The relationship between the CIO and the Board is one of the most important in today’s world of digital transformation, yet it’s one of the least understood.
Background
This series explores how the board of directors can help the company leverage technology to create a differentiated customer experience and sustainable competitive advantage. A good place to start is the relationship between the board and IT.
The Board’s Expectations
Two critical items that the board should expect in the company strategy are “cyber resilience” and “technology strategy”. That means cyber security, disaster recovery, and business continuity need to be integrated in the company strategic plan. As the company defines new business initiatives, these cyber resilience features need to be factored in and not afterthoughts.
While there may be a separate, detailed IT strategy, the use of technology to drive desired business outcomes must be emphasized in the company strategy. That may include initiatives like:
- Leverage technology to create a differentiated customer experience, or
- Apply predictive modeling to better target products and services to specific markets.
The board will challenge management to demonstrate how technology will be used. Management will develop and execute the strategy. Without the board’s challenge, many companies will not think this way.
Once the strategic initiatives are set into the company strategy, IT can work with its partners across the business to detail out the IT strategy that will help deliver these initiatives. In many cases, the technology strategy may be reflected in departmental or product line strategies. IT does not need to own them. IT simply needs to partner with the rest of the business and facilitate delivery.
The CIO and the Board
While the CIO may or may not report directly to the CEO, he or she must be in the board meetings. He or she must also be intimately involved in strategic planning to execute what was described above.
Board members should challenge the CIO with possibilities. And the CIO needs to be confident enough to respond crisply and honestly.
I once had a CEO and board that seemed to forward to me every technology breakthrough reported in the New York Times. The articles were always accompanied by a note that said, “why aren’t we doing this?” I would estimate 99% of these articles pertained to vaporware that was still in the conception stage. I was able to build credibility for IT by explaining what was feasible, what was economically infeasible, and what alternatives we may pursue, if any. This was an important step in developing the relationship with the board and the board building trust in me.
By the way, we did apply business process improvements and significant new technologies to take that company to the highest profits in their history. That would not have been possible without the relationship I developed with the board.
Start Small and Build
Often, the CIO can start with just a frank IT assessment report to the board. In 10 minutes or less, tell them what’s working and what’s not working. Highlight IT strengths and weaknesses. And, most importantly, tie a specific business impact to everything you say. For example, “IT has not had the staffing to keep up with security patches, increasing our risk of being hacked”, or “IT has not developed a good software testing discipline, resulting in bugs in our mobile app that have caused us to lose sales”. And, of course, explain what is needed to remedy any deficiencies. The CIO, initially, may or may not get the support for what is needed but will be building a trust relationship.
Open, honest, and direct communication will build the CIO’s credibility with the board. That leads to support for initiatives that improve IT capability and reliability, and benefit the business.
The board should expect IT to measure their own progress. More on that in an upcoming article. When the board sees the continuous improvement, they are likely to trust IT to engage in more strategic initiatives.
For most organizations, this is a process that takes some time. The board may only see the CIO four times a year. Both need to make it count by the board asking the right questions (upcoming article) and the CIO reporting what is meaningful to the shareholders and board.
What’s Next
Coming up, we’ll discuss Embedding Technology in the Business Strategy, Measuring the Risks and Impact of Technology, Questions the Board Should Ask, and How the CIO Should Prepare for Board Meetings.
As always, if you want more information or don’t want to wait for all the upcoming articles, email Emily Ford at Emily@WolffStrategy.com and she’ll be happy to set up a complimentary 30-minute consultation with me.
Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management, Digital Transformation, IT Leadership, and Executive Coaching. Larry has served as CEO, COO, CIO, Chief Digital Officer, and management consultant for public, private, international, and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues. His methodologies span industries and scale to companies of all sizes.
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