Harnessing the Power of Information Technology: Information-Age Boardrooms
Most boards outside the information technology sector do not need to add individuals with in-depth knowledge of the technical workings of information technology or the Internet. Nor do they need to replace all of their senior directors with members of Generations X and Y. But they do need to ensure that several of their members have a clear understanding of how information technology and the Internet are changing the dynamics of their industry and the array of strategic options open to their firm.
Technology expertise can come from a director who is a CEO or senior manager at an information technology or Internet-enabled firm. These individuals can bring the rest of the board members up to speed on the latest developments and updates. Boards can also be kept updated through presentations from external experts, senior managers, visits to firms with leading-edge practices, and by ideally encouraging each member to spend time on information technology and Internet strategy as a routine part of their board responsibilities.
Just as boards can take advantage of the Internet's ability to improve communications among its members, they can also become more effective by tapping into the wealth of information contained on a firm's intranet and the Web. Motorola, for example, is enabling all its directors to access electronic courses through Motorola University, an inexpensive means of increasing their knowledge about the firm and its markets. However, because of the wide array of potentially relevant topics for the board and the limited time of its members, there is a very real danger of the Internet leading to information overload. Thus, it is vital that some means be put in place so that the intranet and Internet are deployed to distill the key data that directors require for financial and strategic oversight, without overwhelming them with the immense amounts of operational information that a corporation generates. Among the key kinds of information that boards need to gather and distribute electronically to its members are the following.
Key performance indicators: A growing number of firms use a balanced scorecard approach to monitor not just the short-term financial performance of the organization but also the extent to which the firm is building longer term capabilities and meeting the needs of key stakeholders (customers, suppliers, and employees). Rather than just gather these indicators in reports for each board meeting, organizations need to create an electronic dashboard that the directors and executives can consult on an ongoing basis.
Internal communication: Many boards have already attempted to improve their legal oversight and compliance function by establishing a toll-free number that concerned employees can use to raise any issue. The use of it will be supplemented in the future by creating a widely publicized e-mail address or Web site link where employees can send suggestions or voice concerns to an outside board member that they may be reluctant to share with management. For such a system to work, of course, employees must be assured that all such e-mail will be treated as strictly confidential. Thus, the board may want to contract with a trusted outside organization to act as an initial clearinghouse for such communications.
Employees are likely to be far more willing to share their thoughts with the board's directors if the board first takes advantage of the Internet's potential to build a two-way conversation with employees. Currently, most directors are invisible to employees. Company intranets, however, provide a low-cost and rapid way to share appropriate information—such as long-term strategy, celebration of key successes, rationales for major acquisitions or divestitures—with a firm's entire employee base. Some firms are already making good use of this capability, although more frequently it is the top managers rather than board directors who have taken the lead.