If you still have any remaining doubts over whether the boundaries between online and physical operations are becoming increasingly blurred, then Marks & Spencer’s recent decision to put previous executive director of ecommerce in charge of all of its UK stores should finally dispel them.
Laura Wade-Gery, who has just been appointed as the retail chief of Marks & Spencer and is already tipped to be the company’s next CEO, exemplifies how much the digital revolution is fundamentally impacting all areas of business, from financial data to cyber-security and right down to customer service. In doing so, it also puts the spotlight on an issue that is central for many companies across the globe: just how digitally literate are the people at board level?
Marks & Spencer’s website is now its largest single point of sale. The same is undoubtedly true for many other businesses, meaning that translating technological advancements into notions that will benefit the business is now a fundamental piece of corporate strategy, and one that no board can afford to ignore. But how far are these boards equipped to actually devise and implement a three to five year strategy for a digital future? CEOs are required to be the mastheads of this transformation agenda, but in reality are they able to rise to this challenge?
If they’re going to avoid going the same way as the dinosaur, CEOs will already realise that the digital revolution goes right to the heart of organisational design
For our recent report ‘Refreshing the Board for the Digital Era’, we asked over 100 CEOs, NEDs, chairs and C-suite leaders about the level of digital literacy and preparedness at the top of their organisations. What emerged was that a significant percentage of these key figures are admittedly out of touch with the needs of their customers and ignorant of the pace and scope of the changes that are being made as a result of new technology. One chair that we spoke to had never even shopped online.
Dragging dinosaurs into the 21st century
This immediately begs the question of just how big a problem these ‘dinosaur boards’ actually are. It is becoming more and more obvious that without a creative, innovative and digitally savvy culture, even the longest-running companies will eventually become extinct. Particularly successful businesses will have a single view of their customers that extends throughout the whole business, from physical sales channels down to online and mobile technology. To coincide with this mentality, CEOs need to be asking themselves how they can integrate digital knowledge into all areas of their business, and how they can use their existing customer data to make the right decisions regarding it.
Equally, boards must have the experience, insight and substantial management information to be able to judge whether their company currently has the capability to meet these new market dynamics: they must be prepared to assess whether their unique set of skills and experiences will in fact allow them to develop a new business strategy, or to challenge or support the investment decisions that surround building their company’s digital capacity for the future.
For some CEOs, taking on a broader remit with an agenda for digital transformation may mean embracing entirely new ways of thinking, asking unsettling questions, seeking external counsel or even appointing new people to fill the gaps within the company’s knowledge and expertise. It will also be important to have a good understanding of the risk implications of making large capital investments in technology.
All of this suggests that taking the ‘financial route’ to the top spots in companies could become gradually less common, and that CEOs will increasingly need to have well rounded career histories. It is therefore very likely that we can expect to see more companies following in the footsteps of Marks & Spencer by favouring those from marketing or technology backgrounds when appointing senior executives or CEOs.
Existing chairs and NEDs, particularly those who came from traditional finance or governance backgrounds, are more at risk than ever of being seen as being out of touch with their own companies. Nowadays even the business’s chief financial officer is required to have a compelling narrative with which to communicate transformation agendas, investment plans and long-term strategies to investors. Many companies can be seen to be following this trend; for example Sainsbury’s, who appointed Matt Brittin, Google’s UK head, as an NED back in 2011 in order to provide some much-needed technical expertise and impetus at board level.
Of course, many organisations simply don’t have individuals with these skills. It is therefore critical to be completely honest about the level of expertise that is currently sitting around the top table: contracting specialist experts in the short- to medium-term may be the only feasible option for bringing in the additional knowledge, pace and precision that the company needs. Although the CEO should be the head of the transformation, he/she may still need to bring in this additional expertise in order for a phased approach to take place.
Drafting in digital evangelists, however, should only ever be transitional: to avoid becoming a dinosaur in the digital era, digital strategy is something that needs to become part of an organisation’s DNA. It isn’t and should never be just one person’s responsibility. Organisations will need to build leaders from within, spotting future stars at mid-level management and ensuring that there is a talent development plan in place. Employees should have the opportunity to rotate across several different disciplines, all the while maintaining a constant focus on digital technology and marketing.
If they’re going to avoid going the same way as the dinosaur, CEOs will already realise that the digital revolution goes right to the heart of organisational design. It’s no good having boards clinging onto sacred cows simply because they don’t like what they don’t know, and it’s not enough to listen to the same old voices when change is happening so quickly and so profoundly. Customers have constantly evolving perspectives and expectations, and any business’s digital transition should always reflect that.
As the chairman of one specialist retailer put it: “If you want to build a shiny new bathroom, sometimes you need to change the whole system, not just the taps.” This is why cognitive diversity is more important now than ever: leaders who bring these fresh perspectives and new ways of thinking to their teams tend to embrace change, and are also more likely to ask the difficult questions. The more diverse the perspectives involved, the more connections are made; sparking vital innovation and supporting integration and collaboration across all business functions.