Most boards may not know it yet but the business over which they preside is fast becoming a technology business.
Such is the increasing impact of data on decision-making and the need to disrupt or counter-disrupt, that it’s almost impossible for companies not to look for competitive advantage through technology.
Throw in artificial intelligence, robotics and automation, and a complex picture emerges where technology is not just a tool to get the job done, but the backbone and reason to exist.
Of course, companies will be at different stages of their digital development but the fact remains that technology will have an increasing impact on the boardroom, through the risk it poses to business and through the change in culture it demands.
“There are few aspects of a board’s functioning that are as crucial to long-term corporate success as risk management,” says a recent PwC practical guide for the boardroom.
Most, if not all, board members will know that already. Governance is a key responsibility but technological change and the impact it can have on a business pose new problems, new risks and demand new skills and knowledge.
Digital risk is a growing concern, especially with the growth in malware such as the recent WannaCry ransomware attack. Given that the volume of mobile ransomware rose more than threefold during the first few months of this year, according to the Kaspersky Malware Threat Report 2017, it’s easy to see, with the proliferation of mobile devices in business, how this can potentially hurt any company.
Ensuring business continuity for customers in the face of threats and change, while minimising business and reputational risk for shareholders, are the challenges facing any boardroom today—so what can boards actually do about it?
How can a board help to align corporate culture with business strategy, a culture that can be agile enough to deal with the digital challenges ahead?
Start at the top
Culture needs to start in the boardroom and the rest of the business should take its lead from that. Strategy, risk and culture must be tightly knit and encapsulate how the business needs to operate.
Part of that culture is understanding change and working towards a more agile approach to how business will ride the various waves of change without getting distracted. That means understanding technology and how it can improve business, and how it can create but also mitigate risk.
Essentially, culture needs to be a regular boardroom agenda item so it can move with the times.
“It is often said that ‘culture eats strategy for breakfast’, so yes, it should be very high on the board agenda,” says Tessa Bamford, a non-executive director at Wolseley and Barratt Developments, speaking to KPMG.
“Strategy away-days are important and perhaps the starting point for any discussion around culture—that’s where the big picture starts.
“But equally it is important that culture is addressed when discussing other board issues, whether that be the risk agenda, CEO succession or technology. It’s not just a once-a-year conversation.”
It’s a good point. As businesses become increasingly digital, their role in markets will evolve and be multi-paced. It brings into question the more traditional approach to board meetings and board packs.
There needs to be greater fluidity, improved access to ongoing business data, and a well-informed board that is up to date with developments and not playing catch-up four times a year.
A millennial moment?
Does this mean reaching out to millennials within the organisation? Not necessarily. While board members undoubtedly vary in terms of their digital literacy, it doesn’t mean this is an age thing. This is about skills and knowledge about what customers want.
It is also about how technology can help business thrive, but also knowledge of the potential risks, in terms of data loss and business service disruption. Whether that person happens to be a millennial or not is irrelevant, but getting someone with a different skill set and perhaps a younger outlook in the boardroom could be hugely beneficial.
It’s a fact of life that the majority of millennials will have a different attitude to technology. It will be interesting to see how millennials will change boards and attitudes to technology and talent in the future.
Blake Stephenson, product manager (EMEA), Nasdaq Board & Leadership Solutions, comments that “almost certainly a board pack to a millennial will become nothing more than a compliance document. They will not be consuming information from paper documents and making notes in the margins. Information will be accessed and distributed closer to real time, with ongoing collaboration, especially on mobile [devices]”.
Decision-making processes are changing as senior leaders and board members are replaced by up-and-coming talent, but compliance cannot be compromised by rapid change.
Perhaps there is an argument for having youth on a board, to reflect the customer base where relevant. Companies need to be able to meet this shift, if only in piecemeal.
The culture has to reflect the overall goals of the business but remain compliant, instilling responsibility where necessary, but encouraging openness and agility to cope with changing times.
While cyber-security grabs all the headlines—and boardrooms have to take up the mantle to deal with it—technology is also enabling incredible insights into business operations and customers through data collection and analysis.
How boardrooms deal with that data and what culture they put in place, could ultimately determine the future success or failure of that business.
This article has been prepared in collaboration with Nasdaq Corporate Solutions, a supporter of Board Agenda.