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While AI captures headlines, it is part of a far wider, often chaotic ferment of various digital technologies, including AI, mobile apps, additive manufacturing, distributed energy resources, and health monitoring. It is a multi-decade, economy-wide revolution that we call Proximity, as featured in our recent book by the same name (Proximity, Columbia University Press, 2024).

Proximity is predictive of the direction of every industry for years to come, with pivotal implications for corporate governance.

Proximity observes the following simple premises:
1. Digital technologies compress capabilities into smaller packages, which become distributed closer to each moment of potential demand;

2. Thus, digital technologies compel value creation ever closer to customer demands.

Proximate business and technology models distribute decisions more broadly across a company's operating environment, closer to where and when customer demands might arise.

As business models become more distributed and technology decentralizes and accelerates decision-making, enterprises must adapt their governance structures and practices. The rise of Agentic AI autonomous systems, empowered to act, means companies will increasingly entrust key decisions to AI agents operating in real-time, optimizing production, logistics, and customer engagement at unprecedented speeds.

This explosion of empowered agents and digitally enabled enterprises means that annual planning cycles and quarterly reviews are no longer sufficient (if they ever were). Enterprises will face decisions of greater variety, volume, and velocity occurring across their operating ecosystems. Boards will need to mitigate risk while enabling rapid evolution.

To discover actionable insights for corporate governance, we will apply a "three lines of sight" framework: Hindsight, Oversight, Foresight (see, for instance, the work of David Beatty of the University of Toronto) Our objective will be a practitioner-focused perspective on how board directors must adapt to distributed, highspeed decision-making, personalized customer experiences, and unprecedented agility while ensuring accountability without compromising innovation and long-term vision.

Let's start with insights from a prior technology-driven, economy-wide transformation.

From Railroads to the Digital Age: Technology and Corporate Evolution
Technological revolutions require companies to evolve or die. Alfred Chandler's seminal work, The Visible Hand, revealed how 19th-century railroad companies had to invent new management systems to handle the scale and complexity of their operations. Railroads required centralized coordination to raise and allocate capital, oversee far-flung operations, and supervise thousands of specialized workers. Chandler argued that in solving these challenges, railroads created basic plans for the structural form of the modern American corporation, including hierarchical management layers and standardized procedures.

Today's digitally-driven transformation presents different implications. Instead of centralizing operations, digital allows companies to distribute capabilities to the edges while monitoring and coordinating them centrally. Activities that once required concentration due to economies of scale, such as manufacturing or financing, can increasingly shift closer to end-users. For example, cloud computing and Agentic AI enable real-time, decentralized decision-making. Additive manufacturing (e.g., 3D printing) and robotics change the economics of highly customized, low-volume production at the point of demand.

Companies become less able to rely on decisions made on fixed, dependable cycles; instead, they must respond in real-time to customer demands, supply chain disruptions, and even geopolitical tensions. At the forefront of Proximitymazon, the algorithm adjusts its product recommendations, pricing, and inventory decisions. These real-time adjustments present customers with the most relevant products while enhancing Amazon's efficiency. By integrating AI into its supply chain, Walmart anticipates local demand spikes and automates distribution decisions, reducing waste and improving customer satisfaction.

Traditional oversight structures, which rely on periodic reporting and centralized authority, will rapidly become insufficient, even treacherous. As businesses adapt, boards must ensure they have the mechanisms to oversee and guide high-frequency, high-impact decisions without slowing down operations or impeding innovation.

When Technology Changes Overcomes Governance: Boeing's 737 MAX Failure
Boeing's 737 MAX crisis offers a cautionary tale. As Boeing sought to compete with Airbus' A320neo, the company introduced the 737 MAX with a newly designed flight control software system, known as MCAS. The MCAS system automated critical flight control decisions to account for new engine placement and the plane's altered aerodynamics.

Rushing to maintain production schedules, Boeing failed to disclose critical safety information about MCAS to pilots, regulators, and even its internal oversight committees.

The company pushed for expedited FAA approvals, resulting in insufficient independent safety reviews. Boeing also failed to adapt its governance framework to account for the increasing complexity of software-driven flight control systems, resulting in an over-reliance on existing risk assessments that did not fully capture the dangers posed by MCAS.

Two fatal crashes in 2018 and 2019 resulted in the deaths of 346 people, leading to the grounding of the entire 737 MAX fleet for nearly two years and losses of over $20 billion due to lawsuits, compensation payments, and production delays. Boeing's reputation and relationships with customers, employees, and regulators suffered immense damage.

