As companies progressively rely on technology to lower costs, power new business models and gain a competitive edge, corporate boards are increasingly recognizing the value of having CIOs and other technology executives participate on boards with them for their technology/business expertise.
Indeed, the percentage of public companies that have appointed technology-focused board members has grown from 10% in 2012 to 17% in 2017, according to a study conducted by Deloitte. The percentage of public companies with tech executives on their boards almost doubles to 32% for "high performers" - companies that have outperformed the Standard & Poor's 500 Index by 10 percent or more for the past three years.
For guidance on what it takes for CIOs to succeed at the board level, we recently turned to Ralph Loura, most recently CTO at Rodan + Fields. Loura, who has held CIO roles at Hewlett-Packard, Clorox and Symbol Technologies, also serves as a Technology Advisor at REL Advisory, providing strategic advisory services to startups and mature companies in the technology, commerce, and consumer goods industries.
HMG Strategy: Why should the CIO be a leader in the boardroom?
Ralph Loura: CIOs are increasingly being sought out for corporate boards as more and more companies face digital transformations and born-digital competition. CIOs are not just being placed on boards for their technical knowledge - they're also being tapped for their broader understanding of how technology can be applied to tackle business challenges. They're valued not only for their technical acumen but also for the business viewpoint for the art of the possible.
What advice do you offer to CIOs who are interested in landing a board position?
RL: Board members aren't managers, they are advisors. The role of board members is to ask appropriate questions and to help the C-suite to identify where there may be opportunities for improvement.
One of the most important qualities of a successful board member is to be candid. People bring their best face forward when they engage with boards but they often soft-pedal tough questions. Boards are there to provide external perspectives for better options. You as a board member with technical experience should be able to help the C-suite think through their choices but be careful not to play armchair CIO. The board is there to help the CIO, not to judge them.
The worst thing you could do is to assert your strategy and vision over theirs without due cause. This isn't a competition, it is a coaching and oversight role.
Which business metrics resonate most with boards?
RL: It depends on the conversation.
For cyber risk, there are a few metrics that matter. Stay away from volume numbers, "we detected 125 attacks this month" as they are meaningless. Instead, the board wants to understand relative maturity and operational efficiencies.
As for platform or operational KPIs, the board doesn't care about technical comparisons such as the organization's percentage of cloud versus on-prem. For KPIs, you should be able to connect what you're doing to the things that boards care about - helping to drive growth or expanding into a new geography through the use of technology.
In becoming boardroom-ready, where do CIOs need the most coaching?
RL: Far too many CIOs have stayed clearly in their swim lanes (technology and operations) and I think those CIOs that are more sought by boards have played a role in P&L, corporate strategy or go-to-market activities. If your company doesn't afford you an opportunity to contribute in that way, then at least spend time to understand those areas and how your work contributes to the broader company and its outcomes.
Can you point to any examples where you've worked with a board in educating them as to how technology can be leveraged to tackle a particular business challenge?
RL: In one case we had board members asking about how we could use machine learning or AI to deliver a new experience. What we did was to use real and practical examples within our business to highlight what we could do with these technologies. In some cases, it's going to result in years worth of work to validate the application of technology, including testing. Many technologies are promising but are early in the value maturity cycle. Having a working prototype is an important early step, but getting adoption and the user experience right are key and those things take time and energy.
You've got to know the industry that you're in and the company's makeup to understand what could be disrupted within your company. Where is there automation that can be applied that could change the economics of markets? Don't think in terms of codifying existing processes, but how might operating models change all together if certain assumptions were changed?
As a CIO, you're rewarded for delivering on your budget, for being a conservative steward of resources and assets. Now, we're asking CIOs to take risks and to think disruptively. We didn't breed that skill into tech leaders, we bred conservative governance. This helps suggest the rise of the Chief Digital Officer, someone who is a bit more entrepreneurial.
So, for CIOs, it comes down to defining the capabilities the organization has and where there are gaps where I'm going to double down on the future. And using non-traditional methods to go after those opportunities.
What types of skills or characteristics are boards looking for in prospective candidates?
RL: Boards are looking for additional talent and perspectives, particularly in the tech area. A CIO needs to think in terms of helping the company to think about technology bright spots that can be applied as opposed to being on the tech committee or the audit committee because of their background. You need to earn your way there through reputation and networking.
To land a spot on a public board, begin mingling with public board members. Be knowledgeable, do your homework. Educate yourself on the role of the board member. And spend some time on private company boards.