It has been repeated to the point of being cliche, but the common saying rings true: Every company is a technology company.
This was true before the COVID-19 pandemic, which prompted a massive acceleration in tech adoption, driven in part by the proliferation of remote work and e-commerce. Today, technology roadmaps are years ahead of where companies were planning to be at the beginning of 2020.
At the board level, this means that every board needs diverse technology expertise. The past few years have seen steady growth in this direction—and a growing body of data points to tech’s increasing importance.
According to the National Association of Corporate Directors (NACD), 43% of board directors at S&P 500 companies and 38% of those in Russell 3000 companies had technology backgrounds mentioned in their public disclosure. These numbers are up from 34% and 33%, respectively, in 2018.
The Heidrick & Struggles board monitor surveyed the 425 new Fortune 500 board appointments in 2020, finding an increasing movement toward specialization of skills and a decrease in the number of former CEOs and CFOs appointed to boards.
“For a long time, the definition of an ideal director was the CEO of another company,” Julie Daum, practice leader at Spencer Stuart, told Fortune. “CEOs are recognizing that it’s a very time-intensive job…so they are cutting back on their outside activity…at the same time boards can be looking for different experiences.”
Data from NACD and Heidrick & Struggles also show increases in the number of first-time board directors, another nod to the rapidly changing nature of the role.
This has opened the door for people like Rinki Sethi, the current chief information security officer at Twitter who was recently named to her first board at ForgeRock, a security software company. She’s one of many cybersecurity professionals helping corporate boards meet their increasing awareness of challenges in this space.
“[Cybersecurity]’s one of the highest-risk areas for companies,” Sethi told Fortune. “If you’re a tech company, it’s important to have good representation on your board, people that look more like your customer as well. I think more and more boards are adopting that model.”
This philosophy has expanded to all types of companies. “Even boards that are not in tech, you’re starting to see more cybersecurity expertise creep in, just because it is kind of one of those existential risks,” Sethi explained.
Tech expertise on the board can be valuable for internal infrastructure decisions but also product decisions. Sethi has seen one side of this play out from her role in Twitter, where she regularly reports on cybersecurity incidents and risks to the board and where her department is seeking board support. At ForgeRock, she is hoping to bring her practitioner’s perspective to support the company’s technical product decisions.
Boards with deep technical experience can challenge and strengthen strategic plans in ways that a traditionally composed board may not be able to.
“My role as a board member is not to manage the board or the CEO,” Julie Iskow, COO and board member at Workiva, the financial reporting software provider, told Fortune. “It’s to call out the risks and make sure that they are managing to those. So there’s an incredible amount that a technologist can contribute.”
Iskow is the former CTO of Medidata, a SaaS company supporting scientific clinical trials, and before that she was CIO of the benefits administrator WageWorks and an engineering and product leader at other companies before that. She is also currently a board member for Vocera Communications, a healthcare software company. Iskow said she draws on her experience in areas such as digital transformation and cybersecurity to point out risks that her board colleagues with non-technical backgrounds might not recognize.
“They can understand them in theory, but to ensure the company is building the foundation for growth and scale…that’s not going to happen,” she said, speaking to the importance of these issues for SaaS companies and others that offer technical products.
Technology expertise is understandably making a profound impact on corporate boards. But it doesn’t look like we’re heading for a full tech takeover, just a correction from the days where CEOs and CFOs were the only experiences desired for board openings. The growth rate of technical board additions has held steady over the past three years, according to NACD data.
“You want to look at the composition and skill set available, collectively, and look at the next five years, [asking] ‘Where, where does my company need to go?’,” Friso van der Oord, SVP at the NACD, told Fortune. “Technology has been an important board skill set for a long time, but there’s a shift happening. Is it a revolution? No, not yet.”
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