Your Grandpa’s C-Suite: Improving Tech Fluency at the Top of the Organization; No board member or executive gets a pass on critical tech literacy
By Jim DeLoach, Former Andersen Partner and currently a Managing Director at Protiviti
Copyright 2023 Corporate Compliance Insights (CCI). This article originally appeared on CCI original article maybe found here. Reprinted with permission. No further reproduction is permitted without permission from CCI.
In our hyper-connected world, just about every company is a tech company. As commerce and technology become increasingly intertwined, it’s even more important for senior executives and board members to ensure they have basic technological understanding.
Research indicates there is a financial performance payback from a technology-savvy board. According to an analysis of the boards of U.S.-listed companies, those with boards of directors that have at least three technology-savvy members outperform other companies. These outperforming companies reported notably higher profit margins, revenue growth, return on assets and market capitalization. Note that “technology savviness” is defined as an understanding of the impact that emerging technologies will have on the industry and business model in the future.
It is also beneficial to have one or more individuals with deep technology expertise serving on the board or as advisers to the board independent of management. But the pervasiveness of technology suggests that every director should at least understand how technology enables the organization’s strategy and business model as well as the implications of disruptive innovations to their industry. Bottom line, every director should be technology-engaged. No director gets a pass.
Likewise, senior executives should be similarly engaged. But one study reports that just 7% of large companies have digitally savvy executive teams. More important, the study notes that companies with digitally savvy leaders outperform peers on revenue growth and valuation by over 48%. Only 23% of CEOs are considered digitally savvy.
Technological fluency is important. According to another global survey, risk concerns for the next decade drive a stake in the ground on technology. The results of this survey indicate that the more significant risks for the next 10 years include the rapid speed of disruptive innovations enabled by new and emerging technologies outpacing the organization’s ability to compete without significant changes to the business model.
Other top-rated risks relate to the impact of the changing workplace, the threat of new competitors, evolving customer preferences, the utilization of insightful data analytics, resistance to change and data privacy/cybersecurity. Technology is an underpinning to all of these risks. The focus on innovation and digital transformation to retain relevance has never been stronger.
Bottom line, it is a technology-driven world. Below are thoughts around improving technology fluency in the C-suite and boardroom.
Stay current with the evolving technology landscape
To stay abreast of technological developments, one approach is to bring outside experts into the C-suite and boardroom and invite them to keep the executive team and board apprised of technological trends. Alternatively, identify and lean on expert resources inside the organization — regardless of the function they are supporting.
When seeking guidance from advisers and insiders, insist on getting it in plain, practical terms. There are also many publications and subscriptions with strong technology content presented in relevant ways. Senior executives and directors should take the initiative to select the ones they find most useful.
Beyond the basics, it helps to view technology as a strategic enabler rather than a shiny object implemented for its own sake. Leaders should focus on the organization’s long-term strategic goals and how technological innovation can help reach those goals. Strategic conversations should:
- Consider the capital deployment ramifications and the related upside opportunity.
- Understand how existing legacy technology in the organization might be an obstacle to the achievement of growth goals.
- Recognize the risks emerging technologies can pose — for example, the risk of improper algorithms and bias inherent in artificial intelligence (AI) — and ensure management has implemented mitigations to address them.
In the end, it is up to each executive and director to sustain their technology currency.
Check out Jim’s website.