This blog is based on Episode 11 of the The Corporate Director Podcast, where we interviewed board member and AI-expert Anastassia Lauterbach.
Interviewing a professional who truly excels in their work is always a positive experience. But we wouldn’t just say that Anastassia Lauterbach is a professional who excels. Really, she’s a champion who inspires. Sure, it’s easy for us to say that. After all, we love board governance issues, and Lauterbach is on multiple boards (EasyJet, Wirecard). She’s also on the advisory board for Diligent Institute, our think tank and global research arm.
But we aren’t the only ones who think Lauterbach inspires. She was actually the second most googled person in Germany in 2017, largely due to her keen strengths as a technology strategist, specifically in ML, AI, and cybersecurity. She’s also the author of The Artificial Imperative, and is CEO and founder of 1AU Ventures Ltd.
She came on The Corporate Director Podcast when we recorded live in Munich to give us her thoughts on board governance and technology.
Technology has been slow to reach the boardroom
“The boardroom is not a room where you can hide.” — Anastassia Lauterbach
If you enter a boardroom today, you’d notice that many of the practices look just as they did in 1870, when Robert’s Rules of Order were instilled. This isn’t just an anecdotal observation—data actually proves how slow the boardroom has been to respond to technology:
Deloitte did research on the S&P 500 that showed less than 18% of boards had even one director with technology expertise. What’s more, the bar for “technology expertise” was rather low—the requirement simply being that an individual had at least one year of professional experience in a technology role (say, as an IT professional or a CSO).
So, while directors are lacking technology expertise, the rest of the business world has been heavily impacted by technological disruption. Why hasn’t that ticked up to boardroom?
One reason is that board members’ jobs have grown increasingly more intense. The number of topics they must constantly stay up-to-date can be overwhelming, and the technology topics in particular can be especially burdensome for someone who isn’t already an expert. But still, there are a few ways boards can rapidly increase their technological acumen.
Every board member should have a baseline understanding of technology
Here at Diligent, we frequently hear concerns about the technological immaturity of many boardrooms. The issue isn’t whether or not the boardroom wants to read quarterly reports on paper versus an iPad. The true issue is whether or not the board is comfortable exploring, understanding, and making decisions about technology for their firm.
When a board member (or worse, a board as a whole) is truly uninterested in learning about technology and potential disruption, that’s a concerning signal.
Consider it in terms of finance: We’d never be OK with a board member saying, “I’m just not interested in finance, so I don’t really want to explore it.” A basic understanding of finance is a must. With technology, frankly, regardless of your industry, your company runs on it, so having a baseline understanding should be a given.
Lauterbach explained that there are really only two options when dealing with a board that has limited technological understanding: One: Bring the board members up to speed on technology. Two: If the first option is a non-starter for an individual, the only question rests on how you remove them.
From her perspective, the modern world has no real room for someone who isn’t interested in learning about the underpinning of what runs our everyday society. Assuming that option one is a possibility, Lauterbach gave us a few pieces of advice.
Lauterbach has a few pieces of advice for board rooms:
#1: Understand that ‘digital director’ is not a one-size fits all
A frustrating, but prevalent issue that Lauterbach has repeatedly encountered, is a misunderstanding of the various subcategories of technology. Frequently, she receives phone calls from companies looking for a “digital director”—to which, she says, there is no such thing. Her point?
The differences between a UX/UI developer and an e-commerce specialist are vast, for example, with numerous sub-categories in between. Boards and search committees ought to be broadly versed on various types of technology, or at least be able to obtain advice from a consulting firm, to even know what type of digital directors they truly need.
#2: Ask management challenging questions on cybersecurity issues
Sometimes you have to challenge management to get them to consider the implications of certain actions, especially when it comes to cybersecurity and other technological issues. Directors should not be scared to ask management: “What would really be the output of x input (or change) in our pricing or systems?” Often times, these sorts of questions not only help reveal answers, but these questions help train everyone involved on how to think about technological implications.
#3: Know when you hire a board director, you aren’t just hiring them, you’re hiring their contacts
It’s important to remember that each potential director comes with a rolodex of contacts from their professional career. If that rolodex is lacking, either in quantity or quality, then Lauterbach simply wouldn’t hire them. These contacts become incredibly helpful to management.
“I would never hire a board director who is not coming with a certain network.” — Anastassia Lauterbach
Board Minutes— rapid-fire statistics every director should know:
We have only one source of rapid-fire statistics we wanted to share this week, from this article by NPR:
- In 2018, 39% of the CEOs who were removed from office, were removed because of ethical misconduct
- Only 35% of those removed were forced to do so because of financial performance
- This marks the first time that more executives were removed from office because of misconduct rather than financial performance