Putting together a tech-savvy board
Just as the highly anticipated seventh season of its record-breaking series Game of Thrones (GoT) was underway, premium cable network HBO was hacked.
Word spread that part of the proprietary information stolen from the company’s computers were material related to GoT, such as script or story treatment that steadily surfaced as spoilers even as the series played out. Considering how valuable a show like GoT is, how careful HBO has been in preventing leaks, and how obsessive fans can get, this is a very serious problem.
A cursory check of the members of Time Warner’s board of directors (HBO is an operating division of Time Warner) and their official company profiles shows that none of them seem to have leadership experience overseeing technology security and infrastructure. Most have held CEO posts in the financial or media industry.
In the face of this serious breach, it makes you wonder how different the conversation of the board would have been if one director had spent a good part of his or her career being directly responsible for dealing with cybersecurity threats.
Based on data from the Spencer Stuart Board Index 2016, many boards of S&P 500 companies do not have the appropriate technology knowledge to manage critical technology-driven initiatives and threats. Which is probably why that same report shows a growing interest in recruiting directors with technology and digital expertise.
Deloitte’s latest publication, “Bridging the boardroom’s technology gap,” looks at three ways boards can address this deficiency.
Appoint a business-savvy
technologist
When looking for a director with relevant IT know-how, it is important to also consider the candidates’ business acumen and strategic mind-set. As a member of the board, this individual should be able to provide guidance on technology issues beyond cybersecurity and also cover opportunities, disruptions, complex digital transformations, and technology spending.
One board leader Deloitte spoke to looks for people with horizontal—versus only vertical —experience when considering adding someone to the board. Another advises the board to look for the type of CIO who not only keeps “the lights on” but also focuses on transformation and can impact revenue.
Take an offensive technology position
Boards with a proactive approach to technology may have an advantage over those that maintain a purely defensive stand. And how do boards go on the offensive? By engaging the CIO.
CIOs often get less face time with the board compared to other members of the C-suite whose roles are more traditionally intertwined with board requirements. But by bringing CIOs into board meetings, directors can get a better picture of the role of IT.
The CIO can better explain how IT is more than cyber and risk management, that it is also about technology-driven business opportunities and digitizing the enterprise. With the help of business unit leaders, CIOs can also better explain to the board how technology enables the former’s various functions.
Of course, it is up to the board to act on the insights or recommendations from CIOs. But for those actions to be well-informed and sound, the board has to regularly engage the CIO.
Consider a technology
committee
Some companies delegate technology oversight to the audit or risk committee still with the thinking that IT is largely about cybersecurity and cyber risk. But that’s slowly changing. Although Deloitte’s analysis revealed that only 9 percent of S&P 500 companies had a technology committee in 2016, this number has been climbing and for good reason.
Many boards use their technology committee to stay on top of their proactive technology moves. These committees are usually in charge of integrating technology into the business strategy; reviewing technology disruptions in the industry, market, and competition; and reviewing strategic technology investments.
The technology committee usually includes leaders from the board, executive management (that is, CEO or CFO), and a director with a technology background. This group could serve as the link between the board and the growing number of executives responsible for various aspects of technology, such as the CIO, the chief information security officer, and the chief digital officer.
In addition to these approaches for bolstering the board’s appreciation and understanding of technology, Deloitte also recommends that directors engage the CIO in an open and honest discussion around these key questions:
1. Does technology drive competitive advantage?
2. Do major IT initiatives deliver promised value?
3. Does technology foster or deter business resilience?
4. Does technology enhance or obstruct employees’ ability to get work done?
5. Does IT have the right talent and culture?
Many of the challenges and opportunities facing businesses today involve technology in some way, and there are signs that boards are acknowledging the need to be more tech-savvy: Deloitte’s report shows that in 2010, only 17.2 percent of S&P 500 high-performing companies (listed companies whose stock price outperformed the index by 10 percent or more for the past three years) had technology directors. Last year, that proportion had grown to 31.3 percent.
It’s a steady, but still slow, shift toward making technology expertise a key component of the board. But as companies like HBO grapple with the risks and rewards that technology present, we can expect more boards to level up their tech skills.
