Digital transformation for boards: not just “why”, but “how”
“Digital transformation” is hot these days; you would have to be shipwrecked on a deserted island not to have noticed. Entrepreneurs such as Uber and AirBnB introduce exciting new business models, and the explosive growth in volume creates opportunities for providers of digital infrastructure. However, if you’re not Amazon, Google, Cisco or any of the other digital trailblazers (”Exponential organizations” by Salim Ismail of the Singularity University offers a great perspective on such companies), it can be tough to establish a clear line of sight and determine the proper course forward. In this article, we propose pragmatic steps that board members of “ordinary companies” should start taking today. But first an assertion: digital disruption and the need for digital transformation have arrived. Most executives acknowledge this, but may remain uncertain about the implications for their business (Interviews and conversations by the authors and validation with board members). Some question the significance for their particular industry and point to the Internet hype and bubble of 2000/2001 as a reason to wait and see. This is not a viable approach; digital transformation 2015 is more profound and pervasive than the hype of 2001, and it is accelerating in speed. It has – metaphorically speaking – transcended the tipping point of adaption, and is becoming relevant for more and more, if not all, industries (Whether this transformation is more or less significant than earlier shifts such as the industrial revolution, is not the subject of this article). You may choose to “wait and see” only at your peril (See e.g. Tech Trends 2015 by Deloitte) and few executives would do so knowingly and deliberately. A barrier to action, though, is the “digital divide” between today’s senior management and non-exec board members on one side, and an up and coming generation of digital natives on the other. Current captains of industry may still be at the helm, but junior crewmembers know better how to navigate the waters ahead. An uneasy situation for the captains … So companies and their boards face a number of strategic, organizational and operational challenges, which manifest themselves through symptoms such as: This leads us a number of concrete recommendations, which are rooted in some fundamental beliefs: Charting a course for digital transformation may seem a daunting task, but just like sailors at sea can’t choose the weather, boards must face reality the way it is – not as they would have preferred it to be. However, once they do, they will realize that their strategic skills and business acumen will go a long way. The essence of our advice, therefore, is to cast your inhibitions aside, grab the helm and embark on the journey. Happy sailing.
Cisco predicts 19 Trillion USD market. Regardless of who is right, it is a large number.
Even if competition from new digital business models is not the only explanation, it is clearly a contributing
factor.
for Growth” 2014/2015).
Boards must ensure executives take action (Inspired by R. Rumelt ”Good Strategy Bad Strategy” (2011) and the experience of the authors).Here is what non-exec board members need to do:
– Pay particular attention to alternative business models and new competitors
– Watch out for adding a token 26-year old “tech wizard” as a standalone solution; he/she may not be able to make their digital voice heard and/or appreciate the challenge of transforming an established organization
– Ideally, add seasoned board members with experience of a similar challenges, both in terms of business model disruption and organizational transformation
reasons for poor performance by ”digital laggards”)Here is what you should ask of executive management:
ABOUT THE AUTHORS
Jens Harsaae is an independent non-exec board member and advisor to private equity and industrial clients.
He was formerly the managing director of the Boston Consulting Group in Denmark.
Most recently, he served as chairman of the board for Conscia A/S (a Cisco Gold partner, acquired by a private equity fund) and as an advisor to nSense (a cyber security consultancy acquired by a software provider).
Morten Kjær is a management consulting professional with specific expertise in commercial strategy and commercial excellence. Additionally he is a non-executive board member in several professional services companies.
Following a long career within media and communications, Morten has held the positions of deputy CEO and CCO of Capgemini in Denmark and that of Managing Director of Marketing Clinic in Denmark and Sweden.
His current position is that of Managing Partner, building and running the consulting company Clay, specialized in improving analogue and digital marketing.
FROM THE ARCHIVE
Previously published on thedigitaltransformationpeople.com in February 2016.
Leave a Reply
Want to join the discussion?Feel free to contribute!