Topics:   Risk Management,The Digital Director

Topics:   Risk Management,The Digital Director

February 20, 2018

Disruption or Distraction? Focused Oversight in the Age of Innovation

February 20, 2018

Over the years, the Consumer Electronics Show (CES) in Las Vegas has featured miles of technology and millions of people—2.75 million square feet for 3,900 booths and nearly 185,000 attendees in 2018 alone.

Under those tents are innovations that will disrupt markets and your companies. The question is, which ones?

Not every innovation is disruptive, and not every market is vulnerable. According to a recent blog by Harvard professor Clayton M. Christensen, written shortly before the most recent CES event in January, “disruptive innovation,” a term Christensen coined in 1995, is “the process by which products and services, often less expensive and less sophisticated, move upmarket until they displace established competitors.”

Displacement is no fun; it generally means downsizing and can mean demise. So directors naturally want their companies to disrupt, rather than be disrupted. That’s why NACD launched the NACD CES Experience in partnership with Grant Thornton. Participants enjoyed a director-curated tour and program that explored the technology trends of greatest relevance to business, helping attendees see implications for their own companies.

General trends highlighted on the tour included the impact of artificial intelligence, machine learning, chip and processing technologies, and sensor technologies on human-machine interface. The small group of directors also witnessed new technologies in voice input and response, image and vision interactions, biometrics, digital assistants, computational photography, shoppable images, virtual environments, and biometric trackers.

NACD inaugurated a similar annual event last July, the NACD Technology Symposium, where directors toured businesses in Silicon Valley, interacting with innovators there. And in April 2018, NACD will host a Global Cyber Forum in Geneva, Switzerland. NACD, working with others, has been providing cyber-risk oversight guidance for directors since the year 2000, most recently with the NACD Director’s Handbook on Cyber-Risk Oversight, 2017 edition. Also our Emerging Issues resource center has a segment on the impact of technology change.

Such programs, encouraging focus amid complexity and change, are models for what board leadership is all about: focused oversight. Based on my own board service, and on my decades of dialogue with directors, I believe that identifying and prioritizing issues for oversight is the single most important value that boards bring to organizations. It’s opposite of the “shiny thing” syndrome, in which our attention darts to whatever is new and interesting.

In a video interview with several directors at the opening day of CES, NACD Chief Programming Officer Erin Essenmacher asked why they came. Lianne Pelletier, whose views on CES were recently featured in the Wall Street Journal, focused on infrastructure, a key topic at Expeditors International, where she serves as a director. John Hotta, a director at First Washington Robotics, focused on the accessibility of platforms like Amazon’s Alexa. Maureen Conners, on the board of Fashion Incubator San Francisco, said that directors should bring the top “three to five” issues to the attention of their CEO to ask for a report on strategic implications.

In short, all the directors interviewed said that they wanted broader horizons but would continue to focus straight ahead.

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