The digital frontier has reached the boardroom. 10 key questions directors should be asking.
By Anita Sands, PhD
As a board director, unless you’ve been living under a rock in Boardville, you’ll have found yourself thinking about how technology is determining the fate of industries and organizations the world over. The transformative effects of digital transformation bring with it a gold rush of opportunity but also greater uncertainty, rising complexity, rapid change, and elevated expectations on the part of regulators, shareholders, employees, and customers.
No question, the “digital everything” economy is as disruptive as it is different (something I covered in a recent article). In fact, one-third of current directors say that staying on top of new technologies is the hardest part of the job.
While there is a strong appetite for adding tech-savvy directors to boards, the following are 10 questions spanning strategy, operational and governance issues to help even the least digitally fluent directors to navigate the threats and opportunities of this unprecedented time.
To begin, your board needs to have a few convictions about where the world is going, and, specifically, how it’s most likely to be affected by the emergence of new technologies. Having a vision and knowing what you want your business to look like post-digital-transformation will make the following key strategic questions easier to answer.
1. What is your organization’s “digital ambition” and how will you measure its success? Ensure your board is looking at various (and new) KPIs to track the execution of your digital strategy.
2. Where should your company focus on digital business “optimization” versus digital business “transformation”? The former adds significant value without changing business models (e.g. automation) whereas digital business transformation leads to new revenue and business models.
3. How mature are your data capabilities? Data is the by-product of every digital activity so the maturity of your data capabilities can be a good proxy for your overall digital maturity.
4. How much time are you, as a board, spending on digital? How often are you getting an update on how the competitive landscape is changing and what emerging trends are shaping your industry?
When it comes to operationalizing your digital strategy, experienced technology leaders will tell you that it’s often issues such as workforce and talent, and change management that become the greatest impediment. In a prior article, I describe some of the reasons, unrelated to technology, why innovation fails.
Technological complexity often reflects business complexity and the board can be an important forcing factor to ensure there’s clarity of vision around digital transformation, but also that the organization has enough resources, the right kind of talent, and, especially, the right culture to achieve its digital goals.
The journey to digital often involves laying out and embarking upon two different but complementary strategies: one, repositioning the core business; and two, focusing on investment and growth in new areas. This approach necessitates a bimodal management style, executed by leaders who can manage two different kinds of work at the same time — one based on predictability, the other on exploration. With that, there are three key talent-related questions to ask.
5. Do you have a talent strategy that will be executed in parallel to your digital transformation journey? For instance, how is automation going to affect your workforce? Do you have a plan for reskilling? “No colleague left behind” is likely unrealistic. Where are you going to find the skills you need to successfully capture the digital opportunity?
6. Does your organization have the right culture? One of agility, curiosity, innovation, and, most importantly, belonging?
7. Who is ultimately responsible for your organization’s digital success and do you have the right leadership in place? Digital success requires leaders who are ambidextrous — those who can transform the core business while spinning up new digital revenue streams.
Governing in the digital era presents a range of new and complex challenges for directors. As much as these technologies will present untold opportunities and sources of revenue, they also present a new set of risks that directors need to be aware of and proactive in dealing with. The final questions for your board to raise focus on the key risk and governance issues.
8. Do you have a handle on the new risks digital introduces? Obviously, cybersecurity tops the list of concerns as businesses digitize, but there are others to bear in mind. One is data — customers are demanding transparency on how their data is being used and it’s imaginable that, in the future, boards will be asked to govern the “currency” that is data in the way we have done with monetary capital in the past.
9. Should your board have a tech, data, or cyber subcommittee? Does the organization, overall, have the right governance structure around its digital activities?
10. Is the board equipped with the right skill sets to provide the right amount of foresight, insight, and oversight as you navigate through this time of tumultuous change?
Organizations tend to approach digital on one of two fronts: they either put their efforts towards client-focussed or process-focussed technology. Neither is wrong, and the most digitally advanced organizations do both.
Having a board that understands the spectrum of options and is conversant in digital speak will be a major advantage in shaping your organization’s digital identify, ensuring it survives and thrives in today’s rapidly changing world.
Dr. Anita Sands is an independent board director, international public speaker and creator of the #wisdomcards series. She writes and comments regularly on issues relating to boards, technology, and diversity & inclusion. Find out more about her at www.dranitasands.com or follow her @dranitasands. All comments personal.