Who is accountable for AI ROI?

 What is the purpose of this article?

This article enables a discussion about: AI ROI Accountability and metrics

The audience for this article includes: Investors, Boards of Directors, CEOs, and C-Suite. This article applies to all companies, ranging from pre-revenue through to long established global companies.

This article does not provide tax, legal or financial advice.  Your next steps must be based on your own research and fact-based analysis using current and relevant information.

AI did not write this article.  100% human written.

You can download a PDF of this article from: Who is accountable for AI ROI

What are the critical learnings in this article?

• Most companies produce poor financial returns.¹ It seems like companies are using the same investment management process for AI as they do for other investments.
• What are the metrics for AI benefits and costs? What are the targets and actual results?
• Who has accountability for achieving the targets?
• Does your AI strategy include ROI and accountability?

What are your AI benefits?

AI Benefits could include:

• Customer impact such as: retention, customer acquisition costs, life-time customer profitability, net promotor score, increase in the number of customers, etc.,
• Internal impact such as: employee retention, employee satisfaction, process costs, process quality etc.

 What might be AI costs?

AI costs could include:

• retraining employees,
• the people (employees and others) to develop, integrate, maintain and constantly enhance AI,
• the cybersecurity, audit, and compliance reporting,
• hardware and software costs, cloud computing costs, etc.,

 What is your ROI on your AI investment?

• What are the metrics for AI benefits? What are the targets and actual results?
• What are the metrics for AI costs? What are the targets and actual results?
• Who has accountability for achieving the targets?

How do companies manage their ROI on AI investments?

• Most companies produce poor financial returns.¹ It seems like companies are using the same investment management process for AI as they do for other investments.

 What are your next steps?

• Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
• Assess your company’s investment management process. Are the processes for metrics, targets, and actual results working? Have accountabilities for targets and results been assigned?
• Make any required changes to your company’s investment management process.
• Include AI investments as part of your company’s investment management process.
• Ensure that any AI strategy includes ROI and accountability.

Footnotes

¹ Your company will fail. Koor and Associates

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

The old VC PE model is obsolete.

 What is the purpose of this article?

This article enables a discussion regarding VC and PE models.

The audience for this article includes: VC and PE fund LPs (Limited Partners) and VC and PE fund GPs (General Partners)

This article does not provide tax, legal or financial advice.  Your next steps must be based on your own research and fact-based analysis using current and relevant information. AI did not write this article.  100% human written.

You can download a PDF of this article from: The old VC PE Model is obsolete

What are the critical learnings in this article?

• The supply of portfolio companies seeking exit is greater than the demand from IPOs, M&A and corporate buyers.
• The challenges for GPs and portfolio company leaders are to unlearn the past ad recognize that they are now leading startups.

 What is the evidence that the model is obsolete?

• Exits dropping.
• Holding periods up
• Over 32,000 unsold companies with book value of close to $4 trillion U.S.

 What appears to be happening?

• The supply of portfolio companies seeking exit is greater than the demand from IPOs, M&A and corporate buyers.

 What was the old model?

• Buy a company with debt, do rollups, increase multiple, exit

 What is the new model?

• More customers buy products and services from the portfolio company than from the competition.
• More talented employees stay or come to the portfolio company than the competition.

 What is the challenge for GPs and portfolio company leaders?

• Unlearn old skills, experience, approaches.
• Learn new skills, experience, and approaches.
• Recognize the funds and portfolio companies are now actually startups.
• Must learn and understand more about customer and employees than the competition.

 Why is this challenge extremely difficult?

• Old mental models need to be replaced.
• Old neurological connections in the brain need to be replaced.

What are your next steps?

• Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people
• Both LPs and GPs are focused on exit. They both need plans to exit and cap tables.
• LPs doing co-investments into portfolio companies must see portfolio company’s exit plan and cap table.
• LPs also need evaluation criteria and processes to assess the talent capabilities of GP. The future will be turbulent and unpredictable – what are the competitively differentiated talent that will succeed in the future?

What further reading should you do?

How profitable is Venture Capital? Koor & Associates

https://koorandassociates.org/selling-a-company-or-raising-capital/how-profitable-is-venture-capital/

How profitable is Private Equity?

https://koorandassociates.org/selling-a-company-or-raising-capital/how-profitable-is-private-equity/

Is there anyone you can trust?

• As noted in the first article below, society does not trust its leaders and institutions.
• Who do you trust?
• How do you know that people trust you?

My learnings and unlearnings:

Below are links to my website containing learnings and unlearnings since my last update in June.

This article was 100% written by me – not by AI.  When you send me an email, my response is 100% written by me.

 

Society does not trust its leaders and institutions. V7

• Criminal behaviour is common in US public companies. The majority of people believe government and business leaders purposefully try to mislead people.
• Accountants are under pressure to commit unethical behaviour and have done so.
• Most young Americans have a bleak (my words) view of the future.
• 70% of people globally are hesitant or unwilling to trust someone who is different from them.
• 68-70% of people globally, think that government leaders, business leaders, journalists, and reporters purposefully mislead people by saying things they know are false or gross exaggerations.

https://koorandassociates.org/values-morals-and-ethics/societys-trust-in-corporate-leadership-and-political-leadership-is-low/

 How profitable is private equity? V2

• Close to 50% of PE buyout funds had the same returns (or worse) returns than public market indices.
• Past PE buyout GP performance is not a predictor of future Direct Alpha performance.
• There are ways to identity what impacts the future Direct Alpha PE of GPs but I have not found fact-based analysis that these ways will results in positive Direct Alpha.
• There won’t be fact-based analysis of AI on GP Direct Alpha performance for several years.
• Scenario planning is important to identify the GP talent which can drive long-term Direct Alpha.

