Setting Sail in the AI Sea: Navigating Through The Fluidity

The recent surge in artificial intelligence (AI) technologies has undoubtedly created ripples of excitement across industries and globally. These technologies promise innovation, efficiency, and new capabilities that can revolutionize business processes and holds the potential for significant financial impact for public companies. But as with any new technology, the growth of AI comes accompanied by a wave of global legal and regulatory uncertainties and evolving ethical standards.

As we move into Q3 2023 Earnings Season, one of the critical questions is going to be: How should public companies communicate about the return profiles of their portfolio of AI investments in an environment where the global legal and regulatory landscape and ethical uses of AI frameworks are still under development and in individual countries?

Lessons from History: The Biotechnology Era

The early days of biotechnology is a strong example of when technological advancements danced on the edge of regulatory precipices. As biotech firms began to genetically modify organisms in the 1980s and 1990s, they ventured into largely uncharted regulatory and ethical waters. Like AI today, the promise of biotechnology was vast, but public understanding was limited, and global regulations were disparate and evolving. Public companies of that era had to be adept at communicating the potential returns from their biotech investments, even as they navigated legal and regulatory uncertainties.

As we stand on the cusp of the implementation of the roadmap and resulting AI revolution, there's much to be learned from how biotech firms navigated their challenges in investor engagement and a strong reminder that with innovation comes responsibility, foresight, and the need for clear communication.

Critical Dimensions of Investor Engagement

Drawing from these biotech lessons, here are key dimensions of engagement that public companies can use to effectively communicate their AI investment strategies and return profiles in the context of the evolving global legal, regulatory environment and ethical frameworks

1.Transparency: Be open about the nature of your AI investments, the objectives of these investments, and the potential risks. Don’t oversell capabilities; instead, give investors a clear view of where the company is and where it aims to be.

2. Acknowledge the Fluidity of the Landscape: It is essential for public companies to acknowledge that AI regulation globally and in individual countries is still a work in progress. Instead of being definitive, public companies can benefit from communicating their readiness to adapt and reorient based on emerging regulatory and ethical guidelines.

3.Education: Many investors may not be fully versed in AI's nuances as they relate to your company. Leverage each communication and engagement with investors as an opportunity to educate. Break down complex concepts and focus on how AI aligns with broader business goals, the strategic trajectory of the company and the capital structure strategy.

4.Ethical Commitment: In an environment with evolving regulations, a strong ethical commitment can serve as a compass. Publicly commit to ethical standards, and ensure stakeholders understand that the company prioritizes responsible AI deployment in advance of economic benefit.

5. Adaptability: Emphasize the company's agility in the face of changing regulations. Highlight examples of how the company has adapted to regulatory changes in the past, reassuring investors of your resilience and flexibility and describe what this creates competitive advantage.

6. ROI Metrics: While AI's strategic investment returns can be multifaceted, aim to quantify where possible, within ranges. Whether it’s improved customer satisfaction scores, decreased operational costs, or increased revenues from new products, tangible metrics can make abstract benefits more concrete.

7. Investor Involvement: Encourage active stakeholder participation. Whether through Q&A sessions, investor days focused on AI, or feedback loops, ensure that investors feel involved and heard.

For public companies, the goal is to ensure that their AI investments not only deliver strategic returns but also elevate their value in the eyes of stakeholders. By adopting a communication strategy that is transparent, ethical, adaptable, metric-focused, and inclusive, companies can effectively navigate the challenges posed by the evolving AI landscape, turning potential uncertainties into opportunities for growth and trust-building with investors and in turn elevating their value.