IT or digital capability on your Board or governing group (Part 3). The how.

By Mark Nicholls, Partner, Information Professionals
Considering what options you have in order to add more IT or digital capability to your board? Great! If you haven’t had a chance, read our earlier article describing what capabilities you might need, and whether they might be a priority for your organisation/s. We also introduce the difference between the general IT skills and specialist skills of interest to Board Directors.  
digital strategy
Here, we define four approaches you can take for adding the capabilities you’ve identified.  None of them are mutually exclusive so you should mix and match them to suit.  

At times, multiple approaches may be necessary, as it may not be possible to have one person or one way that provides the right capabilities now and into the future. Some of these are better suited to building the general skills introduced in our last article, and some are more relevant to the specific or transient topics that can come and go in prominence from time to time.


The first option to consider is hiring Directors with the Digital/ICT capability who can inject their unique perspectives into your Boardroom.  As covered in our first article, this should not be at the cost of the corporate governance skills that all of your Directors should have.  You should focus firstly on the general IT/digital skills listed in our last article. If you feel you have these covered, then you could also consider specialist IT skills that your organisation will be focusing on over the coming years. 
The benefit of hiring is that there is no better learning than on the job learning. So having someone with good IT/digital skills can bring insights and perspectives that can help your entire Board to lift their own capabilities in this area. If you choose well, you may get someone willing to spend some time outside of the boardroom with your other Directors, to accelerate their learning.  This is a good step to building long term capability in your Boardroom.  Remember though, that depending on your Board culture, and the size of your Board, having one person on their own to quickly change the perspective of your Board, may be asking too much. 

The next option is the active development of your existing skills.  There are multiple ways of doing this.  On the job learning is one way through increased dialogue and discussion at the Board table, and increased discussion and information papers or presentations from the executive team.  As already mentioned, having Directors with more IT/digital savviness can help uplift everyone, either through Board discussions or discussions outside the Boardroom.
Additionally, there are significant opportunities for external training and education.  The AICD is one such body with increasing amounts of IT/digital education for Directors. Another option is coaching and mentoring for some Directors. If you have strong skills on your Executive team then building opportunities for high value contact time between specific Directors and Executive can be helpful. 
Skills development should be adopted by all Directors, as part of their continuous learning. And there is no better area to invest time than in IT/digital, given its changing landscape.

 
The third option is to extend the Board’s consideration of important or challenging matters through Board Committees or Advisory Boards.  This will be organisation specific, as one topic could be challenging for one organisation, but easy to deal with for a different organisation. 

This approach gives you flexibility to involve Directors (due to their special knowledge or interest, or to support their growth), Executive (due to their role, special knowledge, or to support their growth) and external advisors or experts.
 
Sometimes Boards may use Committees or Advisory Boards to assess candidates for future Board vacancies.  For those Directors or Chairs concerned about whether bringing in IT/digital skills means sacrificing basic corporate governance skills, then this could be a good testing ground.
Where you have existing Board Committees (eg Risk Management, Remuneration etc), it is prudent to consider how the IT/digital landscape may change their scope and role.  And in doing so, do they have the skills and capabilities to deliberate on this expanded scope.  For example:
  • Does your Risk Management/Audit Committees also cover Security/Privacy? How would this change the operation, make-up, reporting?
  • Does your Nominations/Remuneration Committees also cover IT/digital skill needs and recruitment/retention strategies? Have you got the skills on that committee to understand current and emerging needs in this area?
 
 

The final option to consider is consultancy or advisory input.  This could be used to accelerate the improvement in general IT/digital skills across the Board.  

It could also be used for specific topics that may be of interest from time to time.  It could take the form of research and discussion papers, presentations, hosted discussions, and guest presentations.  




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.  

An active industry participant, Mark was elected to the QLD Council of the Australian Information Industries Association (AIIA) in 2013, was appointed as Chair in 2014 and to the Board of Directors in 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.

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 2014 and to the Board of Directors in 2015.