The TRUST framework and guardrails for AI

EPP 189 - Dominique Shelton

Intro: Welcome to the Corporate Director Podcast, where we discuss the experiences and ideas behind what's working in corporate board governance in our digital tech-fueled world. Here, you'll discover new insights from corporate leaders and governance researchers with compelling stories about corporate governance, strategy, board culture, risk management, digital transformation, and more.

Dottie Schindlinger: Hi, everybody, and welcome back to the Corporate Director Podcast, The Voice of Modern Governance. My name is Dottie Schindler, executive director of the Diligent Institute, and I'm joined once again by my two amazing co-hosts, Megan Day, strategy leader here at Diligent, and Kira Ciccarelli, who's the head of research at Diligent Institute.

Megan, Kira, how are you both doing today?

Meghan Day: Very well, Dottie. Pretty good.

Dottie Schindlinger: So hopefully everybody had a nice weekend. I know here in the northeast of the US we've just come through, uh, lots of bad air quality from the really awful, awful fires up in Ontario, and then we had major storms again. Boy, this has been, this has been a summer for the record books, hasn't it?

It's been crazy here.

Kira Ciccarelli: And by the way, don't buy the produce, I guess, for a little while.

Dottie Schindlinger: I know. The... Of... On Saturday, we had this idea of, like, going to a local salad bar, and then three seconds later went, "Maybe not the time to be eating fresh lettuce."

Kira Ciccarelli: Maybe in a couple weeks.

Dottie Schindlinger: Maybe in a couple weeks. But, um, but listen, Kira, I wanna give you the floor 'cause you flagged us on an article that you saw in today's CEO Daily about Jeremy Allaire's treatise on the agentic economy.

Do you wanna kinda talk about that a little bit?

Kira Ciccarelli: Yeah. So this absolutely caught my eye this morning when I was going through my newsletters and my inbox this morning, and essentially, Jeremy Allaire's tech company CEO, he and his team have put together a sort of treatise on the agentic economy. And basically, the point that he is making here is that as AI agents become more dominant in workflows and just in the economy and business world in general, they're going to have to start operating with sort of blockchain and things like that as opposed to traditional means of changing money back and forth, and it was really, really fascinating.

Dottie Schindlinger: Yeah, I, I have to be honest, there's lots of different versions you can read. So if you go to the website and you check out this treatise, there's the 60-second thesis, there's the tell it to me like I'm a 12-year-old version, there's the long read, there's the podcast, there's a video. I went to the tell it to me like I'm a 12-year-old version, and even that I found really challenging.

But, uh, the thing that I was really struck with, so he's talking about agents managing agents and, you know, dividing jobs into discrete tasks that they can assign to each other. And the way that it's written made me think, "So is this the end of corporations as we know it?" Part one, and part two, where in this treatise does he cover what happens to the rest of us?

Because he talks about how, you know, agentic AI can't replace hands-on work, so people who, you know, are caregivers or, you know, sanitation workers or anybody who's working with their hands, their jobs are probably safe for now 'cause robotics is still a long way away from replacing them. And all the people at the top are okay because they s- you know, you still have to have a human being taking accountability, responsibility.

But the rest of us, question mark? Did he cover it anywhere in this treatise?

Kira Ciccarelli: So I, like you, I started with the 60-second version, and then I was thinking to myself, "None of these words are making any sense to me at all." So I quickly went over to the explain it like I'm 12. And yeah, I think you're right. I mean, he makes the point in this five-minute version that's kind of covering some of the major tenets of the treatise that the huge risk here is exactly what you're saying.

If everything is handed off to agents and you only need one person overseeing a mass of agents, then it is very likely that power will become very concentrated in the hands of very few people.

Dottie Schindlinger: So that doesn't sound like a great idea to me. Um, I, you know, it's, it's really interesting. I- as I read through it, as I thought about it some more, I mean, in fairness, Jeremy Allaire, CEO of a company that is in the blockchain space, so maybe not super surprising that he's anticipating that blockchain will be part of the ecosystem that makes this all possible and happen.

But there were certain phrases that really kind of set me back, like, "This will happen and it'll seem like it was almost by accident." There was a phrase in there that, that said that, and I, I thought, you know, that is really important for us to pause on and say, that will be true if we don't do anything right now.

Um, Megan, I don't know what your take on all this is, but, uh,

Meghan Day: yeah. Yeah. What I struggle with, and this has come up in some of our other conversations, is how, how soon is this reality going to be here? And I oscillate between, "Oh my God, the end is near," to, "All right. We have some time here. This is, you know- 10, 15, 20 years out before we live in this society.

I do encourage folks, if you haven't read it, um, earlier this year in "The New Yorker," there was a great piece, uh, called "What Is Claude? Anthropic Doesn't Know Either." And it's worth reading on a couple of fronts. One, it, it, it sends you into the mind, if you will, of this agent economy and some of the things that we might grapple with in the future.

But like the, the manifesto, the treatise, it does pose a million different questions about where we're headed and how quickly we will get there.

Dottie Schindlinger: I mean, one of the things I think about, and this is probably a really good segue for us to listen to our interview, um, for today, but one of the things I think about is, you know, we're seeing, we're seeing signs that this is already starting.

And so to your question, Megan, about how soon is it before we're in this new world, well, we will get there if we don't put guardrails in place right now.

Intro: Mm-hmm.

Dottie Schindlinger: Like, if we don't, if we don't, like, have some conversations at the right leadership level to talk about how do we keep this from being an existential threat, then it will be an existential threat within a generation.

Like, like within a gener- if, if what this treatise lays out comes to pass and nothing else changes, that's the most important thing, if nothing else changes, within a generation you have absolutely no pipeline for future leadership. Within a generation, you have absolutely no one who is prepared and qualified to be those people at the top running the agent economy, right?

Truthfully, because how do we, how do we prepare people today? They come up through the ranks. They learn entry-level jobs, then they get more responsibility, then they manage some people, then they get more responsibility, and over the course of years, they accrete enough experience and, and education that they are now ready to lead teams, departments, companies.

That whole pathway, if we were to just allow the agentic economy to happen the way it's written about in the treatise, completely breaks down. And whole companies, whole types of jobs, whole sectors of the economy all become agentic with robots governing other robots. What are the people doing? I'm seeing you both nod your heads and saying absolutely nothing which is terrifying me even

Meghan Day: more.

Well, this reminds me of the, the, the other manifesto, if you will, from earlier this year, and I'm blanking on who wrote it, but we talked about it in the podcast. That's it. I mean, it's terrifying as it is exciting.

Dottie Schindlinger: So that's probably a very good segue to a glimmer of hope, which is the event that Kira and I got a chance to go to in June in Brussels.

We had an... We were invited to come and speak at the Digital Trust Summit that was organized by Dominique Shelton Leipzig. And so today we sat down with Dominique. We asked her lots of questions about the event, about why it's important, about why every director should think about trying to go next year, every CEO should think about trying to go next year.

And this treatise, I think, just adds extra fuel to that fire for me, that we, we really all-- we will all do ourselves a disservice if we don't get this right, and pretty much right now. We need to get the right guardrails in place. And the great thing about this event was it was all about guardrails and innovation.

It wasn't about how guardrails slow down innovation. It was about how guardrails speed innovation, and I think that's really cool. So why don't we give a listen to the interview, and we can come back, and maybe the two of you will have more to say.

Joining us on the Corporate Director podcast today is Dominique Shelton Leipzig, founder and CEO of Global Data Innovation. Dominique, thank you so much for joining us again on the show.

Dominique Shelton: Dottie, thank you so much for having me. It's great to be back.

Dottie Schindlinger: Well, let's just get started off here by having you introduce a bit more about yourself to our listeners than your current title 'cause you've had quite an amazing career.

So could you share a little bit about your career background?

Dominique Shelton: Yeah. So, you know, I started my company, Global Data Innovation, almost three years ago now because I could see that we were getting with AI and new technology is kind of in the same pickle we had gotten into with cyber. In other words, uh, there is new technology out there, a confusion at the board level and CEO level about what to, what to do with this new technology, how to govern it.

