Digital Economy Dispatch #042 -- Do you know what's going on under the digital hood of your company?

Digital Economy Dispatch #04227th June 2021

Do You Know What's Going On Under the Digital Hood of Your Company?

A few months ago, my car broke down. With smoke coming from the engine, I pulled to the side of the road to see what was going on. As I walked around the car I came to a sudden realization: I have no idea what’s happening under the hood. I have driven cars for many years. I have watched the experts on TV fixing cars on “Wheeler Dealers”. I even had some car maintenance lessons way back in school (it’s what they did in inner city schools in those days). But the reality is that what I remember from many years ago has little relevance to today’s technology.

I was reminded of this very recently when I spent a morning talking with the Board of a well-known UK retail company. I looked around the virtual room at those attending, took a quick look at their bios and linkedin profiles, and came to the same conclusion: They have no idea what’s going on under the digital hood of their company. They have plenty of expertise in business strategy. Several have deep financial management skills. A couple led large organizations and built successful talented teams. Yet no one on the Board had a substantial technical background in digital technology or digital business models. Surely in a 21st century company that matters?

Of course it does! If we even half believe Satya Nadella’s view that “every company is a software company“, then those in leadership positions require a reasonable familiarity with the digital underpinnings of software-driven organizations. They must refresh their digital skills to keep pace with the changing technology base of their organization. They need to question the key elements of the digital business models that drive future growth with the enthusiasm they devote to reviewing company expenses. They should be able to monitor the technical debt to be paid back in the same way they manage the financial debt.

Yet, this is rarely the case. Along with the broader digital skills shortages now being highlighted, too often organization make excuses for board members and business unit leaders not to acquire those skills and delegate the digital responsibilities to the “IT gurus” in the company.

The scale of the challenge is becoming clear. Lack of digital skill across key roles in major companies has been highlighted in several surveys, notably the work of Peter Weil, Stephanie Woerner, and Aman Shah. They studied data from over 1300 companies and came to the conclusion that high-level leadership teams in executive roles in companies that appreciate the details of digital technologies are rare, but when they do exist, they accelerate company growth and lead to higher company valuations.

The study also found that the depth of digital knowledge varies considerably depending on the executive role. Not surprisingly, roles such as Chief Technology Officer (CTO) and Chief Information Office (CIO) are at the top of the list of digital skills. While leadership roles in areas such as Human Resources, Finance, Legal Services, and Compliance are particularly low on the “digital savvy” scale. The breadth of understanding of digital issues is just not permeating key leadership positions in many organizations. 

But just what do leaders across the organization need to know about digital technology and its application to run their business? Just as not everyone who drives a car needs to me a mechanic, business executives do not need to be able to tune their back office software systems to support a new sales project, spin up a new cloud-based server to test a product offering, or create a visualization for operational performance data (although it might not be a bad thing!). What should be their digital learning ambitions?

This is a question now being addressed by a range of offerings emerging from executive learning organizations, business schools, technology providers, and consultants. Perhaps a little slow out of the blocks, these organizations are now adapting their key offerings and bringing many new leaning packages to market. It is instructive to take a look at what is emerging to see how they are changing their curricula to provide overviews of digital technology and digital business disruption: Examples abound such as the new technology leadership programme at MIT, updates to flagship leadership offerings from the likes of London Business School, and additional digital technology modules appearing in well-known MBA programmes at Cambridge Judge and Oxford Said Business Schools.

Overall, many are now convinced that the challenge to raise the digital understanding in their organizations will be a critical part of future success. This responsibility is not delegated away by digital transformation efforts aimed primarily to upgrade technology infrastructure and rebadging the IT team as “digital delivery”, but also to demands bringing greater awareness and “digital savvy” to the leaders across the organization. Here are 4 critical steps all organizations can take to boost their digital transformation efforts:

• Engage in upskilling activities to build a deeper understanding of digital technology across your leadership roles. Take a look at the many digitally-aware learning offerings now appearing and sign up your key executives to a digital refresh.

• Ensure digital skills are prioritized in hiring senior roles across the organization in all areas of the business. When hiring for these roles, be clear that a strong understanding of digital fundamentals is essential to leadership success in every part of your organization.

• Maintain a clear perspective on how digital technology drives your business. Build these skills by participating in discussions with digitally savvy colleagues, exploring case studies in digital transformation from related domains, and critically reviewing the digital strategies of competitors.

• Work across the leadership team in your organization to bring a heightened awareness of the impact of digital disruption. Drive your business unit leaders to respond to the digital challenges they face. Expect more from your Board to question, advise, and guide you on your digital journey.

Digital Economy Tidbits

Top Trends in Tech. Link.

From those clever people at McKinsey…..

Which technologies have the most momentum in an accelerating world? We identified the trends that matter most.

Move fast and break things. Link.

It is very difficult to read this and mot come to the conclusion that our need for speed and instant gratification also come with very challenging responsibilities to be respectful and thoughtful. Not sure that the motto “move fast and break things” comes out so well in today’s post-pandemic era where responsibility and fairness are at the fore.