Digital Transformation: The Board's Imperative for Today, Not Tomorrow

The research findings from the Global Network of Director Institutes' 2022-23 biennial Survey Report have been circulating in WhatsApp groups of boards and chairpersons, shareholders, and CEOs, sparking both alarm and necessary dialogue. As someone closely engaged with the dynamics of modern corporate governance, I can't stress enough the importance of taking these findings seriously. The composition of boards for 2024 must not be a mere reflection of traditional thought but a courageous leap into embracing digital competencies and diversity. The urgency of the message contained in this report cannot be overstated: the future is now, and the call to action is immediate.

In the wake of the 2022-23 biennial Survey Report from the Global Network of Director Institutes (GNDI), a startling revelation is clear: 83% of directors see technological transformation as a matter for the future – not the present. This misstep could prove disastrous, and urgent corrective action is needed. We must dispel the notion that digital is a future problem; the digital era is now.

The Lack of Digital Competence

It’s not just provocative to say that 83% of our directors are living in a previous era – it's downright alarming. The survey reveals a glaring and deeply troubling gap. Boards are staring into the abyss of the digital revolution but have yet to make the leap. Digital transformation is ranked a mere fifth (21%) priority, even though cyber risk and digital innovation are seen as critical areas where boards lack expertise.

How can boards govern effectively when more than half feel they are not equipped to do so in crucial areas? This is not just a problem; it's a crisis.

The Diversity Imperative

Board transformation is no longer a buzzword; it's an urgent need. 78% of directors see increased diversity as a key area of change, and that includes a diversity of skills, expertise, and perspectives. Digital competencies are a part of this broader imperative.

In our rapidly evolving world, having a homogeneous board that lacks expertise in areas like cybersecurity, sustainability, and digital transformation is a recipe for stagnation. Boards must not only be diverse in gender, race, and background but also in thought and expertise.

Sustainability and Technology: An Unavoidable Fusion

While the acknowledgment of expanding board structures to include technology and sustainability is heartening, it's distressing to observe that this is viewed as a future concern. A mere 5% of directors considering climate change critical for success today, and only 27% think a focus on social and environmental issues will be essential in 3 to 5 years.

These numbers are not merely disappointing; they are dangerous. Boards must understand that technology, climate change, and sustainability are intertwined and imperative now.

The Balancing Act

What's at stake here is not merely the infusion of new skills but a profound transformation that must be both bold and nuanced. Directors must find the equilibrium between the infusion of new experts and enhancing governance and performance. Recognizing the lack of expertise in areas like cyber-risk and digital innovation, the boards must be proactive in sourcing and recruiting directors with specific skills and expertise.

This isn't about mere adaptation; it's about survival.

The Future is NOW

Digital transformation is no longer a distant horizon; it's our reality. Technological change is not waiting for us to catch up. The lack of focus on cyber-risk, data protection, and privacy is not just a lapse; it's a failure that can have severe consequences.

Directors must develop digital literacy akin to financial literacy. Understanding the terminology and concepts is not an optional add-on; it's a core requirement.

The GNDI survey paints a picture that cannot be ignored. It's a call to arms for the boards to shake off complacency and embrace the digital era. The message must be loud, clear, and uncompromising: Digital governance is not a future challenge; it's a pressing crisis.

Boards must undergo a profound transformation that includes not only embracing digital competencies but also cultivating a culture that understands and leverages the digital revolution.

The time to act is not tomorrow; it's now. The future is already here, and the boards that recognize this reality will lead. Those that don't will inevitably falter.

The digital transformation demands bold leadership, strategic vision, and unwavering commitment. It's time for boards to step up, diversify, educate themselves, and lead in the digital age.

Anything less is not just inadequate; it's an abdication of responsibility in a world that waits for no one.