The “Digital Director” Dilemma

According to Darwin’s Origin of Species, it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.’ (Megginson, ‘Lessons from Europe for American Business’)

The “Digital Director” Dilemma

It is an obvious statement that much has changed in the boardrooms of corporations in the past few years.  What’s not so obvious is that such changes sometimes lag far behind what is happening in business – be they large, small, public, private, or not-for-profit companies – as a result of rapidly evolving technology.  Along with the ubiquitous dependence virtually all organizations now have on technology, be it hardware, software, cloudware, netware, etc., has come an enormous uptick in unforeseen risks and vulnerabilities.

For years now, as it has been filtering upwards through organizations (from those at operations levels most immersed in the technology fields) to the C-Suite, most levels of management either gained or are gaining some grasp on what their businesses face or are about to confront.  But that understanding, more often, dies when it hits the boardroom.  While some astute portions of the director populace get it, and many are beginning to understand that what they don’t know can hurt them, there are directors who can’t  respond to a simple email.  Some still have their right-hand admins print out their emails so they can read them and decide how to respond through those same admins.  How easy, do you think, it is for them to grasp the concept of “social media” and its implications. And, if you read the quote at the top of this blog, how long can these directors be expected to last, let alone succeed?

So now, as an answer to this problem, many are bandying about a special kind of director: “Digital Director.” So what, exactly,  is a Digital Director ( DD)? Ideally, this is a candidate with all the traits that make for a good director plus having strong knowledge of the current state of technology (i.e. cloud computing, social media impacts, etc) and risks (i.e., cyberattacks, cybercrime, intellectual property theft, etc.).  This is the new “Uber-Director” the one who will save the board from ignorance and irrelevancy.  Of course, this raises some questions: Is the DD readily available? What other impacts can the DD have on the Board? and Is (s)he really needed? What’s their impact on strategy? etc.  These are just a few questions to start the ball rolling further along.

Next: Is the DD readily available?

How easy is it to find the DD? The answer is: not so easy. Think about the populace from which we prefer to draw our directors — the 50+ year old business veterans: those, whose long and varied experiences have grown and honed a “big picture” view of things.  What needs to be considered is that these professionals did not grow up comfortably immersed in the technologies of today (like almost any 20+ business newbie). The digital age sort of seeped up around them.  Some few embraced it early on, some are trying to catch up or not look stupid, others are lost and clinging to the rocks of what they knew early on in their careers.

Fact is, there just aren’t many directors with strong “current” knowledge of the digital world, let alone those the additional needed skills and experience to have impact strategies  guide businesses.  Which means, that, if everybody wants them, there will soon be a whole crop of “over-boarded” directors (good, bad, or indifferent).  Which, in turn, will soon mean that your particular board cannot expect much from them. So what is the alternative? Settle for less? Recruit new board members steeped in technology but light on strategic operational business and governance experience?  While this may be the expedient solution, the tactic in and of itself leads to other board issues.

What impacts can the “new” DD have on the Board?

First off, the board gains asymmetries that will reduce the entire board’s effectiveness in discussions and decision-making.  A new knowledge expert, with no close seconds, will often go unchallenged by peers in discussions and decisions on technologies for the firm. At the same time, this new DD has to catch up on all the other skills to be able to contribute in any other discussions. That lost multiperspectivity can lead to group-think and other board dysfunctions.

In addition, having a knowledge expert allows those so inclined to “skate” and not advance their game. One can hope that the DD will educate and advise all the other board members, but this is a very rare expectation sought in new recruits.

So, coming from the first two the last question (at least for now) is…

Do boards really need a Digital Director?

The answer is: it depends.  It depends on what knowledge the board members collectively have and each individual’s base understanding of technology as a tool and how it does/will impact the firm.  It depends on the potential for damage to the firm from the board’s not understanding its technology risks.  It depends on how quickly a new Digital Director can be educated and integrated as a full contributor into the board.  And lastly, it depends on how quickly and firmly all other directors bring up their technology “literacy” so that vigorous, useful discussions and effective decisions can continue to be made to protect the firm and its stakeholders.

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