And then, uh, what I noticed was a tendency to over-delegate to, um, anyone else that would take this on to figure it out, and what that leaves is a huge bucket of risk. Uh, so from those days in cyber 25 years ago, I kind of vowed to myself I would never let that happen again because of course, cyber has turned into, uh, an issue that has cost our global economy about 12 and a half trillion per year, and in the past 10 years, over 60 trillion has gone in, uh, cyber-related fines and expenses and, and ransomware payments, et cetera.

And I- when I saw those trends starting to happen with AI about three years ago, I realized that we needed to do something we didn't do with cyber, which is leverage best practices, solutions, and really our study of AI failures, bringing those learnings to our leaders ahead of time so they could map solutions to avoid those problems and be successful with their technology.

Dottie Schindlinger: Well, I know that the work that you're doing is really having a big impact because I, myself and, and Kira Ciccarelli, my, my colleague, had the great privilege to join you in Brussels just a few weeks ago at the Digital Trust Summit, and I think this is the, the fourth year. Is that correct? Maybe the fourth- That's right

or the fifth year?

Dominique Shelton: The fourth. Mm-hmm.

Dottie Schindlinger: Yeah. So we were so excited to be there. Um, could you share with our audience a little bit more about the goals of the summit, kinda what led you to start this event in the first place, and what were some of the biggest themes or wake-up calls that were shared at this year's event?

Dominique Shelton: Yeah. So, uh, Dawne, I started the Digital Trust Summit in 2023, very close, about a year before I started my company, and I started it for the very same reason I started my company. I could see that our CEO and board community, uh, were a little bit, uh, deers in headlights with the new AI technology, and through no fault of their own.

The technology is moving so fast, the trends are moving so quickly, and there were so many headlines even back then. I- it was clear to me that we needed to create a space where our CEOs, boards could get together with regulators, legislators, and large language model experts, data scientists, and academia and, and pe- put our heads together about solutions, not hype.

So that, uh, mission that started in 2023 continues and remains, as you know, uh, the, Dottie, 'cause you do so much of this work at the Diligent Institute. We are literally, our, our, our CEO and board members are inundated with all kinds of signals, headlines, noise. It's very hard to make, make sense of it all and to figure out what should boards be doing right now to, uh, govern AI.

So the, the goal of this conference was really to provide, in this fourth year, clarity and a roadmap for solutions for excellent, um, exercise of fiduciary duty over AI. And I, I believe we accomplished that, so I'm, I'm very proud that you were there, and you were a big part of that, Dottie, in terms of, uh, your panel on laying out what boards in the EU and US need to know about trends in order to arrive at great governance.

Dottie Schindlinger: Well, speaking of boards in the EU and the US, we are just days away from a big milestone in the EU AI Act. I know August 2nd represents a really important day. So could you share a little bit about what directors need to know most about the EU AI Act, and what's happening on, on August 2nd that they need to be aware of?

Dominique Shelton: Yes. So for directors that are directors of companies that either do business in the EU, have vendors in the EU, or see the EU as a growth market, which is a big swath of our, uh, US companies. If you're on a d- on a board of a company like that, the EU AI Act, uh, should be on your radar screen. On August 2nd, the-- first of all, the EU AI Act is a sweeping law.

There's over 1,000 KPIs in it, uh, things that, that, that are, uh, very hefty, about o- 700 pages or so of law in there, uh, a lot going on. But what we've done at Global Data Innovation is taken that law and looked at what aspects of this law are, uh, most germane to avoid the tens of thousands of incidents that we've been studying.

As I mentioned, uh, there are so many incidents that have occurred with AI in the four years since ChatGPT hit the market. And from those learnings, we've seen that out of those thousand KPIs in the EU AI Act, there are only about five that really are moving the needle and causing about 85% of the incidents that have been documented, the tens of thousands of incidents out there.

So what we wanted to do with, uh, what we want directors and CEOs to focus on at the level that they're in, obviously, their legal counsel will make sure that they're buttoned up on all the legal compliance. But f- what a CEO and a board member needs to know, what are the things that are going to-- that deserve my attention so that I can avoid or help our management team think through how to avoid, uh, um, losses that have happened to maybe 95% of the companies deploying AI, so that we do not repeat those, uh, incidents in our company.

