As information technology (IT) continues to evolve, so do the oversight responsibilities of corporate directors. From big data analytics to social media to cybersecurity, technology creates opportunities for companies to innovate, to create operational efficiencies, and to develop a competitive advantage.
These potential rewards can bring significant risks, however. Directors have the task of ensuring technology is integrated into both company strategy and enterprise risk management—and to do so they must first gain a deeper understanding of how technology is impacting their businesses.
The series includes insights from leading technology experts and top executives from AT&T, Citigroup, Dunkin’ Brands, Kaiser Permanente, and Oracle, among others, and focuses on critical IT areas for directors, such as:
how emerging technologies are altering the business landscape;
critical questions boards should be asking about technology;
the role of the CIO;
balancing IT risks and opportunities;
To complement the video series, NACD has additional resources, including white papers, articles, webinars, full transcripts of each video, and a discussion guide for directors who would like to take a deeper dive and bring these topics into their own boardrooms.
To watch The Intersection of Technology, Strategy, and Risk video series and access the supplemental resources, visit NACDonline.org/IT.
Throughout Monday’s plenary sessions, a key message from panelists was the need for directors to blend quantitative—harder—data with qualitative—softer—complements. For example, a focus on shareholder return but with a stakeholder view, the intersection of situational awareness and the ability to use intuition, or the need to harness qualitative data with application of context. In an interview with Jeffrey M. Cunningham, managing director and senior advisor of the National Association of Corporate Directors, RichRelevance Co-founder and CEO David Selinger shared how directors can bring big data into the boardroom.
To a room full of attendees admittedly dissatisfied with the level of technological literacy on their boards, Selinger relied on his expertise in the field of e-commerce data analytics and groundbreaking work leading the research and development arm of Amazon’s data mining and personalization team.
The Creation of Data
The amount of data created today, and available for mining, is outstanding. As of 2012, 2.5 exobytes of data are created in one day. In 2004, the Internet traffic per month was 1 exobyte. According to Selinger, this figure both exemplifies the risk and the opportunity big data presents. For example, the current iPhone has the ability to tell Apple Computer where its user is at all times. Businesses can use this data to pinpoint the best offers and products that consumers may be interested in.
“All the different data around a consumer is the same as 100 years ago,” said Selinger, “but our ability to harness it has fundamentally changed.” Even broader, big data has significantly altered the rules of business competition, especially in Silicon Valley. Governance, however, has not yet adapted to this shift and technological pace. “Boardrooms are not designed to handle situations in which the tenets of the organization are subject to fundamental restructuring in just five years.”
Lessons for Directors
So what can directors do to tackle the unavoidable big data trend? From his experience as an executive and a director, Selinger observed that “the best thing my boards have done is force themselves to ask themselves the hard questions.” In many cases, the hard questions are the simple ones. How does this new product or technology impact our business? “It is the willing to be somewhat pedantic, somewhat provocative.”
On the heels of the NACD Directorship 2020™panel, Virginia Gambale, director, JetBlue and managing partner, Azimuth Partners LLC; Helene D. Gayle, president and CEO, CARE USA; director, The Coca-Cola Co. and Colgate-Palmolive Co.; Michael D. Rochelle, founder and president, MDR Strategies LLC, director, Military Officers Association of America, trustee, U.S. Army War College Foundation; and Clara Shih, CEO, Hearsay Social and director, Starbucks, discussed the perspectives, expertise, and skill sets that will be critical for boardrooms of the future.
Gambale noted that some of the issues that will confront boards in 2020 are obvious today. Globalization, technology and innovation, the drive for transparency coupled with short-termism, and a focus on shareholder returns will require a certain expertise at the board level. To meet these challenges, Gambale suggested one valuable mindset is contextual awareness—the ability to lead and make decisions in the context of what is going on in the environment around you with the information you have.
“Another way of thinking about contextual awareness is as the intersection of situational awareness and the ability to use intuition to take advantage of opportunities,” said Rochelle. “It’s a 360-degree awareness.”
“Part of situational awareness is to ensure that in a globalized world you have the ability to speak each other’s language and talk across the divide,” explained Gayle. “We can be brokers for merging creating wealth with creating social value.”
Reinventing the Future
While some technologies, such as social media and mobile, enhance existing business models, some companies are developing technologies that will completely alter the future. Shih pointed to the examples of 3-D printing and self-driving cars, noting that embracing embrace rapid innovation can redefine the customer experience.
Directors and management will need to prepare to keep pace with evolving technology. “The bylaws in corporate governance were meant to maintain stability. We need to be aware that in that environment we need to try harder to carve out time to brainstorm about how businesses can be transformed by these technologies.”
Onboarding Future Directors
“Ensuring a board is prepared to embrace emerging technologies starts with an effective onboarding process. Boards must do a better job of thinking about diversity as more than numbers,” Gayle explained. “How do we make sure what that person has to offer is brought to light? In onboarding, we need a focus on dialogue—having a discussion about what that member brings to the table.”
In addition, considering younger directors may also prove fruitful, she continued: “We have deliberately looked for younger candidates on my board—they understand some of these worlds better.”