Technology – the Future Boardroom
I recently wrote this article (titled utilising Technology in their publication) for ICSA – The Governance Institute exploring the future of technology in the boardroom. For those of you who don’t know, The Association of Corporate Governance Practitioners (ACGP) the organisation I am a founder member of have formed a partnership and have launched a West Midlands Chapter. Together, we are pushing the boundaries of the governance, working to ensure practitioners in this area have the right skills, competence and networks to deliver effective governance.
Technology is a key driver globally and as developments move forward in this area, the boardroom will have to keep pace. I hope in sharing this blog with you (which is a bit longer this month) it helps you to take stock and prepare for the future.
We live in a world where technology is developing at lightning speed. The result is exciting opportunities and massive disruption, creating big challenges for boards in organisations of every size and from every sector. I want to explore whether we are fully capitalising on the benefits of the latest digital developments in the boardroom, or are board members being left behind in the fourth industrial revolution, resulting in their organisations being vulnerable to attack and missing out on valuable opportunities to rise to new heights of performance?
Pace of change
Science fiction is becoming science ‘fact’ with every day that passes. Ongoing revolutions in bio tech and info tech are game-changers and the buzz words ‘globalisation’, ‘virtual and augmented reality’, ‘machine learning’, ‘cyborgs’ and ‘networked algorithms’ are central to the vocabulary of this new world.
Augmented reality glasses or headsets are rumoured to be in the development pipeline of tech giant Apple, moving us ever nearer to the fantasy worlds portrayed in the Marvel comics. Are we really that far away from the Iron Manhelmet, developed by the fictional Stark Industries, which allows its wearer to see data overlaying the people and places in its line of sight?
Professor Klaus Schwab, founder and Executive Chair of the World Economic Forum, calls the era in which we are living: “The Fourth Industrial Revolution characterised by a range of new technologies that are fusing the physical, digital and biological worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human.”
In order to have productive discussions at board level there needs to be enough understanding and knowledge of the digital world, but many boards don’t have the necessary expertise.
We currently recruit to ensure that boards have collective and individual expertise around finance, law and human resources, but is it time to ensure that the same focus is given to expertise in areas such as IT, data security, social media, cyber risk and emerging technologies? Although there may be expertise at the executive level, is there an argument for board representation in this area to be more robust with at least one board member with up to date and sector-relevant technology expertise?
Technology threat risks are real
Here are just three examples of recent corporate failures. I want you to reflect on these high-profile cases, and the role of the board, and consider whether they were sufficiently informed and knowledgeable?
- IT and systems – As reported in the Times, on June 22, 2018, TSB did not test its new IT system adequately before embarking on its ill-fated migration of customers that left thousands unable to access their accounts, according to IBM. The board got its assurance from Sabis, a subsidiary of the holding company, and its Chief Executive Paul Pester said the evidence it received was ‘instrumental’ in the board’s decision-making.
- Social media – In April 2017, a passenger was forcibly removed from a United Airlines flight ahead of take-off. In an initial statement, CEO Oscar Munoz backed the behaviour of the airline, but after a video of the incident went viral the airline was forced to consider its position. As a result of the outrage across social media, politicians expressed concern and called for an official investigation. S. PresidentDonald Trump criticised United Airlines, calling the treatment of its customer ‘horrible’.
- Data security – Imagine you were a board member of British Airways: would you understand the wider IT security issues around some 380,000 credit and debit cards potentially compromised as a result of a data breach between August 21 and September 5, 2018? Hackers were able to steal the details of customers who booked flights on the airline’s website during this two-week period, apparently by injecting malicious code into the payments section of the British Airways’ website.
What inventions should we be understanding and embracing?
Putting aside the dangers of the new digital landscape for a moment, I still think our boards are exposed through failing to maximise the benefits and opportunities that technology offers.
Other parts of businesses and organisations in almost every sector are engaging the use of technology, but are we doing the same in the boardroom?
So, what are the areas that other parts of the business are embracing, and what do our board members need to be aware of, to ensure that we are not left behind?
- The Internet of Things (IoT) is the integration of hardware and software without the need for human interaction. For example, in our homes multiple devices can work together to control lighting, heating, air conditioning and security systems.
- Blockchain was invented by Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin. This invention made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. It is said the underlying technology will do for trust what the internet did for information.
- Artificial Intelligence and machine learning mean that businesses are getting smarter and using data more intelligently. Robotic assistance and automation is creating real change.
- Drones are being linked with artificial intelligence that does away with the need for skilled pilots. Remote maintenance checks are a good example of their commercial use.
Responding to the challenge
In one of my NED (non-executive director) roles I was presented with an IT strategy at a recent board meeting. I commended the director for a great presentation, an excellent strategy and some innovative and exciting future developments. Here was an example of embracing technological advancements and ensuring that we were ahead of the game, future proofing and maximising potential. We heard about savings in manpower but redistributing the expertise of those employees, about using technology to systemise certain processes and introduce mobile working, digital platforms and robotics for engagement.
There was a but however: the only thing he had to offer to the board, after all this exciting technological advancement in the organisation, was support with our board portal and little else.
I encouraged him to consider the latest Kingsmanaction-comedy spy film. There is a scene where the secret agents are having a virtual board meeting. As each director dialled in from remote locations, a hologram representation of them appeared in a seat at the table. How far away are we from using this technology in our boardrooms, where we already have video conferencing? That technology does exist. We may not be ready for a virtual boardroom to that extent, but I do feel that it’s time to think about the future boardroom.
I was reading recently about the first robot citizen in Saudi Arabia. There was a demonstration of a robot fully (I say ‘fully’ tongue in cheek) engaged in a meeting responding to questions and contributing. With the merger of artificial intelligence and robotics could we see boards that include a robot to answer questions around variance and discrepancies? Could the same robot do the triangulation that board members normally try to do from experience and intuition in real-time, providing boards with early warning signals because of pre-programmed algorithms?
If you were a Star Trekfan you may recall Lieutenant Commander Data, a self-aware, sentient, and anatomically fully-functional android with impressive computational capabilities. Maybe that’s a board member of the future?
What about the ability for the boardroom to be connected through satellite or video access to remote sites to obtain answers in real-time about customer treatment, workplace conditions and environmental impact?
Personal development and education of board members could be boosted with online training taken to a new level and evaluations complemented by augmented reality. Imagine your one-to-one appraisal with the Chair being instantly recorded; your development needs tracked to available resources; diary time booked in and progress monitored seamlessly.
Boards need to ensure that they adopt and adhere to a governance code. Disclosing how they manage their governance is critical. The opportunities to maximise the potential of the digital landscape are vast. Why isn’t our technology helping with code compliance, corporate disclosure and board evaluation?
The potential to work with technology and create the boardroom of the future is a compelling and necessary consideration. The merger of biotech and info tech can only expand the opportunity to make boards more responsive, prepared and intuitive.
We have to know how to use technology and manage it better. Don’t leave the technology to do compliance, but ensure that technology helps to reduce the time we spend on compliance. When the board’s foresight functions need to be exercised why not integrate as far as possible with technology?
The greatest opportunity for boards is in that space of insight and intuition, bringing together all the platforms to triangulate and predict and therefore become great boards. The new digital world offers exciting opportunities for boards to back up beliefs and test assumptions, enabling directors to combine intuitive thinking with an analytical mindset.
Until next time…