So we want incidents to stop where they are, not repeat themselves over and over again, uh, in companies in various ways, like what we have with cyber.

Dottie Schindlinger: So, you know, a couple things that you just touched on there are really resonating for me because I think what always happens when we have a new technology come to play, the development of that technology and the adoption of the technology almost always outstrips the governance of the technology.

And I think we're absolutely seeing that with AI, that AI is moving a lot faster than regulation is able to keep up, and really even organizational governance is keeping up. So what are some of the questions that boards should be asking management right now to really get a sense of where AI is being used across their businesses, including shadow or embedded AI?

What, what should they be asking about?

Dominique Shelton: Yeah. You know, first, every board member should, uh, be asking for management to make sure that AI is on the agenda in a specific way. To, to your point, Dottie, what AI use cases do we have going on in the business? That is a great question to get a report on. And then similarly, once that report is delivered, having the resilience or, you know, pushback to ask, what do these AI use cases that are in flight, what do they have to do with our strategy and the company in terms of revenue operations and overhead cost reductions?

What impact will this AI have on our business if it, if it is successful? So getting aligned on those preliminary questions really helps the board get a sense of, are we doing AI that's really gonna move the needle if it's, if it's successful? Or are we doing science projects in the company that even if we have home runs with it, we-we're not going to be able to demonstrate to an investor or, uh, to our stakeholders, our, our business partners and employees and customers that this is added value.

Dottie Schindlinger: So Dominique, one of the things I was eager to talk to you about is the TRUST framework that you developed, and, and TRUST, T-R-U-S-T, is an acronym that stands for triage, right data, uninterrupted monitoring, supervision, and technical documentation. And, and first of all, I just-- I love that framework so much because it's so easy to understand and get your head around.

But I wanted to ask you more specifically about the genesis of that framework and how that maps to the EU AI Act. Um, and also just where do you see companies falling short on that framework today?

Dominique Shelton: Yeah. So the genesis of the framework was really ground up. I looked at AI incidents that were occurring and then compared them with where I saw commonalities in the legal frameworks in 100 countries, six continents.

Uh, m- a lot of those frameworks are on my company's website at globaldatainish- uh, innovation.com. There's a frameworks tab, and you can see all the countries that have, uh, legal frameworks. And what I noticed is there were certain themes that, you know, kept coming up in, in all of the legislation. I also then-- we took the four years now since, uh, almost four years of data we have since ChatGPT-4 was first announced, and there are tens of thousands of incidents.

So what we did is we mapped where we saw commonality in the law with what would have prevented those tens of thousands of incidents from occurring had those best practices, uh, some of the laws aren't in, um, in effect yet, had, had those best practices been, uh, enacted, what would have prevented those losses?

And it came down to these five areas. You know, when I think of the EU AI Act, which has over 1,000 KPIs, or NIST, which many companies are mapping to, uh, just the NIST Gen AI framework alone has over 260 KPIs. That's so much for a board or a CEO or even your general counsel to focus on all at once. So I wanted to find a clean way to prioritize what is really important.

And what we learned is, is that about 85% of the incidents are caused by the lack of something in the T area, the R area, the U area, the S area, the T area that you, uh, outlined, Dottie. So that's why we focus on it, because, uh, we figure that if a board or a CEO focuses their attention on innovating to anticipate and avoid those issues, then they're gonna be on the road to success with their AI.

Dottie Schindlinger: So I love that so much. Uh, you know, of course, if you're on a board, you're gonna wanna ask what kind of framework is in place around governance of AI. But then are there, are there a couple of the letters that board members should be asking about at every meeting? I mean, are, are there specific things they should be getting reports on at every meeting?

Dominique Shelton: Yeah, I think the two most important and where we've seen the biggest losses are in the area of R, the right data to train, and that's really about, um, accuracy, making sure that, uh, there's a process for ensuring that accurate data is used for, uh, the AI. And then second, uh, in, in the right data has to do with IP rights, privacy rights, and business rights to train.

