Monday, April 23, 2018

The BOD's Three Oversights of Digital Transformation

The digital BoDs share ‘deep common sense,’ leadership proficiency, strategic viewpoint, growth cycle balance, creativity, progressiveness for leading digitalization effortlessly.

The beauty of the digital landscape is the fresh insight of business. The digital paradigm is an emerging ecosystem of principles, policies, and practices that set limits or boundaries, also offer the guidance for problem-solving or creating something new under the digital rules, keep information flow and achieve a state of dynamic balance. An effective board enables and directs management towards good outcomes, and ensure the business is on the right track to reach well-defined business goals. What are important oversights the board can offer about digital transformation, and what are the possible governance methods, techniques, structures, etc, help to improve the boardroom effectiveness?

(a) Oversight of assessment - gauging conditions and choices: With increasing pace of changes and continuous digital disruptions, businesses today need to ride the change waves or catch the rising tide timely. There seem to be three choices organizations make: ignore emerging digital trends, jump on the bandwagon even if you don't know what you are doing, and embrace the digital technology and practices, finding ways to create strategic value. There is no doubt that the third option is the right one. But the first two are far more common. The board should frequently brainstorm the digital impact on the business, gauging conditions and choices, leverage emerging digital trends to the business’s strategic planning. Digital organizations arise when the scale of the interrelations, interactions, or interrelational interactions surpasses our brain's capacity to be able to do whatever it does with smaller scales. A digital-savvy board will have the advantage of pulling enough resources and pushing the business model of technology, trustworthiness, prepare, and launch change, innovation, and ensure what happens next. The board oversight of digitalization and information-driven innovation agenda will directly impact business growth and organizational competency for the long run. There are a lot of things (both “hard” factors such as policy, process, performance, and “soft” factors such as culture, leadership, communication) that come with business success, boards need to gauge diverse conditions and choices, in order to make the digital model transformation sustainable.

(b) Oversight of appropriation - matching priorities and resource: The board's role is to enable the dynamic governance to fit the “VUCA” digital new normal. One of the BoD’s oversight should be focused on the maximization of capital & resource allocation. To address the resource competition issue, the 'benefit' must often be articulated in user-specific currency. The bottom line is, for any company to succeed, it is essential for the entire company to be pulling in the right direction by allocating resource, time, and assets scientifically. The governance and management disciplines go hand in glove. The challenge of digital management is to set the priority right in strategy execution and manage the tactics with efficiency. Although a Board should be long-term oriented, the perspective of a Board must encompass the past, present, and future when assessing risks and growth opportunities. The board’s oversight of appropriation - matching priorities and resources is to ensure that management can see and agree on what has been done and what should be done next all these with proper check and balance, make use of clear targets, communicate and embed prioritization mechanism into the multitude of management to unlock performance and unleash digital potential.


(c) Oversight of accountability - scoring activity and net results: Board governance (as opposed to other entities with governance authority and responsibility) is the delegate process by which a board carries out the governance of the organization. But the board needs to have the oversight of accountability - scoring activity and net results, monitoring performance closely. Accountability goes hand in hand with the delegation of authority or power. The board needs to focus on their own performance as well as the performance of the management team; and, that performance is not limited to financial performance, but also to the firm's performance in creating value for employees and customers. Accountability starts with leaders at the top, to advocate the digital style of autonomy and self-management. If you ensure the individuals have the autonomy within their tasks, you will be able to address performance on an equal partnership base. Shared accountability or collective accountability involves shared ownership, empathetic communication, the true measure of accountability is about resilience. The board advocates the culture of accountability. There are also some structural issues with accountability. If one is to hold another accountable (peer or subordinate) for achieving some result, there is a set of conditions that must be fulfilled in advance on the "receiver" side. From the top down, the leaders and managers should be more interested in finding "causes," not interested in assigning blame, in order to build a culture of accountability.

The open digital paradigm is not just about opening your technology, becoming transparent. It's a new paradigm shift. The high-performance board makes the disproportional impact on running a high-performance business through their invaluable oversight of the strategy and inspiring changes and innovation. They have to leverage information to predict, bring up the outlier’s viewpoint to see things differently. They share ‘deep common sense,’ leadership proficiency, strategic viewpoint, growth cycle balance, creativity, progressiveness for leading digitalization effortlessly.

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