A practical guide to digital transformation
Pierre Nanterme, CEO of Accenture, once said, ‘Digital (technology) is the main reason just over half of the companies on the Fortune 500 have disappeared since the year 2000’. Does your board have an up-to-date digital transformation strategy and framework? In this guide to digital transformation we look at the key areas board members should focus on and recommend training in this area, specifically designed for board members.
70% of the top global brands are now digital and tech companies. 64% of the people on the planet have access to a smartphone. If your organisation doesn’t have the desire and the strategy to meet the disruptive power of digital, then you are likely to be in trouble.
As a board member, digital transformation must be an always-on board agenda item. Here, we explain why and examine the questions board members should ask regarding digital transformation.
Examples of transformation
Airbnb is an excellent example of a startup that disrupted the hotel sector without building any hotels.
On the other hand, General Electric is an example of a massive organisation that faced disruption but battled to keep up. Watch Robert Farrell (below) discuss how this example of digital transformation went badly wrong.
What does digital disruption mean?
Digital disruption is ‘an effect that changes the fundamental expectations and behaviours in a culture, market, industry or process caused by, or expressed through, digital capabilities, channels or assets.’ It fundamentally changes your market and industry.
For example, look at what happened to Blockbuster in the U.S. An organisation and its board were so myopic, locked into groupthink and their traditional business model, that they couldn’t see Netflix as a threat. And we know how that ended. Netflix fundamentally disrupted the TV and film rental business, and Blockbuster went bust. Read the entire case study here.
What does digital transformation mean?
Digital transformation is “the process of exploiting digital technologies and supporting capabilities to create a robust new business model”.
Digital transformation is your response to changes in your market. It’s not just about technology; it’s how you adapt your organisation, its people and processes. It is a fundamental re-think of your value proposition and business model.
What are the types of digital transformation?
- Process transformation.
- Business model transformation.
- Domain transformation.
- Cultural and organisational transformation.
The digital journey
What can boards do to ensure their organisations embrace digital transformation?
The chair and the CEO should first ask if they believe their board has the appropriate resources to move their company forward in this new era of digital disruption?
Your board needs to ensure it has the right resources and plans to deal with digital disruption.
Next, the board needs to ask, how attuned is the management team to the potential disruption of your organisation and industry? As a first step, your board could set up a digital trends committee to monitor and report back on how digital will transform your sector.
Individual board members also need to keep themselves informed about digital trends and their potential impacts on their industry. Don’t rely on briefings from the executive.
A digital transformation framework
The board must also ask itself, would it support the management team to undertake potentially disruptive and innovative projects if they could offer long-term benefits? What’s your risk appetite when it comes to innovation? Does your board have access to your organisation’s digital transformation framework? As a board member, you need to be clear about that.
Another question the board should ask is, what are the biggest challenges the organisation faces when adopting emerging technologies? Are the challenges to do with hiring new people, obtaining sufficient capital, and integrating new technologies into older systems?
Digital transformation trends boards should study
1. Cloud technology
2. The hybrid work model
3. Artificial Intelligence and Machine Learning
4. Cybersecurity and privacy
5. Blockchain technology, NFTs And the Metaverse
As a board member, you must ensure that the broad topic of digital transformation is always on the board’s agenda. It also needs to be part of your organisation’s risk management. And finally, the board should recruit non-executive directors with specific technical skills to ensure that the executive asks the right questions when discussing digital disruption and transformation.
Digital transformation training
In today’s world, being able to harness digital transformation and implement it is a must. It impacts your entire organisation, supply chains, value propositions, working environment, and business models.
The Corporate Governance Institute has created a self-paced, fully online certificate in digital transformation in collaboration with digital transformation experts and partners.
This certificate was created by directors for directors. Click here to discover more and download the course brochure.
Become the digital transformation expert in your organisation. Show the board how it can change the way your business creates value and how to measure success and identify emerging risks.
Be the person who drives this critical strategic issue.