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 board includes both Instagram co-founder Kevin Systrom and Yahoo CEO Marissa Mayer. Or that energy company ExxonMobil gets advice from Xerox CEO Ursula Burns and former IBM chairman Sam Palmisano, both of whom were on the vanguard of today’s digital business movement. Health care company McKesson counts on Intel chairman Andy Bryant and former Qwest Communications CEO Ed Mueller for insights. Warren Buffett’s Berkshire Hathaway has a trio of digital mavens: Microsoft co-founder Bill Gates, former Yahoo president Susan Decker, and Comcast 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.
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 letting competitors control the pace of digital disruption.
Heather Clancy is a contributing editor at Fortune. Reach her via email.
THE DOWNLOAD
Why SoftBank is spending $32 billion on ARM. From the iPhone and Apple Watch down to the cheapest Nokia phone out there, you can be pretty sure your mobile device uses a chip from British designer ARM. The Japanese conglomerate intends to at least double ARM’s U.K. headcount and to grow its employee numbers outside the country over the next five years. The business model will stay the same, as will the company’s organizational structure and senior management.
More on the deal, plus takes from The New York Times and Bloomberg.
BITS & BYTES
U.S. may allow foreign search warrants on electronic data. The Obama Administration is brokering deals—the first one apparently with the U.K.—that would enable foreign governments to request emails in the course of investigations into criminal or terrorist activities, reports The Wall Street Journal. The revelation comes days after Microsoft prevailed in arguing that the U.S. had no right to data stored on its servers in Ireland, a ruling the Justice Department is like to appeal to the Supreme Court. (Wall Street Journal)
Telecom stocks were hot. Now, maybe not. The Standard & Poor’s 500 returned just 7% in the first half. AT&T shares have gained 28%, while Verizon stock has grown 24%. But investors are growing wary. (Fortune)
Chinese search giant Baidu backs fintech firm. It made an undisclosed investment in ZestFinance, founded by former Google executive Douglas Merrill. Its aim: Use data analytics to more accurately evaluate the credit-worthiness of would-be borrowers. (Fortune)
How virtual reality could help build your next corporate headquarters. Graphics chip maker Nvidia used 3D images and VR headsets to test certain architectural designs for both aesthetics and practical considerations, such as how they might affect the performance of heating and cooling systems. (New York Times)
Tesla retools radar. It is making changes that should help its Autopilot technology "see" more effectively in rain, snow, and bright sunlight. (Fortune)
WATCH FOR IT
Is this Yahoo's last independent quarter? The Internet giant is scheduled to post second-quarter results. Analysts are expecting revenue of $840 million, off from $1 billion one year ago. A decision about the company's pending sale is also imminent. (Recode, New York Times, MarketWatch)
Analysts anticipate another decline for IBM. The tech giant is expected to report $20 billion in revenue for its second quarter after the Monday market close, which would be off 4% from last year. One developing concern: the impact of the U.K. "Brexit" on European technology spending. (CNBC)
Netflix subscriber numbers under the microscope. Analysts will closely scrutinize new signups in the Internet video giant's latest financials, due Monday, especially given a competitive new service from Amazon. The numbers to meet or beat: 2 million international subscribers and 900,000 domestic ones. (The Street)
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IN CASE YOU MISSED IT
What Google Can Learn From Microsoft's Antitrust Problems, by Nicholas Economides
How Amazon Echo Could Serve as Your New Business Analyst, by Heather Clancy
Why Ford Is Investing in 3D Mapping Startup Civil Maps, by Kirsten Korosec
Airbus Is Using Drones to Inspect Airplanes, by Jonathan Vanian
Blame Apple for Your Rotten Stock Market Returns, by Lucinda Shen
Microsoft Will Blow Its Own Timeline for Reaching 1 Billion Devices With Windows 10, by Barb Darrow
ONE MORE THING
There's an emoji for that. We've come a long way in the five years since computer symbols took up the job of sharing our emotions. There are 23 different versions of the smiley face alone. Plus, you can express your love (or hate) for bacon. (Time)
This edition of Data Sheet was curated by Heather Clancy.
