Companies with CIOs, tech experts on board see higher revenue growth, MIT study shows

Companies with board members who have digital expertise are more likely to see high performance rates in areas such as revenue growth and return on assets, according to a study published by Cambridge-based Massachusetts Institute of Technology.

Results showed companies with three or more digitally savvy directors experienced 17 percent higher profit margins, 38 percent higher revenue growth, 34 percent high return on assets and 34 percent higher market cap growth.

Researchers analyzed data from 1,122 U.S. companies with more than $1 billion in revenues to determine whether companies with "digital savvy" board members benefitted financially. Digital savvy is defined as an understanding, developed through experience and education, of the impact emerging technologies will have on business' future success. Of the participating companies, researchers found only 24 percent had digitally savvy boards.

"When a board lacks digital savvy, it can't get a handle on important elements of strategy and oversight and thus can't play its critical role of helping guide the company to a successful future," researchers wrote. "But companies can fix that by understanding what characteristics to look for in existing and new board members, managing board agendas differently, and cultivating new learning opportunities."

To be digitally savvy, companies must fill their boards with members who have an enterprise-level understanding of current technology like artificial intelligence and digital platforms. Researchers found it takes three digital savvy members to have a significant impact on the business.

Researchers concluded that while most companies today are approaching digital transformation in one way or another, companies that encourage digital savvy leadership, education and growth among its board members may experience financial benefits.

To view the full report, click here.

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