It is estimated that approximately only 1 per cent of non-executive directors at Europe’s top 100 companies have proven digital skills. This fact is also not lost on the Australian Institute of Company Directors, which identified low executive level digital literacy as a challenge three years ago.
The majority of the top ASX 200 listed companies employ directors aged 50 and over, so low digital literacy among these organisations should come as no surprise. After all, the majority of the 50+ age group directors’ careers occurred in the pre-digital era.
This often translates into a real sense of frustration expressed by those in an IT leadership role when trying to get funding or approval for that important technology investment or project.
The need for improving the collective ‘digital literacy’ of company boards and executive teams – especially in established (non-ICT) organisations – is increasingly seen as a pressing challenge. The reasoning is that, in many instances, the wholesale digital disruption of industries and organisations is a real threat to established businesses, so having ‘digital literacy’ is key.
In addition, the speed of technological change is fast, and getting faster. Not having a digitally savvy board or executive is seen as a risk in itself.
The paradox is that the top firms are profitable and thriving despite chronically low levels of board level digital literacy. Would they be necessarily be even better off with a more digitally-savvy board? Perhaps not but asking why executives' level of 'digital literacy' is so low is the wrong question.
It is a widely accepted fact that our world is digital. Underpinning the demands of consumers, global markets and in the face of increasing competition to do ‘more with less’, there is an expectation that business’ enterprise technologies should operate with bullet-proof reliability, low cost and ease of use.
Outside of the organisation, technology is creating growth opportunities for those that not only can recognise its potential, but also have the strategic, tactical and operational capability to fully realise this potential.
Today's IT world is substantially different to that of a decade ago, yet organisations still struggle to fully exploit the real business potential that IT can offer. Why is this still the case?
While businesses are becoming increasingly dependent on their use of information technologies, executives' understanding on how exactly IT can contribute to their organisation's future remains stubbornly low.
The right question to be asking is: How exactly can IT contribute to our organisation's future?
If your ‘c-suite’ has the collective capability of appreciating the intrinsic business value that digital technologies offer – and that includes the optimal use of their existing IT systems, then you're well down the right path.
Most organisations struggle to fully integrate their IT and business strategies effectively. Now, that's a bigger issue that 'digital literacy.'
This lack of an effective, adaptive and agile integration, limits the organisation’s capability to fully exploit and realise the strategic, tactical and operational business benefits that technology has to offer.
What can be done to bring home the real issue of not being able to fully exploit technology in your business?
Do this simple experiment. Separately, ask each of your organisation's board members this question: What business outcomes are you expecting from your spending on IT both now and in the next five years?
Then collate the answers to see what consensus or correlations are evident. If there is a large diversity of perspectives, then that’s where the conversation should start. And it’s all about organisational outcomes, not technology per se.
The influence of your CIO is crucial in helping to ensure a convergence of executive’s opinions on how specifically technology will contribute to the success of the organisation.
Failing that, the bottom line is that your organisation will continue to risk falling short on harvesting the benefits that technology can deliver, not to mention the serious risks of making a bad technology decision – for the wrong business reasons.
Is it time to start the conversation in your organisation?
Rob Livingstone is a respected CIO with more than three decades of industry and ICT experience, the last half as a CIO with several multinationals, most recently Ricoh. He is the owner of Rob Livingstone Advisory and a fellow of the University of Technology, Sydney.