The National Association of Corporate Directors (NACD) and Marsh & McLennan Companies released Governing Digital Transformation and Emerging Technologies: A Practical Guide. This report, based on primary research conducted through interviews with company directors as well as a survey of 200 NACD members, outlines a practical approach to advancing board oversight of digital transformation and emerging technologies.
“Businesses of all sizes across every industry are being confronted with unprecedented technological change, forcing them to reimagine traditional practices,” said Peter R. Gleason, president and CEO of NACD. “This report provides fresh thinking to improve board oversight in the digital era, so that boards can guide their companies toward success.”
Corporate directors recognize that governing digital transformation is a challenge. According to the NACD 2019 Digital Governance Pulse Survey,
- 66 percent of directors believe their companies will be vulnerable to the disruptive impact of emerging technologies in the next year;
- one in three directors believe that no one, specific technology, but rather a combination of technologies, will significantly transform their business; and
- while 81 percent of boards prioritize cybersecurity discussions with management, only about half focus on topics of more long-term strategic relevance, such as digital transformation initiatives.
The report outlines five foundational principles to help prepare directors for navigating the complexities of digital transformation and emerging technologies, such as artificial intelligence, blockchain, the Internet of Things, and robotics process automation. Here are the five principles:
- Approach emerging technologies as a strategic imperative, not just as an operational issue.
- Develop collective, continuous, technology-specific learning and development goals.
- Align board structure and composition to reflect the growing significance of technology as a driver of both growth and risk.
- Demand frequent and forward-looking reporting on technology-related initiatives.
- Periodically assess the organization’s leadership, talent, and culture readiness for technological change.
In the report, each principle includes specific recommendations to assist boards with charting potential pitfalls, spotting red flags, and formulating and adopting a more cohesive oversight approach to help them chart a path to effective digital transformation oversight.
To help boards navigate the interconnected and simultaneous forces presented by the digital era, NACD also offers experiential education opportunities such as curated director tours of the Consumer Electronics Show (CES®) and access to the latest business incubators leveraging technology in Silicon Valley. NACD has also led an effort to close the board’s knowledge gap on cyber risk through educating its members on leading practices, convening key stakeholders, and engaging the director community in an ongoing dialogue.