https://koorandassociates.org/selling-a-company-or-raising-capital/how-profitable-is-private-equity/

How profitable is venture capital? V2

• The median VC funds had returns about 3% higher than the public market indices. Picking the right VC GPs is critical to better performance than a public market index.
• Past performance is the best predictor of future performance. Past performance does not 100% guarantee future performance.
• The VC markets have undergone massive change in the past 20 years.
• The future environment for VC GPs will be different from the past, turbulent and with regular new challenges.
• There won’t be fact-based analysis of the impact AI on GP Direct Alpha performance for several years.

https://koorandassociates.org/selling-a-company-or-raising-capital/how-profitable-is-venture-capital/

What is the value of a strategic advisory board? V3

• CEOs need advisory boards to increase their cognitive abilities and address the challenges of CEO isolation.
• CEOs who can benefit from a strategic advisory board have the cognitive humility and flexibility to unlearn fundamental knowledge, experience, facts, beliefs, and decision-making processes.
• CEOs who cannot benefit from a strategic advisory board are unable to change their fundamental thinking.
• After a successful strategic advisory board meeting, the CEO leaves emotionally and intellectually exhausted. Fundamental learning/unlearning is similar to physical training – improvement is painful and exhausting because muscles are being created.
• Valuable strategic advisors can challenge the CEO’s fundamental assumptions by asking paradigm shifting questions.

https://koorandassociates.org/corporate-governance/what-is-the-value-of-an-advisory-board-v2/

Your company will fail. V4

• 40% of CEOs believe their company will not be viable in ten years if it continues on its current path. 80% of companies are not prepared to quickly address disruptions.
• Few large companies have provided good shareholder returns and had sustained value creation.
• Most companies do not recover from crisis.
• Most major changes fail or create limited value.
• Most large-scale tech programs fail.

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

What is my personal update regarding the past 3 months?

• Mentoring at The Hatchery, Department of Engineering, University of Toronto.
• Continued as a member of the Angel Capital Association in the US and the Institute of Corporate Directors in Canada.
• Continued to share with you, and on my website, some of what I’ve learned and unlearned. I hope that you can also unlearn and learn to succeed in an unpredictable future which is very different from the past.
• Continued as Board Director at a private company.
• Continuing my long-term fundraising for the Geoff Carr Fellowship at Lupus Ontario. Over the past 20 years family, friends, neighbours, and colleagues have contributed over 284,000.

 To support the Geoff Carr Fellowship at Lupus Ontario

Link to my Geoff Carr Fellowship fundraising page

What is the value of a strategic advisory board? V3

 What is the purpose of this article?

This article enables a discussion regarding the value of strategic advisory boards for CEOs. The audience for this article is focused on the CEOs of a for-profit businesses.

This article does not provide tax, legal or financial advice.  Your next steps must be based on your own research and fact-based analysis using current and relevant information.

AI did not write this article.  100% human written.

You can download a PDF of this article from: What is the value of a strategic advisory board. V3

What are the critical learnings in this article:

• CEOs need advisory boards to increase their cognitive abilities and address the challenges of CEO isolation.
• CEOs who can benefit from a strategic advisory board have the cognitive humility and flexibility to unlearn fundamental knowledge, experience, facts, beliefs, and decision-making processes.
• CEOs who cannot benefit from a strategic advisory board are unable to change their fundamental thinking.
• After a successful strategic advisory board meeting, the CEO leaves emotionally and intellectually exhausted. Fundamental learning/unlearning is similar to physical training – improvement is painful and exhausting because muscles are being created.
• Valuable strategic advisors can challenge the CEO’s fundamental assumptions by asking paradigm shifting questions.

Why do CEOs need advisory boards?

CEOs need advisory boards to increase their cognitive abilities and address the challenges of CEO isolation.

• The CEO can discuss their issues and concerns a psychologically safe space. Advisory boards may disagree with the CEO, in a safe space.
• The CEO can increase their cognitive capabilities by drawing upon the current, relevant, knowledge and experience of the advisors.
• The CEO can improve the quality of their recommendations and decisions resulting from advisors challenging the CEO’s thinking.

 What are the different kinds of advisory boards?

There are many kinds of traditional advisory boards plus the rare strategic advisory board.

Traditional advisory boards have domain experts with current, relevant knowledge e.g.

• External warning board. Making the CEO aware of changes occurring in the world.
• Introductory board – doing introductions for the CEO to potential customers, suppliers, employees, and investors.
• Expert board – a group of experts providing answers to the questions posed by the CEO

A strategic advisory board helps the CEO change how they think, learn, and unlearn.  A strategic advisory board is not a replacement for experts with current relevant knowledge.

There are some cases of a CEO creating an advisory board comprised totally of AI personas or having at least one member of the advisory board being an AI persona.

 How are CEO advisory boards different from consultants?

Consultants provide fact-based analysis while advisory boards provide judgement.

• Consultants may do fact-based analysis and provide recommendations to the CEO.
• Consultants may implement solutions.
• Advisory boards do not do fact-based analysis nor do they implement solutions.

 What is the value of a strategic advisory board?

Strategic advisory boards help the CEO think differently by learning new mental models and unlearning old models.

• The old mental models were a success in the old world. The world has changed. New models are critical.
• CEOs cannot learn new models by being told what the new models are. The CEOs need to develop new models, and unlearn old models, with the help of the strategic advisory board.
• Fundamental learning and unlearning can only happen with neurological changes to the CEOs brain – changes to neurons and the interconnections among neurons.

What are the characteristics of a CEO who can benefit from a strategic advisory board?

CEOs who can benefit from a strategic advisory board have the cognitive humility and flexibility to unlearn fundamental knowledge, experience, facts, beliefs, and decision-making processes.

