The technology gap in boardrooms needs to be plugged. “I would hazard that most public boards spend more time talking about accounting, governance and regulatory change than they spend talking about how future technology could disrupt their company, its products, channels, customers or operational model,” says Margaret Rice-Jones
, Senior Independent Director at Xaar.
Certainly, many big businesses will continue to be punished because their boards assume the existing commercial model is built to last. Margaret
, who was the former Chairman of Skyscanner, adds: “It is very hard to destroy the thing that made you successful, especially if you are the market leader. When you have been on a growth curve for several years, it is much easier to think that it is going to continue.”
So, how do you build a board which is able to navigate technological disruption? The subject was hotly debated during a panel discussion at last week's Non-executive Director Retreat
, held in association with Santander, EY UK and Brewin Dolphin. One idea put forward was to appoint a 'technology guru', someone who has the experience and know-how to compensate for a lack of expertise around the table.
, Chairman for Cisco UKI, argued that this was not the solution. “Putting a ‘tech-specialist’ on the board is probably the exact opposite of what you should do,” he stated. “It looks like a token appointment, when actually what you need to be carrying out is a digital culture change, which requires the whole board to take ownership.
“Boards need to ask: how do you optimise digital technology and how does it apply in your sector? There are so many technologies today that can influence your business.”
A similar point was made by Orna Ni-Chionna
, Senior Independent Director at both the Royal Mail Group and Saga. “NEDs will often not come to the board with a good understanding of technical issues or the customer journey. One of the solutions you hear is to ‘put a techie on the board’, but that will not solve the problem.
“Instead, boards have to think much more deeply about how technology enables – or forces – changes to both their vision and its delivery in the future,” she said.
It was agreed that the creation of an advisory board could be a useful way to bring experts together within an organisation, provided it was treated as a means to support the board’s thinking, rather than to replace or outsource it.
, Head of Programme Development at Criticaleye, said: “The message from this year’s NED Retreat is loud and clear: neither chairmen or chief executives want NEDs who hide behind their independence.
“The board, collectively, needs to be engaged and thinking about how a business model can be transformed. This absolutely demands an appreciation of how new technology is driving innovation.”
An increasing number of boards are putting mechanisms in place to ensure executive and non-executive directors step away from the business. This allows them to take a broader view on how the current strategy stands up to scrutiny in a shifting competitive landscape.
According to Shriti Vadera
, Chairman at Santander UK: "It is important to ensure issues are brought to the board before final decisions need to be made, allowing for early engagement which can bring a longer term, ‘step back’ view.
“The culture of the board is critical
– the chairman and directors need to make sure that they foster an environment where [people] feel able to engage on strategy and challenge shorter term thinking.”
While this may be uncomfortable for some boards, they need to acquire the necessary mindset and discipline. In the context of technology, it demands that NEDs have a duty to understand the business imperative to back innovation, something that may well entail moving away from a tried and trusted commercial model.
Margaret says: “It takes real vision and some bravery to step back from that and transfer investment somewhere else... However, history is strewn with senior management and boards that hung onto a success story for a bit too long.”
Don’t let your business be one of them…
, Managing Editor, Criticaleye