By Mike Wright
There has long been a divide between the technology function and other parts of many organisations. This hampers performance – strategic opportunities arising from technology innovation are not pursued; cost reductions are missed; and customer service is not personalised as it could be. Leaders need to urgently take four inter-related actions to prosper from the technology revolution.
The pace of technology innovation continues to accelerate. As Justin Trudeau said at Davos in 2018 – “The pace of change has never been this fast, yet it will never be this slow again…..There’s enormous opportunity, and enormous potential”. Indeed, we can see examples of this innovation everywhere in our day to day lives. From the now ubiquitous smart phones to the ever increasing computing capability within cars that allows them to pretty much drive themselves.
This growing role for technology highlights the need for business leaders to proactively think about how to harness these changes for benefit – to their customers, to their employees and to shareholders. As Satya Nadella said in 2019 “every company is a software company now”. He also said “Computing is a core part of every industry. I don’t think in ten years we will have these demarcations. We won’t have the tech industry and other industries.”
And yet we still do. A survey in 2024 by CIO Development found there are 50 times more financially qualified people on UK public boards than technologists. This knowledge and experience gap hampers business performance in 3 major dimensions – (i) strategic opportunities arising from technology innovation are not identified and pursued; (ii) cost reductions are missed; and (iii) customer service is not personalised as well as it should be to enhance sales and retention. Business leaders have a real opportunity to take steps to reduce these areas of underperformance.
So what should business leaders be doing? Four elements are important:
1. Recruit at least one senior technologist to the Board. Ideally this should be the CTO (or CIO) from the executive team but the reality is that CTOs are culturally misunderstood, undervalued and very largely written off by recruiters. That is not to recognise the fact that many such individuals are not fully able to participate in Board debates. But this lack of appropriate skills points to the need to build the training and career pathways to correct this leadership gap. Hiring the relevant digital skills to the Board in a Non Executive role can help reduce the gap in the meantime. This lack of genuine digital capability at Board level limits senior decision making…. And the problem seems to be getting worse:
- As Gen AI explodes, traditional thinking needs to be challenged and Board decision making enhanced to avoid organisations becoming increasingly irrelevant (as happened to Kodak with digital cameras)
- As cyber security risks grow, the scale and relative importance of risk is changing (witness the disruption to Jaguar Land Rover and to Marks and Spencer this year)
2. Hire new capabilities and build human capability across the organisation. Having senior decision making capability is of limited use if there is no ability to execute. Many people still think of business and technology separately. Organisations need people who do not think in this binary manner – rather they see business issues and technology solutions as a single holistic problem. Locating and hiring these people is vital – and hard. But, it is not just about building the relevant talent, leaders need to nurture these people and create a culture where they feel valued and involved. There are multiple ways to do this (such as role modelling, reverse mentoring, active training programmes). The actual hiring – while vital – is only the start of the real challenge.
These two actions will help address the talent issue. However, in isolation they are insufficient. Two other actions are needed – to help the organisation learn and to build a culture where digital skills are perceived to be valued at all levels.
- Ensure the business strategy includes a section on data and technology infrastructure. Leaders recognise the need to rethink operating models in the digital world but such thinking needs to be holistic. This is not easy. Many existing business leaders shy away from “techie” subjects as they are outside their own personal comfort zone. Yet, in today’s digital environment, an effective technology architecture is vital to enable the rapid pivots and innovation that business requires. An ongoing programme to eliminate legacy applications is often missing from business strategy. High quality, consistent corporate data is essential to AI and more general data analytics. These elements need to be inter-connected to more traditional strategic initiatives as part of the overall business strategy to ensure they are funded effectively.
- Undertake multiple Gen AI and other innovative pilots. Much innovation fails, and indeed, according to MIT, only 5% of AI driven projects reach production and deliver meaningful value. Meanwhile, a study published this summer in the Harvard Business Review found that staff were using AI to generate large amounts of what has been dubbed “work slop” – material that has little actual value. Neither of these factors should deter experimentation but they point to the need for clear scope control and explicit metrics to measure value creation and learning. Establishing a culture that celebrates learning, avoiding allocating blame for “failures” is equally vital but often missing. Seemingly small things can be very impactful – not least ensuring the business problem is framed in the right way; that the team skill set is adequate to address the problem; and that they feel psychologically “safe” to experiment and get things wrong.
The four actions described above do not guarantee corporate success. But they will help to reduce the leadership gap that currently limits many organisations from competing effectively in the digital world that already exists, and from falling further behind the increasing rapid pace of change.
Mike Wright
