Is your board ready for digital age?

Chapter 3 of the ZimCode addresses Board of directors. This chapter highlights that the company’s business is managed under the direction of the Board of Directors.

THE board is the guardian on the shareholder’s investment and gives strategic guidance to the management to ensure that the company continues to operate sustainably and profitably.

Considering that the world has gone digital the board has to be agile enough to meet the demands of this era.

There’s no doubt leadership is a vital component for the success of every company in this digital era.

Principles 54, 56 (g), 60 (e) highlights that among other things, the board should provide leadership by ensuring that technology and systems used by the company are adequate to run the company viably.

Whenever boards are told about being digitally viable the common response has been hiring a digital director, launching subcommittees on digital transformation, buying the latest phones for directors and internet access, making pilgrimages to silicon valley; the Far East and so forth.

Though these efforts are commendable, yet more than awareness is required for directors to lead companies in this digital environment.

As one author puts it, “Board members need better knowledge about the technology environment, its potential impact on different parts of the company and its value chain, and thus about how digital can undermine existing strategies and stimulate the need for new ones.”

Awareness of the existence of the digital era is one thing, but one’s mindset about how to handle new digital competition is another.

In some companies very few directors indicated they fully understood how the industry dynamics of their companies were changing, few were aware that their business model will be disrupted in the next few years and to make matters worse very few boards were sponsoring digital initiatives.

The fluidity of technology, the digital experiences customers demand, and the rise of non-traditional risks leaves many boards feeling outmatched and overwhelmed but it doesn’t have to be so.

The board has to move from just reviewing and approving strategy and to rethink its strategy and posing several scenarios and assess if the strategy would survive.

Essentially the strategy should allow business model transformation, which is re-engineering the company for success using potentially different assets going forward.

The board has to realise that the traditional business models and pipeline models are quickly becoming extinct as industry convergence, digital workforce and platform business models take centre stage.

Years ago few people would have anticipated the expansion of traditional food industries into pharmaceuticals, convergence of traditional banking and mobile technology, driverless cars, platform based businesses such as Alibaba.

Yet these have become the norm and companies that failed to adjust to the changing times and embrace technology are being buried.

Board members need better knowledge about the technology environment, its potential impact on different parts of the company and its value chain, and thus about how going digital can undermine existing strategies and stimulate the need for new ones.

They need new means of attracting digital talent and not merely employ a digital director. The digital “thinking” should be evident throughout its talent pipeline.

The general advice for board on digital talent is to go young — the likely candidate pool for this digital infusion is largely under 40.

Boards must move beyond an arms-length relationship with digital issues to an understanding of the technology environment and how the company can carefully navigate and benefit from the new technologies.

There is no time for procrastination because the rate at which digital technology is being transferred to Africa is incalculable.

Boards should use this time to get ahead of issues rather than being restricted to the traditional business models which will always keep them a step behind.