In today’s fast-changing world of technology, the key to business success is changing. Having a board that knows how to use technology was once a big advantage in business, but now it’s just the bare minimum for companies that want to succeed. The next edge in business competition is for boards to really comprehend artificial intelligence (AI). This perceptive comment originates from a recent study undertaken by a distinguished centre for information systems research.
The Changing Meaning of Smart Leadership In 2019, a study showed that UK companies with boards that were good with technology and had more than £1 billion in revenue did about 30% better than their competitors in their industry on a number of important indicators, such as an increase in market capitalisation. But when the same analysis was done again in 2024, there was a huge change: the percentage of boards that were technologically aware went from 24% in 2019 to an amazing 72%. This means that being good with technology is now a common trait instead of a unique one that sets people apart in terms of performance.
Companies need to be good with both digital and AI if they want to do well in today’s fast-paced world, because these two skills go hand in hand with better performance. An expert in the sector said, “The technology innovation curve has gotten steeper since 2019, with big companies using new digital tools like generative and agentic AI, robotics, and xTech.” Digital savviness is “an understanding, developed through experience and education, of the impact that emerging technologies will have on businesses’ success over the next decade.” At least three directors on a digitally savvy board should have this knowledge.
Researchers use machine learning methods to look for certain terms and phrases in director bios that show digital skills. They then interview non-executive directors to find out how good this quality is. Changing the Way People Talk in the Boardroom In 2019, board members mostly talked about how to change their businesses digitally, how to change their business models, cybersecurity, and how reliable their IT systems are. At that time, 8% of the corporations in the S&P 500 had set up technology committees to deal with these issues. Chief Information Officers and Chief Information Security Officers usually spoke about digital issues at these meetings. The agenda for the boardroom has grown a lot since 2024.
Cybersecurity and related regulatory reporting are now more important than ever. Some parts of digital transformation are slowing down, and there is a greater focus on selling digitally enabled products and forming digital partnerships to reach new customers and services. There are now almost twice as many boards in the S&P 500 with their own technology committees, up to 15%.
Additionally, a broader spectrum of executives, encompassing technical leaders and heads of business divisions, are currently addressing the board on these critical issues. When the researchers found out that 72% of firms now have boards that are good with computers, they changed their definition to include machine learning and all types of AI. The new research gave results that were similar to those from 2019: 26% of corporate boards showed that they were good with both digital and AI technology, and these companies also did better than their competitors.
Companies with boards that were good with both digital and AI technology saw an average return on equity that was 10.9 percentage points higher than the industry average. On the other hand, the 74% of companies with boards that weren’t very tech-savvy were 3.8 percentage points behind the norm for their industry. This interesting research reveals that companies with boards that are good with technology and AI are likely to be bigger and worth more because of growth expectations and other variables.
The Strategic Function of Board Committees Researchers looked into the roles of board committees—groups of directors who focus on certain themes and give advice to the whole board—in order to learn more about how boards that are technologically and AI-savvy work. The boards in the research sample usually had four committees, but they might have anything from one to twelve. The results showed that boards that were good with computers and AI were more likely to have committees that worked on cybersecurity, talent, technology, and digital products. Most of the directors who were interviewed supported the creation of board technology committees in their companies, which shows how important these concerns are.
Fostering Ongoing Technological Comprehension After talking to a lot of directors, the researchers give three pieces of advice to boards and executive teams on how to keep up with quickly changing technologies: Educate: Boards should look for outside speakers to come to meetings, set up technology demonstrations, and make custom education programmes. Working with technological partners like universities, venture organisations, and start-up accelerators can also be very helpful for keeping up with current trends and technologies. Make Time a Priority: Board agendas are often full, which makes it hard to give enough time to important issues like decreasing costs and dealing with unconscious bias. When making board agendas, it’s important to focus on why particular actions are needed instead of how to perform them, which can take too long.
Stay on Track: Setting up a specific technology committee might help show how important technology is to corporate plans. These kinds of committees provide board members the power to think carefully about how technology fits in with the company’s overall goals.
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