With the February 1 announcement of its mammoth public offering, Facebook is basking in the limelight. The $1 billion (in annual revenue) Silicon Valley darling, along with LinkedIn, GroupOn and Twitter, is yet another reminder of the dramatic impact that the social, mobile and cloud revolutions are having on customer communications and shareholder interest. Is it time for boards, and their directors, to reinvent themselves to keep pace? Yes, according to this opinion piece by Barry Libert, CEO of OpenMatters, a company that invests in social technologies and advises boards of directors and executives on the impact of new technologies on corporate governance and enterprise risk management.
Let’s start with today’s reality. The world has changed but corporate boards haven’t kept pace. How do you know? Ask most boards what they monitor and measure at their organizations. There’s a big chance that most of them will say they are monitoring and measuring financial results, compliance and legal risks. Then ask them if they monitor and measure the impact of new technologies on their operations, including the social communications between their customers, employees and shareholders, and the answer will most likely be no. And finally, ask them if they know what the risks and costs are of not using these technologies to communicate and collaborate with stakeholders, or having the insight they provide. Once again, the answer will often be no.
What’s surprising about such responses is that boards know that solid decision-making is essential to mitigating risks and ensuring the viability of their enterprises. How is it, then, that most of them don’t have a grip on the operational value these technologies offer, or the critical “big data” — about customer sentiment, employee engagement and investor insights — that they produce? The answer: They’re still using corporate governance tools and strategies that were developed in an age that was neither social nor mobile, or ever considered that the “cloud” would exist.
In short, today’s corporate directors have the “necessary” skills in terms of compliance and financial performance, but not the “sufficient” skills in terms of strategic or technological know how. Why? Because for years, astute corporate directors believed the tools that companies like Facebook and Twitter offered weren’t essential. In their view, these new means of communications were for kids, had little, if any, business value, and created minimal strategic, operational or financial risks. Wow, were they wrong.
Now maybe you are part of the majority of board members who don’t use social media. Maybe you believe your board and organization don’t need new skills taking new technologies into account because they don’t apply to your industry. Or maybe you believe your customers, employees and shareholders aren’t social or aren’t mobile. Think again.
As you read this, there is a good chance your customers and employees are sharing their knowledge about your organization and its products, services, research and culture with customers and employees at other companies. If you don’t believe me, check out employee feedback on Glassdoor.com or Amazon’s online price comparison tool. And remember that the corporate directors of Kodak, Blockbuster and Borders also possessed the necessary, but insufficient, skills to compete in a social and connected world. Further, ask them how their lack of digital technologies expertise impacted them.
The good news is that if you are among the majority of corporate leaders and think you are ill equipped to deal with today’s technology realities — as various recent surveys suggests — it’s not too late to reinvent corporate governance and your board. If you don’t want to go the way of Borders and the like, you and your fellow corporate directors have the chance to update your skills and build a high-performance board. But to accomplish this goal, corporate directors need to add deep technology and strategy knowledge to existing Sarbanes Oxley and financial reporting expertise. To get started, below are seven steps you and your board can follow to get a handle on today’s enterprise risks.
To read the rest of Barry Libert’s opinion piece, visit this link: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2940
