differently, allocating more time to strategic foresight and innovation, and less to compliance and box-ticking. The board will ask questions about whom these trillion-dollar companies are serving and how, what risks yet unseen may be created and will need mitigation, and what kind of investors might get on board to finance the wealth creation being promised. Indeed when “trillion-dollar” is held up as a marker of success, the language is still signalling old metrics and measures of success, better suited to current corporate forms. With its job of ensuring the long-term success of the micro-enterprise, the board must ask: How financially and socially sustainable is a micro-enterprise that replaces humans with agents and tokens?
When decisions in a company are jointly made by agents and humans, how would the conversation about accountability change? In 2022, Air Canada’s chatbot gave a passenger misleading advice. The company tried to argue that the chatbot is a"separate legal entity that is responsible for its own actions". The judge did not buy the argument. But when a technology vendor pushing the possibilities of their constantly evolving tool, a workflow of a company, and a human in the loop are all involved in every decision, how might a judge see a customer dispute in the courts of law? What happens when an agent goes rogue, as we sometimes see reported? What unforeseeable risks may be created? Governance related questions in such a context will have to change dramatically.
A decentralised organisation, whether selling services or physical goods, will need different, fail-safe guardrails to protect its core work and its operating backbone, and to build resilience into its core. Future-relevant governance will demand greater executive competence in matters of supply chain resilience and backup plans.
The term fintech is used to refer to nimble companies creating and applyinginnovative technologies to products and services in the financial industry. But they are still regulated like any other purveyor of financial products and services.When companies run by a mix of a small number of humans, with automated agentic workflows, emerge, they may solve wholly unforeseen problems in new ways. This will redefine several traditional ideas. When the boundaries between sectors are already dissolving, how will we define competition? How will we collaborate between companies without it being seen as anti-competitive? As we move away from old definitions and paradigms, governance will need to evolve to balance opportunities and risks even as the business environment itself evolves.
All this will create interesting conundrums for regulation and companies interacting with regulators. If boundaries of sectors and companies change, existing regulatory structures may not remain relevant.New regulators, regulatory framework, and regulatory practices may indeed be needed. A nation-State’s governance structure will need to be up for the job of tackling this change and uncharted territory.
Given the complexity, future-relevant governance will need a bigger range of skills, capabilities, temperaments, and personalities to do the job right. Will the board members of such a micro-enterprise out-number the employees?
For a vibrant democracy with a large young population such as India, the micro-enterprise of the future puts one topic front and centre: How do skilling and education of upcoming generations need to change? This is the first question that future-relevant governance needs to address urgently, so that the trillion-dollar micro-enterprise can be created.
(The views expressed are personal)
This article is authored by Shefaly M Yogendra, independent board director.
