How boards can lead digital transformation efforts

ARTICLE | September 21, 2023

Authored by RSM US LLP

Digital transformation has been on the collective minds of most corporate board members in recent years. With the speed of innovation accelerating, boards may need to analyze how digital transformation is prioritized and managed within the organization.

The digital transformation playbook is changing for organizations of all sizes. Companies are moving from digitizing—focusing on operations and efficiency—to a more digital mindset, which means disrupting models within industries and doing things differently. And contrary to popular belief, digital transformation is not just about technology; instead, it encompasses people, process and technology.

Technology evolves very quickly, and when people see what is possible and how rapidly consumer and employee demands change, it’s natural to feel left behind. However, boards can take steps to make up digital ground and leverage innovation to gain an edge on the competition.

Consult the experts

Organizations should take a holistic approach when developing a digital transformation road map that involves enterprise-wide functional leaders. Successful transformation projects include the participation of business owners and technology leaders. If boards get technical information about digital transformation only from the chief technology officer or chief information officer, they will likely miss out on most transformational opportunities. While technical insights are certainly important, consulting a broader range of leaders can help boards learn how digital transformation can solve multiple business problems.

For example, boards may bring in human resources leaders to discuss changes in recruiting or people development. Marketing leadership may provide insight into how new technology or strategies can enable the company to market differently or create new channels to bring in new customers.

The power of education

Digital transformation will continue to be a top initiative for years to come. Board members should understand what options are available and what each could mean to the company.

One route some board members take is to enter into a reverse mentor relationship with a younger, more digitally proficient coworker. In that relationship, board members learn about digital technologies that they may not have exposure to otherwise. In addition, a host of learning opportunities about innovation and digital strategies are available through online services such as YouTube and LinkedIn.

Onboard directors with the right skill sets

Having board members with knowledge of each emerging digital strategy and available technology option is great, but not always possible. Still, seek out candidates who can bring maximum expertise, and when assessing them take into consideration their exposure to digital transformation solutions and strategies.

Having board members with knowledge of each emerging digital strategy and available technology option is great, but not always possible. Still, seek out candidates who can bring maximum expertise, and when assessing them take into consideration their exposure to digital transformation solutions and strategies.

Form a tech committee

Initially, boards may have difficulty determining where digital transformation fits within a committee structure. While some elements may work in the audit committee, for example, others may best belong in the governance committee.

Board members need to think about the different committee structures and how they will manage long-term transformation. Because of the unique nature of digital transformation and its importance to the future of the organization, forming a separate technology committee may be the best move.

Asking the right questions

Boards are typically accustomed to monitoring projects that might take years to implement. However, digital transformation is fast-paced, a reality unlikely to change anytime soon. Boards have to operate with a more agile business model, and that outlook should trickle down to the questions asked about digital projects.

For example, board members should ask about the short-term and long-term goals of a project, what external ideas can be applied internally, and how long it will take to introduce new features and strategies. The connections established with executives outside of IT can also lead to discussions that can uncover transformation opportunities throughout the organization.

Inspirational leadership

Championing digital transformation is a key role for a board. The board is instrumental in instilling the mindset of change, and members should question how projects are prioritized and aligned with other initiatives. The board should be the constant voice reiterating the importance of digital projects, and can play an important role in making sure leadership stays focused on transformation.

Inspiring innovation may require a culture shift. To generate new ideas, board members need to make sure that the organization does not punish commercial failures. Instead, leaders should encourage employees to take risks. Failing fast is an important part of an evolving business.

Ramp up internal personnel

When making transformation plans, board members cannot forget about the people part of the equation.

For example, there’s no reason that individual development plans can’t be formulated for critical employees. A variety of online courses and in-person learning programs can hone their skills, and the company should emphasize internal development because talent is so scarce. Often, organizations put training at the bottom of the list of initiatives. However, it is one of the most important elements for transformation, and it can have a significant impact on their digital success.

The takeaway

Digital transformation is both an art and a science. The science is the innovation, but the art involves getting people excited and shifting the organizational mindset. With the right approach, the board can play a critical role in helping the company move forward.

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This article was written by Chris Wetmore, Laurie Mosebrook and originally appeared on Sep 21, 2023.
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