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Company boards? Must try harder - you're just not digital enough

Despite all the senior-level chatter about the importance of digital-business initiatives, only a tiny minority of firms have put executives on the board who have any digital knowhow.

Few firms have boards containing a high level of digital expertise. Image: Shutterstock

Firms are fond of talking about digital business but that enthusiasm has yet to translate into board-level appointments of digital experts.

Earlier this month, research from analyst group Gartner suggested that digital-business initiatives are behind a surge in planned innovator and digital-leader hiring and a decline in the IT management tier.

Now a new report suggests those digital-type appointments have still to take place, with less than six percent of companies worldwide described as having boards containing a high level of digital expertise.

About one in five companies has at least one digital member on its board, according the study from executive recruitment firm Russell Reynolds Associates, which it says is not enough to be classed as highly digital.

Gartner admits that what 'digital' means varies widely - much as e-business did in the late 1990s - but it is generally understood as involving a move away from a preoccupation with systems and apps to focus on an organisation's efforts to build new channels and markets through technology.

According to Russell Reynolds, the success of retailers depends on their ability to exploit social networks, while oil companies pursue data-driven models to help maximise extraction.

"In this environment, every function has a digital component, every C-suite executive must be able to lead a piece of the company's digital transformation, and the CEO must be the chief digital visionary," said the report's authors.

Geographic variations on digital boards

The level of digital expertise at board level varies hugely according to geography. Almost all the boards - some 88 percent - that can be classed as highly digital are to be found in the US. The remainder are in Europe, with none in Asia, the research found.

However, any suggestion that the US lead in this area is due its dominance in the technology sector is not borne out by the figures, with one in three of the highly-digital boards operating in non-tech sectors, Russell Reynolds reports.

The US tech companies rated as highly-digital are Apple, Cisco, Dell, Google, Hewlett-Packard, Intel, Microsoft, Oracle and Amazon.com, while the non-tech firms are Wal-Mart, Berkshire Hathaway, Procter & Gamble, FedEx, Coca-Cola and Allstate. The only two in Europe are Telefónica and Nokia.

The study of 300 Fortune 100 US, European and Asian companies and 3,307 directors found that 15 percent of newly appointed board executives in US organisations have digital expertise, compared with five percent in Europe and one percent in Asia.

The researchers expect those figures to rise this year to 19 percent for US firms, and to eight percent in Europe.

About

Toby Wolpe is a senior reporter at TechRepublic in London. He started in technology journalism when the Apple II was state of the art.

3 comments
casey
casey

This is a sad, but predictable state of affairs. Where most Executive leadership has intentionally throttled CIOs by treating them as sub-departments of Finance without true C-level representation, they are now apparently turning their backs on the executives most suited to understand and deploy digital solutions. CIOs, most of whom are anxious to hold on to their jobs given historically short tenures, have seemingly done a poor job building a case for why a technology perspective is critical to senior leadership in today's organizations. Putting "more digital" representation on boards of directors is unneeded. Companies should look internally as the resources they need for digital understanding are most likely already employed, just not being utilized effectively.

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