Directors who focus on developing a sustainable innovation strategy are more likely to secure long-term gains. What are the key components of this approach?
Digital transformation is a continuous process weaving its way through every part of an organisation. When it is executed well, it leads to innovation becoming part of an organisation’s DNA, and being able to face off competition in today’s crowded marketplace. As the gains become more substantial and the costs of delaying mount, the question for many directors is simply where to begin.
An essential first step is to create a digital roadmap, says Diane Smith-Gander AO FAICD, chair of ZipCo, Safe Work Australia and CEDA, and non-executive director of AGL Energy and HBF Health. It ought to provide a clear-eyed assessment of what the current state looks like and where you need to be. A useful roadmap defines business goals, identifies priorities and sets out a process for managing and reviewing progress along the way.
“If you’ve got a roadmap with a set of tools that you’re going to deploy, then you’ve got a path to innovation,” says Smith-Gander.
Hungry for change
Technology has become so central to doing business that failing to be on the front foot will almost certainly diminish an organisation’s ability to innovate. And in today’s world, innovation and digital go hand-in-hand, says Wendy Stops GAICD, a non-executive director at Coles, Blackmores Group and not-for-profit organisation Fitted for Work.
“Technology is not something to be afraid of, it’s actually part of our DNA now and it’s in everything we do,” she tells Directors on Digital. “We have to be able to embrace it and find ways to move forward.”
Fortunately, whether it is a small NFP such as Fitted for Work or a large retailer like Foxtel, directors in Australia are hungry to develop new strategies that focus on furthering innovation.
Make innovation non-negotiable
Of everything that start-ups, scale-ups and other young companies can teach incumbents about digital maturity, Smith-Gander and Stops say that their approach to innovation contains the most important lesson of all.
“Walking into Zip Co on day one was a very different experience to walking into the offices of any other board that I’ve ever been on,” says Smith-Gander. “It hasn’t built any legacy around itself. Innovation is just the way business is done. The company expects it to happen, and customers expect it to happen.”
Stops agrees that this no-alternatives approach to innovation is the best way forward, and says that COVID-19 gave us a crash course in how to do it. “It was a classic example of how organisations who had said, ‘Well, it will take us six months because of this or that’ all of a sudden found out, ‘Well, actually, we can do it in a month — because we have to’.”
Adopting a maturity model
The take-up of cloud-based services illustrates how quickly businesses are changing, says Omar Abbosh, corporate vice president of Cross-Industry Solutions at Microsoft. “Today, about 20 per cent of businesses’ technologies are in the cloud and we’re probably going to go to 80 per cent in a five-year period, which is a drastic increase of uptake.”
He notes some organisations are adopting what is known as a “maturity model” to measure their ability to achieve continuous improvement within a digital transformation. “There are many models out there,” says Abbosh. “But in the modern world of digital technology, the best practices are not necessarily coming from within your own industry. So, looking across industry becomes important. Make sure that you’re not limiting your maturity model more than it should be by looking through a narrow set of industries.”
AICD’S New digital directors webinar series
The AICD will soon launch a new Digital Directors 10-part webinar series designed to enhance the digital literacy and capabilities of Australian directors.
Webinar participants will learn practical skills from digital specialists and directors experienced in digital governance. The series will cover emerging digital topics, including:
- Changing business models
- Digital decision-making frameworks
Get more information on AICD webinars.
Already a member?
Login to view this content