by Paul Galland, GAICD
The Australian Institute of Company Directors (AICD) recently published an article entitled, “4 questions directors must ask to lead their organisations through the digital age”. These questions discuss how to define and measure disruptive change, how to fuel the transformation change of the organisation, shifting leadership mindsets, and how to pre-empt the next big change that occurs. Taken together, these questions primarily address the how and what for directors to become more effective in addressing their digital value.
No doubt these questions are of high value to ask any board. However, they assume a fundamental aspect; that directors collectively understand and appreciate the value that digital offers in their organisation. I would like to add a fifth qualifying question: “Why should your board become more active in the digital discussion, and what is the board members doing to educate themselves on the disruptive forces impacting their own industry and society as a whole?”
In my work in strategy, I often meet senior executives and board members who like to jump right into a detailed ‘what’ and ‘how’ analysis. Their passion and confidence in their opinions provide fantastic insights. Yet I also notice how little organisational context and expectation alignment has been done to justify these opinions.
If there is no agreed to context about where the board believe the organisation is on its digital journey, it is then difficult to provide clarity to the 4 key questions mentioned in the article. The alternative is to outsource thought leadership to an advisory or consultancy firm, but that is in essence abdicating individual responsibility to the performance (read strategy / growth) duties of a director.
If you are a board member reading this, challenge yourself (and your board) on your own knowledge of digital disruption. For example, ask yourself if you believe this new digital age is led by technology? If you think it is, question this assumption of why you believe this is so.
If there is one truism I have learned from over 20 years working in the technology sector, it is this. Technology advances are ultimately led by people; their change in buying habits together with changes in how they perceive and rate business value is relative to their purchasing power.
These purchasing habits have significantly changed in the past ten years and are here to stay. They underpin a consumer / customer mega trend that is disrupting the very nature of how we define and prioritise our strategic intent. Do we innovate into new markets, continue to maximise our price discrimination strategy, or perhaps both in parallel?
The ever-rising force of technology innovation is a result of this purchasing mega trend. Both these forces are now creating a closer and closer bond we generally call, digital disruption.
This bond has in turn cemented a significant change in the business-to-customer paradigm. Customers are for the first time (in a long while) able to dictate the terms and value to which technology investments are made by companies. In response, companies are becoming more agile to ensure these technologies that customers expect, become supported by their organisations.
This is quite the opposite approach to the more traditional product-to-market view of competition. It has somewhat flipped to more of a market-to-product view, as companies race to roll-out their support of technologies that customers trial first.
So, if a board (and their management team) is simply reacting to this market-to-product view by racing to roll-out technologies their customers ask for, they are not truly engaging in a proactive discussion of digital disruption. They are instead seeing digital disruption from only a technology lens and missing the people equation all-together.
What I’ve described above is just the tip of the iceberg to addressing the fifth question I posed earlier. What will enable the board to better experience the digital disruption in ways that accentuate this technology-people bond unique to their organisation?
One approach to accelerate a board becoming active digital participants is to establish their own digital platform in which to conduct their board affairs. A platform with the sole purpose of identifying, recording and analysing digital value for the organisation.
Working in collaboration with their management team, a digital platform can deliver significant governance improvement between board and management. Better governance, in turn, increases the chances that the digital strategy will be delivered successfully. Conversely if directors are not on that digital journey with management, and to borrow words from the article, “[technology] has the capability to destroy your business if you do not do anything.”
This year’s Disrupt Sydney is exploring digital disruption from the angle of board governance. There’s both a presentation and workshop that will cover this subject in greater detail. We hope to see many of you there participating with us.
And if you like this read, I describe more of this concept within my blog, “Why a digital role for company boards is a game changer”