In this CXO roundtable, Tony Uphoff is joined by Acceleration Economy analysts Janet Schijns and Wayne Sadin. The three discuss the need for, and process of, technology education and training for boards of directors (BODs). Towards the end of the discussion, Wayne and Janet discuss a few other priorities for boards of directors, including the need for more diversity.
01:22 — Technology education for BODs is becoming increasingly important. Why is the understanding and education of technology so important for boards today? Every company — whether it is a technology business or not — is heavily reliant on tech, as the digital world is becoming the new norm, suggests Janet. The board of directors — whose role reflects oversight and governance, and is a key player in business strategy — needs to guide the understanding of technology’s potential use, benefits, and risks. Close to 40% of today’s BODs have a technology committee, which speaks to the growing importance of technology education.
02:23 — Tony inquires about Wayne’s thoughts on the rising need to educate board members on technology. Wayne argues that boards have two duties: loyalty and care. He defines the responsibility of care as “what board members need to know in order to oversee the organization properly.” While it’s important for BODs to be able to ask good questions, it’s even more important for them to be able to understand the answers.
04:17 — Janet predicts that there will be a growing role of the technology advisor on boards of directors who will be responsible for setting up practices to inform and advise BODs on technology. She notes the difference between this concept and technology consultancy companies, which typically advise a business, as a technology advisor will be educating boards of directors with a focus on shareholder value.
05:09 — Tony notes the importance of technology education at a strategic level. He asks Wayne how to educate boards in a way that will have a positive impact, as opposed to solely recommending new technologies.
06:17 — Wayne emphasizes the importance for boards of directors to not exercise management roles. They must be comfortable asking CISOs for clarity and further understanding when presented with concepts they do not understand. They must feel that they can adequately exercise a level of oversight that they can understand, ask business questions about the concept, and be responsible for answering questions that may come from the perspective of a shareholder.
07:45 — Janet reflects on the ways board composition has changed throughout the last several decades. Technology education will enable boards to onboard members that feel more comfortable with new technologies. This will bring about a new representation of “technology people” on boards. There is a newfound need for business people who understand technology in order to inform businesses on how this tech will impact the overall business, employees, sustainability goals, and throughput.
10:44 — Tony reflects on a time when he was giving a presentation and used the term “technical debt,” which left a few board members needing further clarification on what he meant. It is imperative that business users speak with a strategic business point-of-view to ensure the board is able to relate to the outcome of what is being explained.
12:50 — Companies are beginning to implement innovative technologies, specifically in areas of customer experience. In doing so, they are also creating a massive risk footprint with data for their business. Janet suggests that board members are not always aware of the risks. Wayne agrees and adds that board members must know how to ask about the risks.
15:09 — Tony clarifies a few components of Janet’s point. It is important for board members to be able to identify, understand, and mitigate any potential risks that are posed by new technology. He also references the underlying rise in the liability of board directors, which he notes is highly important. Janet adds that board members of publicly traded companies have insurance, but it comes with the expectation that the board member acted in the best fiduciary and oversight responsibility; they cannot be negligent.
17:08 — Janet predicts that over the next year or two, insurance isn’t going to cover a board because they didn’t do their job. Currently, 40% of companies have a tech committee, with 100% of companies projected to have one soon. Businesses cannot escape the fact that everyone is now using technology — the backbone of every company ought to be intimately involved in the oversight and risks them, notes Janet.
20:25 — Tony describes the balance between the “gas and brake pedals” within the context of tech training for BODs and asks for Wayne and Janet’s thoughts.
21:08 — Wayne says it is “time, and past time, that boards looked at having a qualified technology expert.” This person cannot just be someone who understands “digital stuff,” but must understand risks and opportunities. This person must be in the room at every meeting. Back in 2021, Wayne published an analysis on Acceleration Economy that discussed the six cybersecurity principles to protect from ransomware. He says this analysis does not include technical terms and allows readers to understand and ask the questions that will protect them from cyberattacks.
23:20 — Janet agrees that no one is looking for the board to become CIO-level technical experts. Rather, they must understand how to ask the right questions and how to give the right answers as it relates to technology. She encourages boards to stretch the boundaries of innovation while ensuring to serve in the role that is responsible for the oversight of risks.
26:11 — While there is great emphasis placed on risks, Wayne suggests the board’s real focus should be on strategy. Janet adds that CIOs should be running the innovation in a company. If companies can only get one committee together, she advises it to be a technology committee, which “creates the most upside for a company” and a need for governance. Additionally, she notes that boards should feature more women, as it has been shown that women create a more open environment, ask questions, and inspire male board members to work harder.
30:27 — Tony echoes Janet’s statements and notes that having more women on boards creates a diverse culture that makes for a more effective board of directors.
Want more tech insights for the top execs? Subscribe to the CXO channel: