Boards Ask: 'Alexa, Can We Team Up?'
The Agenda article, “Boards Ask: 'Alexa, Can We Team Up?'" quoted Russell Reynolds Associates Consultant Nada Usina on the trend of boards adjusting their business strategies in order to accommodate for major digital disruptors. The article is excerpted below.
Earlier this month, auto manufacturer Hyundai announced it was teaming up with Amazon to launch a digital showroom providing vehicle shoppers with a one-stop shop on Amazon’s platform, including through its Echo devices. Best Buy, Hilton Hotels, Nike and Visa have also been added to the list of partnerships recently announced with the e-commerce giant, in an age where disruption can build companies up or tear them down.
Rather than compete in a battle they may not be equipped to win, traditional and nontraditional competitors to disruptors are opting to join forces with them through partnerships, or adapting Amazon-like business strategies to their various industries.
“The interest in learning as much as possible seems to be the mode of operating these days,” says Nada Usina, member of the board and CEO advisory group and co-leader of the technology sector at Russell Reynolds Associates. “In the boardroom, you have an openness of ideas and questioning, but [directors] are less exposed on a daily basis to the true partnering, operating models or potential relationships than the C-suite. So, we are finding increased dialogue from the board around these topics.”
Taking a Page From Disruptors
Sources say there are more opportunities than many companies realize to cash in on the fast-paced changes coming along with disruption, and taking a page from those companies that are seeing success can bring an advantage. Disruptors are impacting companies where technology has not been a traditional driver of change, such as oil and gas, manufacturing and health care, Usina says.
“I’m continuously surprised at the lack of pace more traditional organizations have in thinking of how to compete with what is coming,” Usina says. “The discussions should be on how to continue to focus on your own strategies, which digital is a piece of, and whether adjusting [the strategy due to disruption] should be organic or through M&A.”
M&A strategy is a big part of this, Usina says. Generally, investment in technology, particularly private tech companies, is increasing dramatically. According to a report last year by CB Insights, between 2013 and 2016, private tech investments by non-tech Fortune 500 corporations grew 149%.
“Boards are asking, ‘Do we acquire the Dollar Shave Club or do we build it?’” Usina says. Indeed, that company was acquired by Unilever in 2017 for $1 billion.
Moreover, Usina says, companies are bringing the idea of “digital DNA” directly into the boardroom through changing board composition. Companies are adding directors that come not only directly from technology companies, but from other companies, such as manufacturing, with experience in innovation through the supply chain or CEOs from non-tech companies further along in the innovation path.
“There’s been a new type of tourism formed in Silicon Valley, and boards are getting excited about what they see, but then asking, ‘Now what?’” Usina says. “Is it enough to open their eyes, or just become another item on the agenda? There’s a delicate balance between learning and competition on both ends.”
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