We're seeing, uh, billions of dollars going into settlements on, for copyright and other IP-related claims, and so it's an area of focus that we think boards should pay attention to. Another area for the, the board should pay attention to here is, is, and I call it like the fail-safe, is the U in TRUST, uninterrupted testing, monitoring, and auditing

Dottie Schindlinger: And I would imagine part of the reason why boards should be asking about those two areas is that, especially in terms of the uninterrupted monitoring, that, that might sound like something that is costly and so there might be pushback on it.

But what would, what would you counsel a company that tells you such a thing?

Dominique Shelton: Well, the good news is times have changed. AI is here, and uninterrupted testing, monitoring, and auditing, I've seen certain guardrails, you know, say there's, um, monitoring against a known accuracy standard that the company has for, say, if it's a genomic company for certain types of, uh, R&D for disease or if it's a retailer, uh, certain standards they have for customer service.

The good news is that with AI these, um, these standards can be coded into the AI itself without using generative AI. They can be used using deterministic or, uh, what I mean by deterministic, just hard-coded rules that don't need to shift with the internet or the waves of the whole wide internet. These are your company's standards with respect to accuracy.

So they can live in uninterrupted testing, monitoring, and auditing in a hard-coded way. Uh, they can live either in what's something called an observability model, or they can live in the AI itself, uh, as a monitoring vehicle, and we've seen that done as low as five figures, six figures. So let me put this in context.

If you're working for, uh, you're on the board of a big bank or a healthcare company, they are putting in, uh, say it's a small midcap healthcare company, uh, they're putting in

millions of dollars, uh, associated with AI development. And in some of our bigger banks, uh, anywhere between, you know, the proxies reveal in their annual reports anywhere between, you know, 15 billion, 19 billion in digital transformation and AI development. In that context, a six-figure guardrail is literally a drop in the bucket, and when I think of the CEOs just this year that have had to step down because of AI incidents and the shareholder derivative actions that are naming board members individually for failing to exercise oversight and the months that those directors will be sitting in deposition and looking through their emails and sitting with counsel, it is so worth it to take care of these issues and, and ask the question as a board member now rather than be defending, defending your governance and, and your oversight later.

Dottie Schindlinger: Such good advice. Well, one of the other aspects of AI and governance is the use of AI in board work itself, which of course, is something that we spoke about at the Digital Trust Summit. Um, Diligent Institute's been doing a lot of research in this area, and one of the things that we have found is that while directors are using AI pretty, pretty frequently to help them with board work, very few companies have AI usage policies in place that govern usage of AI specifically in the boardroom.

So if you were advising a board that you know has been experimenting a little bit with AI but still doesn't have a very mature governance framework, what would be some of the first things that you'd recommend directors do in the next, let's say, 60 to 90 days to really get ahead of the risk?

Dominique Shelton: Well, first, uh, within the first 30 days, I would highly recommend that the board get to the Diligent portal and pull down the sample, uh, template AI, uh, board policy that you've made available, Dottie, which is incredible.

But it's absolutely, uh, important for the board to have their own AI, uh, governance policy. Why? Because in the interstitial area of boards using AI and the lack of guidance on what it should be used for and should not be used for, risk stands. You know, uh, think about this. We already know of several public companies where this has happened, where they've, uh, board members have used AI, uh, commercially available AI, not enterprise licenses, and competitors have been able to derive intelligence about those boards and about the, the companies that those board members are on by virtue of the prompts, even if they don't even put in confidential information, by vir-virtue of the prompts that they use.

So this is so important, uh, for a board, uh, boards to have that guidance and to focus on making sure that there's a policy in place. Second step is training on that policy so everybody knows why it's there. Uh, Dottie, you and I have done a, a number of trainings together, and I, I... one of the things I like doing with you so much is, uh, the fact that both of us bring up a lot of stories.

I find it so much easier for a board member to, um, to, to remember the importance of why they're, uh, it's important to use an approved portal that has security controls like what you've got going on at Diligent versus the general commercial, uh, tools that are available. Uh, and they're not to-- they're, they're not necessarily confidential, and, and the providers themselves say, "Please don't put anything in here or d- use prompts that you would be concerned about being the subject of a data breach," because many of the providers have suffered data breaches.

