Deloitte recently published the worrying evidence that “many boards provide IT oversight and guidance without sufficient knowledge in technology.”
Whilst the good news is that the number of board directors with meaningful technology experience is growing, the rate of increase is still relatively slow.
That’s a worrying, because companies are clearly missing out performance-wise.
Just witness Deloitte’s research that indicates the percentage of public companies appointing technology-focused board members has grown from 10% to 17% in six years. But, by contrast, in the case of high performers (those that outperformed the Standard & Poor’s 500 Index by 10%-plus over a three-year period), the figure almost doubles to 32%.
Winners? Or losers?
In more than 20 years of executive search in technology, I’ve seen at first hand how the positive difference that injecting fresh thinking into the boardroom can make to a business. In particular, when recruiting executives who understand the technology and/or disruption trends that are utterly vital to inform strategy development.
Often, appointments of this kind can make the difference between success and failure. Even to the point of corporate survival.
Discussing strategy and risk
A key question for many organizations is, how best to utilize such board-level technology talent? And more broadly, how should boards set about incorporating technological disruption and innovation initiatives into discussions around strategy and risk?
For some fascinating insights, I spoke to Nelda Connors, Founder, and CEO of investment firm Pine Grove Holdings, and currently a member of the board of directors at four leading public companies: Boston Scientific, Delphi Technologies, Echo Global Logistics, and EnerSys.
I asked her a few questions about where having technology expertise on boards can be a powerful asset.
How does having a tech-savvy board improve the board-level conversation?
“On the boards I serve, innovation and technology are integral to growing the business, so it’s a constant topic of discussion, whether it’s at a formal committee, an annual review, or at each board meeting.
“What’s really most impactful is when the board participates in a hands-on demonstration of a new or emerging technology. For me, it enhances the understanding of the product innovation or technology roadmap. Collectively, we become more closely engaged with the product and may provide strategic management feedback.
“Given that the board members often come from various industries and experiences, the quality of questions is focused and assumptions about the presented technology and financial story can be shared and debated. In these cases, it has solidified for me why capital should be deployed for that innovation or technology.”
What about the discussion of risk?
Internal R&D initiatives don’t necessarily hold all the answers. So boards must think strategically about where the company should place its bets, deciding on a case-by-case basis whether to take a ‘make or buy’ approach to technology.
“All of the boards I sit on are also engaged in adjacent mature M&A or early-stage investment in tech startups as part of a strategic review for growth. At the very least, this review happens annually, but some end markets are riper for consolidation and investment opportunities are more plentiful.
“Corporate innovation and technology risks can be somewhat mitigated by investing in start-ups and think-tanks to do the initial evaluation/research to achieve commercialization.
“A public-company investing in early-stage companies may have the ability to be an influencer or participate in greater value-creation once [the idea has] proven successful. Sharing the risk can be a viable strategy for innovation and technology refreshment.”
Challenge and opportunity
Technology is changing the way companies operate, in the widest sense. To understand the full implications of this and exploit them to the maximum, corporations must harness people of the right caliber to drive innovation and transformation at board level.
With digital disruption ever-present, these are exciting times full of challenges to relish. That’s equally true at Odgers Berndtson where we’re using our executive search know-how and a huge network of global connections to help clients find the tech-savvy talent they need.
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