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In a World of Disruption, Boards Should Look to Digital NEDs

 


Agenda | August 14, 2017


The Agenda article, “In a World of Disruption, Boards Should Look to Digital NEDs,” was co-written by Russell Reynolds Associates Consultants Rhys Grossman and Tuck Rickards. The piece looks at the four types of digital non-executive directors and explains how appointing the right digital NED can help unlock digital transformation and board diversity. The article is excerpted below.

Companies the world over are constantly being disrupted by new digital technologies. Appointing the right digital non-executive director (digital NED) can help unlock digital transformation and board diversity.

There is a huge disconnect between the actual pace of digital change on boards and what we hear from executive leadership. In a survey by Russell Reynolds, 74% of executives said they expect their businesses to be significantly disrupted by digital technologies in the coming year, and 63% believe that the board must play a critical role in the success of transformation efforts designed in response.

Despite this, only 27% of executives feel the board acts as an advocate for their organization’s digital initiatives. In 2013, only 18 of the top 300 companies in the U.S., Europe and Asia had boards with high levels of digital experience. Though we’ve indeed seen growth, that number has not quite doubled despite updating the research in 2016.

Initially, the strategic investment in digital marketing channels, app development and isolated innovation hubs was perceived as a good start by boards and executive leadership. These front-end efforts answered early customer demands and added just enough edge to traditional companies to make them appear relevant in a business economy that was quickly becoming anything but traditional.

However, as data-driven, on-demand, personalized products and omnichannel experiences have quickly become the norm, these companies are now looking to incorporate their early digital investments into a more systematic, data-driven and end-to-end strategy. And this has made their leadership needs evolve. Rather than an emphasis on front-end strategists, boards are increasingly seeking directors who bring operational capabilities and could guide the re-engineering of the entire organization.

We counsel our clients to be wary of “single-issue” board members because the ability to contribute to all governance matters is a critical competency of any board appointment. However, the scarcity of digital talent with CEO experience has provided open-minded companies the opportunity to shift the traditional makeup of the boardroom; women account for 58% of the digital NEDs recently added to boards and now make up 37% of all digital NEDs.

To read the full article, click here.

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In a World of Disruption, Boards Should Look to Digital NEDs