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IT Strategy: Boardrooms must adapt to new technologies or risk monolithic failure

Management tools for the boardroom are incomplete, while hubris and ignorance remain major threats

CREATING and managing a new company or, indeed, keeping an old one ahead of the game is hard, regardless of their size or sector. Success does not come easy or cheap, and as a general rule the key difficulties arise from information confusion and a polarisation of expertise and experience at board level. By analogy, it can feel like you are in the cockpit of an A380 where the instruments are telling you everything about the status of the airframe and passengers – ignoring the height, heading, fuel, altitude and speed. And worse still, the crew of the flight deck have only ever read a book or had experience of a flight simulator.

The worst boards I ever served on were diametrically polarised. One had accountants and lawyers and no knowledge of the technology or market, while the other was weighed down by techies who knew nothing about accounting, the law, marketing or sales. In the first case, they stood no chance of appreciating the technology, product or market;  in the second, the time to learn the basics of business was protracted. For one of these companies, this turned out to be fatal, and it was extremely damaging for the other.

The magic formula for success involves a diverse and adaptable board and management team willing to learn and take measured risks. There is no place for ignorance. Even an experienced chairman needs the support and counsel of a good lawyer, accountant, analyst, marketeer, sales and technology team. And it should be of mixed gender, colour and creed, with a diverse educational, industry and sector background. They also have to meld, work together and be prepared to continually question, challenge and learn.

If you get all of that right, and it is working well, there are still some big problems with data, information, modelling and decision support. These are essential tools that the management system needs to augment human instinct and experience. But here is the bind. Getting timely data and transforming it into relevant information is not as easy as saying you will do so. For example, the automotive industry tends to operate with data that is one month old, while data used in logistics can span days, weeks and months.

By and large, the software tools available to boards and managers assume a level of market stability and materials supply that hasn’t existed for decades. In short: they don’t cope too well with the reality of rapid and chaotic change, and boards have to become skilled in the art of asking, “What if?” A widening gap that can be filled, or at least augmented, by war gaming and ‘Monte Carlo’ simulations. To date, this uncertainty problem has not been automated and/or embedded into the management tools available on the market, and we are a long way from seeing skilled and experienced board members being replaced by machines.

As a long-serving board member, the wildest ride I experienced was a start-up that went from idea to £1m in four years. We had a good and experienced management team, a great organisation, but none of the above tools or wisdoms. We flew by the seat of our pants. My responsibility was technology and financial veracity, and I can now say I was operating in a fog of confusion along with everyone else. Clarity of everything was only manifest in the last few months of the fourth year. We were lucky – very lucky.

Such an approach might have worked 15 years ago, and I know it did for very many companies that I advised, but today it would spell almost certain death. Modern tools and techniques are vital in this modern world and boards and managers clinging onto the old ways are a fast-growing liability. ?

Peter Cochrane is an IT consultant and the former chief technologist at BT

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