Boards need to be more tech-savvy in order to manage threats.
According to PwC’s global survey of large-company directors, 79 percent said their boards did not sufficiently understand technology.
A lack of IT literacy can leave a company vulnerable to issues such as power outages, system failures, and cyber-attacks, which will determine how well they navigate through the crises. These pressures intensify the need for every company to be better equipped with up-to-date technology expertise. Complex strategic questions that centre on technology are forcing directors to have a robust understanding of technology.
Pace of innovations is moving so fast with businesses struggling to stay ahead to future proof their business and implement a strategy to protect them against disasters. Technology decisions fall under the remit of the board, which means there needs to be an appropriate depth and breadth of knowledge of its applications, threats and opportunities.
Without adequate technology knowledge, boards will struggle to make informed decisions when considering which new technologies to implement and how to gain business value from them. Not understanding the value of technology can deter executives from directing investment towards different technologies – holding them back. For example, PwC’s 20th CEO Survey, revealed that nearly half (47%) of UK CEOs say they are not currently addressing the impact that AI or automation has on their organisation.
With every company becoming a technology company, IT experience, knowledge and skills should be embedded within the DNA of the business in order to successfully navigate through the digital economy. Technology pervades every aspect of business operations (HR, finance, sales & marketing) and so executives operating in the current business environment need a 360 degree overview of their IT infrastructure to avoid any blind spots that might pose a risk to both their finances and reputation.
British Airways is expected to pay out approximately £150 million in compensation, which has had a knock-on effect on share prices of its parent company, IAG. Both the CEO and chairman were challenged by experts in the sector around the cause of the failure, which triggered more uncertainty amongst an unsympathetic public. Board-level executives are the face of a brand during crisis situations and without being able to articulate or comprehend the cause of these issues, steering the ship through a storm proves a challenge.
Adopting a digital mind-set starts with the board setting a tone for the rest of the workforce from the top down. By adopting a hybrid approach, which combines traditional forms of talent sourcing with project consultancy, business leaders are able to tap into technology skill and adapt the board to the digital age.
There are three ways businesses can restructure their board of directors to generate a digital conversation at the highest level.
External technology consultant
A study revealed that almost 30% of UK boardrooms in key sectors of the economy still view cyber security as an IT issue, with only 35% of boardroom executives believing their board has a high level of personal expertise in cyber security. Without adequate board level IT experience, executives are lowering their defenses and making themselves vulnerable to threats. In the case of data breaches, it’s the duty of the executives to front the crisis and without understanding the scope of the issue they will not be able to control how people perceive them.
To compensate for the lack of IT expertise at the board level, many businesses rely on the strategic insight and advice of external technology consultants, who act as an advisory tool, injecting IT expertise into the board. This can be seen as a transition step to acquiring next generation technology knowledge, before having a full-time technology member on the board. Consultants will gift the board with an outsider perspective, encouraging a multitude of digital possibilities.
Technology expert on the board
The number of FTSE 100 CEOs with a digital background has trebled in four years, as the number with experience in finance falls – from 55 per cent to 43 per cent last year. Digital expertise is being pushed higher up the list of priorities for CEOs, as it becoming central to all business functions.
Having a technology expert on the board will become increasingly key to driving profitability, managing risk, and tracking performance. Their fluent in-depth knowledge and experience will help develop conversations around technology between other board members. In the long-run, this expertise will then filter throughout the rest of the board, who will be able to attain some IT knowledge.
Training existing board members
However, a business cannot solely rely on having a technology expert on the board. The smartest strategy is to ensure that all members of the board have a firm grasp of IT, and further, how to navigate an IT crisis. The best way to narrow the technology skills gap is for companies to train existing board members, enabling them to add value to the company by creating business objectives that are influenced by digital strategies. It’s important not to underestimate the deep industry knowledge that existing board members have, and their ability to shape the decisions around digital application.
Board level members are under pressure to become well versed in IT and technology, as their industries are transformed by digital. Turning attention to board-level expertise will increasingly position technology as a business priority, to support them in riding the wave of digital disruption.