Discussing the role of board directors in digital business

Board directors role in digital transformation
Peter Sondergaard, executive vice president of research at Gartner
Board directors role in digital transformation
Peter Sondergaard, executive vice president of research at Gartner

In recent years it has become fashionable for business leaders to visit Silicon Valley in order to meet and learn from the digital giants who have helped reshape entire industries.

“Save your money,” says Peter Sondergaard, executive vice president of research at Gartner. “Change doesn’t happen by going to Silicon Valley, although it can certainly provide inspiration. Digital transformation requires a series of fundamental changes in your organisation.”

“Will your leadership team stand up and manage through a period in which they will be constantly questioned? As leaders, you need to see your organisation through to the other side, to what Gartner calls the ‘plateau of productivity’,” he saysSpeaking to an audience of board directors in Sydney, Australia, Sondergaard said that the concept of digital business would enter the ‘trough of disillusionment’ within 12 to 18 months, as large parts of organisations become frustrated with the speed of change and rebel.

Put technology at the core of your business
According to the 2017 Gartner CEO survey, 42% of enterprises plan to use digital technology to optimise the current business, not for transformation. Seventeen percent have no ambition for digital business at all.

Digital transformation is about making technology the core of your business, not the back office IT that runs your business today. Most organisations, Sondergaard says, have very large digital projects underway, but have not changed the way the organisation behaves. They have not put digital at the core of their business.

Sondergaard highlighted a set of five fundamental changes that board directors need to make:

  • Change the metrics. Gartner’s 2017 CEO survey found that more than half of CEOs have no metric for digital business transformation. How will you measure progress?
  • Change how performance management is done. Today’s employees expect ongoing feedback and coaching. Old-style annual performance review cycles will result in the organisation losing agility as well as the talent it wants to retain.
  • Change governance and decision making. Some governance processes are necessary due to the regulatory environment. However, every large organisation says it holds them back. Directors should ask if the current decision making processes will stack up in 5 years.
  • Change your approach to security. Don’t treat security as a technology problem, but as a business problem. Set metrics that are leading indicators rather than “after the fact” once an incident has occurred. Adopt a continuous, adaptive risk and trust assessment approach for making decisions.
  • Change financial management for projects. The business world is no longer defined by large scale multi-year projects with an end date. More flexible, performance based budget processes are needed for technology-based change.

Finally, directors and senior executives need to change the leadership mindset of the organisation. Digital is about leadership, culture and talent, says Sondergaard. How will you execute leadership transition at board and executive level?

By Peter Sondergaard, executive vice president of research at Gartner