• They need cognitive humility – able to admit, in the safe environment of the advisory board, that their knowledge and experience are limited and fallible. They can accept that their deepest beliefs may be wrong.
• They have cognitive flexibility, able to unlearn what made them successful in the past.
• They are comfortable saying “I don’t know”. person
• They don’t view their perception of their self-worth to being the smartest in the room.
• They don’t try to strongly defend past decisions. They don’t punish themselves for being wrong.

What are the characteristics of a CEO who cannot benefit from a strategic advisory board.

CEOs who cannot benefit from a strategic advisory board are unable to change their fundamental thinking.

• They view any contradiction to their beliefs as a personal threat rather than a learning opportunity.
• They confuse company performance with personal self-worth.
• They cannot alter plans when presented with new facts – they do not accept new facts, as facts.
• They have severe cognitive rigidity.

 What does success and failure of the strategic advisory board look like after 12 months?

Success may look like:

• At least one major flawed initiative was stopped due to new insights.
• Significant changes made to the strategic plan before the strategy is presented to the fiduciary board.
• At least one major implementation ran more smoothly.
• The CEO left advisory board meetings emotionally and intellectually exhausted. Fundamental learning/unlearning is like physical training – improvement is painful and exhausting because muscles are being created.

Failure may look like:

• The CEO made minor changes to major initiatives and decisions.
• The advisory board was focused on deep details of minor issues
• The CEO left each advisory board meeting “feeling good”. The meeting was pleasant with no difficult action or outcomes for you. This meant that little learning/unlearning occurred. Just as if the CEO left a private training session, not tired in the slightest, heart rate never changed, etc.,

 Who should be on the CEO’s strategic advisory board?

Your advisory board has an extremely diverse background. Potential members could include those who;

• Have excellent listening skills.
• Can challenge the CEO’s fundamental assumptions by asking paradigm shifting questions.
• Can be patient during the CEO’s neurological restructuring process. The advisor understands the biological implications of cognitive unlearning
• Can leave their egos behind – and not try to prove how smart the advisor is.

Who should not be on the CEO’s strategic advisory board?

Do not have people on the CEO’s strategic advisory board who want to give advice rather than help the CEO learn and unlearn. Don’t have people such as:

• Retired executives who have out-of-date functional and industry knowledge.
• Having a dominating, narcissistic personality.
• Avoiding conflict. Fundamental learning and unlearning requires intense uncomfortable debates.
• Friends and allies who lack the courage to not support the CEOs points of view.
• Professional services providers who may have biases to sell you major projects or be concerned about the financial implications if they upset you.

How can the CEO deal with the conflicting advice they’ll get from their strategic advisory board?

The onus is on the CEO to make decisions and not just ask for 100% consensus from the advisors. Some of the ways for the CEO to deal with conflicting advice are:

• Being able to describe conflicting options in their own words.
• Seeking out the best components alternatives.
• Resisting the biological pressure to reject conflicting data.
• Describing how they will make a decision and how/why the board and C-Suite will support the decision.
• Taking notes.
• Sleeping on the discussion and making critical decisions the next day.

What are your next steps?

• Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
• Have the functional and industry expert been able to successfully address the CEO’s issues?
• If the CEO still has issues, does the CEO still need to address those issues?
• Determine which type(s) of advisory board are needed.
• If considering a strategic advisory board, assess the phycological and cognitive capabilities of the CEO.

 What further reading should you do?

• Norman Doidge, “The brain that changes itself”, Random Penguin Books, 2007
• Jacqueline Brassey, Aaron de Smet, Michiel Kruyt, “How to learn and unlearn in a volatile world”, Harper Collins, 2022
• Is the human expert panel concept obsolete? Koor & Associates

https://koorandassociates.org/creating-business-value/is-the-human-expert-panel-concept-obsolete/

• What is learning? Koor & Associates

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/

Does your company have current knowledge and facts?

 What is the purpose of this article?

• This article enables a discussion about the value and creation of knowledge, facts, and data.
• The audience for this article includes: investors, board oof directors, and C-Suite
• This article applies to all companies, ranging from pre-revenue through to long established global companies.
• This article does not provide tax, legal or financial advice.
• You must do your own research and fact-based analysis using current and relevant information.
• AI did not write this article. 100% human written.

You can download a PDF of this article from:Does you company have current knowledge and facts

How is this article structured?

• Decisions and actions are based on knowledge. Knowledge is derived from facts. Facts are derived from data.

What are the critical learnings in this article?

• Your company’s survival and success depends on having better knowledge than your competitors and better ability to learn.
• Knowledge explains why things happened. Your decisions and actions are based on knowledge.
• Facts describe behaviour at a point in time and are validated. Facts are what people believe to be the truth.
• In today’s turbulent, fast changing, and unpredictable world knowledge, facts and data often become obsolete quickly.

What is knowledge?

Knowledge explains why things happened. Your decisions and actions are based on knowledge. For example:

• The facts could be that sales dropped last quarter. Knowledge is knowing why customers decided to buy from your competition rather than from your company.

What are the two types of knowledge?

• Explicit knowledge is what resides in documents and electronic files.
• Tacit knowledge is extremely difficult to document e.g. how to calm an angry customer, how to reorganize talent to cope with an unexpected crisis. Tacit knowledge resides in peoples’ brains.

 Why is current knowledge critical to your company’s survival and success?

Your company’s survival and success depend on having better and more current knowledge than your competitors in key areas.

• Some of the key areas include: Why customers make buying decisions. Why your solution more is more profitable than the competition. Why star employees decide to join your company or leave your company.
• You must have current knowledge. Why? For example, knowing how customers made buying decisions 10 years ago is not helpful in today’s world.
• Why customers make buying decisions may change within days. E.g. fashion
• The average half life of professional skills and technical knowledge is below 5 years.¹

What are facts?