That's the reason they tell you that in their terms. So I love to do that storytelling so our board members are, have the, not just the, the policy itself, but the why it's important and what it's there to protect

Dottie Schindlinger: Such, such good advice. Well, listen, before we wrap up our conversation here, there are three questions that we like to ask every guest that joins us on the show, and I know you've answered these before, but we're gonna ask them again.

So the first question is: what do you think will be the biggest difference between boardrooms today and 10 years from now?

Dominique Shelton: Well, I think you're going to see the boards that are around 10 years from now are going to be the ones that adopt these proactive practices that I'm talking about here. There's about to be a huge schism that lays out in the next, I would say, 12 months to 24 months between those boards that proactively lean into the technology and also, equally important, lean into the governance so that they're turning out AI products that have a level of-- that, that match the brand, that have a level of excellence, accuracy, and really reflect what's best about your brand.

There'll be the, uh, the others that are not gonna make it because they're gonna turn out products and AI-enabled, uh, material that's inaccurate, that, uh, causes brand tarnishment and harm to their customers, employees, and business partners, and they're not gonna be sitting with us, uh, 10 years from now. So I'm excited that we're gonna have a really sophisticated group of, uh, companies and, and boards that have learned how to manage this technology and many more new things.

We're just at the beginning of quantum, uh, and, and we're at the naissance of what AI will be doing and a- and agents and agentic AI and robotics. I saw so many prototypes at the UN in, in Geneva of all the new technology that's co- coming our way. But the boards that become flexible in this reflex of being continuous learners, asking questions, not deferring and, and, um, putting our heads in the sand and deleg- over-delegating to the technical folks, but jumping in with strategy and making sure that you understand, as a board member, what you're overseeing, uh, actually ask for the types of briefings that will help you understand it.

That's the-- those are the boards of tomorrow, and I'm excited about that.

Dottie Schindlinger: Well, speaking of briefings, what was the last thing that you read or watched or listened to that made you think about governance in a new light?

Dominique Shelton: There are two things. One is the Pope's Encyclical Letter, Humanitas Magnificus, which came out in June, and I just...

It's about 100 pages long. It's a long read, and when you read it, you can see some of the difference between AI writing and a, a real person's writing because it's clear, uh, that somebody, uh, uh, working with the Pope and the Pope himself spent a lot of time in putting together a, a great document that I think eventually history will show as a roadmap.

It's not really a religious document. It's about planning and thinking ahead of the society that we want with AI and how to get us from point A to point B. Uh, it talks about the dignity of work and also the importance of accuracy and truth. These are all things that, uh, are gonna be essential for our future, and I'm, I'm excited that there's a roadmap there, uh, in that document.

So I, I found that that was a very... It's synergistic with the work that we do at Global Data Innovation and also an extension of which is our Digital Trust Summit, where we act out, uh, uh, simulations and, and work on forward planning and, uh, thoughtful pre-planning around AI. The other book I came back to, uh, is, uh, Haruki Murakami's IQ84.

I highly recommend it. It's really about, um, technology, lives, science fiction. Um, it, it also has kind of a Proustian way about it. Um, it's, it another long read. That one's about 1,200 pages that I- ... uh, I read it about 10 years ago, and I came back to it, and I've been rereading it this summer, and it's, uh, just been a joy.

Dottie Schindlinger: Those are great, great suggestions. I think you get the prize for being the first guest to ever recommend a papal encyclical, so thank you for that. That's really fantastic. Um, and Dominique, before we, before we let you go, what is your current passion project?

Dominique Shelton: Yeah. You know, right now I'm really passionate about making sure that we build also the next generation of governance, uh, experts.

So I started a Career Ascend program for, uh, as, as part of Global Data Innovation. We just came off our first cohort of, uh, 11 amazing governance, uh, professionals, and really refined many of the things that we've been talking about here: how to use their voice, how to say some- see something, say something.

And if there's something that they notice at, at, uh, the ground level, to be sure to raise those things to the CEO and board so that, uh, everybody's working off the same sheet of music and we're getting to great governance, not, uh, waiting for it to be, uh, turned into something like what happened with cyber, where we kept things in silos and it, it ended up costing our global economy trillions.

