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The business case for constant change: Developing a digital mindset

The business case for constant change: Developing a digital mindset

If you are looking for a digital native, you won’t find them sitting on the board of most Australian companies.

The age breakdown of Australia’s 300 biggest listed companies suggests most board directors started their careers with a Rolodex and a notepad, not an iPhone and a laptop.

In fact, Australia’s Governance Institute revealed this year that the average age of directors was about 60 years, and there were more male directors aged over 70 than there were aged under 50.

Age should not be a barrier — but without a digital mindset, board members can find the wave of technological transformation, systems, tools and cyber security threats a hefty challenge.

And evidence suggests too many boards leave the issues of digital transformation, disruption and cyber security to employees or third-party contractors to worry about.

A study of directors on the ASX 100 found less than one per cent had experience in cyber issues, for example, and just 16 per cent could call on experience in technology.

Why does it matter?

Well, the Governance Institute warns technology disruption and cybersecurity risk will rank in the top challenges for boards by 2025, alongside better-known challenges such as climate change and COVID.

And the recent spate of cyber breaches among leading Australian companies shows this risk to be a live one.

So, what does it take to develop a digital mindset for your board?

One of the first considerations is understanding that a digital mindset is not just about adopting modern technology or using particular tools — it is about changing attitudes.

A management team may be experienced and have a strong track record of success, but its effectiveness will be diminished if board members do not embrace new ways of doing business.

Does every conversation start with a complaint about the technology? Do eyes glaze over in discussions around automation or tune out when interrogating cyber security measures?

If so, you might be sabotaging the digital potential of your business.

A business with a digital mindset needs to be both bottom-up and top-down.

For your employees, that might be an awareness of how data can be used to improve performance, a solid training and retraining program to skill them up on new systems, and core groups of pioneers who can test and deploy tools with artificial intelligence or machine learning.

For the leadership team, though, it means recognising the power of digital technologies to extract value, reduce costs and improve security in a business.

No one would last long on a board if they expressed their lack of interest or knowledge in finances. Digital domain knowledge requires the same kind of commitment.

So what should you do if you don’t have that kind of depth in your board or executive team?

Well, the Governance Institute suggests that technical know-how needs to be represented at the top table.

If you can bring that depth to your team, appointing someone with direct experience in a digital specialty, that’s a good start.

But you should equally look at helping your leadership team reskill so they can adapt to technological change.

It’s never too early to take this step; the one thing that never changes is the relentless nature of digital change so incorporating training as part of the board and leadership role can help you sustain a team with the requisite skills.

If that’s not feasible, though — or there are significant gaps in knowledge at a director level — organisations can establish a digital advisory board or employ a chief innovation officer to stay ahead of technological advancements, new regulations, and risks.

A good advisory board could bring together a diverse set of digital experts, covering data management, cybersecurity, artificial intelligence, automation, and digital marketing.

It could include digital champions already within your organisation who can put your digital investment into context, while also giving these individuals invaluable experience of working with a board.

And if an advisory board is not an option, external consultants can be employed to advise directors on new and emerging digital trends. It is important to find consultants that take the time to truly understand your business so that the ideas brought to the table are relevant and potentially useful for you.

If we have learned anything from recent corporate data breach disclosures it is that no business is too big to be caught up in a digital crisis. Cybersecurity is top of mind for everyone at the moment, but that is just one of the many elements that will dictate your digital prowess in a constantly changing environment.

Make sure your board has the technical expertise and digital mindset to be ready when it does.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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