Over the past 40 years, computing, technology, and data have permeated almost all aspects of our lives. Our interactions with the world are increasingly mediated through systems of historically unimaginable complexity. The technology “stack” required to do something as mundane as ordering a pair of socks from Amazon on your smartphone contains many elements that, just decades ago, would have been indistinguishable from magic.
When you go to order those socks on Amazon, your device displays, almost instantaneously, a complex range of data and information communicating with gigantic databases at hundreds of megabits per second. All the while, learning algorithms analyse and predict what you would like to buy next. For almost everybody, this infrastructure and complexity is invisibly woven into the fabric of their lives.
Similar infrastructure and complexity are also invisibly woven into every business. Thirty years ago, almost all companies—excluding explicitly technological or engineering firms—interacted with STEM (science, technology, engineering and mathematics) through an unloved IT group, who were more tolerated than embraced. The financial services industry was possibly the first industry to truly realise the benefits of investing in STEM through high-powered computers and mathematicians. Today, the STEM revolution has rolled over into almost every industry.
Living in the age of STEM
Retail companies use cloud computing and machine learning to manage inventory and forecast demand in stores or online. Resource extraction companies use supercomputers and complex mathematical models to understand existing and potential mining and drilling operations. And construction companies use structural and planning models to build ever more complex buildings more cheaply and quickly.
One of the defining characteristics of the world of STEM is that change happens exceptionally fast. Computers get more powerful, and the software they run becomes more sophisticated over timescales of months, rather than decades.
Over the next few years, companies in every sector will have to deal with the impact of diverse technologies, such as machine learning, artificial intelligence, low-Earth orbit satellites, quantum computing, and blockchain on the core of their business. Some technologies, like data science, may be applicable to all industries. Others, such as blockchain and quantum computing, might turn out to be useless or too advanced, respectively, for many industries. But all companies and, critically, their boards, need the knowledge and experience to make informed decisions about STEM topics.
Although not exclusively the case, non-executive directors tend to be senior industry figures and therefore less adept at understanding sophisticated technology and less able to scan the horizon for new and disruptive advances across the STEM universe. For all industries, CEOs, CFOs, and CTOs will struggle to integrate existing technologies into their businesses and to make strategic bets on how to cope with the opportunities and threats that new technologies can bring.
Lawyers, bankers, managers…
Currently, boards are dominated by industry professionals. I believe there is a strong case to be made that boards should seek out non-executive directors with a STEM background. If companies fail to take on STEM professionals that truly understand the increasingly complex technology and science that drives them, they risk falling into irrelevance.
A recent post by the Institute of Directors listed several requirements for a board of directors. It said the board was “required to be sufficiently knowledgeable about the workings of the company to be answerable for its actions, yet able to stand back from the day-to-day management of the company and retain an objective, longer-term view”.
Many boards will fail to meet this requirement if they do not expand their STEM knowledge and expertise. As industries and the landscape they operate in change, so must the composition of the boardroom.
Mistakes in STEM can be expensive and, in some cases, catastrophic. Corporate history is littered with failed information technology projects, wasted spending, and disruptive technologies overlooked until it is too late. I believe the impact of this can be as damaging—if not more damaging—than an inappropriate strategic decision, a failed merger, or a poor acquisition.
No board would allow a CEO to undertake a merger or acquisition or change the strategy of the business without significant and insightful board-level scrutiny, which challenges the management to justify their decision.
When equally crucial decisions emerge in the realm of STEM, the same quality of scrutiny must be applied. So why do so few boards have the capability to do this, given the enormous impact that science, technology, engineering, and mathematics can have on a business? It’s time for boards to radically upgrade their STEM expertise.
Ewan Kirk is a technology entrepreneur, philanthropist (Turner Kirk Trust), a NED at BAE Systems and founder of Cantab Capital Partners