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By Andrew Saunders Monday, 29 February 2016

The evolution of the digital director

In the internet age, technology permeates every area of business. So why are there not more techies in the boardroom? MT goes in search of the lesser spotted chief geek.

Illustration by Matt Harrison Clough

Looking back over the many changes in the 50 years since MT was first published, one paradox in particular stands out. When it comes to the way we run companies in the UK, why has the influence of technology so completely outstripped the influence of the technologists, the people who implement and look after it?

Back in 1966 - the year MT first appeared - the internet was still three decades into the future and only the very richest firms could afford their own computers (a Mad Men-style IBM 360 mainframe cost an eye-watering £1.5m in today's money). Such techies as there were in those far off days were definitely confined to the windowless bowels of the 'Computer Room' (yes, there really was such a place) and only emerged blinking into the daylight to petition senior managers for more money to spend on the latest kit.

In 2016, there are 6.5 billion connected devices worldwide and the £500 smartphone in your pocket has more computing power than existed on the face of the planet back then. Digital business models that entrepreneurs could barely dream of in the 60s are busily disrupting anxious incumbents in every sector from retail to healthcare, finance to logistics.

This new digital order is as much about bits and bytes as pounds, shillings and pence and the geeks we are told, stand to inherit the earth. So why aren't they? Far from ruling the roost in the boardroom, outside the rarefied worlds of Silicon Valley, Fen or Roundabout, a CIO, CTO or even -the latest grade of job title inflation - a CDO (chief digital officer or chief data officer) who sits on the main board of a FTSE 250 company remains a great rarity. A search of the BoardEx database suggests there are as few as half a dozen, those mainly at tech or scientific companies.

It's because the UK's bosses are still playing catch-up with the idea that technology is now a key part of the strategic toolkit, says Philip Letts, founder and CEO of digital purchasing specialist blur Group, and it's not good enough.

'The days when the CEO and the CFO could laugh about the fact that they know nothing about tech are over. Things have changed and tech has to be front and centre. It's not about "IT", hardware or a set of web pages any more, it's about the need to digitise your products and services. The people who are leading that process clearly need to be tech savvy.'

It's not an issue that is confined to the UK either - a recent survey of the 300 largest firms in the world by executive search outfit Russell Reynolds found that over 80% did not have a tech exec of any kind on the board. Only 4% of European boards have such a 'digital director', compared to 24% in the US (the figure falls to a mere 2% in the rest of the world).

Even among the Brit firms that are asking the right questions about board skills and leadership, there is a lag effect at work, says Letts. 'CEOs of some larger businesses at least recognise the need. But there's a separation between intent and execution - what has actually been changed?'

In fact, Letts is so sold on the need for better tech direction that he reckons the relationship between the CTO and the CEO needs to become more like that other vital partnership, the one between the CEO and the CFO. 'As CEO, my key partners are the CFO for financial delivery, the CMO for getting closer to my customers and the CTO for developing tech strategy.'

For boardrooms more used to a low-calorie data diet, the shift to such tech-expert-heavy fare could lead to a bad case of dyspepsia. Especially as it's usual in the UK to have a very small executive board, often just the CEO and CFO - a standard practice that may need revisiting, says Susie Cummings, founder of digital recruitment platform Nurole. 'That is the norm, but things are changing fast, I really think it is time for firms to think about having a CTO as an executive on the main board, to help avoid them getting left behind by technology and to protect against cybercrime.'

Nurole is endeavouring to do its own bit of disruption, bringing the power of social networking and online referrals to the largely offline world of sourcing senior candidates for the likes of Smith & Nephew, Land Securities and The Landmark Trust. People who get the tech love the service, she says, but in other cases it can be a hard sell. 'People don't like change, and they don't want to move out of their comfort zones.'

Martin Gee, recently appointed CTO of MT's parent company Haymarket Media Group, agrees. 'It's a shame that there are so few CTOs on boards. As a technologist, you have to have a much broader perspective on the business than most people appreciate. Just as finance is always across the whole organisation, so is tech.'

Old-fashioned notions of what technology is and what it can do are a big part of the problem, he adds. 'The resistance comes from the view that technology is a cost centre, but for many organisations - this one included - it is a source of revenue. Software creates value in direct and indirect ways.'

