Business leaders must understand the enabling power of technology and get the right people on board in order to stay ahead of the game.
The power of technology to make or break a business has arguably never been greater. On one hand, says Klaus-Michael Vogelberg, chief technology officer at business software company Sage, cutting-edge technologies and digital skills are no longer the exclusive domain of large organisations.
“Technology is becoming democratised,” he notes. “In the past something like machine learning would have required huge investment. Now you can do it for pennies via the cloud, and you can afford to experiment.”
On the other hand, the USP of so many smaller firms – the ability to offer a personalised service based on detailed customer knowledge – is being eroded by the very same technologies.
It’s an issue that Andrew Liles, CTO of digital consultancy Tribal Worldwide, acknowledges. “What should slightly terrify small- and medium-sized businesses is the onrush of giant companies such as Amazon,” he says. “Thanks to the latest data analysis techniques Amazon can match what many smaller firms do.”
According to Mr Vogelberg, “almost every firm will be a software-enabled business. Technology is the new business language.”
If this is the case, and technology is seen as the language of business, surely it follows that the board of every company, large or small, should learn to speak it fluently?
“A knowledge of technology is absolutely essential,” agrees Kalyan Talluri, professor of operations management at Imperial College Business School. “I don’t know how company directors can do their duty without keeping up with it, because if they don’t make the best use of it, their competitors will.”
Do you need detailed tech knowledge?
It’s a view that resonates with the respondents in a 2017Telegraph/Brother survey of UK IT decision makers, more than half (56pc) of whom said they believed strengthening the board’s digital skills was important.
This is not to suggest, however, that business owners should be getting to grips with blockchain, artificial intelligence or the internet of things. “I don’t think it’s realistic to develop detailed knowledge, partly because technology is so fast moving,” says Mr Liles.
“You don’t have to know how ‘the cloud’ works, or even what it is. But you do need to know what it can enable. For example, the ability to rent software and services by the hour or even the minute to turn them into variable costs. That knowledge could be very valuable.”
Mr Vogelberg believes that what is important is to understand the “key digital drivers of the organisation. That could be the internet of things and two-way communication with devices, or intelligent automation and how it could improve productivity, or how technology could transform the customer experience.”
Often the best way to get your head around technology is through personal use, according to Mr Liles. “You want to understand artificial intelligence and natural language processing, then get an Alexa,” he advises.
“It’s in the nature of small businesses to be pragmatic and entrepreneurial,” adds Mr Vogelberg. “So get back to the entrepreneurial mindset that first created the business and apply that to technology.
“Think about chatbots, for example. What could a different kind of customer interaction do for your business? Write a skill for Amazon Echo and find out.”
Secure a champion CTO
Topics that should be top of the mind for many directors is cybersecurity and data security, particularly since they may find themselves personally liable for any breaches.
“We’re receiving significant numbers of requests for training on General Data Protection Regulation and the personal liabilities that go with it,” says Helen Beech, a partner at law firm Clarkslegal. “The fines for GDPR breaches are potentially huge, and people are starting to panic.”
Although in an ideal world all company directors would be fully au fait with technology, Mr Liles concedes that this is not always realistic. “But you do need at least one person who understands and champions technology,” he says. “And it needs to be a strategic position, not just an IT manager who reports to the finance director.”
If no one on the existing board fits the bill, Mr Liles suggests co-opting a freelance expert as a part-time non-executive CTO. This may secure a bigger fish, technologically speaking, who would potentially find a full-time job at a small firm too dull.
Finding the right support
There are formal education programmes aimed at skilling up senior managers in the latest technologies. Imperial College Business School offers a part-time MSc in business analytics, plus hands-on short courses on using technology to address business problems.
Peer groups, supply chains, business associations, professional organisations and publications can all be useful sources of information and moral support. But often the expertise directors need can be found within their own organisation – especially among more junior staff who are “digital natives”.
“Our strongest digital talent isn’t at partnership level but much lower down,” says Ms Beech. “We have an innovation group, led by our chairman and including some of our most junior lawyers, secretaries, administrators etc, to bat ideas around.
“We also include new starters because they’ve come from different organisations and can tell us how they did things there.”