ARE BOARDS READY FOR DIGITAL DISRUPTION?
As the tide of disruption and digitization sweeps into every sector, the flow of digital know-how into Executive Management Teams – CDOs, CIOs and CTOs – has stepped up. This report maps the digital competencies of the Boards of the 110 largest stock-listed companies in 11 countries in Europe and the US, and the backgrounds of 1280 Non Executive Directors (NED’s). The analysis is enriched by in-depth interviews.
No company, in no sector, can turn a blind eye to disruption and digitization. Yet digital transformation is here to stay. It brings risks and opportunities in its wake. The Board has the task of foreseeing, evaluating, and prioritizing all of them.
The demand for senior executives with digital know-how is rising. As the flow of CDOs, CIOs and CTOs into Executive Management teams steps up, what are businesses doing to equip themselves at Board and Non-Executive Director level?
Digitization on Boards is Still in its Infancy
- 36% of Board Members in Technology Companies Have Digital Competencies.Unsurprisingly, technology posts the biggest proportion of digital NEDs. Finland scores highest, France, lowest. The US ranks third-lowest (US tech companies tend to seek financial and consumer competencies). 23% of tech/digital competencies are in the form of Employee Representatives.
- 5% of Board Members in Non-Technology Companies Have Digital Competencies. Denmark and Spain rank lowest (2%), Sweden ranks highest (8%).
- Digital-Critical Sectors are Under-Equipped. Consumer Goods & Retail (5%), Financial Services (4%) and Life Sciences (7%), have strikingly low proportions of digital profiles in the Boardrooms.
- Financial Competencies Are 3 Times More Prevalent Than Digital. In non-Financial Services companies, the representation of financial competencies is at 16% (vs. 5% for digital and Consumer).
- Only 4 Listed Companies Have An Official Technology/Digital Committee.Committees can help Boards gain critical insights into digital – and be at the forefront. Their absence means another route into the digital ecosystem is missing. Nominations Committees have a critical role to play.