Facts describe behaviour at a point in time and are validated. Facts are what people believe to be the truth.

• Facts are truthful at a specific point in time in a specific situation.
• Facts describe behaviour at a point in time e.g. 80% of revenue comes from 20% of customers.
• Facts by themselves are not the rationale for making decisions about actions to take.

Everyone needs to have a common understanding and agreement on what the facts are.

 How does your company create knowledge from facts?

• Analytical techniques and software, including AI, help identify potential knowledge from facts.
• The creation of knowledge in the brains of your board directors, C-Suite, and employees requires physical changes in their brains.

Do facts need to be validated?

Facts without validation are not facts. Assumptions, opinions, hopes, etc. are not facts. Some types of validation may include:

• Separating correlation from causation e.g. smoking and lung cancer are correlated. But it’s false to conclude that lung cancer causes smoking.
• Getting different data e.g. the statement that the new software is great success because there were 100,000 downloads in a month is not fact when the different data shows that 99% of people uninstalled after a week, and that after a month only 10 people were cash paying subscribers.

Facts need to be constantly validated in today fast changing, unpredictable world.

How does your company create facts from data?

• You must have a common definition of facts and data. Create a glossary for defining facts and data.
• Create data from variety of sources.
• Analytical techniques and software, including AI, help identify potential knowledge from facts.
• The final step is people in your company agreeing on what are the facts.

Why are current facts critical to your company’s success?

Facts are constantly changing in todays turbulent and unpredictable world.

• There is the risk that your company continues to believe out of date or unvalidated facts as the truth.
• Your decisions and actions are then based on out-of-date or unproven knowledge.

What is data?

• Data is a huge pool of unprocessed – unvalidated and without business meaning.
• Examples include: 1,000s of customer invoices and payments, sensor readings in a factory, raw survey responses, social media posts, logs of customer phone calls and emails, etc.

Why is current data critical to your company’s success?

New and changed data often appear in todays turbulent and unpredictable world.

• Current and relevant facts must be based on current and relevant data.
• Current relevant knowledge must be based on current and relevant facts.
• Your company decisions must be based on current and relevant knowledge.

What are the challenges in your people learning to create new knowledge?

It is mentally difficult and psychologically stressful to make the biological changes in your brain required for learning and creating new knowledge and new facts.

• You will very naturally, and often unknowingly, utilize a broad range of cognitive and psychological bias to resist unlearning, and to resist new knowledge which is different from the past.
• You will unconsciously favour decision making and planning processes from the past and which are no longer useful today.
• Your information technology systems continue to support the old way of doing thing.

What are your next steps?

• Define the words/concepts you are using, in a glossary. I have seen major confusion when the same words mean different things to different people.
• Identify the key areas where your company must have competitively differentiated knowledge.
• Identify the links between your company’s performance and your company’s knowledge.
• Assess your company’s knowledge and facts.
• Assess your company’s planning and decision-making links to knowledge.
• Identify your company’s process for creating fact from data.
• Assess your company’s leadership capabilities to quickly learn and unlearn. Start with the Board of Directors, CEO and C-Suite.

Footnotes:

¹ Boston Consulting Group “Reskilling for a rapidly changing world.https://www.bcg.com/publications/2023/reskilling-workforce-for-future

 

What further reading should you do?

• What is learning? Koor and Associates

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/

• Are you solving the right problem? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/are-you-solving-the-right-problem/

• Is you company planning to fail? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

Are you solving the right problem?

 What is the purpose of this article?

• This article enables a discussion about whether you’re solving the right problem with the greatest impact on your business.
• The audience for this article includes: investors, the board of directors, CEOs, and C-Suite.
• This article applies to all companies, ranging from pre-revenue through to long established global companies.
• This article does not provide tax, legal or financial advice.
• You must do your own research and fact-based analysis using current and relevant information.
• AI did not write this article. 100% human written.

You can download a PDF of this article from: Are you solving the right problem

What are the critical learnings in this article?

• A problem is a symptom (something observable) which has a negative impact on your company.
• You need a solution which addresses the cause of the symptoms.
• A cause explains why the symptom is occurring e.g. a fire in the building is causing smoke to pour out the windows.
• A root cause is a cause, which if addressed by a solution, means the problem will never occur again.
• The fundamental root cause is always people.

What is the structure of this article?

Symptoms > Problems > Causes > Root Cause > Fundamental Root Cause

What is a problem?

• A problem is a symptom (something observable) which has a negative impact on your company.
• A symptom occurs when what is observed in not what is expected. The observation may be by a human, sensor, or AI making an observation based on complex analysis of data. Some examples of a symptom are: smoke coming out of building windows. The observation may be measurable e.g. last quarter sales 20% below target.
• A decision is made whether or not the symptom is a problem. It is not a problem for me if the morning temperature is 2 degrees lower than I expected. It may be a problem for your company if last quarter’s sales were 20% below target.

How do you decide if a symptom is a problem you may need to correct?

• You have criteria to define if a symptom is a problem.
• These criteria may include the impact on your company, employees, your shareholders, and society.
• The impact may be in the next month, or 10 years from now.

Your company will have lots of problems. You won’t solve all of them, because many will have little impact.

Do you need a solution to the problem?

• You need a solution which addresses the cause of the symptoms.
• You do not need a solution to the problem.

What is the cause of a problem?

• A cause explains why the symptom is occurring e.g. a fire in the building is causing smoke to pour out the windows.
• A cause can only be determined after investigation i.e. is the smoke due to an electrical fire, a broken natural gas line burning, a smoke bomb, a blocked fire place, etc.

