Monday, June 16, 2014

An Informative Board

11:45 PM  Pearl Zhu  No comments

The foremost thing is to realize that IT is strategic at the board level. 

Information is the lifeblood and one of the most invaluable assets in digital business today, the corporate board as a top governance body plays a significant role in overseeing business strategy and monitor business performance. To connect the dots, can today’s digital board become more information-driven, and IT savvy? But how?

Strategic IT: The foremost thing is to realize that IT is strategic; and as such, it should be a distinct part of the business strategy telling how to maintain compliant and secure and how to enable business growth. It is a board responsibility to ensure that the strategy covers all important parts, to question it and to finally decide on it. Often in traditional organizations, IT is not part of the business strategy at all. By understanding the importance of digital knowledge flow, the board can ensure that IT as a part of the strategy work which needs to be understood and brainstormed more often in the boardroom. Because IT's ability to embrace the transformational new technologies (Social/Mobile/Cloud/Big Data/Industrial Internet) can mean the difference between a firm's long-term success and failure.

'KIDM' effect: An effective IT can enable the Board to become more ‘informative’; and the IT savvy board can lead IT to get a new charter to focus on KIDM; that is knowledge - information and data management to the right person at the right time with right reasons. KIDM improves measurably with analytics, as the speed, accuracy, and precision of the decision which in this new market has a new level of importance and competitive value. IT Agility (time-to-market and speed of sense-response) become vital for long-term success by using IT as a competitive weapon.

The BoD capability: A high performing board has a solid capability to govern the changing tide of technology and its impact on business. But first of all, IT needs to be involved in the development of the enterprise strategy not just aligned with it. They need to deliver the unmet needs of the enterprise business leadership, so they become a competitive asset not just an infrastructure. But to become a sustainable competitive asset, they need to start to become input to the C-Levels, as to not only risk identification but value-adding, that will improve the performance of the employees and add to the brand as customers will see it and feel it. The expertise to especially understand the impact of technology issues and the potential impact on business requires a significant improvement by Board members.

The BoD grooming: This must be addressed through better grooming and selection of board candidates and mentoring/coaching once they are on the Board; help them bootstrap their members to raise themselves to the level of knowledge and sophistication required to fill their oversight and fiduciary responsibilities. Business understanding is a prerequisite for being a board member in the first place, and to add to that you need different members to have important experience/ competence in many other areas. IT is one of them, as IT can be a success factor and a business boost or worst case, run you out of business due to not being able to cope with regulations or taking decisions on huge projects with an unclear scope, timeline, and budget. IT is strategic in every business and IT management experience from a business perspective is essential to the board. Not every Board member needs to be versed in IT, but every Board needs to have the IT related expertise and experience to formulate relevant questions and understand management's answers.

The Board competency: There is much to be done in terms of having appropriate competencies around the board table to deal with all aspects of governance responsibility, including IT. Research is showing that there is a significant void in terms of enterprise business technology governance and given the sweeping changes in computing technology which are now sweeping all sectors of society; it is negligent to continue avoiding the responsibilities it brings. In addition, company executives do not have an impartial view on their function and, therefore, cannot be seen to be objective. Every day they are battling their corner for resources, funds, and sometimes recognition. Therefore, a well-balanced company board with a proper nonexecutive structure usually means that decisions are taken somewhat more impartially since the nonexecutives are not tied to the company as are the executives.

Five barriers: There are several barriers to be overcome in shaping an ‘Informative’ Board: (1) Some directors still don't see IT as being important (2) Directors don't want to appear uninformed, so they won't start asking questions (3) IT competent people have not developed the communication skills to convey concepts and ideas without lapsing into technology acronyms (4) Many people with good IT skills lack the complementary business skills required (5) There is a lack of willingness to ask the hard questions about skills required around the table to meet the needs of enterprise today.

There is still a propensity to try to make the technology changes "go away" or to ignore them. The matter of fact is that the changes sweeping the world are hugely disruptive and there is nowhere to hide. The changes are touching every industry and activity, but they have yet to produce a wave of response at board level. Hence, boards need to focus on many technology issues to call themselves corporate stewards. The organizations are at a tipping point to shape the more ‘informative’ board, and only the fittest ones will survive.




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