Supervisory Board Needs Data Tutoring

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In this era of ones and zeros, organizations cannot function without knowledge, vision, and leadership in the fields of data and technology. That applies to the organization’s directors, but also to their superiors: the supervisory board. A supervisory board without tech knowledge or experience with data-driven earning models is out of date and presents a threat to the organization’s continuity.

Anno 2018 you should expect a supervisory board to be able to appoint a team of directors with the competencies needed to do business in the digital era. It would be impossible to fulfill this crucial HR role without understanding the impact of technologies such as machine learning on the business model – not to mention valuing strategy, investments, and risks. (Dutch link) Such an understanding is nonetheless often a blind spot to many supervisory boards. Every supervisory board member needs to have sufficient financial knowledge to comprehend the company’s financial reports. So it should also be a logical requirement that he or she has a sufficient understanding of the culture, competencies, earning models, and work methods that characterize a data-driven organization.

The fall of OAD Reizen is an excellent example of what can go wrong when a supervisory board lacks any form of technological expertise or affinity with data. In his novella ‘Enkele reis Holten’ (Dutch link: One-way to Holten), FD journalist Job Woudt describes how the company repeatedly responds too late to new developments, such as booking travel via the Internet. The supervisory board of OAD consisted of the owner, the former financial director, and commissioners from financial and legal backgrounds. In a sector that has dramatically changed as a result of digitalization (Dutch link), that was an unfortunate combination, to say the least.

Some Dutch organizations provide a good example of how things should be done. Wolters Kluwer, for example, has made an amazing transformation over the past 15 years. The former provider of printed information has become a pioneering digital player, which earns more than 85 percent of its revenue from its digital products. With the appointment of IBM Managing Director Jeannet Horan and Fidelma Russo, computer scientist and Senior Vice President of EMC, Wolters Kluwer has embedded digital business in its supervisory board. And that effort has undoubtedly borne fruit. At Philips, the supervisory board and the entire organization are undergoing a vital transformation. In addition to several supervisory board members with medical backgrounds, the supervisory board has recently added Neelam Dhawan CEO of HP India and former Managing Director of Microsoft India.

The Dutch business community is currently facing murderous competition, mainly from the United States and China.  Organizations would therefore do well to follow the above-mentioned examples. A logical first step would be to appoint at least one supervisory board member with relevant knowledge and experience in the field of data-driven (Dutch link) business models and transformation processes. Step two would be to look beyond the traditional ‘mature’ supervisory board member, as Blikverruimers advocates: the fresh perspectives offered by young ‘born digitals’, who have a natural affinity with technology, would give a huge stimulus to any supervisory board. Step three would be to organize expertise in this area into a committee within the supervisory board, as is currently the case for issues such as compensation, appointments, and auditing. This committee of at least two members would advise the other supervisory board members and prepare the board’s decisions on digital initiatives.

Additionally, supervisory board members without a direct affinity or experience with the application of data and technology should actively expand their knowledge in these areas. Executive master classes designed especially for administrators would be an ideal solution for this purpose. The same applies to ‘reverse mentoring’, in which an older employee undergoes a digital apprenticeship with a younger colleague. Finally, supervisory board members should regularly take a close look behind the scenes of their own organization. These visits are crucial in order to better understand what the organization is working on, and how it can adapt to changes in the market. Following these steps can, and should, lift the supervisory board’s technological expertise to a higher level. And that is essential for every organization that doesn’t want to be left behind by the competition and new entries to the market.

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Frans van Helden and Hans Spaan
Frans is Managing Consultant at ORTEC. With several years of experience in consulting at ORTEC and his mathematical background, he combines an open and fresh mind with thorough knowledge of algorithmic optimization, analytics and applications in various business areas. Hans is Director Data Science at ORTEC and supervisory board member. He has profound experience in business transformation, business restructuring and strategy formulation. He has a Master's degree in Economics from Amsterdam VU University and participated in the governance program from Nyenrode Business University.

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