Before you can start your business’s digital transformation and boost your competitive advantage, you must ensure your board members have a digital mind-set.
In these ever-changing times, there is a growing strategic role for board directors. But creating the right mix of board members is also critical. Your mix will vary depending on where your business is and the maturity of the company. Businesses need to have members of their board of directors that are proactively implementing digitally transformative strategies, or you could be left behind practicing your traditional techniques.
“You need a digital person on the board, not just someone talking about the website and social media; but, someone who understands the digital landscape and opportunities. A generational step-down needs to take place to infuse boardrooms with more digitally-savvy members. By including digitally talented people they can work through the reams of data and identify key strategies to focus on.
– Peter Williams, Boohoo.com
“Initially being digitally transformative was more about keeping up and catching up with innovative businesses, instead of true transformation. Early transformation efforts were focused on initiatives such as e-commerce, sensors/internet of things, applications, and client and customer experience,” according to Harvard Business Review. But, businesses are realising that in order to optimise these initiatives they have to go through a total end-to-end transformation, which demands shifts in operational, structural and cultural components or aspects within the business.
|DID YOU KNOW?
9 out of 10 chief executives believe they should champion the use of digital technologies to get the most from investment, according to a PwC survey. 63% of executives say that the partnership of the board is critical to the success of transformation efforts, but only 27% report that their board serves as an advocate for current strategies, reports HBR
Here are four types of digitally-savvy board members who you’re looking for to enhance the digital knowledge and experience on your board, and how you can tell if your board is ready for a digital transformation:
The four roles of mature digital directors
1. The thinker
This director has very little if any direct contact with the digital strategy as an operator. But, needs a full and thorough understanding of the digital environment. The person is usually someone who has been a board director or adviser in a digital business, but aren’t a digital native themselves.
2. The leader
This director has substantial experiences in leading a traditional business that was able to leverage digital in an impactful way. This person also doesn’t have as much hands-on experience, but has managed disruption as a general manager.
3. The disruptor
This type of director has been deeply embedded in the digital landscape, and often comes with experience from a pure-play business. This type of digital leader does usually come with less general management experience.
4. The transformer
Here is a digital leader who has led or participated in a transformation of a traditional business. They bring with them the experience of having once before helped a business undergo a digital transformation. This director doesn’t usually have the seniority of the leader, but is more digitally astute.
How to tell if your board isn’t ready to digitally transform
The involvement of shareholders in strategy is increasing as they’re looking for change. The challenge is finding suitable candidates as a majority of board members are legal or financial experts. You need people with these skills, but you also need directors who understand the digital industry and how it can be used to transform your business.
Case Study: Catherine Livingstone, chair of Telstra is assisting her business have a greater focus on digital and IT. “She’s a real tech head, and I’ve seen her trying to transform the Telstra board into something appropriate,” says Steven Burdon, professor of strategic management and technology at the University of Technology, Sydney. By incorporating digital experts into your board they can start the discussion on implementing strategies to digitally transform the company.
Board members tend to focus on compliance, which leaves little effort for innovative discussion and digital transformation. Luke McCormack, VP and MD of Pegasystems for Asia Pacific, says that the main focus for boards, over the last 10 years, has been to improve compliance. Innovation is on the ‘to do list’, but it isn’t a priority, boards need to balance compliance and innovation to remain competitive.
Because of this reality, directors have come to accept that they will always just play catch-up with innovation, or leave it to a digital officer. However, this needs to be a complete culture shift.
Case Study: CIO Executive Council member and digital consultant, Karen Scott Davie, is using her expertise to shift the board’s focus and encourage board members to see the world through a digital filter. “There has to be more tech-savvy and digital people on boards. There’s actually enough space for two roles whether it’s digital, digital marketing, digital technology, and then the end-to-end technology side,” explains Davie.
Davie continues by saying that she has been the sole digital and technologically savvy person on every board in the last 12 years. This makes a digital transformation challenging when the expert is trying to recommend digital innovation or marketing. Other members invariably? have little-to-no understanding of what the strategy is and how it will impact the business.
Keep in mind that you want your entire board to have some digital knowledge. Peter Williams says that he’d rather have a board of directors who all have an understanding of the digital industry, compared to a board that has only one person with 100% digital understanding.
As Davie also expressed, it may seem as though you’ve solved the problem by appointing a digital person, but if no one understands their strategies or how to digitally transform the business, you won’t make any progress. It will take your digital appointees too long to explain and convince their non-technologically savvy board members to agree to an innovative strategy. Can your business afford this time? Is there time to wait to start the competitive advantage of digital transformation?