Time for CIOs to Shake Up the Boardroom
This guest blog is by Holly J. Morris, former CIO of Thrivent Financial and City of Minnapolis. In addition, she served on the Board of Directors at Royal Cameron Corporation of Cameron, TX. She is currently an IT consultant and executive coach.
In her thoughtful book, The CIO Paradox: Battling the Contradictions of IT Leadership, Martha Heller gives shape to twelve dilemmas that make the CIO job hard and (sometimes) frustrating. In this essay, I’m adding my two cents to Martha’s paradox concerning the lack of CIOs elected to corporate boards, even as technology increases in importance to most businesses. I think directors are adding risk and missing big opportunities by not electing more CIOs to their ranks. It’s time for CIOs to do what they can to shake up the boardroom.
The numbers tell a troubling story about the current ability of boards to guide technology. According to Price Waterhouse Coopers (PWC), less than 1% of board directors have technology experience, and less than half believe they can make appropriate technology decisions. One prominent expert I spoke to believes close to 90% of board members feel ill-equipped when it comes to technology. Surveys published by PWC and McKinsey suggest most board members would like to spend more time talking about technology at meetings and believe management should be bringing more technology topics to the board agenda. Spencer Stuart’s research shows there was a 20% increase in CIOs recruited to boards in 2012, and yet the overall number of CIOs on boards is very small.
Boards Weak on Technology Oversight
Meanwhile, recent dramatic advances in technology, as well as the accelerating pace of innovation in technology, offer businesses amazing opportunities to reinvent themselves and grow. And these same advances have brought new threats and challenges, leaving many companies struggling to make wise technology investments. According to the Kellogg School, 75% of executives aren’t confident in the value of their technology investments, 70% of IT projects deliver disappointing results and 35% of projects fail outright. These numbers are staggering and make it clear to me that boards are missing the mark when it comes to providing technology oversight.
Martha’s book described a number of reasons for this paradox. The lack of CIOs on boards and what to do about it has become a hot topic written about by consulting firms, Linked-in contributors, and CIO blogs. In April, I participated in two events in the Twin Cities looking at this paradox from both sides. The first was a symposium with 50 local CIOs and several experts focused on understanding how CIOs can break through the barriers that hold us back from board service. The second was a National Association of Corporate Directors (NACD) chapter meeting for sitting directors who wanted to learn the fundamentals of IT governance. Here are some insights from these events:
Boards have a big job, and technology is only one of several challenges they are grappling with.
The overwhelming majority of directors are qualified and committed professionals, balancing a variety of issues in a high-pressure environment. Deloitte’s Directors Alert 2013 lists the top issues facing boards, including cash management, getting ahead of the next regulatory wave, winning the war for talent, innovation and others. These issues are piled on top of the other basic responsibilities like CEO succession, executive compensation, crisis and risk management, and the on-going rise of shareholder expectations in a recovering economy. Is it any wonder that technology often gets relegated to the back burner? One prominent board member put it to me this way: “ I am very interested in technology at the company. But how do I get the CIO to tell me only what I really need to know? That’s all I have time for. I need him to handle the rest without him telling me about it.”
The CIO role does not prepare us for many of the bread and butter board responsibilities
At my last job I had the opportunity to sit through a three-hour board audit committee reviewing the external auditor’s report on the year’s financial performance. I’m no slouch on financials but I was in over my head about an hour into the debate between the board and the CFO. And how many CIOs are experts in the arcane science of executive compensation? When boards recruit members, they have to be practical about what skills are most important, and it is understandable they select people with expertise in the traditional board functions over CIOs.
A lot of CIOs have not made the transition to business leader first, technologist second.
According to research by Korn Ferry International, the competencies that make us great CIOs can get in the way of being a great board member. About 50% of sitting CIOs have broken through the “techie stereotype” and are moving toward becoming business leaders. Only 2-5% of CIOs are viewed as potential CEOs and possible board members. These are the executives that can speak two languages, operate at the intersection of business and technology, and keep technology discussions transparent and relevant. It’s their business expertise, along with their technical background, that allow them to have an impact. As more of these cross-over CIOs emerge, we will see them elected to boards.
There isn’t one expert I’ve spoken to who doesn’t agree that many board members contribute to the current situation by not learning and being open to technology as a topic. Experts also agree that over time, the number of CIOs recruited to boards will grow. But the change is slow, and nothing short of crisis is likely to speed it up. So here is what I think CIOs should do about it:
Change the goal
If our aim is simply to land a board seat, the odds are against success. But what if our goal was to start a movement, to work together to change the existing biases against CIO on boards, to help board directors alter their mindsets? What if we started now preparing the next generation of CIOs for board service? Devoting ourselves to a movement and being catalysts for change is a more realistic way for us to invest our time and energy and could actually result in more board opportunities sooner.
Walk a mile in their shoes
CIOs need to round out their understanding of board service. Stay abreast of current debates and issues in the board governance literature, talk to board members about what concerns them, educate yourself on the roles and responsibilities of boards, attend NACD meetings.
Expand your expertise
Pick a few skills outside your sweet spot that are core board functions and learn them. Take a class, read a book, join a non-profit board. Be intentional about gaining basic board competencies.
Evolve as a business leader
Consciously continue your path from technical leader to business leader. Use Martha’s paradox framework as a guide for the journey. Find a board director to be your mentor.
A successful CIO can make a tremendous impact as a board member. Successful CIOs are among the most versatile, innovative business executives at the board table. We have to believe our contributions can make a big difference and convince others to believe it too.