TECHNOLOGY
PHOTOS: CHRISTINNE MUSCHI
The
‘digital director’ imperative Technology and governance specialist ESTELLE MÉTAYER talks to business writer Virginia Galt about the need for boards to enhance their digital prowess by broadening their recruiting
8
DIRECTOR JOURNAL
TECHNOLOGY
Last year, the boards of two Canadian organizations beefed up their technology expertise by recruiting tech genius Nicolas Darveau-Garneau, whose full-time job is chief search evangelist at Google. The decision by Quebec City-based Industrial Alliance Insurance and Financial Services Inc. (iA Financial Group) and Toronto’s TMX Group to appoint Darveau-Garneau – who is also an angel investor in startups and a former tech entrepreneur himself – to their boards is a sign of the times. There is an appetite for this new breed of “digital director” as a small, but growing, number of publicly traded companies seeks deeper understanding of emerging technologies at the board level, says Estelle Métayer, corporate director, business professor and chair of the technology committee at the Institute of Corporate Directors’ Quebec chapter. While some boards recruit for the role, others “volunteer one or two of their existing board members, telling them ‘You have to be our digital director; go and acquire the training.’ “I am seeing a lot of this,” said Métayer, an adjunct professor at McGill University’s business school and a faculty member in the ICD’s director education program. Directors are telling her “we need to get better [at technology oversight].”
THE POOL IS DEEP Métayer does not share the commonly held view that there is a shortage of tech talent in Canada. “There is a lot of talent out there. There are a lot of people who deeply understand emerging technologies.” The more worrying skills gap is at the board level. One way to bridge that gap, she says, “is for our governance committees and boards to shift away from systematically asking for an ex-CEO or someone with previous governance experience” to fill an open board position. Organizations are gradually starting to shift. “Some boards are thinking, ‘There are 13 people on my board; we can have one or two who are really digital.’ ” Many of these digital recruits bring much more than tech smarts to the board, she added. Canadianborn Darveau-Garneau, for instance, graduated from the University of Waterloo with a math degree, earned an MBA from Harvard Business School, and worked as an analyst for McKinsey & Co. and Sanford C. Bernstein & Co. LLC before joining Google. In his current role as chief search strategist, Darveau-Garneau helps Google’s top advertisers improve their digital strategy. He is also a guest lecturer on machine learning and marketing at the Kellogg School of Management at Northwestern University in Illinois. Darveau-Garneau is not the only techie on the 12-member iA Group board. Fellow director Louis Têtu is chief executive officer of Coveo Solutions Inc., an artificial intelligence search applications company based in Quebec City. “You won’t need to change the entire board,” Métayer advises, “but you might want one or two digital directors to join.”
EXPERTISE IS EXPANDING Métayer will moderate a panel discussion in June at the ICD’s national conference in Toronto on how technology is driving and changing the director’s role. In her view, it’s no longer enough for the board to have regular briefings from the chief information officer or chief technology officer; it’s essential to have one or two directors at the table with a working knowledge of emerging technologies. Typically, when directors think about tech, they are primarily concerned about cybersecurity risk and the cost and complexity of technology investments. However, “it’s so much broader than that,” with the advent and application of artificial intelligence, augmented reality and virtual reality, drones, blockchain, the Internet of Things, 3-D printing, robotics and cloud computing, said Métayer, founder and president of Montreal-based Competia, which advises corporate executives and boards on “competitive intelligence” and strategy. Métayer is an independent director at BRP Inc. (Bombardier Recreational Products) and Swiss watch maker Audemars Piguet. She’s also a keen and prolific tweeter, providing newsy comments and links on her Twitter account about business, governance and technology developments. To help directors navigate the complexities of governance in the digital age, the tech committee of ICD’s Quebec chapter has just published a guide, “Emerging Technologies: Understanding the Disruption Ahead.” “The board needs to be able to understand how the company is planning for the future, how emerging technologies are empowering or threatening tomorrow’s strategies and MARCH/APRIL 2019
9
TECHNOLOGY
how it’s managing associated risks such as data privacy, cybersecurity and talent acquisition,” Métayer and her committee members wrote. It’s not that every company will dive into AI, or blockchain (the technology that underpins digital currency transactions) or robotics, but it’s imperative that they understand the rapidly changing technology landscape. “Today’s boards must keep abreast of the opportunities and risks that come with emerging technologies, and surround themselves with the needed expertise to be able to oversee management’s decisions that are most likely to create strategic opportunities,” the guide says. Forward-looking boards are already immersed in these issues, said Métayer, who will be joined in the ICD panel discussion by three seasoned directors: Chris Clark (Loblaw Cos. Ltd., Air Canada, Choice Properties Real Estate Investment Trust), Deepak Chopra (Celestica Inc., the North West Co. Inc.) and Kalpana Raina (Yellow Media Group, Information Services Group). They will be looking at the topic from several angles, including: •
•
Whether risk oversight should be assessed and overseen by a separate committee;
•
How the increase in automation and other new technologies affect the race for talent and threaten existing functions in the organization; and
•
10
How tech has changed the role of the director and what new skills boards need to acquire or develop;
The challenge, for board members, of keeping up to speed with the technological race and its impact on their organizations’ business models and ecosystems.
DIRECTOR JOURNAL
INACTION IS DANGEROUS Métayer said in an interview that, in the absence of robust tech oversight, organizations are putting themselves at unnecessary risk. She cited warnings by Canadian securities regulators about inappropriate disclosure of material information on social media. (“As social media and the use of the Internet have become increasingly part of how we communicate information, we have observed a higher proportion of corporate disclosure being provided through chat rooms, investor presentations, blogs and social media websites,” the Canadian Securities Administrators said in a 2017 bulletin. “Given that investment decisions are made on material information, it is critical for issuers to adhere to high
quality disclosure practices regardless of the venue used for dissemination.”) Directors seem well aware of the cybersecurity risks posed by hackers breaking into company networks and stealing confidential information. But there are also growing concerns about what companies do with the data they collect from their own customers, Métayer said. “Many companies collect data about the clients [and] clients are just realizing how much is being collected about them, and that can backfire,” she said. “Another liability, in my mind, is strategic,” she added. For instance, there’s a risk that if a company fails to adopt new technology in time, it will grow less competitive. VIRGINIA GALT, a former business and education reporter for The Globe and Mail, covers legal, education and management issues for a number of publications.
•
A board’s need to acquire technological expertise is no longer just about understanding cybersecurity threats. It’s about being able to stay competitive by understanding the building blocks of the new economy.
•
Some boards have begun to prepare by recruiting highly successful executives and entrepreneurs from the tech sector. There is no shortage of talent. The key is to expand recruitment beyond former CEOs and current directors.
•
To become more technologically savvy, boards don’t have to completely reinvent themselves. Adding just a couple of ‘“digital directors” will prove extremely helpful.
•
There is an increasing variety of resources available to help boards make the shift, including a new report by the ICD’s Quebec chapter called “Emerging Technologies: Understanding the Disruption Ahead,” and a panel discussion at the ICD’s national conference in June, moderated by Estelle Métayer.