Corporate boards of today are challenged with understanding the opportunities and the risks and threats presented by “Digital”. As cybersecurity incidents and privacy issues from the Sony hack to the Facebook/Cambridge Analytica debacle increase in number and severity, board rooms cannot afford to not know. neXt Curve hosted a discussion with USC Marshall School of Business professor, Bob Zukis on the urgency for digital savvy and competency in the board room.
Digital transformation is the mantra du jour for many businesses today as they seek new value and competitive differentiation through the application of “Digital” technologies. For businesses undergoing digital transformation the opportunities and risks can be significant and foreign. Many organizations lack the digital competencies to direct, manage and execute on their digitally-enabled business transformation initiatives.
But digital transformation is not just about adding digital sales and marketing channels or digitalizing the core of your business. As enterprises embark on their digital journeys, they are met with increasing risk to their business in the form of an ever-expanding universe of cybersecurity threats and consumer privacy concerns. With the Internet of Things promising to digitize and connect everything, business leaders and executive teams need to understand and get comfortable with dealing with the digital risks to their business.
Minding The Digital Gap: Leadership & Governance
But we have a problem – lack of digital leadership and governance in the board room. According to Professor Bob Zukis only 5% of board members in companies outside of the technology industry have digital competencies. Though the level of digital savvy differs from industry to industry, there is a general gap in competency need for enterprises to effectively govern the risks and opportunities associated with their digital business.
One of the challenges that many enterprises face is determining who owns the fast-evolving digital agenda on the board and executive team? How should digital and cyber risks be managed by the board? Who is responsible? Is it the CIO? The CISO? The CEO?
Challenges In Digital Leadership & Governance
In light of the Facebook-Cambridge Analytica debacle it would seem that digital governance would be an obvious priority for boards. Surprisingly, Professor Zukis sees a lack of urgency among most companies. One of the key barriers to urgency is a lack of a burning platform such as the Enron accounting scandal and the subsequent collapse of Arthur Andersen, which brought about financial accounting regulation in the United States with the passing of the Sarbanes-Oxley Act of 2002.
Professor Zukis believes that a mindset shift is critical. Business leaders and board members need to think of the next-revenue dollar in terms of opportunity risk along the lines of privacy and cybersecurity. Given that the digital privacy and security evolve in a very fast pace, executive leadership teams and boards need more than just competency. They need governance practices and processes that enable the effective consideration and management of digital opportunity risk for a business operating in an increasingly digital economy.
Implications for Business Leaders
Corporate boards need to get serious about cybersecurity and other critical digital topics that could severely impact the enterprises that they oversee and govern. These impacts can be both positive and negative. Gaining visibility and insights into these impacts will require boards to establish formal infusion of digital competencies critical for digital leadership in the board room as well as on executive teams.
Listen to our Podcast and view the presentation materials for more details on our interview with Professor Bob Zukis. Links are provided below.
neXt Curve can help you bring digital awareness and savvy to your corporate board and leadership team in collaboration with Bob Zukis and the Digital Directors Network. We encourage aspiring and established digital directors to become a member. Membership is free. Contact us for a complimentary consultation and an overview of our advisory and coaching services.
You can listen to the audio replay of our The Great Gap: Digital Leadership & Governance webcast by playing the media below or downloading the Podcast available on iTunes. Subscribe to our Podcast channel and keep up to date on the latest insights from neXt Curve.
Audio replay of The Great Gap: Digital Leadership & Governance webcast with Bob Zukis