Embracing Digital Change: A Board’s Essential Role in Company Transformation

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Old TV set on bench in nature
Old TV set on bench in nature

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Boards play a crucial role in driving CEOs to prioritize digital change and reinvent businesses before coming under pressure from activists. The unstoppable forces of digitization are affecting traditional companies, as seen with P&G’s market share erosion and lackluster earnings growth. To navigate this digital divide, boards can take five key actions:

  1. Understand Digitization Impact: Boards must grasp the fundamentals of transforming a legacy business to a digital one and create a sense of urgency by engaging in discussions and seeking external perspectives.
  2. Select the Right CEO: It’s essential to ensure that the CEO is embracing digital change and addressing obstacles effectively. Boards need to distinguish between genuine challenges and mere excuses.
  3. Enlist Expertise for Digital Reimagination: CEOs should be encouraged to seek expertise in reimagining the company around a digital platform and embracing exponential growth potential.
  4. Defend CEO Against Backlash: Boards should prepare to defend the CEO against internal and external backlash, communicate the transition plan, and rethink the compensation philosophy to align with the new digital game.
  5. Address Cold Feet: Boards should address concerns about digitization, evaluate their composition, and expedite changes if resistance to digital reality persists.

Boards must recognize their responsibility in leading their companies across the digital divide and driving the necessary digital transformation.

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