But boards are still short on members with a digital mindset.
Boards continue to make investments to create more digital-based operating models, with automated, iterative, data-driven management and cloud-based platforms ranking among the top investments.
That’s according to West Monroe’s Quarterly Executive Poll – Q3 2021, which saw 52% of respondents citing digital as their top business opportunity, with board “digital savvy” ranking as a top priority for executives.
“Boards guide companies through big decisions, especially those that require a shift in direction or significant investment,” says Casey Foss, chief commercial officer for digital consulting firm West Monroe. “Whether it’s launching digital products to reach new markets or investing in business operations to enable more efficient processes, the board plays an important role in allowing for innovation while focusing on business results.
But, according to the study, only 24% of companies with revenues over $1 billion had at least three directors who were digital-savvy.
To increase the level of digital savvy on a board, it’s important to define the term. To Foss, digital savvy is not something that can be measured on a test or even necessarily by past hands-on experience. She says that a digitally inclined board member is someone who understands the power of digital, is able to anticipate risks by being forward-thinking, believes in and understands the important use of data and places a high emphasis on experience for clients and people.
“A digital-savvy board member should not think of digital as a tactic, but as a way of governing.”
Even if a board member doesn’t know the specifics of digital strategy or hasn’t experienced the full arsenal of the digital toolkit, adds Foss, it is essential that they have their mind open to digital possibilities.
“A shift from seeking digital expertise to supporting the development of a digital mindset is the best strategy for success. If you don’t have a board that appreciates and understands the power of digital, you’re going to find yourself steps behind your competitors.”
According to Foss, the importance of digital knowledge on boards can be attributed to the evolving nature of board service. Boards that are empowered with technology and data can make better, faster decisions that break down the previous hierarchical system of quarterly board meetings.
“In a world where disruption and chaos are the new norms, boards must find a better way to govern,” Foss says. “They can do this by considering every tech company a competitor, by being available for shorter and more frequent meetings, and by using real-time data to make decisions.”
Foss believes that the challenges of the last two years have accelerated the movements of boards toward a digital-first model, as well as board members who understand how digital strategies enable companies to respond quickly to changing conditions.
Foss says there are concrete steps nom/gov committees can take to ensure that their boards are stocked with directors who have a digital mindset, including shifting priorities to make digital skill sets a top priority and realizing that the process will be an extended one.
“It is no longer enough to hire a chief digital officer and have a few board members with a digital background,” says Foss.