Consider that Boeing's crisis occurred in part due to the failure to navigate the reallocation of a small set of decisions regarding flight controls under specific conditions. Multiply this risk by orders of magnitude as decisions of all sorts become allocated and distributed across a company's competitive space. The 737 MAX example occurred before the rise of Agentic AI, which today presents the opportunity to accelerate responsiveness and amplify customization. In a competitive market, you must assume your competitors will do so. All organizations will face the quandary of how much agency to cede for better competitiveness, balanced against the need for risk mitigation.

The challenge will be to ensure adequate oversight while also enabling rapid innovation, agility, and responsiveness.

Corporate Governance in a Proximate World
Governance fundamentals, including accountability, fiduciary duty, and strategic guidance, remain core board responsibilities. What is changing is how these duties should be achieved. Directors must enable local autonomy while maintaining enterprise-wide oversight and control. They must be technically savvy enough to understand digital tools and risks while anticipating emerging trends that could disrupt the business. Governance must become more distributed, coordinated, and always-on.

To navigate, boards can embrace a three-part framework: Hindsight, Oversight, Foresight.

HINDSIGHT: Learning from the Past, Everywhere
Hindsight involves reviewing performance, learning from experience, and ensuring accountability. Traditionally, boards exercised hindsight through financial reports and audits.

Digitally-enabled companies have far more data available in real-time. Instead of waiting for quarterly reports, directors can access live dashboards. Some boards utilize data analytics to monitor performance continuously. One global survey found that 63% of directors plan to expand their use of analytics for decision-making, including tools that scan public information to create dashboard summaries of sentiment and emerging risks.

However, more data does not necessarily mean better hindsight. Boards must manage information overload by identifying key signals. Controls and accountability mechanisms must keep pace with increasingly distributed and empowered systems. The railroad age relied on layers of supervisors; today, digital oversight tools can automate monitoring. Companies implement real-time control systems, such as AI-driven anomaly detection in financial transactions. Boards should champion such systems to ensure distributed decision-making does not erode compliance and ethical standards.

Frontline employees often have the clearest view of what went wrong or right in particular situations. Increasingly, AI agents, amplified by connected devices, will participate or even be central actors. The opportunity thus arises to gather and monitor inputs, decisions, and outcomes in greater detail, highlighting and assessing issues, and surfacing risks and potential mitigations in real-time.

Recommendation: Automated After Action Reviews (AARs).
After failure, many companies blame, ignore, or both. However, understanding what went wrong and what went right is essential for risk mitigation and improvement.

AI enables boards to generate assessments of successes or failures within minutes, as well as the potential to take various perspectives based on broad and deep analyses of corporate documents, emails, messaging apps, and other information to which the company has compliant access. Automated AARs would offer an opportunity to query the past at low cost and support continuous improvement. Enhanced pattern recognition and root cause analysis will likely spot issues humans might miss. If leadership decides new approaches are warranted, changes to policy or guidelines can be implemented immediately to all automated systems. Humans require time for change management. AI agents do not.

While it is not clear that anyone has yet applied AI to generating board-level AARs, the concept presents a clear opportunity. Technology companies, such as Microsoft, Amazon Web Services, and Adobe, use AI to generate insights from automated workflows, software development, and operational issues. Companies should translate this approach to generating AARs applicable for board-level deliberations.

OVERSIGHT: Risk Management at Digital Speed
With a greater variety, volume, and velocity of decisions across the enterprise's ecosystem, their own and others ' oversight must become continuous and tech-enabled. Doing so, oversight becomes more "owsight"

AI can continuously scan for regulatory changes, shifts in customer sentiment, and competitor strategies, presenting insights in digestible formats for board members.

Furthermore, autonomous systems are increasingly scanning for patterns indicative of fraud, cybersecurity threats, or operational inefficiencies. Companies that employ these systems benefit from increased transparency, accountability, and responsiveness to market conditions. AI can also help manage cognitive biases, though it can also magnify them. Used properly, AI can raise awareness of potential decision-making biases, such as confirmation bias, recency bias, and anchoring bias, challenge long-held assumptions, and encourage more rigorous strategic discussions.

Examples include audit and risk committees utilizing external scanning tools to track cybersecurity threats, regulatory decisions, and customer sentiment, as well as continuously monitoring internal company communications and employee and stakeholder social media feeds, thereby identifying potential threats before they occur. Eventually, automated systems will be able to assemble personalized psychological nudges, human by human, team by team, to correct or prevent unwanted activity.

Some of these tools and practices are likely to generate controversy. New monitoring capabilities will arise that have yet to be vetted by legal and regulatory entities.

Boards will be faced with deciding how assertively to proceed. Boards have a responsibility to help management determine how invasive such systems should or should not be, to mitigate risk without compromising employee motivation and freedom of action.

