Time for change at board level

close up of clock faceA recent survey by McKinsey found that boards are lagging behind the rest of the organisation when it comes to supporting digital initiatives. Whilst 69% of CIOs, 61% of CEOs and 61% of CMOs were said to be either supportive and sponsoring digital initiatives or supportive and directly engaged in digital initiatives, the figure for the board of directors was just 27%. In other words less then one in three boards are considered to be supportive of their organisation’s digital activity whilst only 14% are actively engaged in digital programmes.

And whilst many members of the C-suite have been gradually increasing their involvement in digital initiatives over the last few years it seems that board members are stubbornly refusing to join the digital revolution. Whereas the proportion of CIOs that are supporting, sponsoring or engaged with digital business initiatives has increased from 59% in the 2012 version of the McKinsey study and the proportion of CEOs has increased from 46%, boards have barely increased their participation in digital from 24% three years ago.

Implementing any type of transformation programme without the support and engagement of the board is challenging and likely to result in the initiative failing to meet at least some of its objectives. In extreme cases it will lead to outright failure. Given the importance and impact of digital and its potential to disrupt whole markets it is particularly worrying to see such a low level of support from the organisation’s senior team. Companies that do nothing when their markets are being disrupted, and those that make only minor changes to their business model, rarely survive for long. Yet boards seem disinterested in helping to lead their organisations through this period of major change.

A recent Forrester survey found that 93% of business executives believe digital will disrupt their industry in the next 12 months. And whilst 64% said their company has a digital strategy, only 16% believe they had the skills and capabilities to execute on that strategy. That is a major issue that every board should be addressing; a significant majority of organisations are facing the prospect of disruption but are not equipped to implement the changes they believe are necessary to defend against the disruptive forces.

Being a board member in the digital age requires different skills, knowledge and experience than has traditionally been required. To provide the vision and leadership required to create a digital business and to ensure that business survives and grows in dynamic markets that are driven by customers, requires a board that truly gets digital.

But it would appear that many board members are just not equipped to lead in the digital era; they do not understand what it means to be a digital business. Many struggle to grasp the basics of technology let alone how it can be applied to enable new business models, products and services, create differentiation and enhance the customer experience. And this is why so few board members are actively supporting, sponsoring or engaging with their organisation’s digital initiatives. They are treating digital just as they treated technology; keeping it at arms length as something that they do not need to understand or get involved with.

To address this gap between the board and rest of the organisation, businesses will need to start appointing board members with a broader range of knowledge and skills. These board members have to be comfortable with technology and have a solid understanding of digital markets, products and services. And they also need to be able to work in a way that reflects the joined-up and fast moving nature of digital business.

Successful digital businesses create digitally enabled products and services and they also transform their own organisation to create entirely new business models and ways of working. Digital is about reinventing the organisation, looking at the business from the customers’ perspective and building an operating model, capabilities, processes and systems that are driven by customer needs. This requires news skills and experience, and new ways of working throughout the organisation, including at board level.

If the board does not have the right skills and experience for digital then the gap between it and the rest of the business is only going to grow. This will eventually damage the organisation, if it is not doing so already. To become a successful and sustainable digital business requires board members that can and will take an active role in shaping and leading digital initiatives.

Digital will impact every industry and every company. And it is happening now. Boards need to change if they and the organisations they lead are to stay relevant in the digital age.

If your organisation wants to improve its board’s awareness and understanding of digital, or if it is looking for an adviser that can provide the board with assurance, oversight and guidance on technology and digital initiatives then please contact me or visit my website, axin.co.uk.

Trackbacks

  1. […] digital initiatives, or supportive and directly engaged in digital initiatives,”  while at the Board level the number plummets to an embarrassing […]

  2. […] and supportive senior team is a recurring theme in research about digital transformation (see Time for change at board level). Strong leadership is a key requirement for any transformation programme to be successful. And […]

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