Introduction

The corporate board has many stakeholders—shareholders,¹ employees, vendors, customers, and communities.² Being responsive to such a wide array of constituencies is no easy task. Over time, technology has become an omnipresent concern across these groups. And thus, technology has likewise become a recurring topic of concern to boards.³ The rise of the digital age has brought with it a mix of both opportunities and threats. On the one hand, the high-tech revolution has improved economies of scale and transformed business processes across every industry sector.⁴ Conversely, the boon of technologically aided abundance has brought with it increasing economic inequities, regulatory scrutiny, and rising consumer distrust.⁵

For board members, making informed governance decisions in this area is more challenging than ever before.⁶ This is partially because the complexity of enterprise technology is increasing at an exponential rate.⁷ Deloitte’s 2023 Tech Trends report offers a navigational framework for boardroom conversations in this area.⁸ Specifically, the report suggests a holistic governance approach where leverage of technology is based on the business use case rather than its perceived novelty or innovativeness.⁹ To put it simply: The best way to drive a nail is determined by the size, dimensions, and materials of the nail—not the newness of the hammer. That remains true even if it’s an “enterprise smart hammer,” which connects to your smartphone and provides voice-guided assistance.

What does it mean to have ‘effective’ technology governance?

Deloitte’s analysis shows how the ever-changing technology landscape is being driven by a mix of macro-level innovational and foundational forces.¹⁰ Interaction, information, and computation are the innovations that have shaped nearly every paradigm change in technology. Notably, these are the basic structural forces behind every major technology innovation in the modern business era—from the first general-purpose computer to the metaverse.¹¹ Underlying this are three foundational forces: the business of technology, cyber and trust, and core modernization. Taken together, these six macro forces can serve as guideposts for how technology trends are shaping stakeholder expectations.

Guideposts for technology-informed governance strategies

Importantly, these six forces are more than simple expressions of specific and discrete technologies or platforms. After all, the current vessels of innovation—which for 2023 includes artificial intelligence, the metaverse, and blockchain—are always changing. Being a technical expert in any specific platform or emerging trend may certainly be helpful, but for boards, a broader purview may be needed. These six innovational and foundational factors offer a way to better understand the needs of board stakeholders, especially in terms of how they interact with the digital world around them.¹² The below chart outlines how keeping these drivers of technology trends in mind can inform the governance process.

How drivers of technology innovation can add value

What does a technology-informed governance strategy look like?

In recent decades, the amount of time boards devote to technology and the enterprise has been on the rise.¹³ And according to research conducted by the Center for Board Effectiveness and Columbia University’s Millstein Center for Global Markets and Corporate Ownership, that trend is only expected to accelerate.¹⁴ As technology issues have become more complex and multifaceted, there is an understandable tendency to compartmentalize them.¹⁵ For example, technology is frequently discussed only in the context of risk management or information security.¹⁶

One timely example of boards balancing growing priorities is the SEC’s upcoming rules on cybersecurity.¹⁷ Dialogue on the proposed regulations has revolved around the technical requirements. Among the most pressing concerns is how corporations will show board cybersecurity expertise via SEC filings. These proposed requirements may increase compliance obligations,¹⁸ so focusing on such details is unquestionably important. However, it may also be helpful to view the issue through the lens of technology trends. Because at its core, research suggests the SEC’s regulation changes may reflect an institutional response to growing public trust gaps—another issue noted in Deloitte’s 2023 Tech Trends report.¹⁹ 

It is perhaps cliché to note that every company is a technology company. But a growing body of evidence shows a link between proactive technology governance strategies and performance.²⁰ For that reason, technology trends are likely to remain at the top of the board’s agenda for 2023, and beyond. Regardless of the challenge—be it an evolving regulatory framework for cybersecurity or the changing way stakeholders’ interface with the digital world—the coming years may require a fundamental reframing of technology issues. There are clear benefits to such reframing, because doing so could foster a more agile and forward-looking governance culture.²¹ In that vein, the below might act as a starting point for navigating boardroom technology discussions.

Reframing board connections between technology and enterprise

What questions can guide boardroom discussions in this area?

The innovation du jour at the start of 2023 is, undoubtedly, already changing. But regardless of form, technologically informed governance can help both mitigate risk and enhance a company’s competitive advantage. Questions to consider in this area include:

• Is the technology strategy consistent with the company’s values on inclusivity and equity? Are there checkpoints to ensure these values are kept in mind at every point in management’s decision-making process?
• What is the strategy to proactively monitor the opportunities and threats that arise due to changes in the technology landscape?
  • What is the process to determine whether an innovation is worthy of pursuing and incorporating into the business process?
  • Is the proposed adoption of a new technology solving a priority issue in a manner congruent with the organization’s strategic plan?
  • What are the risks and liabilities that could occur due to using (or not using) a particular technology?
• Beyond technology executives, what other internal stakeholder input is needed to ensure a holistic strategy in this area? When should external stakeholder input be gathered?
• How might the decision to use (or not use) an innovation improve (or degrade) trust relationships across the board’s stakeholders?