Is your New Zealand board ready for digital transformation?
Digital transformation: two words that are on everyone’s lips at the moment, but that doesn’t mean many companies are genuinely doing anything about it. A McKinsey survey found that only 17 per cent of directors said their boards sponsor digital initiatives, and just 16 per cent said they fully understood how their industry’s dynamics are changing.
This is despite the fact that the advantages of pursuing digital transformation are clear. Microsoft estimates that digital transformation will add US$1.16 trillion to GDP in the Asia Pacific region. Meanwhile further McKinsey research indicates that digital leaders experience five times more revenue growth than their peers.
The goal of digital transformation is ultimately business transformation – to ensure your organisation is as efficient and productive as possible. And this means that your board, who in the end are the true decision makers in any business, must be driving it. How can you get your board ready for digital transformation?
1) Recruit for digital transformation
Boards tend to be made up of people who have had years of experience working in the business’s particular industry. Because they have been chosen for their experience, board members are often a little older than the workforce average, and this means they may not have grown up in a world where digital is the norm.
This is why it’s essential not just to recruit for industry knowledge but to hire board members with a range of skill sets, including those related to technology. It’s become much more common in recent years to hire a digital director, and this is a trend that New Zealand companies should consider following. Only then will the board get the advice they need regarding where digital transformation poses risks within the industry and what specific technologies the business should adopt.
2) Become digitally literate
It’s essential organisations start putting technology at the heart of their operations, and this means integrating IT into the overall business strategy, instead of seeing it as something that’s dealt with separately. In order to understand how technology can become part of the strategy, it’s not enough simply to have a digital director. The board members will arguably understand the business itself better, and this means they must become digitally literate to at least some extent.
Take the case of Singtel. According to the HBR, the Asian telecommunications company sent its whole board to Silicon Valley for a week to learn about up and coming technology in their industry. The board concluded that Singtel could no longer be a traditional telecomms company and instead had to become a mobile internet player. This meant moving from call and messaging price plans to data-driven ones became integral to the business strategy, and the company was able to remain relevant as a result.
One of the key causes behind this epiphany can be traced to the board as a whole becoming much more digitally literate. Board members must understand new technologies and risks that directly affect their organisation and industry.
3) Get behind the CEO
While the board can set direction, it’s ultimately the CEO who has to carry these plans forward, and they’re therefore a key player you must get onside to carry out successful digital transformation. CEOs often get to their position by cutting costs and saving businesses money, so they may be reluctant to implement a significant IT budget.
CEOs are likely to get significant stick for increasing spending, especially as most digital transformation projects can take a while to produce ROI. Boards must make it clear to CEOs that they are willing to defend them and any strategies they might put in place, and will not hang them out to dry if an experiment goes wrong.
To fully see the benefits of digital transformation, you need the right CEO at the helm of your company. JacksonStone can help you find them. For more information about our executive recruitment services, contact us today.