Today’s businesses innovate across business models, services, products, and customer engagement while disrupting industries. Though implementing technology strategy throughout the value chain creates significant opportunities, it also presents considerable challenges and unknown risks. In this race to harness emerging technologies, it is easy to forget governance. Failure to ensure compliance with the legal framework can lead to remarkable risks. In this article at McKinsey, William Forrest, Sidney Li, Isabelle Tamburro, and Steve Van Kuiken explain how effective boards approach technology governance.
Technology Strategy: The Right Approach to Establish a Governance Framework
Get the C-Suite Engaged and Committed
“The most clearly defined form of board engagement with technology is a board committee dedicated to understanding and supporting the organization’s technology strategy, investments, and risk profile and to sharing its insights with the full board,” say the authors. Often, companies point out that they did not find the right members to serve on the committee. Studies indicate that only 12 percent of Global Fortune 500 companies — telecom, healthcare, and finance — have tech committees. The authors believe that though a tech committee is not mandatory for every company, having some form of structured engagement is beneficial.
Charter Governance Structures
Directors and C-suite executives must fully understand technology’s implications for their business. Additionally, they must have the expertise to navigate wide-ranging issues such as corporate strategy, governance, and operating models. Experts believe that goal-based approaches provide regulators greater flexibility to mobilize their powers. The process leads businesses to reduce regulatory uncertainties.
Implement a Technology Strategy to Establish a Standing Committee
C-suite executives must understand the evolving tech landscape and its consequences on businesses. Therefore, establishing a standing tech committee allows business leaders to understand the interdependencies between corporate strategy and digital. According to the authors, organizations must define the right charter and regular meeting agenda when setting up a formal tech committee. Furthermore, the committee must also assess the tech decisions and status updates as a part of their broader corporate strategy.
To read the original article, click on https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/how-effective-boards-approach-technology-governance.