An article in Strategy + Business said that as digitally-driven changes become the norm in nearly every sector, many companies are having to re-imagine and re-construct almost every aspect of their business. The article also said that boards of many large companies are not prepared to adequately respond to such major shifts in technology. The authors studied 1,000 non-executive and executive directors at more than 100 of the largest publicly traded companies in the U.S. and Europe. By analyzing company filings and public information, they found that “all too many boards lacked the expertise needed to understand how technology informs strategy and affects execution.”
Mark Raskino, vice president and Fellow in the CEO Research Group at Gartner, said in a blog post that as the level of business disruption is rising, boards should be vigilant and cognizant of technological changes. Raskino said the scope of changes needed nowadays are often beyond the capacity of the executive committee alone. He noted that one key action a CEO and chairman can take is to bring a highly tech-savvy member on to the board.
“Such a person would be highly capable and knowledgeable in an advisory capacity, but also very well personally connected in the world of technology,” said Raskino.
He added that there are a number of examples of companies that are bringing in board members who not only are individually capable, but are “very well personally connected in the world of technology.” Examples include people such as Kevin Systrom, co-founder of Instagram who is serving on the board of Walmart, and Margaret Georgias, president, Americas at Google, serving on the board of McDonald’s. He said the inclusion of tech-savvy board members doesn’t just apply to large companies, as companies of any size can benefit from advanced tech knowledge.
“Cognitive diversity matters to strong corporate governance. If you look around the table and see no strong tech knowledge, it’s time to go out and find a new face,” Raskino said.
Authors of the Strategy + Business article also said that companies need to “hold out” for sufficiently broad and deep expertise and avoid just “checking the box.” They must open multiple board seats for people with technological experience and reach beyond the traditional tech targets of former CEOs and also consider CTOs and CIOs. The board must also support robust discussions about technology with the right kinds of practices and management structures and “set the right contents” in which to view technology.
“Today, every board of directors has a once-in-a-generation chance to leapfrog the competition through technology competency…Those companies that meet this challenge successfully will capture the markets of the future,” they said.