What exactly is the Internet of Things, and what are the implications for business strategy?

Think about connecting any device with an on and off switch to the Internet and to each other. This includes everything from cell phones, thermostats and washing machines to headphones, cameras, wearable devices and much more. This also applies to components of machines – for example, the jet engine of an airplane. If the device has an on and off switch, then chances are it can be a part of the Internet of Things. The technology research firm Gartner says that by 2020 there will be more than 26 billion connected devices. Think about Uber, the company that connects a physical asset (car and driver) to a person in need of a ride via a website. That simple connection has disrupted the taxi industry.

Airbnb has done the same for the lodging industry by directly connecting people with spaces to rent to those in need of accommodations.

What does this mean to for our companies? Larraine, what are you thinking when you hear about the Internet of Things for business opportunities? As a director, how can you help directors govern in this fast-moving digital age?

Frontier Communications provides connectivity services to a national customer base primarily in rural areas and is integrally involved in the Internet of Things. Frontier has a number of strategic alliances with companies that develop and market those very devices – or “things” – such as the Dropcam camera, a cloud-based WiFi video monitoring service with free live streaming, two-way talk and remote viewing that makes it easy to stay connected with places, people and pets, no matter where you are. Other alliances expanding the “things” will be introduced in the rest of 2014.

As a director, it is critical to be educated constantly about new trends, products and opportunities – competition is fast-moving, and customers are better-educated about their options than ever before. Strategically, the board has to think way ahead of the present status quo – and with the help of management and outside domain experts, explore opportunities for alliances. This requires using strategic analysis at every board meeting (not just at one offsite a year) and welcoming constant director education and brainstorming both within and outside of the company’s industry. The board should continually identify and evaluate strategic directions to keep the company fresh and nimble.

Remembering that we’ve only just begun, here are some critical questions boards should be asking about technology and the Internet of Things:

1. Are you including strategic discussions around technology at every board meeting?
2. Do your strategic directions include alliances within and outside of your industry?
3. How would you assess your current level of interaction with the chief information officer and chief technology officer? What can be done to improve the effectiveness of communications with them?
4. As a board, how are you helping to guide your company in innovative directions, taking into consideration disruptive technologies, competitor alliances and new ideas or skills coming from outside your industry?

Imagine what happens when 100 million people on Twitter can now get involved in the conversation happening in the boardroom from the outside in.

I know that many people in the boardroom are still on the sidelines about social media. What will it take to get your board ready to tackle their willingness to learn what is happening on the internet? Will it take seeing your company's name in the news before you add digital literacy to your director's education? I can see the incredulous look on the directors' faces when the board is called on for their oversight of digital issues.

I can only imagine a board being characterized as:

• "illiterate": showing or marked by a lack of personal knowledge with the fundamentals of a particular field of knowledge.
• Or maybe a board will be portrayed as "ignorant": Lacking knowledge, information, or awareness about something in particular: "ignorant of social media."

Worse yet is as a board leader to know that it is true. So I ask, when are you planning to get digital and social media on your agenda? Who is going to be responsible for taking action to get it on your fall board agenda? Whatever title you have in the boardroom (board chair or lead directors), you are setting the boardroom agenda. Are you waiting for your CEO, Corporate Secretary, Corporate Counsel, Audit Committee Chair to bring resources and spend budget to get this to happen for you and your board?

Time To Learn Where Your Customers Spend Their Time
Social media accounts for 22.5 percent of the time that Americans spend online, according to "State of the Media: The Social Media Report." This is compared with 9.8 percent for online games and 7.6 percent for e-mail. You can read more in the New York Times.

This is a voluntary opportunity for you to keep your board current and relevant. If you're waiting for a regulatory push to get your boardroom thinking digitally, you may not be ready to take action and learn what is happening 24/7 on computers and mobile devices around the world.

Here are some statistics about digital connectivity to help you consider moving this up as a priority. Digital knowledge leads to opportunities for companies to grow, reach and help their customers, employees, investors and stakeholders. Are your business revenues connected to connectivity in Asia? Has digital connectivity impacted new patterns in:

• Consumer and supply chain behavior?
• Operating model innovations?
• Security and transparency issues?

