The rise of the QTE in the boardroom
By David Finke

The qualified technology executive, that is. It is only a matter of time before having a QTE becomes mandatory on boards.      

 

Technology powers today’s global economy. It’s hard to imagine a modern business that doesn’t rely on technology to serve its customers, transact with partners, and enable employees to work effectively and efficiently.

Leading companies across industries have been focusing on how best to leverage technology to enable digital transformation and unleash the power of big data and analytics to enhance business results. Many have added a chief digital officer to their management ranks and digital directors to their boards. At the same time, the risk of technology failure has never been more acute. Technological and cyber security mishaps have been responsible for a number of recent business catastrophes, such as halting trading on a major exchange, causing a leading retailer to lose the trust of millions of its customers, and exposing confidential communications among the leaders of an entertainment giant.

Oversight of a company’s technology infrastructure traditionally has been considered a back office management function that can effectively be handled by a chief information officer (CIO) or chief technology officer (CTO) on the senior management team.

As the need for managing technology risks and opportunities across an enterprise continues to increase, boards need to take a more proactive and informed stance on technology governance. However, the boards of some of the world’s largest organizations are not equipped to ask the right questions or make well-informed assessments about the risks and implications of technology across the organization.

Just as companies are required to have audit committee financial experts to provide financial oversight, given the critical role technology plays in an organization, it is only a matter of time before qualified technology experts become mandatory.

Defining the QTE

A qualified technology executive (QTE) is an individual possessing a high degree of current technology-relevant domain experience. She or he provides oversight and guidance on technology matters of crucial importance to the company in the context of the broader business, from the board perspective.

Whether as a standalone QTE who sits on the audit committee or a member of a broader technology committee, a QTE is responsible for vital input on key technology decisions that require board-level attention, asking the right questions and providing appropriate perspective to ensure that the board and management give proper consideration to the issues at hand.

To do this, QTEs must bring an outside-in point of view to make sure that the board and management team are neither myopic nor too internally focused when addressing strategic technology topics.

A QTE also should provide board-level mentorship to the leaders of the technology functions — CIO, CTO, CISO (chief information security officer) — and the chief executive officer. Key characteristics of a QTE are identified in the accompanying box.

Addressing the QTE Need

Our research shows there still are very few qualified technology executives on the boards of the largest U.S.-listed companies. To address this issue, we recommend that boards start by asking the following four key questions about their current composition:

• Does anyone on the existing board have a clear and deep understanding of the nature and magnitude of the major technology risks faced by the company?
• Does the company have an adequate technology strategy, team and investment plan in place to reduce those risks?
• Who on the board can challenge the company’s executive leadership team while mentoring C-level technology leaders on mitigating technology risks and maximizing opportunities?
• Who on the board owns the governance for technology investment?

No One-Size-Fits-All Solution

Appointing a QTE clearly is not a one-size-fits-all proposition. Companies in different industries face varying sets of technology opportunities, challenges and risks. For example, financial services companies that depend on transactional information technology systems with massive scale will require a QTE with significant experience in scaled infrastructure. Companies that handle large volumes of confidential customer data will need to place adequate weight on cyber security expertise.       ■


 

The author can be contacted at david.finke@russellreynolds.comDavid Finke leads the Global Technology Sector for Russell Reynolds Associates and is a co-founder of its Digital Transformation Practice (www.russellreynolds.com). He is based in the firm’s Palo Alto office. He is the principal author of a new report, “The Rise of the Qualified Technology Expert in the Boardroom,” released by Russell.


Issue: 
2016 Second Quarter

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