So I'm excited about Career Ascend.

Dottie Schindlinger: Well, Dominique, I'm excited that I got a chance to speak with you again. Thank you so much for coming back and joining us on the show.

Dominique Shelton: Thank you for having me, Dottie. It's been an absolute pleasure, and congratulations on all the work you're doing at Diligent.

Dottie Schindlinger: We've been joined once again by Dominique Shelton Leipzig, founder and CEO of Global Data Innovation.

Dominique, thank you so much for joining us. Thank

Kira Ciccarelli: you,

Meghan Day: Dottie. And I was gonna say stop talking. Yes. This is all good. Kira, I feel like you got it

Kira Ciccarelli: Great interview, Dottie. It's always such a pleasure to get to talk to Dominique and just kind of mine her brain. And I think one thing that really stuck out to me from this interview in particular is that she comes back often to this idea of we have a chance now to get it right and to learn from previous instances where new regulations or new technologies came to pass, and maybe we weren't as prepared.

And thinking about this treatise on the agentic economy that we've been discussing, my first thought reading it was when you're talking about agents, AI agents operating within a capitalistic society where it's money changing hands, and you have agents doing that work, I just imagine every CFO, every legal leader just...

Like, I can almost hear them screaming as they read it- ... like from where I am. And I think that's just such a great example of where something like the trust framework, which Dominique talks about, could be so, so important, and the idea of knowing the art of the possible and what might be coming and be able to set up those guardrails in advance, we're at the point now where we have the chance to do that.

Dottie Schindlinger: These are times when, this is, this is totally gonna date me, but these are times when I hear Jeff Goldblum from Jurassic Park in my head saying, "You were so focused on whether or not you could, you didn't pause to ask if you should." Kind of feel like that applies. Megan, what was your, what was your big takeaway from this interview?

Meghan Day: Well, I, I will, I mean, I come back to, to what we talked a little bit about before about governance, um, not being anti-innovation, that it can, you know, if you have weak governance, it creates p- paralysis, um, and you can't scale AI enterprise-wide. Um, but she gives some really practical advice, too, for boards about how to think about this, which I think, again, when we talk about all of this sort of nebulous stuff, you really need to come back to, well, what can I do right now?

And that's about asking at every meeting whether the company has unear- uninterrupted testing, monitoring, and auditing of these AI outputs. I mean, I think that is just, again, what we need to keep coming back to.

Dottie Schindlinger: And I really loved her point that, you know, y- you, you might get an answer of, "Well, that's too expensive- Yeah

and cumbersome and we can't possibly do it," and she, she brought up the case of, you know, I've seen it happen for as little as five figures or six figures. She's like, you know, if you're making these multi-billion dollar bets, that's like, that's couch cushion money, you know, to, to invest in having something that will keep you from an absolute existential threat.

I think the other thing I always appreciate about Dominique's take on how we can get this right now, you know, she lived through... Her career spans across the entirety of the cybersecurity world, and she saw how there was a moment in the '90s when we could have gotten ahead of it- And had we put some frameworks in place at that point in time, we wouldn't have cybercrime as a $12 trillion-a-year industry right now.

And I think nobody wants a repeat of that. Like, literally no one wants something like that to happen with AI. Nobody. That's not good for anyone, except maybe the criminals. It's not good for anyone else. And it has caused nothing but headaches for companies, for consumers, for employees, for everyone, and I think that's such a good analogy, and I, I just keep holding onto that because I think that's what's in it for us, right?

You know, to your point, I don't think good governance slows down innovation. I personally think good governance i- is good governance when it fuels innovation, when it allows innovation to move on smoother rails because you have rails. Like, if you don't have rails, it can just spiral out of control, and pretty soon you end up with a company that is ending because it's done something really terrible without your intention, and, and now it's terrible, and now you have to clean it up, versus good rails allow you to go smooth and fast in a direction.

Meghan Day: And granted, I am not in a public company boardroom, uh, at the moment, but I have to think a lot of the conversations are focused on perhaps you need to be using AI more, add it to this use case, add it to that use case around the business, versus coming at it with a skeptic's lens of how does this connect to strategy?