Connectivity In Asia
Growth in mobile Internet usage is outpacing them all:

• 45% of metro Chinese are online via a mobile device at least monthly, up 21% from 2010.
• 11% of metro Indians access the mobile net monthly, up from just 1% in 2010.
• Japan saw the biggest jump in mobile Internet usage: 57% of adults now have access, up 24% from last year.

Are you challenging yourself to look beyond the status quo, to understand how changes are disrupting your business? Is your board operating in a twentieth-century mode? If so, your business is being challenged to expand communications, attend to shareholder concerns, address issues of trust, take on new technologies (cloud, social media) and more, in order to succeed in and meet the needs of the twenty-first century.

Preparing Our Board Leaders For What's Next
When most of our board chairs were deciding on a college major, the founders of Google were not yet born. Fast forward a couple of decades (or more), and we see that the career landscape has changed so drastically that jobs need new definitions: social media strategist, app developer, mobile web engineer.

How can you prepare for what's ahead? Cathy Davidson has a few ideas. She is a professor at Duke University and suggests that "65 percent of today's grade-school kids may end up doing work that hasn't been invented yet."

"We're 15 years into something so paradigm-changing that we have not yet adjusted our institutions of learning, work, social life, and economic life to account for the massive change."

www.theiirc.org The International Integrated Reporting Committee (IIRC)

Corporate Spring — Is It Only A Matter Of Time?
Salesforce.com CEO Marc Benioff last week predicted that following the Arab 'spring' uprising against dictators facilitated by social media, it would only be a matter of time before similar demonstrations would unseat CEOs — what he referred to as 'corporate springs.'

Benioff has said, "We need to pay attention [to the Arab spring] because it is not so long from now that we'll start to hear about corporate springs and enterprise springs. We've seen Mubarak fall, Gadaffi fall — when will the first corporate CEO fall for the same reason? Because of unhappy customers rising up, or not listening to their employees. Not paying attention. Because it is more important to listen than ever before. That is the social revolution."

On Leading A Digitally Intelligent Board:

1. Time is now to get your board "on board." Schedule a briefing to level-set the board on the fundamentals of your social media risks and opportunities:
   1. Have your board briefed on social media's impact on your business, competitors and mentions of key executives.
   2. Identify where your business is positioned in the conversation: Google, Yahoo, Bing, Facebook, Twitter, LinkedIn. Understand the sources where you can go to gain independent information and business intelligence.
   3. Expand your sources of information on the business beyond management reporting.
2. As you start asking digitally literate questions of your CEO, have a baseline "Social Media for the Boardroom" assessment of your company from an enterprise perspective:
   1. Know the risks on how your company is using social media;
   2. Have a map of your company's engagement:
      1. What marketing is doing for outbound conversations, along with other departments' usage (human resources, customer service, etc.)
      2. What is being said by whom on major social media sites: Google, Facebook, Twitter, LinkedIn.
   3. Become familiar with your own website from a corporate governance and investor relations perspective;
   4. Identify what policies are in place for employees, contractors, etc.;
   5. Begin the discussion on your business readiness to manage crisis communication on social media;
   6. Identify how your board is being portrayed in social media. Think executive and board compensation, say on pay, etc.

Use this briefing and/or assessment to introduce your board to the fast-changing communications happening on line.

If your board is beyond this basic information, it would be great to hear how you got this ball rolling. I'd love to hear how you see this digital business mandate being managed in the boardroom. Do you see a committee taking this on in their charter, or will individual board members be stepping up with "digital expertise and skills" to guide the conversations?

Board chairs are granted a unique role in setting the boardroom agenda. With the privilege of leadership, they are accountable for leading change in their boardroom and supporting their CEO to focus business strategy on the future.

The KPMG 2011 Audit Committee Institute Spring Roundtable polled over 1,500 directors on managing technology risk. Here is the self-assessment.

Although almost 75% of the ACI responses suggest "we’re on top of technology's rapid change," I’m seeing a different picture emerge.

BRANDFog, a C-Suite advisory firm for the web's social media says for executives "If You're Not Online, You Don't Exist." As a board chair, it is important to have directors focused on what your CEO is doing/not doing on the web relative to reputation and brand management. This all reflects on the board's reputation, especially in the eyes of investors and stakeholders.

