CIOs Say Corporate Directors Are Clueless About IT
Our exclusive research shows that boards of directors still don't understand the role that IT can play in driving business innovation. It's the CIO's job to change that.
Wed, November 14, 2012
CIO — Even as companies are relying more on technology to come up with innovative business models and fresh ideas for finding new revenue, many boards of directors don't understand enough about IT to keep up. Few CIOs sit on boards and, according to PricewaterhouseCoopers, just 1 percent of directors have any technology background at all. Discussion of IT issues in meetings around the mahogany table can be measured in minutes.
There's a dangerous lack of confidence in the board's digital literacy, revealed in our exclusive survey of 250 IT leaders. Sixty-four percent say the board "doesn't do its homework" about technology matters and 57 percent say directors rely heavily on what they read in the press to evaluate IT strategy. Some 40 percent say board members "don't really care about IT."
The Board Institute, which educates and evaluates directors about corporate governance, finds that just 6 percent of companies have a board-level technology committee, where directors are assigned to focus on the strategic use of IT. Vastly more common are boards that confine IT to the audit committee, where the outlook is not proactive or innovative, but risk-averse: Protect against security threats, comply with regulations and manage the risks of big projects and technology spending.
When it comes to strategic IT, says Susan Shultz, CEO of The Board Institute, "Directors are not informed."
CIOs can change that. In fact, as senior officers with fiduciary duties and as strategists responsible for corporate growth, CIOs must change that. A board that holds a narrow, defensive view of IT leaves the company vulnerable to competition, says Evelyn Follit, a former CIO of Radio Shack who has served on the boards of six companies.
An undereducated board can also stymie innovation, says Helen Cousins, CIO of Lincoln Trust. "If they don't know about technology," she says, "they can't imagine what I'm imagining." (Read more in "Boards Want to Learn About Emerging IT Issues.")
But you have to be smart about making change. Boards are long-established institutions with norms and conventions that date back to the days of the 13 colonies. Each has its own quirks and politics. Understand that the prime duty of a board is to oversee what the executives are doing on behalf of the stockholders. Directors don't want to compare Amazon's cloud to Google's. They want to know whether--and maybe a little bit of how--to use cloud computing to create a more valuable company. CIOs should avoid technical terms but be able to explain technology. Anticipate the directors' questions and artfully lead them to the ones they should be asking.