Recommendation: Framework-based oversight
With Proximity, boards must strike a balance between empowerment and accountability in a more distributed decision-making environment. The solution is shifting from command-and-control oversight to framework-based oversight. Instead of pre-approving every decision, boards ensure the company has clear values, risk thresholds, and escalation protocols. Boards that embrace this shift allow more autonomy at the local level while maintaining clear, enforceable policies for risk mitigation.

As agentic AI evolves to incorporate more nuanced capabilities, companies can automate oversight to monitor the alignment of decisions with their stated values and priorities across the enterprise.

As companies remove layers of middle management, as many,, notably platform technology leaders like Alphabet, Amaz,o,n,, and, Meta, have already begun to do, relying more on automation for coordination and oversight, there will be fewer "umans in the loop’'for an increasingly wide range of decisions. Increasingly capable Agentic AI will offer opportunities to monitor the alignment of decisions made by humans and AI with stated values and corporate priorities. These systems can provide early warning systems. While such systems would certainly be relevant to flagging risks, they should also be enabled to highlight decisions and behaviors that meaningfully advance the company's objectives, uncovering both threats and opportunities.

Through this transition, managers will require not only more social and political skills to navigate, but also wider visibility and insight across their enterprise's activities and competitive ecosystem. John Bremen, Chief Innovation and Acceleration Officer of global consultancy WTW, asserts that the management challenge transcends the question of what to hand over to technology. These AI-driven transformations require greater vision and wisdom. Studies show the ascendence of traits such as courage, adaptability, and sense-making."

FORESIGHT: Vision in a Distributed Future
The significant threats and opportunities exist outside your core markets and value chains. Proximity models lower barriers for new competitors to enter markets in new ways. For instance, Google and Walmart are entering the healthcare sector, and public security leader Axon is introducing drone technologies to police forces.

With industry boundaries blurring, in some cases dissolving, boards must track developments outside their core markets. Because digital trends propagate so rapidly, consider how quickly CChatGPT's public launch in late 2022 led to economy-wide anxiety. Boards must be able to anticipate, sense, perceive, and respond more rapidly. Leading boards employ horizon-scanning tools, futurists, and trend analysis to detect weak signals of disruption before challenges become urgent and pressing.

Foresight must become a continuous function. Boards should broaden their information networks by integrating insights from non-traditional sources, such as start-ups, venture investors, digital communities, and other industries, rather than relying solely on internal or industry-focused reports.

Boards must challenge executive teams to explore proximity-driven innovation, leveraging digital tools to foster deeper relational and operational closeness with customers. Whether or not your company does, you can be sure others will.

Recommendation: Automated Peripheral Vision.
Automated Peripheral Vision leverages AI and data analytics to scan beyond a company's immediate ecosystem, detecting developments in other industries, geographies, and technologies with potential future implications. Such tools enable boards to move from reactive oversight to proactive guidance, ensuring leadership stays ahead of changes before they become urgent.

In a world where technology can increasingly do anything, better foresight becomes essential. Silicon Valley veteran and multi-corporate board member, Nora Denzel, observes that too many boards spend the majority of their time on Hindsight and Oversight. As disruption becomes the norm, Denzel advises, You have to change your board's default settings to enhance focus on foresight."

Go Where Value Happens
As businesses leverage technology to provide customers with anything, anytime, anywhere, consider a very human Proximity recommendation: Engage with customers.

It is easy to play board roles in splendid isolation, reviewing documents and engaging with board and management colleagues from within the governance tower. Nothing compares to seeing your company in action.

As a board member of the field-leading non-profit CureBlindness Project, Rob has visited their partner eye hospitals in Bhutan and Peru, deepening his perspective on the organization's mission-driven work. Our work as adjunct faculty at leading business schools, including Booth, Kellogg, and Wharton, enhances our governance relevance for global consultancy Clareo and the Chief Strategy Officer network Outthinker. We both value the opportunity to use keynotes to engage with a wide range of corporations in industries relevant to our boards.

AI-amplified hindsight, oversight, and foresight will also change the game for top management. These capabilities are increasingly available to every competitor requiring new levels of speed, responsiveness, and agility. For example, a thorough understanding of a company's performance and financials (in hindsight) remains essential but insufficient. It must be supplemented by real-time data and analysis (oversight), enhanced by meaningful and actionable insights on risks and opportunities regarding tomorrow (foresight).

As railroads catalyzed the development of the modern corporation, digital capabilities compel next-generation enterprises to move faster and offer customization that is the essence of Proximity. Railroads must adapt. It is a board's role to support, sometimes cajole, leadership to lead through change while protecting the company's legacy long-term. Embracing a three-sights framework can help. And make sure you stay close to customers.