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The Boardroom’s Digital Dead Zone

01 March 2016


Businesses across the country are facing a serious problem; digital disruption. Unlike other revolutions, the digital movement is happening at significant pace, with several household names having already fallen victim to it.

The much publicised fall of photography giant Kodak was the first major example of what can happen when digital disruption is ignored. Kodak did not anticipate the impact digital would have on demands for their products and by the time they started to address this change the damage had already been done.

20 years later and digital disruption is now a commonly used phrase, so most companies are aware of the risks posed to their organisations. However, the key question is, are company boards sufficiently equipped with the expertise needed to lead them through the constant challenges posed by the digital economy?

The Risks of Ignoring Digital Disruption

A recent report, titled Digital Vortex: How Digital Disruption is Redefining Industries, looked at the current state of digital disruption. The survey stated that ‘45% of companies do not believe digital disruption merits board-level attention.’ This is a worrying statistic, especially as there is now overwhelming evidence that nearly all organisations are now at risk from digital disruption, and overnight start-ups suddenly pulling ahead of their far more established competition.

An example of how quickly this can occur is the exponential growth of WhatsApp over five years, and how quickly it surpassed industry standard SMS based messaging.

The ‘Digital Dead Zone’

The make-up of company boards is largely restricted to the Baby-Boomer age demographic, so although organisations often have plenty of in-house digital experience, this can fall on deaf ears where it matters.

This experience gap has created a ‘digital dead zone’ between the younger tech-savvy generations and the more mature business experienced executives. The younger Gen-Xers and Gen-Yers from the IT, technical or marketing fields may have significant technical knowledge, but they do not yet have the same commercial acumen, business experience and leadership credentials as their more senior peers.

This problem exists all over the world, but it is especially apparent in New Zealand because of our far smaller total talent pool. In New Zealand there are far fewer leadership and executive positions than overseas and therefore less opportunities for digital natives to gain the commercial experience. Some companies have experimented hiring from overseas. Although it is a potential short-term fix to the overall issue, what has been seen is that executives brought in from overseas often are too specialised for the NZ marketplace.

Changing the C-Suite

We’ve seen some companies create new roles, like Chief Digital Officer, in order to give digital a real voice in the C-suite. Having a dedicated role in place who is assigned as being the voice of digital business transformation at the top level is a fantastic step forward to giving digital a much needed seat at the table.

Filling these roles often requires a global search of highly specialised, qualified and knowledgeable candidates, who are ready made for the position. These candidates are hard to find, harder to attract, and likely not attainable for many of the New Zealand companies who need a person like this.

There is also the added problem of knowing what this ideal candidate looks like in the first place. The job description for a CDO, for example, seems to write itself; but actually finding a digital expert who has experience in upper level management or other leadership roles is a lot harder, simply due to the generational inconvenience. In addition, this approach does not solve the existing problem of the skills gap at board level.

Getting Ahead of Digital Transformation

As major technology leaders increase their budgets on IT infrastructure and technology for 2016, it’s clear they feel their current infrastructure may still be in danger of digital disruption. Digital innovation can happen overnight, and can instantly render widely used systems and practices redundant.

The logical solution seems to be to use a combination of “analogue” executives and digital natives in the boardroom. However, a more realistic solution is often for the digital expertise to sit within the company’s management board and consult upwards, and the utilisation of third party digital consultants.

Summary

Creating clearer pathways to leadership positions for those in technical roles is something that all companies need to be doing, but this is a long term solution and doesn’t fix the short term problem. With the gap between digital and the board as big as it is, boards are scrambling for solutions to better adjust to digital disruption. What is your company doing to address this issue? Let us know in the comments section below or feel free to get in touch.


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