Tech-Driven Agility Transforming the Board and C-suite
An in-depth discussion with JoAnn McNutt, Boyden Leadership Consulting and Co-Founder, Board First Consulting, LLC
“In today’s digital world, the critical decision for boards is whether to go for offense or defense.”
JoAnn McNutt, PhD
Senior Advisor, Leadership Consulting, U.S.
- An offense or defense governing approach should be one of the factors that informs the make-up of the board. For example, an offense governing strategy involves ethics as part of the board’s conversation, particularly data privacy and guardrails for the consequences of innovation (for example, Alexa listening to all conversations). The defense governing strategy is more about ensuring systems and policies are in place to reduce risk, protect people, consumers, and data.
- Increased competition in the tech industry requires a commitment to innovation, taking a more progressive stance, and recruiting key strategic thinkers with ecommerce and deep-tech experience to the board. To keep pace with the growing demand for talent and breakneck pace of change, an offensive approach to governance is becoming more common and necessary.
- Conversely, when pursuing a defensive governance approach, the board’s decision-making will often center around determining which competencies must be recruited to the board (e.g., AI, cybersecurity, blockchain, etc.), and which ones can be brought in through management-level hires, third-party educators, consultants, ad hoc committees, and/or advisory board members.
- It is also important to note that dysfunctional board dynamics often arise from a board low in collective EQ. No matter how much technical expertise the board has, if it does not have the emotional intelligence to work as a team, maintain a healthy culture, understand the role of the board, and make decisions through consensus, great technical expertise may come at a cost.
- Ultimately, the board’s success is all about the customer. In the tech industry particularly, there are no boundaries between countries or people; it’s a boundless and limitless world, so a tech board needs a global perspective with different world views. Ideally, the diversity of the board’s composition will reflect the customers the company serves.
- The more diverse the board is (cognitively, linguistically, culturally, etc.), the more important it is for the board chair to actively manage the board and facilitate effective discussions. This is very often an acquired skill and the value of training the board chair to be an effective facilitator should not be discounted.
- Another cause of board dysfunction can result from the board not agreeing on how to function as a cohesive team. The board is charged with making the most difficult and financially risky decisions, the ripple effective of which can impact millions of people, and the board’s work must be achieved through only a handful of meetings a year, some of which are virtual. Suffice it to say, it is a big ask.
- What about committees and effectiveness? There is a Goldilocks factor: too many committees can be counter effective, while too few can undermine effective governance. The organization's life cycle stage influences its strategy, which in turn dictates the governance structure and the number of committees needed. Boards should not hesitate to use ad-hoc committees or task forces to support management on specific, challenging topics and issues.
- Digital governance. Boards are grappling with the pros and cons of utilizing tech for their governance practice (e.g., AI to track meeting minutes, online board portals, etc.). The board must gain agreement on its philosophy for tech use: what are the values around managing privacy, raw data and sharing confidential information? For example, one important board principle might cover breach of confidentiality; there are myriad examples of board members accidently disclosing confidential information and bringing down the entire board.
- The organisation is a living and breathing organism that needs to evolve, grow and respond nimbly to external factors. The board needs to evolve in concert with the organisation in response to the market, as influenced by tech, climate and geopolitical change.
- Board composition should be assessed as frequently as strategy is refreshed. The tech industry is changing rapidly, so strategy and board composition should be assessed with a similar cadence. However, a balance must be sough - too much board turnover may result in disruption and lack of continuity..
- Take AI. Some boards bring in a consultant for a special session, others want a board member with AI experience. It’s important first to think through what the board is trying to achieve. The first instinct tends to be bringing on a board member with AI experience; but the board should think through if the expertise might be better at the executive level. The board’s job is to provide guidance and principles for the business to implement in its approach to AI.
- Learn the ‘power of the pause’. It’s important not to be swayed by external noise and the trend of looking for a CEO or board member with AI skills. First stop and ask, “What does AI mean to the business, our strategy, and the board? To what extent do we react? What is our goal?
- To summarise, as technology rapidly evolves and impacts industries, boards must be intentional about their governance principles, including their strategic stance, composition, ethics, and both external and internal perspectives. They need to closely evaluate the CEO and their team. The critical, brave question remains: Do we have the right people leading and governing the organization?
• • •
Technological and digital literacy is now a must-have amongst the leadership team. Here are the top trends across the C-suite driving digital transformation:
- CTOs are now expected to spearhead organization-wide initiatives, encompassing tech fluency, ESG objectives, and more. They are pivotal in leading digital transformations and fostering a culture that supports tech-driven strategies.
- The rise of artificial intelligence, particularly generative AI, has prompted many organizations to create the role of Chief AI Officers (CAIOs), with many organizations combining it with other leadership positions like chief data officer or chief digital officer. This change reinforces the importance of continuous learning, adaptability, and the ability to lead cultural and technological change.
- Just as financial literacy is essential for executives, technological and digital literacy is now crucial. Executives need to understand and leverage technology to drive business success. Here's how key C-suite roles are evolving to include digital competencies:
- CEOs must align the company's strategy with digital goals and cultivate a forward-looking, innovative culture.
- CFOs should harness technology for financial process improvement and strategic planning.
- CHROs are enhancing HR tech systems and to manage tech talent recruitment and retention.
- To remain influential and drive positive outcomes, CHROs must increasingly develop digital skills, recognize the organizational implications of AI, understand data governance, and design for change
- CMOs need to embrace data-driven marketing and ensure multi-channel consistency.
- Continuous learning and adaptability are essential for board members and senior leaders to stay relevant and manage digital transformation effectively. Reverse mentoring and training are key strategies in this endeavour.
- To attract and retain digital talent, organizations need to create a meaningful value proposition, foster cross-functional collaboration, invest in digital experiences, and ensure the C-suite is actively involved in digital strategy and talent management.
- Read more on the topic:
Deloitte: Understanding the Five Competencies of Transformational Technology Leadership
EY: How the C-suite can Address the Talent Crisis in Digital Innovation
Harvard Business Review: Is Your C-suite Equipped to Lead a Digital Transformation
HR Executive: 4 Digital HR Skills That Will Boost Your Influence
CIO: Essential Skills and Traits of Chief AI Officers