There can be a hierarchy of causes and solutions.

• There can be a hierarchy of causes e.g. the fire was from a broken natural gas pipeline, the break occurred due to failures in installing the pipeline, etc.

What is a root cause?

• A root cause is a cause, which if addressed by a solution, means the problem will never occur again. E.g. checking the natural gas pipeline for other defects to make sure there won’t be future natural gas fires. Turning of the natural gas pipeline may correct the immediate symptom but does not prevent future natural gas fires.

What is always the fundamental root cause?

• The fundamental root cause is always people. E.g. who were the people who approved the process for selecting design engineers and installations firms for a poorly designed and poorly installed natural gas pipeline.

Are your focused on the right symptoms?

Have you identified symptoms which could cause major problems for your company in the next 3-5-10+ years?

• It’s easy to focus on short-term symptoms showing that your company is currently in trouble.
• It’s hard to identify symptoms and address causes to prevent your company from getting into trouble in the future.

What will be your challenges?

• Measuring the symptoms and determining their impact.
• It is easy to focus on symptoms and causes rather than root cause. It is difficult to overcome the cognitive and psychological barriers.
• Understanding the cause-and-effect relationship between symptoms, causes and root causes.
• In today’s inter-related systems world, there may be a large number of inter-related symptoms and root causes. One symptom may have multiple partial root causes, and a single root cause may impact multiple symptoms.
• The fundamental root cause of people talent is often impossible to address, especially when changes are needed to the board of directors, CEO, or C-Suite.

 What are your next steps?

• Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
• Create your own framework for analyzing symptoms and documenting problems, causes, and root causes.
• Identify symptoms indicating current problems
• Define symptoms which would identify future problems
• Always include the fundamental root cause of people.
• Define the decision-making criteria, especially the criteria for launching project(s) to address a symptom.

What further reading should you do?

Is your company planning to fail? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

What is learning? Koor and Associates

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/

Is the human expert panel concept obsolete?

 What is the purpose of this article?

• This article enables a discussion regarding the future value and structure of expert panels.
• This article applies to all companies, ranging from pre-revenue through to long established global companies.
• This article does not provide tax, legal or financial advice.
• You must do your own research and fact-based analysis using current and relevant information.

AI did not write this article.  100% human written.

You can download a PDF  of this article from: Is the human expert panel obsolete

What are the critical learnings in this article?

• The traditional expert panel answers questions from a facilitator by sharing anecdotes from the past and opinions about what should be done today.
• The primary challenge of the traditional expert panel is that their historical experiences don’t reflect current reality or future scenarios in today’s turbulent world.
• The AI expert panel may consist of several AIs with deep current relevant knowledge and deep analytical frameworks.
• A human panel can focus on outlining the human implications of past experience in future scenarios.
• You can create your own AI expert panel to have a discussion about your own questions.
• You have to design the expert panel: all human, all AI, or a combination of human and AI.

What has been the traditional expert panel?

• The traditional expert panel answers questions from a facilitator by sharing anecdotes from the past and opinions about what should be done today.
• These experts have a long and deep history of knowledge and experience.
• A facilitator asks the panel a series of questions.
• The audience attends to learn. The audience may come from a wide range of private, public, and government organizations.

Who is in the audience?

• The audience has a wide variety of people e.g.
• Different industries
• Different types of organizations
• Different types of short and long-term issues

What are some of the challenges with traditional expert panels?

The primary challenge of the traditional expert panel is that their historical experiences don’t reflect current reality or future scenarios in today’s turbulent world.

• We live in a fast-changing world in which the future is unpredictable.
• Customer needs, competition, employee expectations, investors expectations change.
• There are multiple, unforeseen crisis at the same time.

 What has started to replace the human panel of experts?

The AI expert panel may consist of several AIs with deep current relevant knowledge and deep analytical frameworks.

Let’s look at an example:

• The panel has three AI created consulting partners: McKinsey, Bain, BCG.
• The AI facilitator asks the panel a question about a business issue. The facilitator will also provide some context.
• Each AI partner then shares some relevant global fact-based analysis from the past 18 months. This is followed by a specific point of view.
• The partners then get into a discussion where they challenge each others’ points of view.
• At the end of the discussion regarding each question, the AI facilitator summarizes the discussion.

What can a human panel do that an AI panel cannot?

A human panel can focus on outlining the human implications of past experience in future scenarios.

When looking at past experience, especially failures the audience should not repeat, the panel can outline:

• The process for making decisions and gaining commitment to action.
• Why people supported or didn’t support changes.
• The human interrelationships and politics of failure.
• The metrics being tracked before decisions were made and ever afterwards.
• The role of value, morals, and ethics.

What are the implications for you as an individual?

• You can create your own AI expert panel to have a discussion about your own questions.
• You can provide the AI experts with public information about your company.
• You might be able to provide confidential information to the AI experts if you run a Large Language Model locally on your computer.

What are your next steps?

• Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
• Describe your audience and their learning objectives for attending? What are the issues and challenges requiring insights from the expert panel?
• Determine the type of panel you need e.g. all human, all AI, or a combination of human and AI.

What further reading should you do?

Is your company planning to fail?

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

What is learning?

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/

Does everyone agree on what strategic planning is?

 What is the purpose of this article?

• This article enables a discussion about your company’s strategic plan and strategic planning process.
• The audience for this article includes: boards of directors, CEOs, the C-Suite, individual investors, and institutional investors. The article applies to all companies, regardless of size.
• This article does not provide tax, legal or financial advice. You must do your own research and fact-based analysis using current and relevant information.

What are the critical learnings in this article?

• There is no broad agreement regarding the definitions of: strategy, strategic plan, strategic planning process
• There is no broad agreement regarding the components and metrics of a strategic plan.
• There is no broad agreement regarding a strategic planning process.

