Do Australia’s top businesses and their leaders understand the digital future? It’s a fair question now that innovation looks like being the centrepiece of the Federal Government’s reform agenda under Malcolm Turnbull.
To remain on, or hopefully ahead of, the curve of technological innovation and digital disruption, corporate Australia needs to have leaders in place with the digital skills and strategic insight necessary to guide the transformation of their organisations.
By extension, executive boards must accept responsibility and ensure their own numbers include people with appropriate digital experience.
A 2014 study by Russell Reynolds Associates explored the composition of board members of more than 300 large companies, including Fortune 100 companies, in the United States and the equivalent organisations in Asia and Europe.
It found that in the Asia-Pacific region only 2 per cent of companies studied had sufficient specific digital expertise represented on their executive boards. This was in contrast to the United States, where 24 per cent of boards had digital expertise.
Given the increasing role of technology in driving business growth and the customer experience, let alone the growing threat of cyber-crime, boards in Australia can no longer charge sole responsibility for leading digital strategy to the CIO.
It’s a given today that C-suite executives need digital acumen in their armoury to effectively address the big technological questions: social media, big data, cloud computing, and cybersecurity.
But as corporations evolve and innovate technologically, so too must their boards be equipped for the journey. They must understand technology sufficiently well to be able to ask the right questions of management.
To put it bluntly, if boards are to guide their companies on the innovation journey, as our Prime Minister and many others are urging, they need to understand themselves what innovation looks like.
This means being aware of new technology and where it fits into the strategic business plan, and it means augmenting their number with people with deep expertise in these issues.
Banks are taking a lead in this space, with NAB and Westpac taking steps to address this deficit by appointing Geraldine McBride and Alison Deans to their respective boards, all seasoned executive with contemporary experience.
Navitas also appointed Diana Eilert to its board in 2014, to support digital transformation efforts and the adoption of emerging business models.
Admittedly, finding the right digital talent locally can be challenging. As demonstrated by the current scarcity of this talent on boards, Australia’s pool for populating executive and board ranks is limited and, inevitably, businesses will need to look overseas if they want to source this expertise.
But failing to do so is not an option. Prime Minister Turnbull’s comments immediately upon being elected leader are telling: “The Australia of the future has to be agile, innovative and creative. We can’t be defensive, we can’t future-proof ourselves. We have to recognise that the disruption that we see driven by technology, the volatility in change is our friend, if we are agile and smart enough to take advantage of it.”
This is music to the ears of Australia’s technology sector, which has for years lamented the lack of policy impetus for investing in education to build the pipeline of home-grown digital leaders Australia will need in the future.
As for the here and now, it is incumbent on all non-executive directors to reappraise their own skillsets to ensure they are equipped to help build the companies of tomorrow.
A useful starting point would be for the Australian Institute of Company Directors to include digital innovation within course material offered to aspiring and currently serving directors seeking accreditation.
Richard Earl is founder and managing director of Talent International.
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