Like Louis Gerstner once said, “The real mechanism for corporate governance is the active involvement of the owners.” Over 95 per cent of corporate Boards across industries have no technology expertise. Many Board members recognise these deficiencies.
In a 2015 survey by PwC, almost 79 per cent of large company directors said that their Boards did not sufficiently understand technology. This represents a huge opportunity. Boards could be enriched with independent directors who bring significant digital knowledge and experience and who can provide strategic direction to the Board from an overall digital strategy and corporate governance standpoint. They can no longer postpone this imperative. It would also be a good practice to open more than one Board seat for such expertise, as people with specialised experience across strategy and execution will add more flavour and value to the Board. Such a Board re-composition should be done hand in hand with changes in the management structure along the lines of the digital delivery structure.
Digital governance: Key to corporate success
Digital governance requires serious work to put a structure in place, whereby nothing is left to chance. Creation of a governance model and a robust delivery structure, including an optimal Board composition, is the key to make this change happen. This needs to be combined with continuous review and fine-tuning of the delivery and execution model to keep pace with changes.
Like Jim Jones said in Business Day, “Corporate governance is not something that is put in place and then left. Ensuring its effectiveness depends on regular review, preferably regular independent review. And, in the end that comes down to the shareholders. Outside assessment and self-assessment need to be regular events.” Corporate governance in the context of digital requires its fair share of attention in driving overall growth in revenues and profitability for any enterprise.