 How do you read this article?

• This article is a collection of quotes defining strategy, strategic plan, and the strategic planning process.
• The quotes are from publicly available articles from the some of the world’s leading strategy consulting firms and business schools.1
• I have not read every single strategy article published by these organizations. I have not included every single strategy quote.

You can download  PDF of this article from: Does everyone agree on what strategic planning is

Are there common definitions of: strategy, strategic plan, and strategic planning process?

There are no common definitions.

A few of the many definitions of strategy are:

• “profitably differentiate a company from it’s competitors”
• “an integrated set of actions designed to create a sustainable advantage over competitors”
• “the ability to foresee the future consequences of present initiatives”
• “a strategy expresses the logic of success for the organisation”
• “explaining what enables firms to enjoy sustainable performance advantages over their competitors”

A few of the many definitions of a strategic plan are:

• “allocate resources to critical capabilities”
• “a road map of how to get to the desired destination”
• “output of the planning process”, “set of plans”, “which describe objectives and alternative strategies”

A few of the many definitions of a strategic planning process are:

• “a comprehensive process for determining what a business should become and how it can best achieve that goal”
• “the ongoing organizational process of using available knowledge to document a business’s intended direction”
• a process to “accomplish the enterprise’s desired outcomes”, “plan for action with clear and measurable goals linked to these outcomes”
• “anchors a company’s vision, aligns resources, and drives impactful decisions”
• “explicit written process for determining the firm’s long-range objectives, the generation of alternate strategies….and a systemic procedure for monitoring results”.

Is there a broad agreement on the components and metrics of a strategic plan?

There is no broad agreement on the components and metrics of a strategic plan. A few of the many examples of possible strategic plan components metrics are:

• “the size of the profit pool available in each market”, the pool’s potential growth”, “the company’s likely portion of that pool”
• “demonstrates how any changes in end markets, competitors, prices, and other external variables will affect a company’s profits, cash flow, and valuation if no action is taken”
• “market growth, segment size, customer needs, competitor strengths and weaknesses, and technological trajectories”
• “operations costs”, unit costs, total volume costs, and lifetime costs.
• “concise sentence describing the reason the organization exists”
• “what success looks like for the organization over a three-year horizon”, “two external tangible outcomes and one internal improvement in capability”
• “return on investment of stockholders”, “stability, good wages, and good benefits for employees”
• “90-day priorities for everyone in your organization”
• “Measures that allow them to understand whether their companies are outgrowing the market and taking share from competitors”
• Explicit stakeholder objectives “listing of all groups that contribute to the organization”, “creditors, stockholders, retailers, and the local community”

Is there broad agreement on the strategic planning process?

There is no broad agreement on the strategic planning process. A few of the many examples of what comprises a strategic planning process are:

• First step: “describe the organization’s mission, vision, and fundamental values”, “understand the current and future priorities of targets customer segments”
• First step: Align on the strategic challenge”, “embedding strategy into plans and budget”
• Answer the question: “is uncertainty properly defined and accounted for?”
• First step: “Systematically scan the environment for opportunities and risks”
• Answer the questions: “How are the priorities and options of leading-edge customers changing?”, “Where are today’s profit pools, and how are they likely to evolve or be disrupted?”
• First step: “Define your purpose” to create customer and employee value.
• Answer the question: “What would it take to be the Google, the Apple, or the Walmart of this market?”
• “Quantify various types of threats” using “AI and machine learning tools”
• Answer the question: “Where can we continue to improve and create value for our customers?”
• “Define stakeholder expectations and establish compelling objectives for the business”

How many strategies does your company need?

The articles from the 9 organizations identified more than 19 different strategies your company might have. ²

I am unclear from the 9 organizations about:

• How many strategies does your company need?
• Who makes the decision about whether or not a strategy is required? What will be the value of each additional strategy?
• Who makes the decision regarding your company’s overall planning and management process, which includes your various strategies?
• How does your company coordinate the various strategies: e.g. assumptions, facts, decisions about resource allocations, decisions about timing etc.
• Who approves the process for each strategy? Process includes: the questions to answer, the people involved, technology used, the types of analysis done, etc.,
• Who is accountable for documenting each strategy process?
• Does each strategic plan document start with a slide that says “Asking for the approval of….”. Do the minutes of the meeting document exactly what was approved?

What are your next steps?

• Define the words/concepts/data you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
• Collect the facts regarding your current strategic planning situation, by using answering questions 2) to 6) from the above section “How many strategies does your company need?”
• Benchmark your company’s historical results with your direct competitors and the broader market.
• What are implications of the above?

Footnotes:

¹ Bain, BCG, McKinsey, Harvard, INSEAD, MIT, Stanford, University of California – Berkley, and Wharton

² I’ve listed here only 19 of the many strategies from the 9 different organizations: AI strategy, AI agent strategy, AI prompting strategy, brand strategy, corporate strategy, corporate finance strategy, crisis management strategy, customer insights strategy, data strategy, go-to-market strategy, innovation and entrepreneurial strategy, international and emerging markets strategy, investor relations strategy, M&A strategy, operating model strategy, operations and supply chain strategy, portfolio strategy, pricing strategy, transformation and change strategy,

What further reading should you do?

Your company will fail. Koor and Associates

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

Is your company planning to fail? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

Traditional strategic planning dooms your company to failure. V2

 What is the purpose of this article?

• This article enables a discussion about your company’s approach to strategic planning.
• The audience for this article includes: boards of directors, CEOs, the C-Suite, and investors. The article applies to all companies, regardless of size.
• This article does not provide tax, legal or financial advice.
• You must do your own research and fact-based analysis using current and relevant information.

