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IT or digital capability on your Board or governing group. Do you need it? Why?

By Mark Nicholls, Partner, Information Professionals

Considering whether you need information technology (IT) or digital capability on your Board? Then the first question to ask yourself is why.

It’s interesting how views have changed in just a few years. Take the Australian Institute of Company Directors (AICD) over the past five years. Each year, the AICD runs their Essential Director briefing and produces the Essential Director Handbook.  This is a useful gauge of where the peak body sees the role of IT/digital.

Alan Cameron, NSW Law Reform Commission
When presenting the 2013 Essential Director briefing, at the Wesley Conference Centre in Sydney, Alan Cameron said: “IT is now such a critical issue that failure to monitor and govern it properly is likely to be a failure of the director’s basic duty of care and diligence”.

He reflected on his own perspectives, stating that when the Essential Director handbook was first drafted, he considered removing the IT matters from it.  On further consideration, he accepted that many IT issues confront all directors, not just those of IT organisations.

2013 was the first year where IT/digital was covered.  Since then this trend is demonstrated by the IT/digital topics covered within the Essential Director Handbooks.  Let’s take a look:

Year
Total Pages
Dedicated to IT/Digital
Pages
%
2013
51pp
5.5pp
11%
2014
48pp
8.5pp
18%
2015
38pp
8 pp
21%
2016
39pp
6 pp
15%

In this past year, the % seems to have plateaued.  However, I will be interested to see where it lands in 2017 given the increased focus on digital both as a disruptor and an opportunity.  It is certainly now clear that IT/digital is firmly a key issue that should be continually addressed as part of a Board’s governance and strategy role.

IT management meeting
However, one objection has been stated by some very experienced Directors. It is that bringing in “special” skills like IT onto a Board comes at the cost of “traditional” skills, like being able to read financials or understand risks.  In my opinion, this view is a little misplaced for a few reasons.  Firstly, it sounds like they may have experienced a less than optimal Director appointment process. Perhaps there was a requirement to populate the Board with only a relatively narrow range of capabilities and without sufficient diversity. That can happen.  Not having the minimum mandatory skills to be a Board member should never be sacrificed, and shouldn’t have to be. However, the ideal Board composition should contain enough diversity of skills and backgrounds to adequately address all the challenges that the organisation faces, and of course this should include IT. There are many capable people out there that have the basic competency requirements as well as that of ICT/digital.

Secondly, there is an error in thinking that an understanding and appreciation of IT/digital is a specialist skill.  It is not.  It is a new general skill for all managers and directors.  I am old enough to remember a time when some senior executives and managers had trouble reading a set of financial statements, leaving such an understanding to the “bean counters”.  These days this attitude would be rare.  Today, financial literacy is an accepted general skill.  I would argue that the same evolution is underway with IT/digital.

If you need any more convincing, and I am sure most of you don’t, ask yourself these questions… who are the global leaders in:

 Bookselling, then publishing then retailing and more………………………...............Amazon
Video entertainment…………………………......…………………...............…………….Netflix
Music entertainment………………............................................iTunes, Spotify and Pandora
Movie production ……………………………..……......…………….. Pixar (bought by Disney)
Photography………………..........…….Apple, Samsung plus Shutterfly, Snapfish and Flickr
Advertising………….....……………………………………………………………………Google
Direct marketing ………....…………………………………………………….Google, Groupon
Telco………………………..……………………………………………..………………….Skype
Recruitment Company …..………………………………….…………………………..LinkedIn
Taxi/Personal transport………………………………………………………………………Uber
Accommodation………….......…………………………..………………………………..AirBNB
News media……………………..…………………………………….Google, Facebook, Apple

Each of these are leaders in a marketplace that used to be a physical marketplace, that is now largely a digital marketplace and they have leading IT capability to support them. 

If you accept the need for improved managed IT services capability on your Board, then the next question is, in which areas and how.  There are a few methods that are available to you to make these determinations.  We’ll cover that in an upcoming blog.

About the Author:

Mark Nicholls, Managing Director, InformProsMark Nicholls is the Managing Director and a Partner with Information Professionals Group (IPG). He formed IPG in 2005, after a career of delivering software development and business transformation programs in the telecommunications, transport and government sectors in Australia and overseas including the United States.  Mark leads IPG's Programs, Projects and Change Practice.  He is a highly skilled program manager and adviser, specialised in leading, managing and advising organisations on the delivery of ICT, digital and business transformation.  

 Mark is an active industry participant. In 2013 he was elected to the QLD Council of the Australian Information Industries Association (AIIA), was appointed as Chair in late 2014 and to the Board of Directors in late 2015.  Mark is the inaugural Chair of the Qld Digital Economy Industry Collaboration Group, involving a range of industry groups that are supporting their constituents in the adoption of digital business.