In today’s rapidly evolving digital age, technology is no longer a peripheral concern for businesses; it’s the very foundation for growth and innovation. Companies that fail to keep pace with technological advancements risk falling behind competitors and jeopardizing their long-term success. Corporations need strong leadership at all levels, including the boardroom, to navigate this dynamic landscape effectively. This is where the inclusion of technologists on corporate boards becomes not just a trend, but a critical necessity.
The Current Landscape and Potential Consequences
Recent data paints a concerning picture: many corporate boards still lack directors with substantial technology experience. According to a Deloitte study, only about 10% of corporate boards include directors with a tech background. This deficit can have severe consequences. Companies without technological expertise are more susceptible to cyberattacks, struggle to capitalize on opportunities presented by AI and other emerging technologies and fall behind in digital transformation efforts.
The Criticality of Technological Expertise
The benefits of having technologists on corporate boards are multifaceted:
Cybersecurity: The ever-present threat of cyberattacks demands directors who understand these risks and can guide effective mitigation strategies. A stark example is the pharmaceutical industry’s ongoing battle with cyber threats. In 2023, the average cost of a data breach in the pharmaceutical sector was $4.82 million, slightly down from $5.01 million in 2022, but still higher than the global average (Security Intelligence). The pharmaceutical industry faces unique risks due to the high value of its intellectual property and sensitive data. For instance, the IBM X-Force Threat Intelligence Index 2024 reported a significant increase in cyberattacks utilizing stolen or compromised credentials, which are often targeted at industries like pharma due to their valuable proprietary data (IBM – United States). A tech-savvy board member or committee could play a crucial role in ensuring that the appropriate departments within the company have established robust policies, processes, and technology solutions to identify vulnerabilities and implement stronger safeguards, potentially preventing these costly breaches.
Strategic Decision-Making: Technological expertise empowers boards to help guide company executives in making informed strategic decisions. In the pharmaceutical and life sciences sector, this is increasingly critical. A Deloitte survey of 150 biopharma leaders found that almost 80% said their organizations needed to be more aggressive in adopting digital technologies (Deloitte). Directors who understand technology trends can help the organizations they serve to anticipate market shifts, enabling the company to adapt, innovate, and make strategic investments in new technologies. For example, a board with a director that brings previous hands-on AI experience can help advise company management on solutions that have been used successfully elsewhere, thus accelerating drug discovery and development and ultimately gaining a competitive edge. Additionally, a 2024 survey by PwC found that 85% of pharma companies are prioritizing investment in digital health technologies to improve patient outcomes and streamline operations (PwC).
Digital Transformation: In today’s digital age, companies across all industries are undergoing digital transformation. This process involves integrating digital technology into all areas of business, fundamentally changing how companies operate and deliver value to customers. Board members with a strong understanding of technology can provide valuable insights and guidance ensuring the transformation roadmap aligns with the company’s goals and adds value. A 2024 PwC Pulse Survey cited more than half (54%) of leaders say their company has implemented GenAI to some extent (PwC). Furthermore, a 2024 McKinsey analysis highlights that digital technologies in pharma can lead to a 50% reduction in time-to-market for new drugs and therapies, significantly benefiting both patients and the industry (McKinsey, 2024).
Innovation and R&D Oversight: Technological expertise is crucial for overseeing innovation and research and development (R&D). Directors who understand technology can better assess the viability and potential impact of R&D projects. They can foster a culture of innovation within the company, encouraging investment in new technologies and processes that can drive growth and efficiency.
Risk Management: A survey by the World Economic Forum highlighted that 40% of board members feel unprepared to manage technological risks. Beyond cybersecurity, technological expertise aids in broader risk management. Technology affects nearly every aspect of modern business, from supply chain logistics to customer interaction and back-office HR and financial systems. Boards that include Directors with tech expertise will be better positioned to guide management in identifying and mitigating risks related to technology adoption and integration, ensuring the company navigates these challenges effectively.
Regulatory Compliance: Technology-related regulatory compliance is another critical area where expertise is essential. With increasing regulations around data protection, privacy, and digital operations, having technologists on the board can provide the proper oversight to ensure that a company stays compliant with legal requirements. They can help interpret, guide, and advise on necessary measures to avoid legal pitfalls and maintain regulatory compliance.
Addressing the Challenges of Inclusion
While the need for technologists on boards is clear, several challenges hinder their inclusion:
Identifying Qualified Candidates: Finding directors with the right blend of technological acumen and business savvy can be daunting. The increase in first-time board directors reflects the evolving nature of board roles and the need for diverse expertise. Companies must look beyond traditional profiles and actively seek out individuals with specialized skills. This means tapping into new networks, leveraging executive search firms with a focus on technology, and considering candidates from non-traditional backgrounds who bring a fresh perspective.
Overcoming Resistance: There can be resistance from existing board members who may not fully understand the need for technological expertise or fear the disruption it might bring. To address this, boards should emphasize the strategic value of tech expertise and foster an inclusive culture that values diverse perspectives. Providing education and training about the importance of technology in today’s business environment, and moreover the risks and lost opportunities associated with not having a strong technology focus, can help bridge this gap. Encouraging open dialogue and collaboration between technologists and traditional board members can also ease concerns and build a more cohesive team.
Long-Term Planning: Boards are encouraged to consider their collective skill set and anticipate future needs to guide their companies effectively. Technology will play a crucial role in this planning, and a balanced composition of board members is essential. While technology expertise is becoming more valued, it is not expected to, nor should it, dominate board composition entirely. The trend represents an addition rather than a complete overhaul of traditional board member profiles. Boards should focus on integrating technological expertise in a way that complements existing skills, ensuring a holistic approach to governance.
The critical importance of having technologists on corporate boards cannot be overstated, particularly in industries like pharmaceuticals and biotechnology where M&A activity is extensive. As the complexity of the tech world is increasing, so do the challenges of post-acquisition. This integration extends beyond technical and tactical aspects to encompass strategic business components.
The role of a CIO in this context is evolving. A modern CIO must be business-focused, someone entering the boardroom with questions like, “What are your needs? What’s not working right, and what can work better?” Then, they think of technology-related solutions to solve these problems. This role cuts across the entire enterprise, providing a critical vantage point essential to the organization’s operations.
Placing a technologist on a board requires more than expertise in big data, IT infrastructure, cybersecurity, or artificial intelligence. It demands a deep understanding of the evolving needs in business systems, the risks posed by external threats, and the complexities associated with M&A and strategic business integration. The right technologist must possess not only technical acumen but also the business savvy to drive strategic decisions and foster innovation. As technology continues to drive business transformation, the need for technologists on corporate boards will only grow. Companies must proactively seek out these experts to ensure they stay competitive, secure, and innovative in a rapidly changing digital landscape.
