If You Watched Senators Question Zuckerberg You Know Why CIOs Belong On Company Boards

First published at Forbes.com Leadership. At a moment in history when billion-dollar companies are made from a clean sheet of paper and digital is eating everyone’s business model, you’d expect technologists to be in hot demand as non-executive directors on company boards. And you’d be wrong.

According to Gartner research of publicly available information, just nine out of 1,086 (0.8%) board members on FTSE100 boards have a CIO, CTO or technologist background. Across the FTSE250, the research shows only 32 directors out of 2,045 board members (1.6%) have such experience.

In contrast, 50% of the total is CEO experience, while CFO, accounting and banking experience make up the other almost 50%. According to Lorenzo Larini, Gartner’s Group Vice President of North America Consulting, these ratios are indicative of a similar situation at DJIA and S&P 500 boards, and broadly the same among quoted-company boards worldwide.

In other words, board-level decisions about new technology and its strategic and competitive deployment are being made mostly by lifers in finance, banking, and general management.

Which seems bizarre given what is coming over the horizon. For example, says Larini, “we predict, as Gartner, that in the next five years, platform business models will create a new market leader in half of all industries.

“Almost none of the large quoted companies in the UK, Europe, and the US, have the necessary technology expertise on their boards. Without that, boards cannot play their most important role which is intervening with substantive conversations about strategic decisions early enough to make a difference.”

Were you in need of an analogy to understand why those in oversight need to know enough to at least ask the right questions, look no further than Mark Zuckerberg’s Senate hearing last week, which had tech onlookers eye-rolling. As CNN Money summed it up: “Most of the senators who asked (Zuckerberg) questions had no clue how Facebook worked, what the solutions to its problems are, or even what they were trying to achieve.”

Similarly for board oversight, where once technology was more ‘stovepipe’ in reach and impact, and could be left to experts, now it touches every decision.

What’s required is both some expertise in core technology—say Web analytics, artificial intelligence, robotics, or IoT— as well as experience and vision as to what the technology will do in the user environment, how it will enable future value for customers and change industry landscapes in doing so.

The board research study was led by Robin Roberts, a former senior partner at the executive search firm Egon Zehnder. All told, it analyzed 3,131 biographies of FTSE 100 and FTSE 250 company directors, using the companies’ own websites, Bloomberg, Reuters and LinkedIn.

To the findings, Roberts says: “Governance is important, but boards are not just about governance. Their purpose is more than just to referee an internal game.

“Shortly will come a future where many boards are making really stupid decisions.”

“The (boiled frog) water is getting warmer around board chairmen,” he says, “while they mostly still swim along with the notion it’s okay merely to ‘summon’ the CIO or CTO when a technology question comes up. Meanwhile, the banker sits at the table all the time.”

“They should have the technologist at the table all the time, and summon the banker!”

With a background in behavioral science, Roberts sees the problem partly as status-quo bias. The finance-heavy board is the way things have always been done, and it’s worked well enough. “So why change?”

Status-quo bias works fine… in a status-quo world.

With clear company need and benefit, the question becomes how many CIOs and CTOs can “broaden up” to be able to contribute to the wider dimensions of the general strategic conversation that being a non-executive director on a board requires. (How many financial professionals are broad enough to manage the wider strategic conversation is a question somehow never asked nor answered.)

Gartner counts about 5,000 CIOs in its global client base, many of whom it already mentors and advances through its executive education programs, and judges that dozens of these are board-ready. Its aim is to build on relationships forged through these programs and help pry open boardroom doors on behalf of this top tier, and in doing so improve leadership readiness for future challenges among its client companies and beyond.

To this, the company has hosted a series of exclusive dinners in London over the past nine months, bringing together board chairmen, recruiters, and tech-type board candidates. According to Larini, the same initiative will begin in various US locations from mid-year, starting with New York City.

“NYC is intended as a global initiative, and we will select some of the leading edge, board-ready CIOs from the US and the rest of the world, also in partnership with the global executive search firms.”

There’s a demand side and a supply side, says Roberts. The demand side is working with recruiters and board chairmen encouraging them to be open to tech candidates. “On the supply side, people such as Jason Whitfield, head of Gartner Executive Programs UK, and colleagues are finding senior technologists and helping them reach up.

“There are sometimes limited aspirations on the candidates’ side of the table if they are technologists. Many think being a non-executive director on the board of a quoted company is just not on offer for someone of their function. They assume people with their career background don’t do this, so they don’t try,” says Roberts.

One example of a technologist who successfully made the board transition is Paul Coby, Group CIO of Johnson Matthey PLC., who has been a non-executive board director of FTSE250 bank CYBG PLC since June 2016. Until recently, Coby was Group CIO of the retail conglomerate The John Lewis Partnership, and before that CIO of British Airways.

Says Coby, “having someone on the board who understands how IT works is helpful. But even more important is how it impacts customers.

“You need someone with the technology background who also has experience how you deploy technology to change and develop businesses: that’s the core skill—it’s how you apply IT knowledge and experience that matters.”

For example, CYBG PLC is a ‘challenger bank’ and there are key enablers for that strategy, one of which is becoming an omni-channel provider. “In fact John Lewis pioneered this. It was a leader in enabling customers to merge ‘click and collect,’ changing the way we all shop,” says Coby.

“Insights I’ve had from BA, how it moved online, and how John Lewis combined in-store, online, and mobile, all applies to CYBG as its banking strategy develops along similar lines.

“It helps one see around corners, because you’ve seen the transitions in other places, other industries,” he says.

On the demand side, Jouko Karvinen, Chairman of Finnair, is known as a board leader who understands the problem and has enacted a solution.

The context of business has fundamentally changed, says Karvinen. “Even a few years ago, in the time of Moore’s Law, management had a forecasting tool of a kind. You could take history and somewhat project it into the future. Now, with disruption, you can’t look in the rear view mirror and extrapolate.”

So a year ago Karvinen added three new board members, one a senior airline executive with lifelong air industry experience, including as Aer Lingus chairman, the other two in their 30s. One has a lot of experience of social media technology and new consumer thinking. The other has experience building up the online travel company Expedia.

This year the Finnair board will propose two more members, further rebalancing between the need for long experience and the need for new skills.

Barry Gamble, an experienced quoted-company board chairman who also leads events for the Non-executive Directors’ Association, and is past editor of The Boardroom magazine, has first-hand experience of technology unhinging a real estate board he was on.

While the firm and its longtime competitors were generally aware of the need to evolve their digital proposition (which eventually became On The Market) they were overtaken by new entrants Right Move and Zoopla, who jumped ahead and grabbed market cap of hundreds of millions of dollars for themselves.

In Gamble’s view, it is the chairman of a board’s Nominations Committee who has a pivotal role in broadening representation. This person has a strong say over the long- and shortlist when new candidates are considered, as well as relationships with parties who can bring about change in board composition, including chairmen and headhunters.

He or she can play a role in widening the mindset of board chairmen, which companies need more urgently than ever. “Too many business are ‘legacy businesses.’ They have momentum which keeps them going, but they are running yesterday’s company.”

“Boards are still very much fashioned in their own image. There are still far too many of the ‘usual suspects,’ says Gamble.

“I recently had a conversation with someone who is on four quoted boards. He had been partner in one of the big-4 accounting firms. Their experience is pretty jolly narrow.”

“Would he have exposure to understand the implications of the technical stuff coming through? I don’t think he would.”