Digital transformation is taking the world by storm. It is generally expected out of C-suite to be leading the company’s digital transformation journey. Although it is equally crucial for boards to develop a strategic insight on how to lead and drive digital transformation in their companies. In this context, this article aims at focussing on the nuances followed by digitalisation in the small universe of Executive Directors (EDs).

As custodians of company, boards need to familiarise themselves with the changing environment and how it may affect the systems and processes in place. They should not wait for a digital crisis to digitalize the board. They need to align the strategy with digital transformation for further value creation.

As technology transforms the workplace, there will be an increase in human resource issues in the coming years. Bold strategies and transformation programs can only be successful if organisations have competent people with appropriate skill sets. Boards should ensure that the director’s experience and competencies both overlap and complement the other Board of Directors.

The premier global provider of market intelligence International Data Corporation (IDC) predicted that by the end of the year 2017, two-thirds of Global 2000 businesses “will have digital transformation at the centre of their corporate strategy.” The plausibility of this prediction to come true is absolute and so is the risk of frequent cyber threats. Therefore, a welcome change will be in favour of all the stakeholders to a company.

Additionally, in order to curb the digital-traditional gap or to increase their digital quotient, directors with non-digital background should engage in frequent dialogue with the digital directors and meaningful board processes. Taking one China-based multinational company as an example: They sent their top 30 executives to Silicon Valley so that they can introduce them to the prominence of global digital transformation, by engaging with their analogues like Google, Uber and Facebook.

It goes without saying that the competition to appoint digital EDs will only increase with time, and C-suite digital experts could be hard to find. Therefore, it is essential for Nomination and Remuneration Committee (NRC) of the boards to not only target directors of digital companies such as Infosys, Tata Consultancy Services and Wipro but also look for those directors who laid down digital strategies for non-digital companies and successfully implemented them.

While recruiting digital directors is definitely a step forward, but is it not sufficient, and could be inimical if these directors lack overarching corporate governance skills. The approach should be to have a director who can successfully combine intricate digital mindset with board tasks, which includes, inter alia, succession planning, risk management and governance strategy.

Since digitalisation is a relatively new phenomenon, most digital directors are generally young individuals and may not necessarily carry the depth and gravitas of a typical traditional senior director. They may carry little or no board experience prior to their appointment and may be groomed in slightly different organizational cultures. Therefore, it is for senior directors to understand that a part of digital transformation is also cultural transformation; it is not just a technological trend.

Author: Ananya Singh

Disclaimer: THE STATEMENTS HEREIN REPRESENT THE CURRENT OPINION AND BELIEFS OF THE AUTHOR ONLY AND NOT THE ASSOCIATION OF INDEPENDENT DIRECTORS OF INDIA (AIDI). UNDER NO CIRCUMSTANCES SHOULD ANYTHING IN THIS POST BE CONSTRUED AS INVESTMENT, LEGAL, TAX, REGULATORY, FINANCIAL, ACCOUNTING OR OTHER ADVICE.