Technology experts increasing priority for boards

Wednesday, 14 October 2015


    Keeping abreast of technological opportunities and risks is increasing priority for boards.

    In a recent article from the Harvard Business Review, technology expert Jean-Louis Bravard, who is a non-executive board member for London and Partners and the chair of Dot London, discusses the need for boards to have a technology expert.

    Researching the professional experience of non-executive directors at major banks listed in Britain. Bravard said that like almost every other major industry today, banking relies on hugely complex and enormously expensive technology.

    “I was curious as to whether the individuals charged with corporate governance would have any more than a layman’s knowledge of IT. I discovered that only one bank had a board member with some direct experience in technology. In that case it was as a sales executive,” he says.

    “I’m afraid this is typical not just in banking but across most major industries. Technology is the most important agent of change today; hardly any industry is immune to both its value-creating and disruptive potential. I perceive a large gap between the direct experience of non-executive directors and the experience required to challenge and support chairs and CEOs to bring the best technology to their business.”

    Fiona Balfour FAICD, a non-executive director who chairs a number of technology committees, believes technology governance in most corporations needs to be strengthened at management and board levels.

    “Most organisations fail to recognise technology as one of the four levers in strategy. The others being human capital, brand and capital itself. Technology is the fourth great lever. It is increasingly fundamental for strategy.”

    She adds: “I strongly support the hypothesis of appropriate technology expertise at board level and would argue strongly in its favour, provided that the company sets up a corresponding technology governance process at management level which interacts with the board committee and governance structure.

    Graham Bradley AM FAICD, non-executive chairman of Stockland Corporation, urges caution against over-reliance on “expert” directors.

    “Boards are at their best when they are a collaborative decision making group,” he adds, “where everybody is contributing even if they’re not a technical expert.

    “If you are someone who is on the board because you have a particular expertise, your job is to educate the rest of the board, not necessarily to make them equal experts, but to help them understand the issues and encourage them to raise any issues – including those that may not align with your view.”

    How to boost your board’s understanding of technology.

    Bravard offers the following principles to ensure corporate governance includes sufficient oversight of technology:

    • Hire a techie to your board. Give priority to individuals with “scars” – with both successes and failures and who continue to be involved with technology.
    • Don’t rely entirely on advisers. Many boards rely on technical advisers and consultants to assess their firm’s technology needs. Too often, this advice is generic and is used to reassure management that it is not falling behind rivals, leading to the predominance of the lowest common denominator.
    • Ask tough questions about technology spending. Using Moore’s Law, zero-based budgeting would call for technology spending to fall each year by about 30 per cent; in most companies spending goes up by at least 5 per cent each year, often due to legacy code that leaves companies vulnerable to new entrants.
    • Understand the cyber threat. New technology opens up vulnerabilities even as it creates value. Total security is not possible, but understanding the risk-benefit trade-off is essential.

    For more information, see All boards need a technology expert.

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