As the pace of digital transformation in businesses accelerates, digital is no longer a specialist skill set, but a requirement, writes Mike Zeederberg.
Digital technologies now impact almost every single business in Australia, and the need for “digital transformation” is a fact of life and a challenge for virtually all businesses (and consequently their boards).
Deloitte’s recent update to its digital disruption report, Harnessing the ‘bang’: Stories from the digital frontline, analyses the key factors that drive success for businesses in the “Short Fuse, Big Bang” category, and concludes that there are four areas that have the most impact — customer experience, digital technology platforms, culture change and continuous improvement.
While customer experience and digital technologies are vitally important, businesses typically have specialist expertise in the form of chief marketing officers (CMOs) and chief information officers (CIOs) who are heavily invested in addressing the challenges. However, the cultural change and continuous improvement aspects are both more amorphous and at the same time, can be more strongly impacted by board behaviour.
As per the Deloitte report: “The ‘people’ piece is big. This begins with buy-in at the most senior levels of an organisation. Support at the C-suite level is crucial. Strong CEO support sends the message that digital transformation is being taken seriously.” While support from the top level is vital, it is also not enough on its own.
Digital transformation within a business is not just the responsibility of the CIO and the CMO with support from the rest of the C-suite. Digital now touches all aspects of a business — service delivery, product creation and research and development, customer support, supply chain logistics, finance systems, HR and talent management systems and even the core business model of most businesses. As such, the entire executive team needs to have a strong understanding of digital, and the tools and opportunities it presents as it relates to their areas.
This means that the board needs to ensure that there is an ongoing training, mentoring and up-skilling in place for the executive team that keeps them up-to-date and on top of the digital world, both within and outside of their industry vertical, as well as within and outside of their specific skills discipline. It also means that the board needs to factor in a clear assessment of a candidate’s digital capability when recruiting new members of the executive team.
This does not mean that every executive needs to be part-geek, more that any new executive needs to have a solid understanding of what digital can bring to the business, and how to keep on top of the digital impact happening in their area of expertise.
In addition to applying digital thinking to internal systems, the board needs to ensure both it and the executive team regularly review the evolving digital landscape — looking at the opportunities for disruption, disintermediation and business model evolution. This will ensure that they either see the competition coming and react appropriately, or set up and develop their own strategies to take advantage of new emerging models.
There are numerous examples of businesses failing to do this — most of the music industry and book publishing industry — as well as those that have moved quickly enough to take advantage, either as separate brands (such as NAB-backed online service UBank) or cannibalising their current business models and re-inventing their core business, for example, Adobe moving to a cloud-based model for its software products.
As part of this, it is crucial that boards themselves develop and maintain digital expertise — either as a specific skill set on the board, or by up-skilling the team on the happenings in their space. This needs to be both around digital basics, as well as ongoing periodic assessment of changes in the market place. There are numerous ways of achieving this — from simple approaches like conference attendance and regularly reading relevant content — to more efficient and tailored approaches, like bringing in industry and digital expert speakers on a regular basis, or setting up an experts panel to feed new ideas into the leadership team.
Whatever your approach, it is vital that you do not let yourself get blind-sided by someone else’s evolution of your business model.
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