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Digital begins in the boardroom

Successful organisations need a digitally savvy board to shape their business agenda

What does it mean for a business to be truly digital? It’s a concept that’s easy to talk about, but difficult to define.

But one thing that unites all the successful digital businesses we see is that the board is driving the technology agenda. There is a culture of digital awareness and prioritisation that starts at the top and feeds down.

Whether an organisation is highly digitised because of the nature of its business, or whether technology plays more of a supporting and enabling role, successful strategies depend on having a digitally savvy board that leads and shapes the agenda. 

The fact is that most board members do not have technology backgrounds and may not regard themselves as digitally well-equipped.

Harvey Nash Group research with the London Business School conducted in 2019 found that many board members lacked confidence around their digital awareness and abilities. While digital innovation had risen towards the top of board agendas, less than half believed they had the right skills to drive digital transformation.

In the intervening period since then, a lot has changed – mainly through the effects of the pandemic. Covid naturally shifted businesses towards more digitally based strategies. It also changed how both leadership and staff work.

Everyone has become more accustomed to using online platforms such as Teams and Zoom and to collaborating and interacting more digitally. So it is likely that if we ran the research again now, confidence would have increased. Nevertheless, from our interactions with executives and non-executives, digital remains an area of some insecurity for many. It would be a brave board member who said they were completely in command of digital.

In our view, while no board or individual will ever be completely in control of what is naturally a fast-moving and disruptive force, there are a number of key elements for success.

Digital for everyone

Firstly, digital needs to become a built-in part of how the board – and, by extension, the business itself – thinks and operates. There must be a focus on ensuring that digital is integrated and infused into every aspect of the organisation’s strategy, rather than being a separate add-on. “Turn to page 18 to see the digital section of our strategy” would be a sign that a business was most likely taking the wrong approach.

Secondly, digital is something that everyone on the board needs to have an awareness of. They may not all be technical experts, but they should all understand the importance and relevance of the digital agenda and how it applies to their business.

This leads us to another key point. There is a perennial debate about which figure(s) should be on the board – the CIO, the CTO, the CDO, etc. It will vary from organisation to organisation and partly depends on personality. It is probably the case that nearly every business needs someone on the board who “represents” technology. In most cases, that is still likely to be the CIO.

Broad generalists, not narrow experts

However, boards need to guard against the default of having a “technology expert” that everyone turns to whenever a digital-related issue comes onto the agenda. Rather than being a collection of individual experts, everyone on a board should have a good strategic understanding of all important areas of business – finance, sales and marketing, customer, supply chain, digital. The best boards are a group of generalists – each with certain specialisms – who can discuss issues widely and interactively, not a series of experts who take the floor in turn while everyone else listens passively.

There is much that can be done to raise levels of digital awareness among executives and non-executives. Training courses, webinars, self-learning online – all these should be on the agenda. But one of the most effective ways is having experts, whether internal or external, come to board meetings to run insight sessions on key topics. For some specialist committees, such as the audit and/or risk committees, bringing in outside consultants – on cyber security, for example – is another important feature.

Digital as another form of disruption

All businesses are looking to bolster the digital savviness of their leadership teams and competition for the best talent is fierce. We have found that it helps to think more broadly about who the board is looking for. It doesn’t have to be a formal technologist. Digital is really another pervasive form of disruption.

Someone who has experience in guiding an organisation through any significant form of disruption or transformation – commercial, operational, regulatory – is likely to have a skillset that is in tune with the digital paradigm.

An innovation mindset across the business

One of the great prizes of a digitally aware board is that it creates the conditions to seed a digital culture throughout the organisation and encourage a mindset of innovation and new ideas. For this, boards must obviously ensure that sufficient funding is in place, such as by investing in R&D. It is also key to recognise individuals and teams who are doing great things. Spotlighting achievements can have a powerful galvanising effect.

Boards need to recognise that the job is never done. The technology agenda is constantly moving on and digital approaches are being used in ever more innovative ways. It is a continual process of keeping pace – and, indeed, looking for ways to get ahead and be the disruptor that everyone wants to be.

The authors are Magnus Tegborg and Catharina Mannerfelt, Alumni, Harvey Nash Group

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