The top five companies on the 2016 Fortune 500 ranking represent a diverse set of industries, but there’s one big thing they have in common—their directors are well-represented by executives who understand digital technology.
Consider that giant retailer Walmart’s (wmt) board includes both Instagram co-founder Kevin Systrom and Yahoo (yhoo) CEO Marissa Mayer. Or that energy company ExxonMobil (xom) gets advice from Xerox (xrx) CEO Ursula Burns and former IBM (ibm) chairman Sam Palmisano, both of whom were on the vanguard of today’s digital business movement. Health care company McKesson (mck) counts on Intel (intc) chairman Andy Bryant and former Qwest Communications CEO Ed Mueller for insights. Warren Buffett’s Berkshire Hathaway has a trio of digital mavens: Microsoft (msft) co-founder Bill Gates, former Yahoo president Susan Decker, and Comcast (cmcsa) executive vice president Steve Burke. (I’m not including Apple because, after all, it is a digital company.)
Recent research from McKinsey suggests these organizations are ahead of their peers and rivals in this regard. Indeed, the consulting firm figures that less than 20% of current boards have the sort of digital literacy required to consider the impact that technologies such as artificial intelligence, data analytics, or the Internet of things will have on their industry. Only 5% of corporate boards in North America actually had technology committees (as of last year, at least), McKinsey reports.
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What’s the solution? Clearly, recruiting more digital-savvy directors should be on the minds of all nominating committees with the caveat that these individuals may “look” different. For one thing, they’ll probably be younger than the average corporate director. They’ll also probably be used to more entrepreneurial, startup-inspired styles of management or organization, which means that might have little tolerance for processes that slow down decisions. That could mean changes for recruiting strategy and for the time commitment required by directors everywhere.
Equally as important, however, will be initiatives that help experienced directors improve their own digital IQ. That could include co-mingled councils made up of members with very different backgrounds or schemes that use directors to test out new software and applications, suggests McKinsey. It could also mean more frequent, less formal board gatherings.
Don’t like the idea of changing the current way of doing things? Then your company should resign itself to the idea of letting competitors control the pace of digital disruption.