How directors can engage with digital strategy

To effectively engage with digital strategy you need to understand the drivers of digital change, learn the language, find experts you can really trust and engage and invest externally.

Recently I was presenting at a conference on what directors should know about technology in the boardroom, and I found that most of the early questions centred around risk and compliance. Then another participant spoke up and opined that most boards already have good practices around risk and a deep understanding of their compliance obligations. What they struggle with is how to really participate in digital strategy. The recent CBA event and subsequent launch of a class action suggests that directors are being challenged by governance of cyber security and must be extremely diligent, so no complacency is possible.

However, governance is not only compliance and in a digital world, it’s increasingly important that company directors also understand and engage with digital strategy ie how the company creates value for its current customers and their emerging digital expectations and needs. In my opinion, there are four things that directors can do practically to get started with digital strategy:

1. Understand what a true digital strategy looks like

First, it’s worth understanding what a true digital strategy looks like. I often see boards who think ‘digital’ means ‘apps’. But apps are only a small part of the story. Digitisation is a term that encompasses a huge range of activities.

The aspect I believe to be most integral to digital strategy is not the technology itself, but the fundamental drivers behind the digital world. Uber is an excellent example of this. GPS technology has enabled it, but the company hasn’t risen on the back of GPS technology alone.

Everyone has a mobile phone and it’s easy to link them to a bank account. Increasingly, people are working as part of the gig economy. Customers expect instant service and the traditional regulated taxi system was not delivering the service dimensions people needed. All of these forces came together to allow disruptors like Uber to move into traditional markets.

If directors can strip things back to the fundamental drivers of change in their own industry, they can be participants in thinking about digital strategy. Don’t look at the mechanism by which digital change is effected, look at the underlying forces that gave rise to the need for change. And importantly, look for the gaps left by traditional players.

2. Learn the same language

Directors often express frustration about the buzzwords and complexities around digital strategy. Too many buzzwords can leave directors feeling locked out of a deeper understanding of digital strategy.

I’d encourage every director to work on understanding the language. Whilst in the boardroom it’s ok to ask someone to “speak english”, requiring constant translation doesn’t allow you to access broader experts or the technology press.

This can be as simple as asking for some simple definitions around key terms – and continuing to ask questions until you’ve got a really clear understanding.

3. Find experts you can trust

Digital entrepreneurs and digital natives can both make a valuable contribution to the conversation. A board that’s largely composed of people with financial or legal skills may not be able to engage in a digital strategy without external input. That doesn’t mean it’s necessary to put digital natives on the board, but they do need to be involved in the strategic conversation.

A great way to get this input is to run an exercise where you think about your company as a technology native. Instead of thinking about your company as a retailer, or a bank, or whichever traditional model it’s historically been defined by, think about it as a tech company. Then ask your digital experts to go through the exercise of developing a strategy for your business as a tech company.

In a way, every company is a tech company now. Customers are becoming more digitally savvy, expecting real-time, mobile and customised services delivered to their phones, so you have to tease out what that means for your business.

By asking your tech experts to develop your digital strategy from the perspective of a tech company, you always identify new ideas and opportunities that are not constrained by the existing business model. This approach can open up a number of new paths that aren’t visible inside more traditional positioning and strategy.

4. Engage and invest in the digital economy

I always encourage directors to consider becoming angel investors in early stage companies (through Scale Investors or elsewhere). Go and hear pitches, attend events, even if just to see the dynamic, energetic, disruptive, nature of what people are thinking about in the startup sector. It’s an easy way to bring a new perspective back to the boardroom.

There are other valuable ways to put yourself on the learning curve. Visit Silicon Valley, universities, or research organisations, subscribe to the CSIRO newsletter, and find out what’s new. I’d like to see far more integration between those sectors of our economy, including our universities, CSIRO, start-up communities and the corporate sector.

As informative as those visits will be, however, nothing compares to being an active participant. To this end, I’m always happy to introduce directors to startup or angel investor groups.

When you participate in the startup sector, you contribute to the country’s innovation agenda and future economy. Just as importantly, you also take a much deeper and nuanced view of digital strategy, how innovation happens and how success is achieved and these are great findings to take back to the boardroom.

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