Digital transformation is in need of a boost. According to Ted Schadler, principal analyst at Forrester, too many businesses are not investing enough resources into digital technologies or not even bothering to transform at all. Writing about the findings of his survey of 1,600 US and European businesses, Schadler talks of his surprise at the 22% “not interested”, and the 56% who are “just dabbling”.
“Why?” he asks. “As one respondent put it, ‘It’s a war between old-school technophobe leaders and the technology innovation that represents a completely different way of doing business’.” Dr Sabine Dembkowski, managing partner at Better Boards, confirmed this in her Board Evaluation and Development programmes and described “the average age of a FTSE 100 director as 58.5 years.”
Perhaps it’s not a war but there is definitely a generational difference, and businesses really are being hamstrung by a lack of technology know-how at board level, which is worrying for their future prosperity. Digital transformation is not really a nice-to-have, it’s increasingly a necessity.
In December last year, McKinsey’s Thomas Siebel wrote about the need for businesses to think digitally and adopt digital practices. His article, Why Digital Transformation is now on the CEO’s Shoulders, contained a clear message.
“Since 2000, over 50% of Fortune 500 companies have been acquired, merged, or declared bankrupt, with no end in sight,” writes Siebel. “In their wake, we are seeing a mass ‘speciation’ of innovative corporate entities with largely new DNA, such as Amazon, Facebook, Square, Twilio, Uber, WeWork, and Zappos. Mass-extinction events don’t just happen for no reason. In the current extinction event, the causal factor is digital transformation.”
Start at the top
Clearly, digital transformation has to start at the top. Boardrooms need to set the digital agenda and that means embracing, if not investigating, some uncomfortable ideas. Artificial intelligence (AI) for one is not going to go away. As a technology designed to help make automatic decisions, its role and potential impact on working life has been the subject of much debate.
As KPMG suggested in a paper last year, Introducing the boardroom bot, “AI is coming, bringing with it a wave of disruption and opportunity for business…AI won’t replace human board members but it will make them more effective.”
Much of this comes down to data, how it’s collected, processed and analysed. Data is now the source of intelligence for most businesses. The real question for the boardroom is how to unlock it. Certainly, this is something AI will help facilitate in the near future, but understanding the value of data is key to providing the right foundations for that future.
Digital transformation in the boardroom is therefore a necessity. Everything from improved efficiency, more informed and accurate decision-making, compliance and accountability will stem from the digitisation of the boardroom. Information flows will become more regular, as live data insights deliver up-to-the-minute intelligence on the business and its customers.
We are entering a real-time data world and the demands this will place on the board and decision-making are unparalleled. So what can boardrooms do to keep up? The first thing is that boards can no longer be technology agnostic. From the deployment of board portals to an increased understanding of technology and data analytics, boardrooms have to reflect the world in which they now operate.
Disparity in knowledge
As digital transformation accelerates strategic thinking, the idea that the board can stay up to date with all developments as they happen becomes increasingly essential. Nascent transformative technology areas such as AI, the internet of things and big data demand regular attention, such is their pace of change and potential influence.
Interestingly we did our own research with EY, and found that, while 58% of boards handle digitalisation issues around new products and innovation frequently, this drops to 38% when it comes to big data and 33% when it comes to the internet of things. The level of experience at board level when it comes to these technologies is unsurprisingly low (around 30%).
Of course, one way to deal with the disparity in digital knowledge is to create specific committees made up of members with digital experience but we found that just 10% of firms surveyed actually do this. The complexity of organising subject-specific committees is partly to blame, but this should be offset given the growing importance of digital technologies to businesses across most, if not all, industries.
Board portals are enablers here. They reduce complexity and make committees possible. The burden is lifted from company secretaries to organise and coordinate multiple committees, as well as regular board meetings. This is one of the key points of digitally transforming the boardroom. What traditionally would be an almost impossible task for one person to manage has become possible.
“We are able to upload our board material as it comes in either from Outlook or our document management system,” says Philip Studd, operations director at law firm Stewarts. “Then it’s very easy to create our agenda and the board pack structure. Brainloop automatically generates a secure PDF inclusive with page numbers and a hyperlinked contents page. It’s very easy to make last-minute changes or additions, even if the pack is already distributed.”
It is this digital boardroom tool that is essential for the modern organisation. A digital business needs a digital boardroom, not just for impactful meetings but to take advantage of new, data-driven intelligence. As big data continues to rapidly evolve and businesses start to harvest live data from customers, products and services, making sense of the data and acting upon it will define business evolution. Boardrooms will become the hub of data-driven decision-making. They will remain the guardians of strategy, using the latest digital tools and data at their disposal, including artificial intelligence to ensure businesses remain competitive. Only a digital boardroom with a board portal at its hub will really be able to cope with what the future has in store.
This article has been prepared in collaboration with Brainloop, a supporter of Board Agenda.