Most board members are comfortable discussing finance: capital structure, mergers and acquisitions, accounting, reporting, and regulatory compliance. They're fine with succession planning, determining the right mix of products, services and programs or assessing the organization's public image. But when talk turns to information technology, many leave their comfort zone behind.
Digitally driven change is now among the critical determinants of organizational success. Every company is a technology company, and techno-literacy is a prerequisite for effective leadership and governance.
"Top leaders will understand digital innovation in the same way they understand finance and accounting today," Bill Ruh, chief executive officer for GE Digital and senior vice president and chief digital officer for GE, has said.
Directors should be cognizant of technological disruptions. Here are three developments that are having an impact on organizations large and small: artificial intelligence, cloud computing and cybersecurity.
Artificial intelligence (AI) has often over-promised and under-delivered, since its birth at Carnegie-Mellon in the mid-'50s. The idea that a machine could mimic human cognition by learning and solving problems that appear to require conscious thought remains aspirational. Science fiction depictions of conscious AI--from the duplicitous computer HAL in Stanley Kubrick's 2001: A Space Odyssey, to the seductive operating system Samantha in Spike Jonze's Her--remain science fiction.
But the AI we have today can do many useful things. The spell checker in your word processor; the GPS navigation system in many cars; the NEST thermostat that programs itself by learning your heating and cooling habits. These are all applications of the mix of pattern recognition and data processing we call artificial intelligence. Perhaps the most successful application of AI is detecting fraudulent credit card transactions. It's not the stuff of science fiction, but it saves credit card processors vast sums.
Directors should ask, "How is the organization exploiting AI, and that exploitation comes from two sides," says Anand Rao, global artificial intelligence lead for PwC. "The one people have focused on is automation: job losses, doing more with less, greater efficiency. But it's also very much how peoples' roles are changing, now and in the future. That is something the board should be more concerned about: How are we preparing our talent and our workforce to deal with this?" If your company uses one of the clever scheduling apps that mine emails, contact lists and calendars to set up...