Digital directors outperform their peers in every industry.
Keeping pace with digitisation can radically improve the performance of companies. How much? Tally the numbers. Organisations that embrace digitisation are 26% more profitable than their industry competitors on average. Moreover, they enjoy a 12% higher market valuation, generating 9% more revenue than their competitors.
The figures belong to a study by Capgemini. The consulting group reports that digital Board Members outperform their peers in every industry - “from media to paint manufacturing”. This is because digital maturity and transformation management intensity are closely intertwined. Turns out, companies drenched in digital knowledge are far better than others at adjusting their business models.
In a nutshell: Boards and C-suite ultimately drive transformation. When the Board is tech-oriented, it becomes a catalyst to top-down leadership and bottom-up innovation. By aligning to C-Suite’s implementation capabilities and leadership competences , it fundamentally transforms how the company operates.
Customers, employees and shareholders have all become tech savvy. As key triggers of modernisation, Boards need to prompt their demand within the company - neglecting digitisation is simply not an option.
Digital expertise is not mandatory for all Board Members; however, digital affinity is a relevant attribute of cutting-edge Boards. Up and above results depend on every Director’s ability to understand new technologies. Will they impact the business meaningfully in the future? How can these be applied? To use Gartner’s Flipping to Digital Leadership summary, digitalisation at Board level changes the way information fuels strategic decisions:
The analytics game is flipping
Now that the case has been made for sharpening your digital senses, time to look at how to get there.
1. Individual level
Bet on knowledge. Several industries - from media to retail - have been disrupted by digital. When Directors visualise/absorb the potential brought by technology, the company can capitalise on opportunities. And becomes less susceptible to see their products or business models become outdated. Broadening knowledge repertoires and familiarising oneself with digitisation facilitates the understanding of the future status quo.
2. Board level
Take advantage of the IT department’s expertise. For certain companies, digitisation is inseparable from its core business (e.g. Amazon). For others, IT departments are sometimes still treated as non-strategic supportive roles - and here lies the risk of missing out on a big transformation need. These specialists can be underused, if regarded as merely operational. Consider them strategic advisors, instead: this input mechanism can actually curtail the gap between leaders and new technologies.
3. Organisational level
Set up a digital dialogue. Foster a culture of knowledge and content sharing to make the best of bottom-up communication. Being adaptable creates real value within and outside the company. In a Digital Board Director Study, Russell Reynolds speaks of leaders as “digital catalysts”. Best practices in digital corporate governance include actively incorporating digital opportunities and risks into strategy, and committee discussions.
Embracing digital technology has as much to do with how Boards function, as it does with how well companies perform. Ultimately: a new form of value-adding boardwork, indispensable in the future.