A Tech-Savvy Board Sets a Right Tone for Shaping the Culture of Innovation.
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1. IT Strategy as an Integral Element of the Corporate Strategy
A Tech-savvy Board oversees strategy: Forward-looking organizations weave IT as an integral part of Strategic Plans, many corporate directors, and senior executives would like boards to have a more frequent and more constructive role in IT strategy.
IT becomes part of the overall strategy: Technology is rapidly becoming an integral part of many companies’ strategic plans. Understanding the importance of IT to the company’s business model is important for effective oversight of technology initiatives. Boards can no longer avoid, delegate or ignore the need for technical competency among their ranks.
Boards need business-technology-savvy strategic thinkers among their ranks: It's a clear signal that boards need a set of competencies within their ranks to demonstrate knowledge of business enterprise architecture and the business use of the nexus of technologies that are increasingly driving businesses - cloud, mobile, social media and big data. Business Architecture drives, but can also leverage Technical Architecture.
The role for the IT leaders at the boardroom: Their role is to identify and present potential strategic alternatives uncovered by disruptive technologies and participate in embedding them into the Business Architecture. IT fundamentals get more attention in the boardroom. Directors are particularly involved in overseeing and understanding more traditional IT issues, such as the status of major IT project implementations and their companies’ annual IT budgets, as well as overseeing and understanding risks related to compromising customer data.
2. Innovation Agenda
True, the board has a role in approving and overseeing the implementation of the enterprise strategy, a key component of which could be innovation, thus, a tech-savvy Board oversees business’s Innovation Agenda:
If the innovation represents creating a significant change to the company, this must be presented to the board. Needless to say, internal innovation must be recognized by the corporation and rewarded. By innovation not only it means product and services innovation but also structure and organization. This helps in prioritizing the innovation as a key strategy and having the board fully apprised to help provide feedback and guidance to the senior management. So the management team can gain a huge advantage for their organization if they seek and utilize innovation in equipping their organization to build and maintain multiple cultures and connect all the right dots.
The role of Board is to help and encourage the senior management team to set an innovation climate that is sustainable and drives future growth: So, the leadership team must create a corporate culture where innovation thrives. In its oversight and guidance role, Boards must continually evaluate the management team to determine if the right strategy and culture are thriving in the organization. Therefore, every board should have an innovation committee or have innovation somehow weaved into its oversight responsibilities.
Innovation is increasingly technology-dependent: Innovation happens at the intersection of market insight and technological know-how. Technological capabilities are of little value without the market insight that determines their application. And market insights left unexploited by technology create vulnerabilities that can be attacked by opportunistic competitors or new entrants. By understanding this, the important intersection between technological know-how and market insight is encouraged, not blocked. Technology is evaluated in concert with customers, channels, products, and markets, serving as a catalyst to drive strategic innovation. Therefore, Board oversight of Innovation agenda will directly impact business growth.
A tech-savvy board is more informative: While directors bring many competencies to the table, most do not have access to information about innovation and its potential related to the businesses they oversee Companies should establish on-going avenues to information which will regularly feed BoDs understanding about trends and potential innovation for their businesses. A tech-savvy board will have the advantage of pulling enough resources and pushing the business model of technology, trustworthiness, prepare, and launch change, innovation, and ensure what happens next.
3. The Oversight of IT Governance
There are inherent risks in innovating, Tech-Savvy Boards oversee IT Governance, there’s trend that IT governance is converging with corporate governance at the age of digitalization.
It is healthy for the BoD and Senior Management to honestly assess their company's maturity level and capabilities for change: Besides strategic planning and innovation oversight, Board also oversees other broad areas like governance, investing, and enterprise architecture, etc. This will help them with foresight. Then help build a roadmap or blueprint to change or improve these capabilities to enable more quick response to consumer and technology opportunities and threats.
Strengthen the technology governance structure: There's potential issue relates to the increased risk of the IT department and the business becoming disconnected. Without board oversight of a strategy-matching business enterprise architecture, costs can easily spiral (returns become difficult to realize); key operational aspects of BT can become disconnected (information disconnectedness further reduces the strategic potential from business intelligence); risk can increase significantly.
Risk oversight is not as same as Risk Management: BoDs do not manage risks but oversee risks. The board must be comfortable that management is identifying and appropriately responding to risk, and that the board itself is apprised of the most significant risks facing the company. To reach this comfort level, effective boards ensure that management has put in place an effective risk-management process, and the directors assess whether risks are undertaken and managed consistent with the established risk appetite. Further, the board has a role in seeing to it that the company has an effective enterprise risk management framework to manage risk effectively.
With the changing nature of technology, a tech-savvy Board is also a learning Board, an innovative Board, and more chance to grow as a high-performing Board as well.
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