Did you hear? Diligent has written a book! Governance in the Digital Age offers a collection of ideas, examples, tools and strategies that are designed to help directors, senior executives, and governance professionals thrive in the digital age. Written by Diligent’s CEO Brian Stafford and VP of Thought Leadership Dottie Schindlinger, this book covers topics ranging from value creation and board resiliency to digital strategy. Below is a high-level summary of Chapter 1, “Ensuring Value Creation (Despite Volatility).”
Achieving Relevance and Impact Today
Companies with longevity know what products to develop, how to adapt to customer behaviors, where to allocate capital, and more. As board members contribute their leadership and guidance to these ends, they grapple with weighty questions: How can the company make—and keep—itself valuable to customers, investors, and the overall marketplace? How does it invest in long-term innovation and sustainability in today’s environment of disruption and digital transformation?
The right answers result in a corporate success story like Netflix, which not only maintained but grew its shareholder value during its transition from a DVD rental company to a content creation giant. Failure results in companies that are no longer listed on the stock exchange because they no longer exist.
Shareholders are demanding a more involved board role in this vital area of value creation, and board members are evolving their practices to keep up. For example, boards are moving from a caretaker approach of corporate stewardship to the sharp, opportunity-focused view of a private equity investor. They’re keeping themselves more closely in touch with change, so they’re better equipped to talk about—and act upon—new developments and trends. Many are recruiting fresh perspectives from different industries and with expertise in emerging digital areas such as blockchain, AI, and VR.
You need at minimum two digitally savvy directors to understand the rate of change, technology, and how to use technology to bring costs down, take friction and steps out of the customer journey, and truly understand future differentiated business models.”
— Betsy Atkins, Board Member for Cognizant, Wynn Resorts, SL Green Realty, Schneider Electric, and Volvo Cars
Indeed, this “clustering” of digital skill sets may be foundational to value creation moving forward. Today’s boards are facing market disruption and business-model transformation. One digital expert on the board is a lone wolf; but, when two or three digital experts have a conversations, other board members can tune in to those strategic discussions and integrate their own experiences and skills.
Directors from all backgrounds are educating themselves through tactics like site tours, customer visits, and expert speakers in emerging tech areas. Boards are also strengthening how they work together as a whole. This means replacing periodic PowerPoint presentations with open and ongoing discussions peppered with thought-provoking questions. Digital age collaboration also entails carving out time for big questions and long-term thinking about innovation. Some boards are creating committees specifically dedicated to value creation, and others are pairing up directors from different backgrounds. The goal: Richer, deeper conversations for sharper, faster decision-making.
According to Margaret Whelan, who serves on the boards of directors of TopBuild and John Burns Real Estate Consulting: “It’s important to set the right tone and standards from the top, establish a growth plan through the CEO, have a board that is fresh and refreshed, and create an innovation strategy to think about things outside the box.”
Value creation tactics to try right now
- Decide how your board will keep its finger on the pulse of corporate culture. Identify potential red flags and design your warning system.
- Assess the technology-related skills your board may need to recruit in the years ahead. There are many different kinds of “technology experience,” which will require an ongoing assessment of strategy and composition.
- Use metrics and dashboards to focus in on what really matters
Value creation questions to consider
- What kind of data does your board need to govern effectively? What’s the best way to collect and visualize this data for board discussions?
- Are technology budgets reflecting strategic priorities?
- How does your brand strategy and business model compare with peers and new market entrants? Does either need a refresh?