A new report has found that digital innovation has risen rapidly towards the top of boardroom agendas this year (ranking 2nd as a priority), but board members report that they are losing confidence in the digital ability in the boardroom – as less than half (47%) feel they have the correct skills to drive digital transformation in comparison with 58% the previous year.
The report says that as digital is rapidly changing and evolving it has knocked more traditional, slower evolving areas like governance & risk and strategy off their traditional top spots on the boardroom agenda for the first time – with digital innovation now ranking second only to talent & succession amongst board members’ top issues.
In the UK, even fewer board members feel they have the correct digital skills (42%). UK boards are also the most likely of the regions studied to be seeking more digital skills in the boardroom, with over half (52%) listing this as a number one priority against the global average of 46%. As the UK looks beyond Brexit the importance of technology and e-commerce in trading effectively with Europe and globally, will make the role of digital key.
These findings are published today (2 December 2019) in the sixth edition of the International Board Research Report, published by Harvey Nash Alumni and London Business School’s Leadership Institute. The report is based on a survey of 640 chairs and non-executives from across the globe, of whom almost a quarter (21%) are members of the boards of major PLCs. The report also included in-depth interviews with a panel of 48 experienced chairs and non-executives.
The Technology and Telecommunications sector feels best placed in having the correct skills on board to drive through digital, but Healthcare board members are much less confident with only 40% believing they have the right digital skill set. The report says that this is disconcerting in a sector where AI is an established reality bringing about major innovations.
Albert Ellis, CEO of Harvey Nash said:
“Boards are well skilled in governance – rooting the business to a key goal, or value. They are less good at constant change and, with digital being a continually moving operational and strategic issue, it often makes it very difficult to identify who owns it.
“To upskill on digital, organisations will need to invest in education and training to bridge the digital skills gap. Directors need to get educated about digital transformation and engage with emerging technologies in order to leverage what makes sense for the company and its strategy.
“The board may benefit from hearing more from those in charge of driving digital strategy, getting more hands-on with technology in their daily activities and keeping up with continuing education.”
Julian Birkinshaw, Professor and Deputy Dean, London Business School, said:
“Digital innovation has propelled itself towards the top of the agenda for boards in 2019 – as the continuing rise of digital giants like Google, Amazon, Apple and Alibaba is causing companies in every sector to worry they will go the way of Kodak or Blockbuster. But it is important to remember that there are still plenty of sectors – like retail banking, accounting, food and drink, or chemicals – where the biggest companies today are the same as they were 30 years ago.”
“As a board member, you need to simultaneously worry about the threat of digital disruption while also reminding yourself of the deep capabilities, strong customer relationships, and powerful brand that you can use to sustain your company through these difficult times.”
Millions of jobs to go to AI
Board members estimate that 16% of the workforce on average will be replaced by AI in the next five years. This is broadly similar to the opinion of CIOs according to the findings of the annual Harvey Nash/KPMG CIO Survey, where three quarters (76%) of CIOs held the same opinion.
The proportion of an organisation’s workforce that board members estimate to be replaced by AI in five years differed slightly across the three regions studied, with Asia Pacific expecting the greatest number of jobs to be replaced, at 1 in 5 (20%).
Albert Ellis, CEO of Harvey Nash concluded :
“The future under AI will be more complex and nuanced than simply replacing humans with machines. We believe that roles will be reskilled and redeployed as organisations recognise the importance of retaining talent.
“In fact, the Harvey Nash/KPMG CIO Survey revealed earlier this year that while CIOs expect up to 1 in 5 jobs to be replaced by AI/automation within five years, over two thirds of them believe that new jobs will compensate for job losses.”