Here are some indications of adoption in the C-Suite:

• Only 5% of all Fortune 500 CEOs are on Twitter
• 64% of CEOs are NOT engaged on company or social websites
• Only 13 Fortune 500 CEOs have active Twitter accounts
• Only 4% of global CEOs have a profile on Facebook or LinkedIn

This is in comparison to the growth of social networking from a society perspective. Facebook alone has:

• More than 750 million active users
• 50% of active users log on to Facebook in any given day
• Average user has 130 friends
• People spend over 700 billion minutes per month on Facebook

With a global reach:

• More than 70 translations available on the site
• About 70% of Facebook users are outside the United States

So, how is a board chair going to bridge this disconnect between stakeholders, their CEO and their board with their own limited knowledge of how it works? Yes, we can write white papers and frame up questions for the boardroom. I believe it begins with a private conversation with the board chair to hear about their beliefs around technology.

Last week, I attended a "private event" that convened a dinner table with directors, academics, professional advisors and institutional investors from marquee brand firms.

I was wearing two hats: as a board member for NACD Southern California and as an independent advisor to board chairs. I was also there to share my experience as a risk expert engaged with the Twitter corporate governance community.

I was delighted to hear from the various perspectives that are adapting to a post Dodd-Frank world. More significantly, I was able to gain a better understanding from the viewpoints of others in the governance community. It is not always easy to "walk in other's shoes."

I also got a chance to see some beliefs expressed about social media, risk and asymmetrical information that, when expressed in public, are the equivalent of a "your zipper's down" moment.

It was brought home when I got this response about social media as a relevant board room capability:

I run companies and chair multiple boards. I have nothing to do with social media. I am a social media outcast with no Facebook or Twitter accounts and no intention of joining these things soon. I know that this is not "mainstream," but there were many people in the room who feel the same.

I shared this perspective with my Twitter community and got some social media wisdom:

Douglas Y. Park
His company sure does, so he should too. MT @fayfeeney: F250 chair emails me "I ... have nothing to do with social media." #risk

Dr. Richard Leblanc
@fayfeeney @DougYPark is it any wonder hacking, privacy, business interruption; IT investment risk is so poor?

So, what can be done to save a board chair from embarrassment? Remember, if it is done right, you'll go up a notch for your nerve and for limiting personal exposure.

1. Use Discretion
   Find a way to let them know that this belief that they don't need to learn about social media and technology negatively represents their brand and could hurt their personal reputation as a leader.
2. Be a Colleague not just Collegial
   Think for a moment, if it were you. Would you rather someone tell you, or just pretend nothing was awry? We would all like for someone to alert us in a way that was discreet and didn't make us feel like it was a major focus of attention.
3. You See This as Having Too Much Personal Political Risk
   1. This might be time for you to call in support. I consider it an honor to meet with board chairs. I find a meal together makes this an easier conversation. Telling someone their "digital zipper" is down is best done while breaking bread.
   2. Print this post and leave it in the chair's in-basket or have it sent as a pre-briefing to the board meeting.

These conversations require willingness for the board chair to see that the world is changing. Accepting the change begins with leading the way for new thinking.

My approach is to listen to the belief usually around changing (no time, not important, someone else knows about it, I get my information by management, I get emails, etc.).

Board chairs operate with a belief system that has served them well in the past, very well. When asking them to look at these beliefs, the Risk for Good model is risk-based. We talk about their perceptions around:

• Susceptibility: belief that not focusing on technology risk on their business could cause loss.
• Severity: consequences of not taking action are serious enough to be avoided.
• Barriers: institutional, people, resources, resistance to change, belief and attitudes, education, training, etc.
• Benefits: connecting to real-time data and extending relationship reach are necessary for future strategy and performance.

Our next step to engage is to get the board chair to consider replacing the beliefs we identified with a willingness to see "how it works." This includes a personal tour of Google and other social networks specific to them, their board, company and competitors.

This is a time of great change for all of us. Some of us are faster and others are taking their time. For all, this is just the beginning and not too late for anyone to grasp the fundamentals. It reminds me of boarding a plane; we all take off together at the same time. However, you do need to get to the airport to board.

The mistake to avoid is to not say anything. The cost of not telling could be high if it appears that you knew and kept quiet. Good leaders want feedback to improve their performance.

So, here's hoping all your "digital zippers" are right where you want them.

In today's global, 24/7, digitally-connected work, you want to be connected to what is being said on social media about you, your board or your industry.