Sherpany: Dr. Bonnet, in your opinion, is digitalisation a bottom up, a top down process or both? What role does the Board play in this process? And what are the do’s and don’ts in this process - from both sides?
Didier Bonnet: Our findings gathered for the past five years as part of a joint research programme with MIT Sloan Centre for Digital Business point to top-down leadership as a key determinant of digital transformation success. There are digital initiatives happening at the edge of the organisation, but the process must be strongly driven from the top down.
Operational management holds a key role in the digitalisation process, ensuring its success. It defines the vision which helps mobilise and understand how work needs to change on a daily basis. The top down process involves Boards, which in turn have a strong role in triggering the change. They have a key role to play in stimulating and triggering action in management, when the latter is not moving fast enough. Thus, Boards guarantee the future health of the organisation, magnify the change and think on a high level about the impact on the business. Disruption is, after all, driven by people and organisations. Boards ensure that the transition to digital is done properly, by creating digital risk profiles of the organisation. And by showing management how they can develop a growth strategy using digital to increase the company's potential value creation.
In regards to the ‘do's’ it is mandatory for Boards to know what a company’s digital strategy program is and what change it brings to the organisation. Boards are responsible for raising questions when management is not fast enough to foresee possible changes. They are the ones that need to instil a sense of urgency to start the transformation.
As for the ‘dont’s’ it is easy to assume that because digital transformation has been discussed at Board level, it will actually lead to action. Oftentimes, it does not. The truth is, however, that discussion does not mean change. Boards need to schedule regular reviews to track the organisation's progress. These can take place either monthly or quarterly, during board meetings. Boards can dedicate a slot to digital transformation, or even attend specific events related to the topic.
Healthy discussions about digital transformation can also happen outside the boardroom, as this is not an area that has a 3 years fixed strategy plan. Things are occurring fast and the degree of responsiveness in the organisation needs to level up. Areas such as A.I. (Artificial Intelligence) where we now have rapid technological advances were not even considered a few years ago. How long digital transformation will take to disrupt industries as we know them is still unknown. Regardless, both management and Boards need to keep vigilant and predict the timing and the impact this will have on their organisations.
Sherpany: Does this effort vary across different types of Boards commensurate to the extent of their strategic involvement or perhaps the digital strategy they seek to trigger or nurture? How should different types of Boards (e.g. strategic, monitoring Boards etc.) differ in this respect?
Didier Bonnet: Even though certain committees are more involved than others in guiding and designing the future of the organisation, every Board Member should be aware of the impact digital transformation has on the company's business. They need to consider the timeframe of implementing a digital transformation and how this change will widely affect the organisation and its employees.
Sherpany: When it comes to Boards as the catalyst for digitalisation / digital transformation and digital innovation, most practitioners’ advice revolves around adding Board Members with digital skills to the Boards. How about making use of digital tools as a catalyst of digitalisation? Would you agree that Boards must be forerunners of digitalisation by embracing digital technologies themselves?
Didier Bonnet: When talking about the usage of digital devices within Boards, the reality is that most Boards are composed of 50+ years old individuals that are there because they have a high understanding of business opportunities and risks. They, however, often struggle to comprehend the new environment dominated by digital. While it’s true that we need to have more digitally savvy Board Members, not a single person can cover the scope of the digital revolution that is occurring.
It is therefore imperative that all Board Members get exposure and awareness to the new digital economy.
One person cannot digitally transform the company no matter how digitally savvy he/she might be. Diversity on Boards is required, as there is a need to understand how digital transformation impacts industries. It should, however, be more than just a fashion statement; it should have deeper roots. Educating the entire Board is important, and there is a need to truly understand the impact of digital transformation. This should be reflected in the actions of the entire Board, not merely in the actions of one person. Boards should showcase change by adopting technological behaviour themselves. They are the ones to show change is possible and to go beyond just using tools. They need to walk the talk.
Sherpany: According to Harvard Business Review ‘becoming a digital leader isn’t simply a matter of technological savvy. It’s about creating an agile organisation that can detect what type of change is essential and respond quickly with the most competitive solution'. As a software provider, we observe that Boards who embrace new technologies themselves tend to score higher on digital transformation. Can you confirm?
Didier Bonnet: I agree with the affirmation of HBR that becoming a digital leader isn’t simply a matter of technological savviness, but more of creating an agile organisation capable of detecting and adapting to change.
Digital transformation is a business issue, not a technological one. From my point of view, tecnhology is an enabler in a very dynamic field.
The tools that Boards use are important, but more so are awareness and behavioural patterns. If CEOs and Chairmen communicate on the same platform and participate in the conversation in an equal measure, then they are able to engage with the entire organisation as well, not only among themselves. Senior executives can learn how to use these platforms through techniques such as reverse mentoring that helps them get familiar with the new technologies.
Sherpany: How can new technologies help Boards increment their decision-making skills, both at a singular level, and at a group level?
Didier Bonnet: For many years we had a cascading type of communication: from top management down to lower levels of the organisation. Currently, this type of vertical communication is fading away and technologies have a twofold role in that they:
Technologies are great enablers, especially for those Boards that are deeply involved and want to know more about the business. At management level, directors have the data Boards are looking for, and technologies facilitate the exchange of information and enable better digital management and therefore better fact-based decision making.
Sherpany: Considering your vast experience in regards to digital how does the future of Boards and digital Boards look like? In what way will Directors who belong to one team or another benefit from the digital transformation?
Didier Bonnet: The level of digital literacy will continue to rise as new talented people will emerge and further the debate about the impact digital transformation has on businesses. There will no longer be a separation between Boards and digital Boards in the future - we will be talking about just one Board. And the discussion will go beyond technologies and assess also the societal impact of digital transformation (e.g. the effect of automation on jobs). Technological evolution in itself is much more open and connected to the outside world and this need to open the organisation will continue. Take A.I. (Artificial Intelligence) or VR (Virtual Reality) for example - three years ago these were not topics of discussion. Technologies, however, arrived incredibly fast. This makes it impossible for someone to be an expert in all matters, and thus the need to connect effectively to the outside world.
Only through collaborative means, Boards will be able to connect themselves to the inside and outside world of the organisation. And to have a broader vision of the opportunities and the vulnerabilities as a whole. In the end, the world is becoming much more complex, and it is driven by blurring industry boundaries.
Sherpany: What would be your advice for Boards starting the process of digitalisation?
Didier Bonnet: My advice is to get out there and see what is happening in the digital world. Watch start-ups disrupt. Talk to people from industries such as media, press or publishing, who have already been through some successful but also painful digital transformations. We have already passed the digital transformation awareness stage. Now it’s time to understand the magnitude of that change and focus on practical actions to adapt our businesses to this new economy.