On the board’s agenda

Tech-savvy board members: A common language for transformation and the impact on performance

Technology and board composition

Many of the risks and opportunities facing companies and their boards today revolve around technology. From the risks posed by ransomware to the opportunities—and risks—afforded by artificial intelligence, technology is a critical factor in developing and implementing strategy, mitigating risk, and achieving performance goals. It is not surprising that transformations have accelerated, and as seen in the 2021 Deloitte Digital Transformation Executive Survey, investment in digital transformation has increased by more than 10% over the period of COVID-19.

It is therefore not surprising that the focus on technology and transformation
has impacted board composition. Many boards and their nominating/governance committees are considering whether and to what extent their boards of the future need to include members with technology skills and what types of skills are called for. Given the investment and momentum of a focus on digital and technology transformation, it isn’t surprising that boards are looking for the right composition to provide oversight. These transformations are focused on enabling resiliency in dealing with unexpected changes and challenges to the business environment or enabling the ability to use digital  echnologies to drive differentiation.

The rooting of technology in strategy and the investment this strategy demands leads some boards to assess their composition. They may seek out experts in technology or aspects of technology most relevant to the company’s business, or look for one or more directors who are “tech-savvy” —not necessarily experts, but rather sufficiently conversant with different aspects of technology to engage in meaningful discussions on the company’s technological opportunities and risks. In fact, the 115th Congress proposed legislation that would require companies to disclose whether any board member has “expertise or experience in cybersecurity” or, if not, how the board has taken “cybersecurity steps” to address the company’s needs. We’d hypothesize that these tech-savvy board members help to facilitate a common language between the board and management, driving more productive engagement and better company  performance.

While it seems reasonable to consider whether a board has the requisite technology skill sets—whatever they may be in the circumstances—there has  been little, if any, data concerning the impact of having a tech-savvy board on  the company’s performance. A study completed by Deloitte Consulting LLP in 2021 analyzed how the “techcentricity” of the board impacts the company’s
performance. The study and its conclusions are discussed on the following
pages.

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