In our 2014 CEO survey we discovered that business leaders see tech trends as the third most important of all the external macro factors that frame their business strategies today (behind economies first and regulation second). Yet the board of directors of most companies today, often lacks anyone with obvious technology experience and credentials.
The level of digital business disruption is rising and when in it takes hold in a sector it moves very quickly. So boards should be vigilant and able to act knowledgeably and decisively when needed. When I review the way the car industry has reacted so far to the autonomous drive innovation, or the way the sports equipment industry has reacted to digital products and wearables – I see very different levels of preparedness between major players. The board’s ability to sense when the big change is coming and take significant action – such as techquisitions – is vital. The scope and depth of change needed is often beyond the capacity of the executive committee alone to deal with. That’s because changes of business model or strategy need investor involvement, acceptance or agreement.
One key action a CEO and the Chairman can take is to bring a highly tech savvy member onto the board. Such as person would be individually highly capable and knowledgeable in an advisory capacity – but also very well personally connected in the world of technology. There are already examples of this emerging good practice
- H&M’s board includes Niklas Zennström, co-founder of Skype
- Walmart’s board includes Kevin Systrom, co-founder of Instagram
- McDonald’s board includes Margaret H. Georgiadis, President, Americas at Google Inc.
However this does not just apply to Fortune Global 500 scale companies. Take for example N.Brown Group the parent company of J. D. Williams – a large UK based distance selling retailer of clothing. In 1882 its eponymous founder was the very first entrepreneur in Britain to use the then brand new parcels service of the Post Office, as a retail distribution channel – and thus catalog selling was born. Today, most of its sales are online e-commerce and within that a significant amount is already on mobile. With such a critical digital shift going on in its business model, it has chosen to include a tech-savvy board member from a silicon valley based, international private equity company.
To take advantage of your digital opportunities, before someone else uses them to disrupt to your business, your board should be following this kind of example. 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. But where to look? You could look for executives from ‘born digital’ companies, or VCs, or technology provider companies and mobile telcos. Less commonly, some boards use technology savvy university business academics and industry analysts. Each of these sources would bring different blends of knowledge and the kind of personal networks you will definitely need quick access to, when disruption looms.
Do not delay. A board without tech insight and connections, is flying blind.
Creating a tech savvy c-suite and board is just one important subject we cover in Digital to the Core – our new book about digital business leadership.
