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Back in 2019, we found that only 24% of large U.S. companies had “digitally savvy” boards — those with three or more directors experienced in digital technologies. These companies outperformed their peers, with over 30% better performance across metrics like market cap growth.
By 2024, a striking shift had occurred: When we reran our analyses using the same digital criteria on 2,800 publicly traded companies with over $1 billion in revenue, we found that 72% had digitally savvy boards. The catch? Being digitally savvy by 2019 standards no longer correlated with superior financial performance. Digital literacy was now table stakes.
So we updated our criteria to include newer technologies like generative AI, AI agents, robotics, and specialized tech like regulatory technology and fintech. Only 26% of companies clear this new bar for “digitally and AI savvy” boards — but these companies are dramatically outperforming their peers.
Companies with digitally and AI-savvy boards averaged 10.9 percentage points above industry average in return on equity, while companies with nonsavvy boards averaged 3.8 percentage points below industry average. The savvy companies also had much larger market caps ($15.5 billion higher versus $5.4 billion lower than industry average).
We found significant industry variations. Information services (68%) and professional services (52%) lead in board AI savviness, followed by finance and insurance (31%). Worryingly, health care lags, at just 8%, with mining (4%), construction (6%), and retail-automotive (11%) also trailing.
We found that to manage increasing digital complexity, successful boards are structuring their focus around three key areas: strategy (analyzing AI and digital opportunities and threats), defense (protecting against cyber risks and ensuring compliance with security regulations and best practices), and oversight (ensuring acceptable data use and tracking value creation). The technology bar for board effectiveness keeps rising. Boards with general digital expertise are no longer differentiated. Only boards that are staying current with AI and emerging technologies are driving superior performance.
