The dizzying speed at which digital continues to redefine the customer and employee experience can leave a Board gasping. It seems to be getting harder to judge how and where to invest in new technology to give an organisation the necessary edge, and yet decisions have to be taken as the risks that come with being slow-off-the-mark are sizeable.
At Criticaleye’s recent
Non-executive Director Forum, held in association with
TCS, the focus was on the role of Boards in assessing the impact of digitalisation on business models. How, as a non-executive director, do you keep up to speed with the latest innovations and understand what is relevant for a business, its customers, employees and wider eco-system of partners?
Amit Kapur, Head of UK & Ireland at TCS, commented: “Technology as a function in most enterprises, for a good amount of time, was a support function. It slowly progressed into an enabling function. We are now clearly seeing that these are technology-led businesses. That transition essentially means that there is a change in business models; in engagement with customers; in employee / employer relationships; and in the acceleration of the path to purpose.”
He argued that Boards must focus on understanding whether their operating model takes an organisation closer to the customer. “Every buyer and seller has a journey and until one mirrors those journeys, across channels of convergence, the reflection of that impression will not come to the enterprise and hence will never reach the Board,” he said.
According to Amit, a different approach is required: "Look at the operating model – the three dimensions of geography, industry and capabilities are a given. For an organisation to sustain and differentiate, what can the fourth dimension be? [The customer journey needs to be] taken… to that fourth dimension, and that's what I believe will ensure that [customers] are reflected in the chain up to the Board in a very structured fashion.”
Digital Lipstick
Boards must have the knowledge and sufficient appetite for risk to create such an organisation. This is a big challenge, especially at a time where the pressure is mounting due to inflation, higher interest rates and a fluid market for talent where salaries remain at the high end (for now at least).
William Lo, Chair of Captcha Media and a Board Mentor at Criticaleye, told the audience: “When you look at digitalisation and how it may be disrupting your business’s future, you have to build an overall strategy. Look at whether the company as a whole has the right capabilities, and then it’s up to the Board to steer the direction. So, it’s vitally important for the Board to have the right expertise and the right people to help move the company towards the right digitalisation strategy.
“New technology always comes in faster than... we expect; it is ahead of us. I think companies have to be very flexible, agile and possess a learning mentality… This means Boards must know how to have the relevant discussions and ensure these are on the agenda.”
It was a point echoed by
Mui Hoon Poh, Independent Director of Singapore Pools and also a Board Mentor at Criticaleye. “Technology can refine the business model in the industry that we are competing in. So, it is really important that Boards understand the implications of the next waves of technology, what opportunities they bring and what threats they can pose to current business models.
“Think long term, develop incrementally and stay nimble. Focus on customer centricity and use data to decide what else to invest in,” she said.
In a poll conducted during the Forum, 51 percent of non-executive directors and Chairs felt they did not have the right mix of skills on their Boards to successfully navigate digitalisation. It reinforced the need to really assess the composition and mix of those around the table to avoid – or at least minimise – the risk of strategic blind-spots. Mui Hoon continued: “If there is a gap in digital [knowledge], I think the first thing is to improve the digital proportion of the Board through better understanding, such as through exposure to technology discussions. Secondly, examine the diversity of the Board – make sure you have people who are able to handle those discussions in significant depth.
“As directors, we need to know the business [and] have a view of what digital can do and what technology can help with. We [should] challenge the management team about what is really happening. One thing I always look for is whether we are trying to move towards digital to [get to] the core of the issue, or are we just putting on digital lipstick. By that I mean, how do you truly transform so that it becomes easier for your customers and makes their experience frictionless?”
Paul Lester CBE, Chair of Essentra, observed: “It’s not [just] one person’s responsibility; it is a collective Board approach... You’ve got to be hungry to learn digital. Everybody now has to be very professional as a non-executive director; you are continuing to learn from your colleagues, from other companies and from meeting the right sort of people.”
He emphasised the importance of external insights, as well as not shying away from bringing in new personnel. “If you haven’t got all that [digital] talent and there are gaps sitting around the Board, then perhaps it’s time to change a few of the Board members – that’s what a Chair has to do, if they think they haven’t got the right skillset around the table.”
However, he also noted that Boards must bear in mind how hard executives and senior leaders are running in the current business landscape. “I don’t think people fully assess the disruption that [new digital systems] are going to bring to individuals. People can get completely sidelined away from their day job if they are not careful. I think you’ve got to get the balance right with bringing in external people to provide support.”
Short vs Long-Term
There are multiple headwinds facing Boards at present.
Matthew Blagg, CEO of Criticaleye, said: “In these volatile times, it’s essential Boards are having robust and quality conversations on strategy and thinking about the longer-term view.
“They need to be identifying the big issues for their business, whether that’s digital disruption, climate change or M&A, it’s up to the Chair and non-executive directors, together with the CEO and CFO, to be open and honest about the threats to an organisation, how they need to adapt, but also to see where the opportunities are.”
Mui Hoon Poh emphasized the need to anchor conversations back to strategy. For example, when it comes to digital disruption, the central questions to ask are: “What is it that we are trying to deliver to our customers? How do we make it easier for our customers to interact and do business with us? How do we change our business model? What else can be done in order to keep ourselves relevant?”
In most companies, the CEO and senior executives are under pressure and that is only set to increase as the economic environment tightens. Executives and senior leaders will have more of their time eaten up by day-to-day issues and firefighting, so the onus is very much on the Board to create the space to explore what the future looks like in terms of delivering what customers want, attracting and retaining the best employees, and delivering to investors in a way that’s consistent with the overall purpose of the organisation.
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