How does this connect to operations? Uh, how is this creating value for the organization outside of maybe cutting heads? Yeah. So, um, lots to think about.

Kira Ciccarelli: I hear that all the time, and I think we see a lot of organizations move in the wrong order. Like, they start with, "We have this tool now, so where can you force fit this in?

Where can you plug this in?" Instead of starting with, what are we doing that is tedious and takes a lot of time? What would we be doing if we could free that time up? And then finding the tools that fit that.

Dottie Schindlinger: That's really profound, Kira. You're so right about that because it, you know, again, I g- I, I know I've mentioned it before, but there's that meme that I keep seeing, that cartoon where it's a group of CEOs all clamoring, "We want AI."

And there's someone asking, "To do what?" And they all go, "We don't know, but go faster." And it's just, it is really true. It's like this, this feeling of, um, we need to have tools now, now, now. But to do what? To, you know, how is that gonna magically make everything better if you don't think first about what it is you're trying to accomplish?

What's the outcome that you have in mind? I think this treatise is really interesting. You know, Kira, I'm glad you shared it with us, and we'll, we'll put a link to it on the podcast page. I think it's really interesting because it's not saying, I don't think it's saying what should happen. I think what it's saying is what is possible and what, what could happen.

And so to me, that feels like a really important wake-up call and a good topic of conversation around pretty much every board table of is this the kind of future that we wanna be architects of, or is there something that would be better for us? And us being all of us, not just a specific company or a specific management team or a specific board, but your employees, your communities, your customers, all of us.

I mean, we're, we're... Right now, for better or for worse, we have a big, giant global capitalist ecosystem. It, you know, is it perfect? No. Not even close. Do we wanna completely explode it without a clear indication of what we would replace it with? That's the right question to ask. I, I think we all have to be a little careful because it could happen to us if we're not putting guardrails in place.

Kira Ciccarelli: And to your point, Jeremy says in the treatise, "The good ending is possible, but only if we actually build it that way on purpose." Right. Share ownership, keep the important pieces open, and make sure no single player gets to own the door that everyone else has to walk through. Yeah, I mean- So we do have the opportunity now.

Dottie Schindlinger: Right. Like, like you could, you could also spin out a scenario where so much of, of what we think of as work is automated that the connection between labor and having the means to sustain yourself get broken, and so you think differently about how people sustain themselves. You could, you could have that conversation.

I don't, I don't h- hear anybody having that conversation. So I just think like this feels like a very, very slippery slope that's very steep and moving very quickly, and so definitely worth having a conversation. I, I hope more people have conversations like the one we had with Dominique. And by the way, I can't say enough good things about Dominique.

I know I probably sound like her, her PR agent, and I'm not. I promise you there's no commercial relationship. I just think she's really smart, and I think what she's doing is very laudable. And so, you know, if you haven't checked out Global Data Innovation, check them out, and if you haven't thought about doing something like the Trust Framework, think about it because I just think, you know, we, we all have a moment right now when we can do this better and protect ourselves, protect, protect each other, protect our companies, protect our shareholders, protect our employees.

Uh, but it, it won't be good if we don't do this, you know? I think things are innovating so quickly, it's gonna spiral out of control. We're gonna be right back where we are right now with cyber, right back where we are right now with social media. We've gotten this wrong a whole lot more than we've ever gotten this right.

Meghan Day: All right. Well, let's, let's get it right then.

Dottie Schindlinger: Let's do it. Come on, people. Lock arms. Yay, corporate governance. All right, on that note, that wraps up another episode of the Corporate Director Podcast, the voice of modern governance. Like to say a few special thank yous, first and foremost, to our amazing trustworthy AI expert, Dominique Shelton Leipzig, podcast producers Kira Ciccarelli, Steve Claydon, and Terry Tyree.

Our sponsors for the show, including KPMG, Wilson Sonsini, and Meridian Compensation Partners, and most especially thank you to Diligent for sponsoring the show. If you like our show, please be sure to give us a rating on your podcast player of choice. You can also listen to our episodes and see more from Diligent Institute by going to diligent.com/resources.

Thank you so much for listening.

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