2018 will see a shift in how technologies such as artificial intelligence (AI), augmented reality and blockchain are used, according to Gartner. Some business models will be reinvented, customer experiences transformed and “smarter” devices from vacuum cleaners to cameras will become mainstream.
As more milestones are being reached in what is being termed the Fourth Industrial Revolution, there is growing evidence that many businesses either don’t have a digital strategy or, worse, haven’t analysed how digital technologies impact on their businesses. Recent Irish research by Siemens found that:
- Only a third of Irish businesses surveyed had company-wide digital strategies
- Just a quarter had analysed workflows with a digital focus
- Almost half could not identify any specific digitisation project on their immediate horizon
Challenges for boards
Given its importance, boards need to be on top of this agenda and have strategic oversight of digital strategy and its implementation throughout the business. That’s the theory, but the practice is somewhat different.
Many directors admit that they are challenged to keep up with digital developments and to grasp the implications for their businesses. The result is that many boards either don’t consider digital strategy or do so in a superficial way.
This presents risks particularly for businesses which have long cycles to produce new products or services and which are not alert to changing customer behaviour and competitive threats. It also represents missed opportunities to make processes more efficient and become more competitive.
Not every sector or every business will be disrupted by technology. For some, it will be more about evolution than revolution. Understanding the impact on the sector and the individual business is an important first step for a board to enable it to set the strategic direction.
To do so, directors need to familiarise themselves with the technologies, the evolving business models and likely customer implications. They need to become more comfortable in discussing and probing the impact of digital change, particularly the capabilities the business and whether the culture exists to rapidly innovate and bring new services and products to market.
Digital literacy
Studies have shown that boards lack the type of skills needed for digital transformation. Hiring a Digital Director, one whom other board members rely on completely, or having “single issue” Directors who cannot contribute to other governance matters do not work, according to an analysis published in the Harvard Business Review (HBR).
While “catalyst” appointments are needed to enrich a board’s digital skills, the HBR authors recommend that all directors become more digitally literate. Directors with no technology qualifications or experience need to become as comfortable with questioning a business’s digital strategy as those with no accountancy qualifications and experience are in questioning its financial performance.
With greater knowledge and confidence, all board directors should be able to ask the right type of questions and constructively challenge management on issues such as how technology enables or limits the business, the effectiveness of rolling out new technologies and return on investment.
Even boards themselves may be impacted by digital disruption. Robots in the boardroom are a distinct possibility. Nearly half of global executives predicted that AI would be deployed in the boardroom by 2025 to interrogate data and automate complex decision processes, according to research by the World Economic Forum.
Aileen O’Toole is a Chartered Director and a Digital Strategist. Aileen can be contacted by email on contact@aileenotoole.ie , through her website www.aileenotoole.ie or at her LinkedIn profile
The views expressed in the posts and comments of this blog do not necessarily reflect the views of the Institute of Directors in Ireland. They should be understood as the personal opinions of the author. The content of this blog is for information purposes only and the Institute of Directors in Ireland is not responsible for the accuracy of any of the information supplied.