ITWC – Should we be concerned about the digital literacy of Canadian board of directors?

ITWORLD Canada Feb 7th, 2021

New capabilities made possible by advances in technology are driving organizations in every function, industry and region of the world to take a serious look at their business and to understand the implications these profound changes will have on their organization. Even for industry veterans who’ve participated in previous technological revolutions – the advent of the PC, the dawn of the internet age, the move to mobility and the cloud – changes being brought about by IoT, AI, machine learning, robotics, social media, quantum computing, et al, can be quite daunting.

The world is witnessing the creation of new business models, heightened competition, the restructuring of hierarchies, new rules of conduct, the redefinition of “stakeholders”,  and sometimes the realization that an entirely new purpose for the organization is required for survival.

This is a lot.

And the magnitude and velocity of technological change have only just begun.

What we haven’t seen enough of yet are the adaptations to the organizational structure necessary to navigate these tumultuous waters. This is especially true of governance at the board of director’s level – at least in Canada. Research undertaken in November 2020 shows that only 7 per cent of directors of Canada’s Top 100 TSX listed companies hail from a technology background. Fifty per cent of these companies have NO tech experienced directors at all.  

Over the last 15 years, legislations have been enacted in technology’s sphere including privacy and data-use protections such as PII/PCI, PIPEDA, GDPR, and many rules around the need for care and vigilance through cybersecurity charters. Surprisingly, there has been no suggestion from regulators or exchanges of the need for technical or digital competence at the board level, when technology-driven risk is arguably one of the most challenging issues confronting organizations today.

Historically, the role of the board of directors is to provide oversight of, foresight and insight to, the leadership team in executing the strategic and business plans and commitments made to shareholders. Their responsibility is to ensure the sustainability of the organization to the benefit of current and future stakeholders.  They are to contribute to, approve, resource and monitor the strategic initiatives of the company.   

In Canada’s case, these accountabilities face two concerning scenarios based on the dearth of technology experienced directors – either the board is approving the digital strategy and future direction of the company from a position of weakness, or they are not considering the issues at all. Neither situation is good for Canada’s corporations.

If any discussions about technology are being held at the board table, they usually centre around cybersecurity or a significant enterprise-wide project underway.  They tend not to be strategic or forward-looking and are often held only within sub-committee sessions. While these discussions are critical, they may miss the most compelling aspects of today’s technological advances  – the ability to leverage powerful computing capabilities to restructure for the future, overtake competitors,  become dominant in your field, grow like a start-up, and attract highly-talented people to join the team.  This is the exciting, innovative and engaging side to digital disruption that will likely be the difference between sustainable market leadership in your industry or longer-term destruction of company value.

Most management gurus tie innovation to competitiveness and competitiveness to the organization’s long term sustainability. Building an innovative organization would prove nearly impossible without the support and buy-in of the leadership and board. Given the scarcity of digital literacy among corporate Canada’s directors, who could champion such catalytic change among their board peers and leadership team?   

Canada’s top companies risk falling behind

Statistics from global think-tanks World Economic Forum (WEF)  and World Intellectual Property Organization (WIPO) place Canada’s Competitive and Innovation ranking between 14 and 17 with a small decline in rank in recent years.    

A 2019 MIT Sloan CISR research report indicated that 24 per cent of the top 1233 NYSE/NASD listed companies had a digitally-savvy board – defined as having at least three directors with a technology background. In Canada’s Top 100 TSX companies, only eight per cent have three or more technology experienced directors on their boards. Already powerful, American companies appear better prepared to face the digital future, with experienced hands to guide, than Canada’s top companies.  

The same MIT research showed that digitally savvy boards drove markedly better performance in four key financial metrics: Revenue Growth, improved return on assets, market cap growth and improved profit margins. This is reason enough for companies to change the composition of the board towards digital literacy.   

As the world recovers from the COVID-19 pandemic, and countries and industries look to “build back better,” those who have used this time to improve their digital capabilities, increase automation, provide skills development for employees, and set a digital-first path to the future, will be in the best position to excel.  And they’ll consider their markets to be global, increasing the competitive landscape significantly.  

Money and talent will move to the most hospitable environments.  Companies that can not articulate an inspiring vision for their future will not attract and retain people with the necessary skills and capabilities to undertake a transformative journey.  

In order to spur innovation and creativity within organizations, I suggest the “digital transformation” start with the board of directors. Governance restructures and reform should occur such that technology discussions are as important as financial results review. At this time in history, I’d argue technology review is even more important.  

It won’t be easy, but it should start now.  I recommend three steps to become a more contemporary, digitally savvy board:

  1. Add technology experienced directors.
  2. Engage in technology education for the full board of directors, and beyond cybersecurity.
  3. Make digital discussions a standing agenda item with a set of high-value reports to provide regular visibility to digital performance and compliance.  

Some responsibility for the board’s lack of engagement lies with the IT leadership themselves who must be more proactive in supporting their boards. CIO/CDO’s should take the initiative to open the dialogue by providing insight and recommendations about the digital strategy or emerging technologies that present opportunities or challenges.    While these executives may not know the intricacies of technology, they do read the headlines and may have concerns or questions about what they are seeing.   

So, should we be concerned about the digital literacy of Canadian board of directors? Yes, we should be.

But it doesn’t have to stay this way.  As technology industry leaders, let’s become the bridge for digital competence at the board level to improve Canada’s competitiveness and innovation performance on the world stage.  


I would be interested to hear from IT leaders and industry executives about your experiences with the board of directors. Do you feel sufficiently engaged with your board and leadership team?  Are they informed enough to guide the development and execution of a digital strategy for your organization?  Your insight and experiences can help other IT leaders build their bridge to a digitally competent governance structure. Many thanks in advance. Contact me at