Tuesday, August 20, 2013

How Tech-savvy are Corporate Boards these days?

Every decision by every decision-maker needs to be informed by an understanding of how technology changes business processes.

According to corporate governance survey, directors reported gaps in critical areas of board expertise: about half of directors said there were skill sets, or areas of expertise missing, or talent with cognitive differences insufficiently represented on their boards. Technology expertise was the most common missing or under-represented ingredient on boards according to US directors – boards are recognizing there is a gap of technology expertise in the forward-looking enterprise. This recognition creates opportunities for CIOs as the new breed in the board room, but how shall they make the difference and fill out the gap at big table?

  • Boards are not monolithic--they typically contain a range of technology savvy, never underestimate the knowledge. Executives may have including their understanding and interest in technology. The CIO's role is to understand her/his audience and target appropriately. Frankly, unless the company's product is technology, there shouldn't be a lot of techie discussions going on in the boardroom. The opportunity for the CIO to influence decisions is to identify where IT can influence (product, customer, information, complexity) and discuss technology strategies in the language of the business (competitive landscape, revenue, cost savings, improved efficiency). 
  • On IT vs. in IT: Boards should be informed on what benefit is being delivered by IT and aware of constraints and risks. The board discussion may not be only centered around cost, but also on productivity improvement, business growth, talent strategy and GRC as well. Board role then is Leadership. Meets = continue. Does not meet = kill it or mitigate it. Focus on truth and value. IN IT: The Board is neither the programmer nor the implementer. 
  • Board has responsibility for failed IT projects: It's under their duty of responsibility and any Board that did not have a credible IT advisor on it was potentially in at least a moral breach of their responsibilities. It may be that the issues related to IT constitute the necessity for more than one IT resource accountable for implementations. For a CIO to be relevant in the Boardroom, the people in these roles must adapt. Understanding technology is important to the business but understanding the business will be paramount for a CIO who wants to influence the Board. 
  • The three keys to presenting IT value at board room are financial returns, return timeline, and risk, just like any other investment. If you can present IT project portfolio in a manner similar to an investment portfolio it makes instant conceptual sense to board and C-level folks. A CIO has leadership responsibilities that include the three legs of the stool: strategic planning, thought leadership and operational oversight. But how much penetration CIOs have got in Board Rooms? Even if few of them have secured a physical presence, have they got "voice" in Boardrooms?  They must be there as IT is driving dramatic changes in the business today. 
  • As new breed at board room, CIOs can bring pairs of fresh eyes and sets of open mind:
    1) "Paradoxical Thinking": Always see two sides of same coin, either business vs. technology; management vs. governance; innovation vs. standardization; speed vs. stabilization; 'keep the light on" vs. transformation; As CIO is at position to oversight business processes/ capabilities, should become a good interpreter at board room.    2)"Independent Thinking": Through the professional lens, CIOs may help optimize board governance process -from rubber stamp to deep insight, take advantage of the latest technology tools in running an effective board in the digital era.  3) "Innovative Thinking", According to industry survey, IT becomes integral element of business strategy, As many CIOs think that technology is the innovation engine and that without a proactive IT and Project management, no business can thrive ... the advice of walking a mile in a board member shoes is the most important. 
Every decision by every decision-maker needs to be informed by an understanding of how technology changes business processes. Although the technology understanding in the boardroom is improving, the level of knowledge required is increasing even faster CIOs should not only get a seat but really make differences at board room.


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