Business 7 min read By Callum Montgomery
Boards Urged to Track Stakeholder Momentum as AI and Prediction Markets Outpace Regulation
Corporate boards must monitor shifting stakeholder influence around transformative innovations like AI data centres and prediction markets, where investment, regulation and community opposition are unfolding simultaneously rather than in sequence.
Corporate boards are being urged to track what one governance specialist calls «stakeholder momentum» as transformative innovations such as artificial intelligence infrastructure and prediction markets develop faster than the institutions meant to oversee them. The warning comes as data-centre projects face mounting local opposition and prediction markets operate in a regulatory grey zone, with courts and legislatures yet to settle fundamental questions about jurisdiction and value.
The Wright brothers kept their airplane aloft for just 12 seconds. For decades afterwards, the real innovation lay not in making aircraft fly farther or faster but in building airports, training pilots, creating air traffic control, developing insurance markets and establishing safety standards. Travellers gradually grew comfortable boarding flights. Today most passengers give the mechanics of flight no thought, complaining instead about delayed departures or stale pretzels. The innovation became ordinary, but only after institutions, standards and expectations had time to settle.
That sequence may no longer hold. Artificial intelligence is driving enormous investment in data centres and supporting infrastructure. Yet the same facilities welcomed for their investment, jobs and contribution to national competitiveness are encountering organised opposition over electricity, water, noise, land use and effects on local communities. In Virginia, a Washington Post-Schar School poll conducted in late March found that only 35 per cent of voters would be comfortable with a new data centre being built in their community, down from 69 per cent when the same question was asked in 2023. In Prince William County, a proposed data-centre development near Manassas National Battlefield faced years of organised opposition and litigation. A Virginia appeals court ultimately invalidated the county's rezoning approvals on procedural grounds unrelated to the substantive objections. The county then decided not to continue defending the approvals, and the developer subsequently dropped its appeal.
Prediction markets illustrate the same governance problem from a different angle. Their rapid growth has occurred while a fundamental question remains unsettled: are sports-event contracts federally regulated derivatives, state-regulated gambling, or some combination of the two? Earlier this month, New Jersey asked the US Supreme Court to review an appellate ruling favouring federal jurisdiction over sports-related event contracts offered by prediction markets. Other courts have reached different conclusions.
In both cases, the innovation is developing while society simultaneously decides what it thinks about it and, in some instances, who gets to decide. Historically many of these developments occurred sequentially. Increasingly they occur simultaneously and influence one another in real time. Investment flows while products and business models are still evolving. Customers adopt while policymakers still debate. Communities organise while companies still build. Courts hear cases while legislatures consider whether new laws are needed. Different countries, and sometimes different states and communities, reach different conclusions about the same innovations.
For a board, the important signal is not simply whether any one stakeholder prevails but how the environment around the innovation is changing and what that may mean for the company's range of choices. Boards must still understand the innovation itself. But they also need to understand what it is setting in motion: which stakeholders are becoming more influential, how their definitions of value differ, where separate concerns are beginning to reinforce one another, and what early signals suggest the balance may be shifting.
This matters not only to companies creating transformative innovations. Many more are being reshaped by innovations they neither invented nor control. Their customers may behave differently. Their employees may have different expectations. Regulators may confront new questions. Investors may reassess risks and opportunities. The governance questions differ depending on which side of the innovation a company sits, but neither group can afford to watch only the innovation itself.
One reason this is so difficult is that stakeholders may not simply disagree about how to divide the benefits and costs of innovation. They may disagree about what constitutes value in the first place. A community evaluating a proposed data centre may hear the company quantify investment, construction jobs, permanent employment and additional tax revenue in dollars. But residents may be thinking about water. How much is an additional dollar of tax revenue worth compared with a gallon of water? What is the exchange rate between economic development and the character of a community, between national competitiveness and noise outside someone's home, between shareholder return and a resource a community believes is already scarce? There is no established exchange rate.
Boards are accustomed to evaluating trade-offs where competing alternatives can ultimately be translated into financial terms. But some of the most consequential questions surrounding transformative innovation involve values that cannot be reduced to a common currency. Tracking stakeholder momentum, rather than waiting for a single decisive ruling or a settled public mood, may prove the more reliable guide as investment, adoption and opposition continue to unfold at the same time.
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