Is there a technology gap in your boardroom?
A new report by Deloitte, published under the ‘CIO Insider’ banner, thinks there might be.
While companies may have embraced technology, many boards lack the knowledge to oversee and make the most of these initiatives.
The report was compiled by analysing data, pulled in October 2016, on directors, their roles and responsibilities, director demographics, and other relevant information in the BoardEx database, which contains over 880,000 unique directors and 1.3 million companies spanning more than 200 countries.21
It shows that those with tech backgrounds are still under-represented on boards.
In 2016, more than 85% of new board seats were filled by CEOs, COOs, or presidents (38%); those with financial backgrounds (25%); or business, division, or other functional leaders (23%).
Just 17% of companies have a technology-focused director, although this is up from 10% six years ago. Interestingly, among high-performing companies (companies that outperformed the Standard & Poor’s 500 Index (S&P 500) by 10 percent or more for the past three years), 32% have a technology-focused board member.
While high performance cannot be solely attributed to having tech-savvy directors, the correlation is intriguing. It may be that adding this expertise enables tech-focused projects to be overseen – and therefore completed – more efficiently.
It may also enable directors to spot future innovations and possibilities – opportunities that may not be identified by those less familiar with technology.
The report looks in more detail at ways that technology-focused directors can help with issues including:
- High-tech risks beyond cybersecurity. While cyber risks are well understood and appreciated, the adoption of technology brings with it a range of other risks. Technologists can help boards to identify and mitigate these risks.
- Opportunities and disruption. Technology creates opportunities for the fleet-footed, but it also causes disruption (read more here about the lessons we can learn from the top disruptive brands). Which innovations are worth pursuing? Which might pose threats to your business? A tech-savvy director can help you answer these questions.
- Complex digital transformations. The need to transform is clear. But these projects need an efficient approach and ruthless focus. Technology-focused board members can help to identify priorities and ensure projects run to schedule.
- Technology spend. IT spend forms a major part of corporate budgets. But is your money spent effectively? IT experts on the board can help to ensure that technology budgets - which according to the report have increased more than 20% in the last year for 12% of respondents - are spent wisely and transparently.
Strategies for bridging the technology gap
So – how can boards fill this shortfall in expertise? The report has some suggestions.
1. Appoint a business-savvy technologist, like a current or former CIO, CTO, CISO. Deloitte’s analysis shows that just 3% of all public companies appointed a technologist to newly opened board seats in 2016.
2. Make sure whoever you appoint has an eye on transformation and commercially-focused tech, though – a director with a purely operational technology focus is unlikely to have the business acumen you need.
3. Be proactive when it comes to innovation. The report says that ‘When it comes to technology, boards with a proactive approach may have an advantage over those that maintain a purely defensive position’.
4. This means regularly involving the company CIO in your meetings to keep abreast of new developments, opportunities and threats.
5. Consider a technology committee. A dedicated taskforce with specific responsibility for technology oversight and innovation may free up your other board members to focus on their own areas of expertise. Although the number of companies who have created such committees is growing, the report claims that only 9% of S&P 500 companies had one in 2016.
Practice what you preach - embrace innovation within the board
Of course, technology isn’t just something a board imposes on the rest of the business. It’s also something that can help the directors themselves to operate more efficiently.
Adopting the latest innovations for board management, papers and meetings is one way to show that you are not only advocating these approaches, but embracing them yourselves.
Board technology – portals, for example – can deliver huge advantages. Make sure the solutions you choose have tangible benefits for both those on your board and those organising your meetings by reading our tips on ensuring everyone benefits from board technology.
Make the most of technology - for your board and your whole business
You can read the full Deloitte/CIO Insider report, which has more detail on the findings of their research, here.
And if you want to read more about how technology can help with the running of your board you can read our Board Portal FAQs. They look at the implications and advantages and are free to download here.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.