Given the fast pace of digital transformation in every industry, board members need to become more familiar with technology and its transformative properties if they hope to keep company executives thinking strategically.
According to McKinsey & Company, traditional boardroom roles and qualifications are changing rapidly in response to the digital shift. Companies and their boards should address these four areas to ensure that the board is an effective catalyst for digital transformation.
Stay abreast of technical shifts
It’s easy to underestimate how quickly technology is enabling digital transformation of many business processes, and the appetites of customers to embrace and adopt these new models. But without the proper safeguards, digital transformation can introduce increased risk. Boards must ensure that digital transformation stays within the bounds of the company’s appetite for risk and that executives are mindful of the steps they must take to ensure the safety and security of information.
Focus on digital fundamentals and business models
Digital transformation is less likely to come from traditional competitors than it is to come from adjacent businesses or technology upstarts. Boards should take the time to understand how the availability of data and the confluence of multiple digital initiatives can rapidly transform customer expectations and indeed, entire industry paradigms. For example, IoT, Big Data, and in-memory analytics together have transformed business models in industries ranging from aerospace to chemicals, utilities, and industrial manufacturing.
The common factor in all these digital transformations has not been simply the addition of technology. The real driver has been a singular focus on improving the quality of the customer’s experience by adding digital insight or services. Boards must ensure that executives don’t lose sight of their customer focus in their zeal to adopt new technologies—and that they don’t allow old-style notions of customer service to blind them to the transformative capabilities of technology.
Revisit strategy frequently
The speed of digital disruption can be breathtaking, catching unwary companies in obsolete business models. To prevent this, board members must engage with executives and each other more frequently to ensure a laser focus on strategy and managing risk.
The traditional quarterly board meeting has gone the way of the dinosaurs. Today’s digital-savvy boards meet in ad hoc committees focused on specific technologies or transformations and to stay in touch with market trends that provide early warning about impending digital shifts.
Nurture digital czars
Some boards address the need for more technology insight by bringing on a superstar from the world of technology. While at first glance this seems like an ideal solution to the problem, this action frequently backfires because of the lack of sophisticated business knowledge and teamwork skills such individuals often exhibit. In addition, startup leaders may underestimate the level of commitment necessary to manage their board role effectively, especially in conjunction with guiding their own technology business successfully.
A better approach may be to create a specific advisory role for technology stars to meet with a subset of board members. These consulting engagements may prove mutually beneficial by providing examples of good corporate teamwork to the technologist while keeping less technology-savvy board members abreast of changes. If the board does choose to bring an unproven technology czar into the fold, it’s a good plan to create an extended onboarding process so the new board member has a chance to absorb the details of the business.
Digital transformation is happening quickly, in every industry. It is incumbent on boards to both drive and moderate this transformation with a judicious combination of business acumen and technology awareness.
Have you started your digital journey yet? Learn more about the value digital transformation can bring to the chemical industry, and establish the right approach, platform, and roadmap for transition.