Excerpted from Digital Expertise in the Boardroom.
The growth of digital as an essential element of business strategy and operations has led corporate boards to consider whether their existing digital knowledge is sufficient, given the broad implications for the business. Many have determined that bringing on a director with digital expertise is the best way to bridge any gaps between what boards know and what they need to know. But just who is this mix of savvy tech wizard, trusted board counselor and thoughtful board contributor?
A digitally savvy director can make a significant contribution to the company’s digital initiatives — in and out of the boardroom. Outside of the boardroom, a digital expert can be a unique partner to the executive team, serving alternatively as a sounding board, a translator and, potentially, a coach. Digital directors may be asked to take on additional projects for the CEO, such as advising on acquisition targets or critical new hires, and frequently make introductions to cutting-edge digital and technology companies. A well-connected “digital director” can serve as a bridge, connecting a traditional business with new and innovative business models that might prove valuable.
In the boardroom, executives with the appropriate digital expertise can demystify digital, help management and the board clarify the specific digital forces impacting the business and provide insight into the ways customer behavior is changing and other important trends — all of which can advance the broader board’s understanding of the issues at play for the business. As a result, the executive team can spend less time educating the board and more time in strategic discussions.
Because they typically have hands-on experience in an area of digital and are still active executives, directors with these profiles also can bring an operational lens to discussions about digital, particularly in relation to capital investments, cultural change and the relevancy of existing technology systems to M&A. Capital spending is another area where the experience of digital directors can be particularly valuable, especially for boards more accustomed to large capital investments on physical stores or operations than the long-lead technology investments required for digital. While boards may have traditionally steered clear of operational concerns, it is critical to address issues such as culture, organizational structures and technology budgets when transforming a business.
In addition to serving as an advocate for the executive team in the boardroom, digital experts also are in the position to lead the board in more effectively challenging management assumptions and plans, when appropriate. Through their work with the executive team, these directors often have unique insight into the talent gaps and organizational impediments to change, and tend to be more confident than traditional directors asking tough questions about technology investments. When the board lacks this insight, it can be harder to determine the degree of progress the business is making and the readiness of the organization to make necessary changes.
Recruiting a digital director for show or to check a box is unlikely to be productive for the board or satisfying for the director. However, being clear about the reason for adding a digital expert to the board and setting the expectations for the digital director’s contribution to the board will go a long way to achieving the benefits the digital director can bring.
Read more about the important role digital expertise is now playing in the boardroom.