But does that mean that every firm should hand their CTO or CDO the key to the executive directors' washroom? Not necessarily, says Ronan Dunne, CEO of mobile network O2 (currently merging with Three in a £10.5bn deal, subject to regulatory approval). 'I have a COO on my board, who is a former CIO. My CTO then reports into him. So do I have tech represented on the board? Yes I do.'

The important thing he adds, especially for firms in less obviously tech heavy sectors, is for the top team to stay relevant and in touch with what the next generation of their customers is going to want. 'You have to have digital in your strategy, there is no such thing as a separate digital strategy. And when it comes to digital literacy, the under 30s tend to do a bit better than the average 45-year-old board member.

'So you need to have a digital champion, someone who can attract the spark of all those millennials and screenagers so you can channel their input. Some of these digital catalysts will be on boards, and some of them won't.'

Dunne is also a big advocate of social media and has nearly 30,000 followers on Twitter. It's not the average Brit CEO's natural habitat, but it should be, he says. 'Activity on social media is the digital equivalent of walking the shop floor. When did CEOs stop wanting to interact with their customers?'

Of course, the majority of board positions of whatever stripe are non-exec rather than executive, and this is another way of teching-up the board that avoids the risk of upsetting the corporate governance police by creating more executive positions. Hiring someone from Google or eBay as a NED can be effective, but chairmen and women need to be very careful to get the right person not just the right skills, says Rhys Grossman, co-leader of the Digital Transformation practice at Russell Reynolds, and one of the authors of the aforementioned digital directors report.

'Board seats are finite and precious, you can't afford to have single-issue specialists occupying them. You need rounded businesspeople who have depth in digital, there is a balance to strike between seniority and experience and proximity to the tech coalface.'

And for many nomination committees (whose members perhaps bear the scars of expensively failed technology projects gone by), the potential digital candidates they see are just too skewed towards the tech end of the spectrum, he adds. 'Good NEDs have usually had P&L experience, or they have been in transformational roles. They need a breadth of commercial experience, strategic insight and influencing skills. To be NED first, digital second.'

It is the lingering culture clash between geeks and the suits as much as anything else which has led to the rise of the latest must-have tech job title, the chief digital officer. These tend to be execs with a more strategic or customer-oriented background, who can talk money as well as they can app development. Crucially for their top-team credibility, they have avoided coming up through the technology silo and work across all the business disciplines. They not only know what tech can do for the bottom line, but also have the 'soft' influencing skills to convince sceptical fellow board members to take the plunge.

It's a potentially lucrative gig - according to a survey by Harvey Nash, an average CDO earns £114,750, rising to nearly £160,000 for those who report directly to the CEO. But not everyone is convinced that this is the best approach. 'I don't think being a CDO is really technology, it's something else, it's a transitional role,' says Gee. 'I've been paid to code and it gives you a perspective. You wouldn't put someone who wasn't a seasoned financial expert in charge of finance, so why put someone who doesn't have a tech background in charge of tech?'

It's also much more common for a promising younger candidate from sales or finance to be groomed by their organisation for a future board role, than it is for a rising tech star to be nurtured in the same way. That needs to change, because firms are missing out on talented candidates, says Cummings. 'I met the chief data guy for a big retailer the other day. He's very smart and ready to go on the board despite only being in his early 30s. There are probably lots more like him.'

In the meantime, ambitious CTOs with an eye on the top table can take matters into their own hands. 'Look out for internal projects that will broaden your exposure to transformational and commercial aspects of the business,' says Grossman. Opportunities outside your day job can do the same - get involved in running a voluntary organisation or become a trustee of a smaller charity or not-for-profit. Learn about group dynamics, and how to speak the corporate lingua franca of money.

But if techies need to work on their management toolkit to make that jump to board level, then it's also high time that the other directors tried harder to boost their own tech credentials too. 'Having a lone techie on the board is not the answer to the challenges of digitisation,' says Letts. 'CEOs themselves must be more tech savvy, they need core skills around technology to go with their traditional financial, strategic, customer analysis and marketing skills.'

So the future will be less about digital directors, whatever their job title, and much more about the digital board. It's good advice, because it will be a lot less than another 50 years before there aren't any non-techie businesses left.

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