Leadership Without Understanding Is a Risk

Why deep business and technology insight still matters at the top

In technology-driven and manufacturing companies, leadership without a deep understanding is not neutral. It is a risk.

I have seen this repeatedly when leaders are appointed from outside an industry. They often arrive with strong leadership credentials and solid financial expertise. What they lack is not intelligence or intent. It is contextual depth. And that gap shows up in strategic decisions.

The danger is rarely total ignorance. It is rather partial understanding.

As a CEO, you are immediately exposed to the business. People explain the technology, show you factories, and walk you through products and portfolios. Very quickly, you develop a sense of what is going on. That sense can be misleading. Having an idea of the business is not the same as understanding it.

 In technology-driven companies, this distinction matters, I refer to technology driven companies, because this reflects my own experience. Strategic decisions about portfolio direction, investment priorities, or transformation paths rest on technological realities. If those realities are not fully understood, decisions may appear logical while weakening the company’s long-term position.

This becomes very visible in e.g portfolio management. Over time, portfolios grow organically. Products are added, adjacencies explored, acquisitions integrated. At some point, leadership must decide whether to expand, diversify, or refocus. These decisions cannot be made everywhere at once. They require prioritization. They also require a clear understanding of which technologies truly drive competitiveness and profitability, and which ones dilute focus.

Portfolio choices are not only strategic. They are financial. Poor portfolio decisions erode margins long before they become strategic failures.

This is where board responsibility begins, not ends.

During CEO nomination, boards often focus on leadership style, transformation capability, and external track record. Those criteria matter. But before selecting a candidate, one question must be answered clearly. What is the mission of this CEO?

Is the mandate transformational? Is it evolutionary? Is the task to stabilize, to reposition, or to fundamentally change direction? Depending on the mission, the profile required changes significantly. In some situations, deep industry and technology understanding is non-negotiable. In others, it can be complemented. But it cannot be ignored by default.

This question does not stop at the CEO level. It applies throughout the leadership pipeline.

Organizations are often faster to bring in external candidates than to promote from within, assuming that outside perspectives are inherently superior. External views can be valuable. They challenge assumptions and bring new ideas. But there is a structural bias here.

Internal candidates are evaluated with complete transparency. Their strengths and weaknesses are known. They have been tested through good years and difficult ones. External candidates are assessed through CVs and a limited number of interviews. No matter how rigorous the process, it cannot replicate ten years of lived performance inside the company.

This imbalance matters in technology-driven businesses. Bringing leaders from outside without sufficient time and support to build a deep understanding creates blind spots. Technology, culture, and business models cannot be mastered in months. Often not even in a year. Without that depth, leaders may act decisively, but not always correctly.

In my own experience, a deep understanding of the business and its technology has been the foundation of every successful transformation I have led. I do not recall initiating a major strategic shift without first investing time to understand what truly drives competitiveness, how technologies interact, and the implications for teams, capabilities, and stakeholders.

Transformation is not only about direction. It is about consequences. New strategies require new skills. New portfolios require different people. Decisions at the top cascade through the organization. If those implications are not fully understood, transformation disrupts without progress.

This is why boards must be deliberate about competence around the table.

Boards do not need to replicate management expertise. But they must be able to identify blind spots. That requires a solid understanding of the business environment, customer requirements, competitive landscape, and technological context. Where that understanding is missing, boards must acknowledge it explicitly and compensate deliberately, through advisors or targeted expertise.

The risk is not having blind spots. Every board has them. The risk is not knowing where they are.

Leadership in technology-driven businesses requires more than vision and execution discipline. It involves respect for complexity and the patience to understand it before acting. At the board level, ensuring that this understanding exists is not an operational detail. It is a governance responsibility.

Rada Rodriguez