Modern boards of companies are coming under a lot more pressure as they need to navigate through technology disruptions, cyber threats, social media and growing investor activism.
Many are still grappling with understanding the impact of this technology disruption, let alone challenging management on decisions as to how companies can thrive in the digital age.
Technology disruptions according to experts impacts company strategy, customer engagement, operations, people and talent and even compliance. This disruption also presents new challenges and opportunities. It is therefore up to boards to help navigate and support companies and that is why digitally conversant boards are essential in an era of digital disruption and digital transformation.
A survey by MIT Sloan reveals that companies with enough digitally savvy board members make more money. The survey findings show that companies with digitally savvy boards had 38% higher revenue growth, 34% higher return on assets and 34% higher market cap. Only 24% of the US$1bil in revenues companies in the US have digital savvy boards.
Technology disruption is also changing consumer behavior and demands. New start-ups are mushrooming and while choices are out there for consumers, trust is a key factor in decision- making, so is company responsiveness and reliability for the consumer.
This explains why the Institute of Corporate Directors Malaysia (ICDM) president/CEO Michele Kythe Lim is reminding boards to re-look and reconsider how companies can navigate through the disruptive forces to stay relevant, competitive, innovative and successful.
Erik P.M. Vermeulen when speaking at the recent ICDM Power talk series said board diversity beyond gender is key and boards should consist of creative people including actors, musicians, writers, data analysts and even millennials. It is not rock stars that the boards need, but people with creative and open minds, people out of their industries so that they can navigate amid the disruptions.
AirAsia Group Bhd has actress Neelofa as its board member, a European pharmaceutical company has a guitarist, various others have data analysts and creative people on board.
With social media, artificial intelligence, Internet of Things and systems taking centrestage, experts believe there is no need to become the next Amazon, Netflix or even Google. But they need to change the way to maximize the potential to drive businesses, tell their stories better, and as Erik pointed out, consumers like to know the “heart and soul” of companies. Boards, therefore needs to be aware of all that. Often companies do a lot of changes at the bottom but with this tsunami, the change is needed at the top.
Erik is an innovation advisor, board/advisory member of several organisations/start-ups and professor at Tillburg University in The Netherlands.
PwC in a report says 64% of financial performers say their business faces a serious threat from disruption. Companies also say they are digital, but are not investing and behaving digitally. Knowing what to do can save cost and boost revenues but it can also be disruptive if not managed well.
About a year ago, when socialite Kylie Jenner sent out a tweet about Snapchat, it knocked the share price down by 7% in the following trading session and wiped out US$1.3bil in market value, although Snapchat had other issues to contend with.bigger market.