By Craig Stephenson, Senior Client Partner and Managing Director, North America CIO/CTO Practice, and Nels Olson, Vice Chairman and Co-Leader, Board & CEO Services Practice, Korn Ferry
As the now-popular saying goes, there are two types of companies: those that have been hacked and those that don’t know it yet. And this year, the ones who do know have had more than their share of headaches.
Already, in the first few months of 2017, the list of those hit with some form of breach includes such names as InterContinental Hotels Group, Arby’s, Verifone, Dun & Bradstreet, Saks Fifth Avenue, and UNC Health Care. Meanwhile, with reliance on technology only growing, the repercussions of outages only become a bigger deal, with airlines unable to fly or customer transactions failing. All of which is opening the door to an ever-pressing need for boards to bring on directors who are experienced CIOs.
The role includes a host of duties, including leveraging technologies to create operational efficiencies and competitive advantage; identifying opportunities related to mobility, cloud computing, digitization, and data; addressing threats and risks associated with information security and business resiliency; and utilizing one’s experience and judgment to oversee, question, and provide input on related budgets and strategic business priorities.
As Sheila Jordan, CIO at Symantec and board member of FactSet, puts it: “All companies are technology companies today. Technology is a lever to run the business, but also to change and grow.”
Recruiting the best, of course, includes some guiding principles. We’ve drawn a couple essentials from leading CIOs of major firms.
Update your mindset about the role of technology on the board. “More boards are waking up to the power of leveraging technology as a competitive weapon,” says Tim Theriault, former CIO of Walgreens Boots Alliance and currently on the boards of Alliance Data, The Vitamin Shoppe, and Wellmark Blue Cross and Blue Shield. He adds, “Boards need to gain an appreciation for what the possibilities are, including how technology can help established, successful companies with needed transformation.”
“Most companies measure their technology spend as a percentage of revenue, and having someone on the board with the relevant expertise and an understanding of what’s needed can be invaluable,” says Frank Modruson, former CIO of Accenture and currently on the boards of Zebra Technologies, First Midwest Bancorp, and Forsythe Technology. “Often that means asking the right questions of the internal CIO: Are we spending enough? Are we aligned on the critical business priorities? Did we get the desired results? How old are the core systems or platforms? The last is crucial and can easily be overlooked by directors who lack a technology background, because once technology starts working it generally keeps working, although it may be far from optimal.”
Define the role as an interface between the board and the internal CIO. An experienced, informed board member should be able to ensure priorities are identified to address key issues related to digital transformation. “Companies that don’t recognize they need to invest in new technology end up with more and more legacy systems, which are a breeding ground for risk,” says Jordan.
This engagement between directors and management starts with the permission of the CEO. “The savvier CEO wants someone on the board who can connect appropriately with management on technology-related issues and make recommendations,” says Charlie Feld, founder of The Feld Group Institute, which works with global corporations to develop next-generation business and IT leaders, and former CIO at Frito-Lay, BNSF Railway, and Delta Air Lines. “Traditionally, boards have tended to stay out of operational functions, but technology is so pervasive that best practice is now direct board engagement in technology through active committees.”
“On the FactSet board, I’ve been encouraged to meet with the management team, and to give advice to the CEO and the CIO,” says Jordan. “It’s important that the board understands the management team, and that interaction helps. It’s not about managing the day-to-day but about the experience and knowledge I can share to open their eyes to the future.”
It is likely that most companies will face unforeseen challenges arising from technology-related risk. But having an accomplished CIO as a member of the board team is an effective way for a board to make sure it identifies the most pressing technology priorities, establishes greater importance for the technology functions, and plays an active role in attracting top technology leaders. Perhaps most important of all, the CIO director can constructively challenge plans for the technology functions, which are the backbone of successful enterprises today.
A version of this article recently appeared on hbr.com.