Regardless of the industry of a company, a technologically literate board is a must. Having an advisory board for your business that also understands current trends in technology can make a huge difference for the company. Unfortunately, for people who’ve spent most of their careers working in industries that are not heavily focused on cutting edge technology, they may not have much knowledge of current tech trends unless they’ve taken an active approach to learning more. For your board, it’s important to have several members who are technologically literate and can help propel the business toward the future.
What does an advisory board do?
An advisory board is in place to provide your company with advice. Not all companies utilize them, but an advisory board is an invaluable resource. While many companies have a board of directors, an advisory board is more informal and provides flexibility that a board of directors does not. No matter what kind of board your company utilizes, you should make sure they’re technologically literate.
What does it mean to be technologically literate?
For boards, being technologically literate means that they understand the newest processes in place and how tech can seriously benefit the company. They also can understand the impact that technology is going to have on the future of business and apply that knowledge to the specific business they’re advising. Instead of simply relying on traditional methods for running the business, newer technology provides better customer service, improved cybersecurity, and more efficiency.
For a board to be considered technologically literate, they need to have at least three members who have a solid grasp on technology and how it relates to business. Just one member won’t make much of a difference; if you want to see something statistically significant, you’ll need at least three technologically literate board members.
How does it make a difference?
Studies have shown that a technologically literate board has financial benefits as well as being more efficient and preferable to consumers. A study with Thomas Apel, chairman of the board at Stewart Information Services Corp., and Jennifer Banner, CEO of Schaad Cos., showed that these financial differences can be profound. For the companies that meet these requirements, they see, on average, “17-percent higher profit margins, 38-percent higher revenue growth, 34-percent higher return on assets and 34-percent higher market cap.” These differences are extreme and can launch a company into solid success.
Unfortunately, the study also revealed that less than 25 percent of companies with a minimum of $1 billion in revenue have what is considered a technologically literate board. Across industries, there are instances of digitally savvy boards, but some industries have more up-to-date boards than others.
How do traditional boards operate differently?
Instead of considering immediately how technology could improve the business or help solve prevalent issues, traditional boards stick to older methods to try to solve problems. They’ll think about current strategy and then consider the resources available and how to use them. While traditional boards often still think about how technology could be helpful, it’s often the last resource they seriously examine.
On the other hand, technologically literate boards almost immediately begin considering how technology can help solve issues or further the company goals. They’ll test their ideas, learn from that information, and find the best way to improve business functions.
A tech savvy board will certainly be better prepared to define and successfully drive your long term strategy.
How can you improve your board?
If you do not believe that your board is technologically savvy, it’s okay. You can easily take steps to fix the issue. While you want to think twice before replacing board members because you likely choose them for their experience and other valuable reasons, the next time there’s an opening, choose someone who is well-versed in technology. Find out if they have background experience working with technology. For current board members, work with them to enhance their knowledge. Show them the statistics on the benefits of being technologically savvy and then find resources and ways they can gain more knowledge and experience. Bring in experts to help teach new concepts and technology or encourage board members to attend conferences, take courses, or read up on the industry.
As a board member, for me personally, attending Singularity University together with the whole board and key executives of a company was a game changing experience.