Successful companies now have AI-savvy boards

Having a digitally savvy board used to be a competitive differentiator for organizations — but today it’s merely table stakes.

Now, it’s corporate boards that are savvy about artificial intelligence that are helping some companies outperform others, according to a new research briefing from the MIT Center for Information Systems Research. 

MIT CISR research from 2019 found that U.S. organizations with more than $1 billion in revenue that had digitally savvy company boards outperformed their industry peers by about 30% across several metrics, including market cap growth.

Repeating this analysis in 2024, researchers Peter Weill, Stephanie L. Woerner, Jennifer Banner, and James Moore found that having a digitally savvy board no longer differentiated a company’s performance, with the number of digitally savvy boards jumping from 24% in 2019 to 72% in 2024. To thrive in today’s dynamic environment, companies must be both digitally savvy and AI savvy, as these companies outperform others.

“Since 2019, the technology innovation curve has steepened, with large organizations leveraging new digital technologies such as generative and agentic AI, robotics, and xTech technologies,” the researchers write.

Tracking the evolution of the digitally savvy board

The researchers define digital savvy as “an understanding, developed through experience and education, of the impact that emerging technologies will have on businesses’ success over the next decade.” A digitally savvy board is one that has three or more directors who are digitally savvy.

To determine the digital savviness of boards and board members, the researchers applied machine learning to 275 words and phrases that they identified as “indicators of digital savviness” to assess the bios of board directors. They also interviewed nonexecutive board directors.

The researchers found that in 2019, technology-related discussions among board members focused mainly on digitally enabled business transformation and business models, cybersecurity, and IT systems reliability and outages. Eight percent of companies in the S&P 500 had formed technology committees to focus on those issues, and CIOs and CISOs were the executives who typically presented to boards on digital issues.

In 2024, the researchers found that that topics of conversation among board members included growing concern about cybersecurity and regulations around cyber reporting; the slowing of digital transformation; and increases in selling digitally enabled products and digital partnering to reach new customers and services. The number of boards in the S&P 500 that had a technology committee had nearly doubled, to 15%, and a broader group of executives — including technical leaders and heads of business units — presented to the board.

After finding that 72% of companies now have digitally savvy boards, the researchers updated their research criteria to focus on machine learning and all types of AI. The results were similar to those of the 2019 analysis, with 26% of company boards being digitally and AI savvy, and those companies also outperforming their peers.

Companies with both digitally and AI-savvy boards saw an average return on equity of 10.9 percentage points above the industry average, compared with the 74% of companies with nonsavvy boards, which averaged -3.8 percentage points below their industry average. This suggests that the digitally and AI-savvy board companies were likely larger and more highly valued based on growth and other expectations, the researchers write.

Analyzing board committees

To learn more about how digitally and AI-savvy boards operate, the researchers analyzed board committees — a subset of directors who focus on certain topics and advise the board on them. In the research sample, the number of committees per board ranged from one to 12, with an average of four.

The researchers found that the digitally and AI savvy boards were more statistically likely to have committees focused on cybersecurity, talent, and technology and digital products.

Nearly all of the directors interviewed advocated for having board technology committees in their company to underscore the importance of these issues, the researchers write.

Keeping up with technology

Based on the interviews with directors, the researchers have three pieces of advice for boards and executive teams on staying current with fast-moving technologies:

1. Educate. Bring in outside speakers to board meetings, provide technology demonstrations, and develop board education programs. Tech partners, such as universities, ventures groups, and start-up accelerators, can help boards stay on top of new technologies and trends.
2. Make time and prioritize. Boards have crowded agendas and often find it difficult to prioritize important topics like cost cutting and navigating unconscious bias. When devising a board agenda, prioritize discussing why certain actions are necessary rather than focusing on how, which takes up too much time.
3. Focus. Technology committees help board members consider technology’s role in business strategies. Establish a specific committee on technology to demonstrate its importance.

Read next: How to build a digitally savvy board