Digital transformation is about much more than technology, it needs to become a key part of your strategy and it needs full commitment from the board.
Traditional boards with a lack of digital natives won’t provide that commitment which makes digitisation almost impossible to achieve.
In this article, I explore the four types of board members you need on your company’s board to give you a better chance of transforming your organisation into the digital age.
The digital era has brought new issues to the boardroom. Companies need the right people on the board to create successful digital transformation.
Traditional boards have members that bring a host of skills to the table. These typically relate to business processes like sales, marketing, and finance. A board will have people who understand businesses processes and strategy to a high level.
But that may not be enough in the modern era.
We’re in the digital age. Advances in technology require the evolution of strategy and processes. Unfortunately, many boards find that they’re ill-equipped to handle digital transformation. There’s a knowledge barrier to overcome and it’s not something that having existing board members conduct research will solve.
Everything from the rise of Big Data to the emerging trend of the Internet of Things presents challenges. These are issues that a traditional board hasn’t encountered before. As such, any strategies they create have a higher chance of leading to failure.
Today’s board needs members that understand this digital evolution. There are four who will play key roles in aiding your business’ transformation. But before getting to that, let’s examine the true scale of the issue.
Australia’s Digital Transformation Crisis
Gartner’s Digital Business Transformation: An Australian Perspective report highlights the issue’s scale.
It says that 92% of Australian businesses achieve no results from their digital transformation efforts.
Jenny Beresford is a research director at Gartner. She spoke to over 370 organisations, 90 of which are Australia-based, to reach her conclusions.
She found that about 60% of the companies she spoke to are in the process of transformation. However, she also discovered that many make a key misstep. Only 8% transform their entire business model to adapt to the digital environment.
And it’s that 8% that successfully scales following their digital transformation.
Beresford points to several issues that lead to this low success rate.
She says that most enterprises don’t understand the risk that digital presents to their traditional revenue streams. By the time they do, they’re often too later. Other companies overtake them and they’re left playing catch-up. There’s an underestimation of the risk that the encroaching digital age presents to the business.
A lack of appetite to confront the need for transformation compounds this risk. Businesses keep doing what always worked instead of preparing for the changing market. This leads to an unprepared workforce. Digital transformation ends up getting forced onto the organisation. And nobody’s prepared to deal with it.
Ultimately, this leads to a failed effort at transformation and that’s likely due to not having the right people in place.
What is Digital Transformation?
Many organisations assume that digital transformation is about technology. They believe that implementing new and “innovative” technology is the key. Through that, they can confront the evolving marketplace.
That’s certainly a part of it. However, digital transformation is about much more than the technology.
It’s a complete transformation of how your business operates. It encompasses your processes, activities, and the models you have in place.
This may be where many organisations make a key mistake. They aim to fit digital technologies into their existing models and processes. This shows an unwillingness to commit to the transformation.
It’s the same mindset of doing things as you’ve always done them that can cause the collapse of a business. Implementing new technology alone won’t prepare you for the shifts the market’s making.
The entire business has to adapt. Digital transformation involves creating new processes and adapting your culture. In this way, you can account for present challenges. Plus, you leave yourself in a position to adapt to future concerns.
Your board plays a key role in facilitating this transformation. Without the right board members in place, your transformation may become nothing more than an effort to use new technology. You won’t make the strategic changes necessary to make the transformation a success.
The Four Board Members
The Harvard Business Review (HBR) began tracking how boards adapt to digital in 2012. Over the course of five years, they found that only 27% of companies have boards that actively advocate for change.
Through this work, the HBR identified four members that today’s board needs to have.
1. The Digital Thinker
This board member understands digital as a concept. They also understand the need to transform the business to account for it. However, they’ve had little to do with digital as an operator. It’s likely that this board member has worked in a digital business. However, they’re not digital natives. Their roots are usually in more traditional businesses.
2. The Digital Disruptor
This is a board member who has much more experience with digital. Typically, they’ve found themselves bedded into a digital company. And they are natives of the digital environment. They may have less general management experience than other members of the board. But they advocate heavily for the disruption of current business processes.
3. The Digital Leader
A digital leader will usually have worked in a traditional business that was able to implement a digital strategy. They have less hands-on experience than disruptors. However, they have more general management experience. Plus, they have helped to oversee a digital transformation in the past.
4. The Digital Transformer
The key difference between a leader and transformer is that the latter prompted a transformation. In most cases, this person has led a transformation. At worst, they’ve had heavy participation in turning a traditional business into a digital one. Often, a transformer doesn’t have as much seniority as the leader. However, they’re the most well-versed when it comes to transformation.
The Issues
A board needs all four of these members to create successful digital transformation.
The problem is that most boards skew too much towards digital thinkers. A thinker understands that digitisation needs to be a priority. But they don’t necessarily have the tools to see it through.
That means there’s plenty of thinking and discussion about digital on the board. But that discussion doesn’t turn into action. The lack of type 2, 3, and 4 members means there’s no expertise. There’s also little drive beyond the discussions to make digital a reality.
And so transformation either fails or doesn’t even get off the ground.
A company’s board must mirror its overarching strategy. If digitisation is the major part of that strategy, the board must reflect that. It must have a heavy weighting towards digital talent. And most importantly, it has to go beyond bringing in a few digital thinkers.
These thinkers can get the conversation started. But without the disruptors, transformers, and leaders, they can do little else. They’ll often run into resistance from more traditional board members. And they lack the tools needed to overcome that resistance.
The Takeaway
The key takeaway here is that digital transformation is about much more than technology. It’s a process that involves the entire business. It’s something that needs to become a key part of your strategy. Plus, it needs full commitment from the board.
A traditional board with no digital influencers won’t provide that commitment. This makes digitisation almost impossible to achieve. The four member types discussed above need to become key parts of your company’s board.
Yet, it’s not enough to have a digital thinker. You need the leaders and transformers who have direct experience in this arena. They’re the people who can create the strategy and see it through to completion.
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