Boards lack the technological expertise to fully understand the challenges and opportunities that data and technology present to their organisations according to a recent poll by ICSA: The Governance Institute and recruitment specialist The Core Partnership.
With a sharp increase in digital business models since the Covid-19 pandemic, boards should focus on acquiring technology talent as there is a shortfall.
This lack of technical knowledge at board level is concerning. It creates a barrier that prevents boards from engaging properly with technology at a strategic level. Important decisions are being made around the table without fully understanding the implications.
58% of respondents consider lack of knowledge to be the main obstacle. While 22% of respondents allude to another reason, 16% cite language as an impediment and 4% blame the onboarding process, 58% is a worryingly high number given the fact that the digital age has been upon us for a considerable time now, and with the hybrid era of work in the new world, technology is becoming the core component of a business.
Organisations are required to stay on top of new technological developments, especially at the speed of change we experience today. Therefore it should be logical that boards consider both technology and data when it comes to strategy.
New technology is emerging quicker now than ever before. The speed at which technology is evolving is concerning. Even if boards receive presentations about the technology and have all the information they are supposed to have, they are unable to validate and trust the information in order to drive decision-making. It is getting exceedingly harder for a board that only meets a few times a year to have its finger on the pulse in terms of developments, opportunities and risks that might exist.
Simply recruiting a digital expert does not solve this problem. Technology needs a seat at the table. Filling this seat requires careful consideration and vetting. Hastily made additions to a board can result in frustrations on both sides:
+ a disillusioned director unhappy with the pace of change and what they view as a lack of urgency around digital transformation,
+ and a board and executive team concerned about a director’s overreaching on issues more appropriately left to management or not having the full governance tool kit to contribute holistically as a director.
A digitally savvy director can make a significant contribution to the board and the company’s digital initiatives — in and out of the boardroom. Outside of the boardroom, a digital expert can be a unique partner to the executive team, serving alternatively as a sounding board, a translator, and, potentially, a coach.
Digital directors may be asked to take on additional projects for the CEO, such as advising on acquisition targets or critical new hires, and frequently make introductions to cutting-edge digital and technology companies. They can expose senior management and fellow board members to radical new ideas and emerging business models to see what might make sense for the organisations. They can manage, mitigate and prevent major risks.
In the boardroom, executives with the appropriate digital expertise can demystify digital, clarify the specific digital forces impacting the business and provide insight into the ways customer behavior is changing and other important trends — all of which can advance the broader board’s understanding of the issues at play for the business.
Directors with digital expertise want to be impactful and tend to be eager to engage with the business at a deeper level, by adopting the responsibilities of a CIO for example. When they have opportunities to dig deeper — through special projects for the CEO or regular meetings with digital leaders in the business, for example — digital directors are more likely to feel they are making a difference for the business and find the opportunity more rewarding.
For a business undergoing a transformation, leveraging a director’s expertise and connections can produce real benefits when interactions are well-planned and meaningful.
As the interface between the board and the company, the CEO should manage interactions between the digital director and members of the broader management team to ensure that they are worthwhile for the company and the director.