In the face of our complex global environment today, we encourage boards to prepare for upcoming changes such as artificial intelligence (AI), ESG, cyber security and other emerging fields that impact on businesses and organizations across industries and countries.
Since these new technologies can potentially transform organizations, boards are appointing board members with specialized expertise, Boards now adding experts in technology or key areas has increased from 56% to 67% since 2020. Further, research shows that boards that include experts show 5% more revenue growth and 8% better stock performance.*
The intent in adding an expert is to discover ways to adapt to and leverage new opportunities that can improve a business and sustainable value for the community it serves.
Nevertheless, directors are disappointed with current results. They cite:
- Gaps exist in how well the board experts (CTO, Cyber, AI, etc.) connect with technology leaders (CIO, CTO, Chief Information Security Officer) on technology topics.
- Board directors see technology and innovation costs are in a black box as their technology leaders cannot articulate the impact the investments in these areas will have on the business.
- Having the expert on the board is important for understanding risk management but we need to widen the discussion to understand how these opportunities align with our strategic engagement.
- Experts often do not understand the business overall and do not contribute to the full discussions of directors for direction, decisions and problem-solving.
Based on our independent board evaluations of companies the root cause of the frustration is that both experts and directors need better ways to learn, understand and collaborate,
How to Increase the Value Experts Can Bring to Board Work Ahead
The role of experts in board discussions is to: 1) share how new technologies can be aligned and integrated into business strategy, 2) explain and teach directors about the innovation, the risks, and applications for the future, and 3) inform the directors thoroughly so they can make technology decisions related to the impact of competitive advantage, regulatory compliance, investments, and potential threats.
To do this well, experts need education in two areas: 1) understand the business from the balcony view with strong strategic thinking skills and 2) learn the governance rules and duties the director role holds. Boards can provide resources to have experts learn the strategic context of the business and get certified in corporate governance.
This education helps experts to add more value as they then educate directors in return.
They can:
- Provide clear presentations of key objectives with understandable explanations of the business need and how the innovation can help drive the business strategy.
- Collaborate with the CFO and Finance Committee to clarify the impact the new technology can have on the business, sharing what problems it will solve and the expected outcome.
- Provide sessions for the board to help the directors and CEO to understand the new innovation direction, it’s potential and possible challenges.
- Be available to answer questions of directors who wish to learn or better understand and to ask for feedback about how to be more helpful in the board meetings.
- Join committee meetings and board strategy sessions to share helpful insights.
Meanwhile, directors can both learn and make improvements.
They can:
- Work with experts to set, monitor and report on key metrics for the innovation, aligned with business results. These can be reviewed regularly at board meetings.
- Consider creating a subcommittee to address the opportunity and the work to successfully gain the advantages it can bring.
- Ask good questions of the expert. The goal is to explore and understand angles and perspectives about what the board should do to help drive success, set an ambitious goal, understand the worries that need attention and access the strength or needs for talent in the organization to do the work ahead.
Asking questions stimulate discussions that bring wiser ways to solve challenges ahead.
Contact us for help and resources to improve the value of board outcomes.
Resources Citations--------
*Deloitte 2023 Global Technology Leadership Study
** The Tech-forward Boardroom: Fostering Richer Boardroom Conversations on Technology
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