You can download a PDF of this article from: Traditional strategic planning dooms your company to failure. V2

What are the critical learnings in this article?

• TSP (Traditional Strategic Planning) evolved in a slow changing world. The future could be forecast, and decision (and decision-making processes) were expected to be valid for several years.
• The result of TSP was that few companies survived and most delivered poor financial results.
• Today’s world is totally different: future is impossible to forecast, multiple sets of fast changes, multiple unpredictable crisis.
• Strategic planning must be rethought to determine which decisions and decision making processes have a lifetime longer than a year.

 When did strategic planning become popular?

Traditional strategic planning became popular in public companies in the late 1970s.  Many of the strategic planning concepts and methodologies are many years, or decades, old.  What were some of the characteristics of the old world?

• Slow changing.
• Infrequent crisis.
• Forecasting the future 3 years out was often possible.
• Capital was very hard to get.
• Talent appears to be easy to get.

What did many strategic plans look like?

• The format was executive summary, vision, mission, values, goals, objectives, multi year strategic initiatives, KPIs (Key Performance Indicators,) past and future financials, and assumptions and strategic initiatives.
• Supporting analysis include SWOT (Strengths, weaknesses, opportunities, threats)

What were the results of traditional strategic planning?

Few companies survive

Most public companies will not survive. ³

• A Fortune 500 company will survive an average of 16 years.
• The typical half-life of a North American public company is 10 years.
• Global public companies with $250 million+ market cap have a typical half-life of 10 years.
• 50% of all U.S. companies survive for 5 years.

 Few companies generate significant value.

McKinsey analyzed the world’s 2,393 largest corporations from 2010 to 2014. The top 20% generated 158% of the total economic profit (i.e. profit after cost of capital) created by those corporations.  This was an average economic profit of $1,426 million per year. The middle 60% generated little economic profit, an average of $47 million per year. The bottom 20% all generated negative economic profit, with an average loss of $670 million per year.⁴

Most public companies have performed poorly⁵

• 6% of all public companies have had negative returns over their entire life.
• The median annual return for public companies (in existence for a least 1 year) has been -0.74%
• 10% of the above public companies in had annual returns of at least 22%
• 10% of the above public companies had annual returns of -58.24%, or less

But the world in 2026 is totally different.

• The future is impossible to predict
• There are multiple sets of crisis and turmoil at the same time and appearing unpredictably
• Technology, customer needs, and competition changes in months.
• Capital is now unlimited.
• Talent is very scarce and very expensive. Elite employee (non-C-Suite) can reach into the millions or 10s of millions per year.
• Two recent McKinsey articles outline: Monthly board and management meetings to discuss strategy; and weekly review of strategic KPIs by CEO and C-Suite, with intent to make any required corrections.

It is time to fundamentally rethink and recreate strategic planning.

• What decisions can last for more than a year?
• What decisions may be obsolete within a year?
• What new decisions may your company need to make next month?

Your next steps.

#1 Define the words/concepts you’re using, in a glossary.  I’ve seen major confusion when the same words mean different things to different people. Critical definitions include: strategy, strategic plan, decision (i.e. what is a decision and the implications of a decision)

#2 Describe your potential external business environment over the next 3-5 years e.g. geopolitical changes, technological, capital and talent availability? Describe your external environment in 2020.

#3 What will your company look like in order to survive and prosper?

#4 What decisions will not need to be rethought over the next three years. Document your current decisions and decision-making processes. Some possible decisions are:

• The processes to select, assess, develop, and exit talent at all levels of the company, including board of directors, CEO, C-Suite. This might include the role of values, morals, and ethics.
• Talent allocation
• Capital allocation
• Decision making principles.
• Board of directors approved policies.
• Processes to launch and shut down projects lasting more than 6 months.
• Risk appetite

#5 What decisions will need to be rethought during the next 3 years.  Document your current decisions. These could include:

• Talent allocation
• Capital allocation
• Exiting certain customer segments.
• Shutting down certain solutions.

 Footnotes

¹ Renée Dye and Oliver Sibony, “How to improve strategic planning”, McKinsey Quarterly, August 2007, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-to-improve-strategic-planning

² Martin Reeves, Julien Legrand, and Jack Fuller November 14, 2018 BCG website, https://www.bcg.com/en-ca/publications/2018/your-strategy-process-needs-a-strategy.aspx

³ “Corporate Longevity”, Credit Suisse, February 7, 2017

⁴ Chris Bradley, Martin Hirt, and Sven Smit, “Strategy to beat the odds”, McKinsey Quarterly February 2018, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/strategy-to-beat-the-odds

⁵ Hendrik Bessembinder, W.P. Caret School of Business, Arizona State University

Analysis of CRSP database of U.S. public companies, Dec 2025 to Dec 2023

https://www.scribd.com/document/924363269/2024-Which-U-S-Stocks-Generated-the-Highest-Long-Term-Returns-Hendrik-Bessembinder

What further reading should you do?

Does everyone agree on what strategic planning is?

https://koorandassociates.org/strategy-and-strategic-planning/does-everyone-agree-on-what-strategic-planning-is/

Your company will fail. Koor and Associates

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

Elite talent – what is it? Koor and Associates

https://koorandassociates.org/creating-business-value/elite-talent-what-is-the-purpose/

What is the corporate governance ecosystem? V2

 What is the purpose of this article?

The purpose of this article is to enable a discussion and action planning among owners/shareholders, boards of directors, CEOs, C-Suite, and advisory boards regarding the company’s governance ecosystem

This article does not provide tax, legal or financial advice.  You must do your own research and fact-based analysis using current and relevant information.

You can download a PDF of this article from: What is the corporate governance ecosystem V2

What are the critical learnings in this article?

