Wednesday, October 3, 2018

The Corporate Board as “Digital Overseer”

Every digital organization perhaps has a different rhythm and needs to monitor its own digital pulse periodically.

The board as senior leadership team needs to steer their organization toward the uncharted water or blurred territories with unprecedented uncertainty and complexity. To lead effectively, they have to look into an unknown future and attempt to define the landscape with its risks and opportunities and provide the guidance about what core to preserve and what future to stimulate the business progress toward. Here are three aspects of the corporate board as “digital Overseer.”

Strategy oversight: Digital strategy is the process of specifying an organization's vision, goals, opportunities, and initiatives in order to maximize the business benefits of digital initiatives to the organization. The board should oversee business strategies by asking tough questions such as: Do organizations have a digital strategy? Do existing functions and business units have a game plan for digital transformation? Who owns digital technologies, methodologies, or practices? Which digital impacts have you identified? Which functions are the most impacted by digital disruptions? Who owns which elements of the digital strategy? What’s the weakest link in strategy execution? Etc. With the increasing pace of changes and continuous disruptions, it is still important to set digital principles to making better assumptions for strategy making. So, you have to collect enough information, listen to different POVs, as everything has more than one side and you have to master them all for making effective decisions. Strategy management is about creating tomorrow's organization out of today. Therefore, the board’s strategic oversight is critical to identify and strengthen the weakest link and determines how each part of the organization, including all of the key functions must "put it all together" to be successful in implementing the strategy, bringing tangible business results and reaching the business vision ultimately.

Workforce & workplace oversight: Building digital workplaces are about developing an environment with the abundance of information and the culture of innovation, to put people at the center of business, and to both engage employees and delight customers. Due to the fast pace of changes, the digital workplace today needs to become dynamic and informative, help people feel more comfortable about the “VUCA” digital new normal. Hence, it is important to set a tone from the top, in the boardroom. When making the workplace policy to enforce digital management, are you thinking of guidelines for people? The digital workplace will be shaped by changes that take place in the way people relate to themselves and to their experience of their environment and others around them. Generally speaking, where you find an effective digital workplace initiative, regardless of the nature of the organization, you will also find some similarities in culture (openness, visionary leadership, encouraging the innovative spirit of experimentation and risk-taking). The board’s oversight about the workforce helps to make the invisible business forces more visible and fine-tune them to unlock business potential. Metaphorically, culture adoption happening is like a wave. Senior Management starts the wave coming into the shore, but it then has to reach the beach (bottom) before it can go back out. If your culture embraces the future, inspires others, being a customer-centric and then it forms the dynamic digital workforce and shapes a high-innovative and high-mature digital organization.

Risk oversight: BoDs do not manage risks but oversee risk by asking tough questions such as: How robust was the organization's risk assurance system, all the way up to the management board? How could that system miss something that has had a widespread impact? Was senior management and, ultimately, the management board, too easily assured? Who was responsible for feeding unreliable information up to the organizational food chain? What checks were there to test the reliability of such information? Etc. The boards should request information from all directions of the operations. However, many Boards and independent board directors are unfortunately focused on the data and information fed to them, and not on how and where they get the information. The board must be comfortable that management is identifying and appropriately responding to risk, and that the board itself is apprised of the most significant risks facing the company. To oversee risks, the top seasoned board of directors with decades of experiences should share the valuable lessons in the past from time to time. Without taking a breath to look back, plowing on to the next big thing before completely pulling all resources or running multiple simultaneous changes can be risky. To reach the comfort level, effective boards ensure that management has put in place an effective risk-management process, and the directors assess whether risks are undertaken and managed consistently with the established risk appetite.

Every digital organization perhaps has a different rhythm and needs to monitor its own digital pulse periodically. General speaking, in the boardroom, the key dimensions of practicing corporate governance discipline are policy setting, strategy oversight, leadership empowerment, performance monitoring, as well as understanding the accountabilities of the environment - regulatory, shareholder, etc. The board directors as the digital overseers today need to understand things and circumstance in a holistic way, deal with opposing views, cultures, constraints, and competitions, in order to steer the business in the right direction, help the business achieve high performance and unlock the full digital potential.


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