Boards Guidance of Digital Innovation 

Boards Guidance of Digital Innovation 

Future and digital Innovation is in increased focus to solve many of our companies challenges. On a recent Digoshen Exploring Leaders Live International Board Exchange we were fortunate to listen to Ingvild Huseby, Experienced Chair and NED in growth companies, with key expertise in TMT, IoT, AI and business services. Ingvild shared insights on how to include digital in business strategies, which was followed by a poll and breakout room discussions amongst participants on the Boards role in guidance of future innovation.

Future. One of the most pressing responsibilities for Boards.

Those not growing is per definition dying. Tech enabled business models and artificial intelligence is seen as the biggest threat and opportunity in modern time. Companies must innovate – or die.

 

       Business models are changing and disrupted faster than ever before. 52 % of the companies in the Fortune 500 have gone bankrupt, been acquired, or ceased to exist as a result of digital disruption. Half of S&P 500 companies will be replaced over the next ten years. Average lifespan of a company on the S&P was 32 years in 1964. In 2016, that went down to 24 years, and by 2027, the average tenure is expected to be 12 years. Data driven companies conquers the top 12 companies (market cap), the top 12 companies (market cap) has dramatically changed during the last 10 years. Company valuation moves towards data driven business models.

 

Creating long term values seems to require the company’s ability to renew their business model, alongside delivering short term return on the existing model. Continuous improvement and automation of existing processes is not enough. Automation of existing processes may as well be contra productive making old ways of working fixed, hindering completely changed operational models and improved margins as consequence. New revenue and changed operational models will be a prerequisite for companies that shall survive 10 years anniversary in the future.

 

Everything went quite fast earlier as well. The biggest shift in modern times is data. Enormous access to data from everywhere, in real time, across industries. Intelligent aggregation of the data enable new revenue and new operational models.  IoT, edge-to-cloud, artificial intelligence are key drivers for change. Robotics, 3-D printing, augmented reality, virtual reality, drones are tools. Electrification is a huge megatrend.  Access to technology enable innovation, new revenue streams and reduce cost.

Treat your data as you treat the cash! Data may become your most valued asset. Collect, grow value and generate x times return.

 

What is the Company’s strategy for data value creation and risk reduction? In the same way as you allocate cash, put cash to work, make sure your operations have a high cash conversion and generate cash for both future growth and distribution – your data must be prepared for meeting customer needs, better operations and increased revenue.

 

 

Boards work increases in complexity. Tech is changing the world. Tech enables radically changed business models and enables sustainable businesses solving global challenges.

Board must secure the right CEO (support, set focus and challenge), the boards must be instrumental in setting the future and challenge status quo, and keep oversight of short and long term value creation for both shareholders and stakeholders. A survey made in 2019 shows that CEO’s requests support from their Board on strategy, digitalization, industry competence for future and sparring. Competence on culture, sustainability and ethics is requested and is as highly ranked as future innovation – underlining the importance in the market. The survey*) showed that CEO’s with a digitally savvy Board that actively support future strategy delivers better on all company value drivers. MIT defined digital savvy as an understanding developed through experience and education for the impact that emerging technologies will have on businesses’ success over the next decade. Among companies with over $1 billion in revenues, 24 % had digitally savvy boards, and those businesses significantly outperformed**) other on key metrics – such as revenue growth, return on assets, and market cap growth.

 

Strategic plan and the board innovation process and governance becomes key for shareholders and stakeholders return on value.

Most Boards are heading traditional business with conservative business models. Nature is conservative. How balance between the disruptive future, opportunities and risks, and the state of the art, step-by-step?

Participants shared their views in both polls and discussions.

From those we learnt that about a third of the boards are underpinning their future strategy with tech enabled business models, have clear strategic data usage and ecosystems.  Which in terms of the continued digital impact on businesses were identified as an issue.  From the examples of business models it was clear that subscription models had clearly moved in to many businesses strategies, whilst areas around intelligent data usage, AI, and edge to cloud still were in early state.

From the discussion about challenges and opportunities, participants identified that focus and competence at both board, management and chair level was still in need of improvements. Participants shared examples of how innovation and technology was included into the strategy process and it was clear that a strong purpose was contributing, that if only one director understood digital it was still a clear struggle and that input on future technology impact was needed from external sources to complement management and the boards perspectives. The participants underlined the importance of combining radically challenge of business model by scenarios and move the business step-by-step.

 

This important discussion will continue in future Digoshen Board Live Exchanges!

Next open exchange will be held on May 19th at 8-9 CET with the focus on  “How can Boards guide the innovation and governance process when tech increases in importance and company valuations moves towards data driven business models.”. In particular we will discuss the role of the Chair, Board and the CEO and how modern board work can adapt to changing needs of innovation. We are fortunate to continue the discussion including framing of the topic by Ingvild Huseby, Chair and NED.

The summary of the framing above was contributed by Ingvild Huseby. Ingvild has more than 20 years of operational experience heading tech growth vehicles B2B. She has 18 years as non-executive Board of Director, 6 years as Chair, and works as an industry specialist and non-executive chair and board member for midmarket growth companies. Her focus is on strategy and M&A processes,  building new business models utilizing tech data industry expertise. Key industry expertise is TMT, IoT, utilities, AI, technology and business services.

 

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This blogpost is shared both on the blog of Digoshen, www.digoshen.com, and on the blog of the Digoshen founder www.liselotteengstam.com .

At Digoshen we work hard to increase #futureinsights and help remove #digitalblindspots and #sustainabilityblindspots. We believe that Companies, Boards and Business Leadership Teams need to understand more of the future and the digital world to fully leverage the potential when bringing their business into the digital age. If you are a board member, consider joining our international board network and master programs.

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