• The corporate governance ecosystem is the same as your company’s ecosystem.
• Your company’s ecosystem can enable your company’s success or destroy your company.
• Like natural ecosystems, the firms involved in business ecosystems compete for survival with adaption and often extinction.

What is corporate governance?

“Corporate governance involves a set of relationships between a company’s management, board, shareholders and other ecosystem members.  Corporate governance also provides the structure and systems through which the company is directed and its objectives are set, and the means of attaining those objectives and monitoring performance are determined”.¹

What is the corporate governance ecosystem?

The corporate governance ecosystem is the same as your company’s ecosystem

What is your company’s ecosystem?²

A corporation’s ecosystem is the network of people and organizations, (including the board, management, shareholders, employees, regulators, suppliers, partners, competitors, the media, rating agencies, communities, NGOs (Non-Governmental Organizations), other third parties, organizations that create and commercialize new technology and society) directly and indirectly involved in the operation of the business through both competition and cooperation.

The idea is that each entity in the ecosystem will affect and is affected by the others, creating a constantly evolving set and nature of relationships in which each entity must be flexible and adaptable in order to survive, as in a biological ecosystem.

The actions and behaviours of the ecosystem vary, depending upon what attribute of the corporation is considered. For example, the ecosystem has different behaviours when regarding the second-to-second corporate delivery of products or services versus when the corporation is dealing the event of personal information of hundreds of millions of users being hacked.

Like natural ecosystems, the firms involved in business ecosystems compete for survival with adaptation and often extinction.

In today’s rapidly changing business world, a company creates its own ecosystem or comes up with a way to join an existing ecosystem by providing an advantage that is currently lacking in that ecosystem.

Why do you need to understand your company’s corporate governance ecosystem?

• Your company’s ecosystem can enable your company’s success or destroy your company.
• You cannot manage what you don’t understand.
• McKinsey has written “..each company must earn the ‘social license’ to be in business..”³
• Understanding of the governance ecosystem can be a competitive advantage, or disadvantage. A global McKinsey survey showed that less than 20% of executives had frequent success in influencing government policy and the outcome of regulatory decisions.⁴
• Influencing your ecosystem starts with listening to the ecosystem members. Then you begin a variety of communications approaches with key members of your ecosystem.
• Governance requires management of the conflicts of interest among your company’s ecosystem members.⁵
• Your company’s scenario planning must include scenarios regarding what your future ecosystem will look like, who the key members will be, and how ecosystem members might interact with each other and your company

What are your next steps?

Define the words/concepts you’re using, in a glossary.  I’ve seen major confusion when the same words mean different things to different people.

Questions for your board and CEO/management to consider. Ask the following questions and document the agreed upon answers, as well as points of disagreement.  Remember, the Supreme Court does not always have a unanimous point of view.

• Who are the key members of the governance ecosystem? Which members assess the performance of the company?  Which members believe they should have some sort of involvement in the objective settings and planning to meet the objectives?
• Who is managing the relationship with each key ecosystem member? Board?  CEO, C-Suite?  Employees?  Contractors? What is the nature of the relationship? (observing, communicating, meetings, working together or working against)
• Which members, if any, have you decided not to have relationships with?
• What is your process for setting objectives for the board and management? How do the relationships impact setting the company’s objectives? What are the various interests of the ecosystem members?  How does the board and management deal with the many conflicts of interests and expectations?
• What is your process for determining how the board and management meet their objectives?
• How do you assess the performance of the board and management, in creating long term value and in meeting their respective objectives?
• How are the members of the ecosystem involved in the setting of objectives, plan preparation, and performance assessment?
• How do you communicate the objectives, plans, and performance to the members of the ecosystem?
• What are the different perspectives among ecosystem members as to how to monitor and assess the company’s performance? How is the board’s, and CEO’s performance measured by different components of the ecosystem?
• Based on the answers to the above questions, what is the action plan, if any, for the board and for management?

Footnotes

¹ Based on “G20/OECD Principles of Corporate Governance”, 2023  Page 6. I changed “stakeholders” to “other ecosystem members”, https://www.oecd.org/en/publications/2023/09/g20-oecd-principles-of-corporate-governance-2023_60836fcb.html

² Adapted from Investopedia 2023

³ Jim Brennan, Greg Kelly, and Anne Martinez “Tough choices for consumer goods companies” McKinsey Dec 2013, https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/tough-choices-for-consumer-goods-companies

⁴ John Browne and Robin Nuttall, “Beyond corporate social responsibility: Integrated external management”, McKinsey Quarterly, March 2013, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/beyond-corporate-social-responsibility-integrated-external-engagement

⁵ Professor Didier Cossin and Abraham Hongze Lu, “The four tiers of conflict of interest”, IMD, Global Board Center, https://www.imd.org/research-knowledge/articles/the-four-tiers-of-conflict-of-interest-faced-by-board-directors/

What further reading should you do?

What is corporate governance?

https://koorandassociates.org/corporate-governance/what-is-corporate-governance/

Your company will fail.

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

 What does society thinks of institutions and corporations “56% companies that only think of themselves will fail”, “60% CEOs are driven more by greed than by a desire to make a positive difference in the world”,2018  Edelman Trust Barometer Global Report, https://cms.edelman.com/sites/default/files/2018-01/2018%20Edelman%20Trust%20Barometer%20Global%20Report.pdf

Jeffrey Sonnenfeld, Melanie Kusin, and Elise Walton “What CEOs really think of their boards”, Harvard Business Review 2013 April, https://hbr.org/2013/04/what-ceos-really-think-of-their-boards

Professor Didier Cossin and Estrelle Metayer “Does your board really add value to strategy?”, IMD Global Board Center, https://www.imd.org/research-knowledge/articles/board-strategy/