It is common today for me to hear, or be part of, a conversation that starts with “so what is this metaverse thing and how will it be valuable?” or “how do I even know where to start?”
As Board Directors, we are currently tasked with gaining knowledge quickly on new business challenges and this now extends to the metaverse. We need to constantly consider what questions we should be asking at Board level, how to interrogate or interpret the data we are shown, how to ensure that we upskill to know enough to feel we can add value in our roles, and how to ensure we are future-fit directors as the world constantly changes.
Let’s start with one definition that I like and found recently in AdNews from
Jordan Fogarty, CEO of Animoca Labs who describes it like this: “The metaverse is better described as a ‘way’ we will use technology rather than a technology or set of technologies itself. An era where we will be able to move between the real world and a virtual world where we have shared economies - the intersection between real life and a virtual life.”
In other words, consider that the metaverse will initially include augmented reality + virtual reality + gamification, built on top of the newest of the emerging technologies, ‘Web3’ (vs today’s internet ‘Web2.0’).
Web3 is itself a shifting landscape of technologies, but for now, it looks like:
- Radical infrastructure decentralisation and delivery;
- Incredibly improved messaging and communication;
- New models of security, of money, of identity.
- New models of governance and oversight.
If anyone tells you they have this all figured out and know the specific investments their business must make, feel free to be skeptical. That is especially true if their perspective is belittling the focus or requirement for consideration of it in the Boardroom. It’s near impossible that during this rapid change period anybody can be really certain.
Many companies are trying new options. The FMCG and retail world are having a wonderful crack at it, mostly using the model of gaming to provide a fun, somewhat engaging experience for customers. Although it is often hard to tell the strategic intent beyond providing a new experience using the newest tool, at the very least, they’re showing initiative in trying to learn how it works and what customers do with a metaverse based experience. With this knowledge, they’ll be likely to be in a position to trump other companies and any competitors who have lagged in this experimentation stage.
DX = Digital Transformation: Not Optional
The first implication of our journey towards the metaverse is that most businesses will undergo a true Digital Transformation (DX). This will be a CEO or Board-led reimagining of an organisation’s culture, markets, products, customer and employee experience that is driven, in part or entirely, by the promise or threat of technology.
In a column on Acceleration Economy, Wayne Sadin Lead Adviser for Via Group Partners writes, “Some firms will willingly embark on such a transformation based on their vision of new possibilities. Other firms will grudgingly undertake a DX under threat from existing competitors and new market entrants who take advantage of emerging technology to threaten the existing market position”.
What’s true is that DX is the single biggest area of confusion today for most Boards and CEOs and requires a significant strategic and cultural shift. Like anything, the customer or consumer has to be at its heart, which is where directors can start to feel comfortable and find relatability once again.
According to Adam Krass at UM, “Consumer data is going to be at the very heart of the metaverse. Just like today where we guide brands to future proof their data strategies and create personalised experiences, so too will be the case in the metaverse, where data about everything from a user’s location and demographics to their browsing behaviours and friends’ characteristics can inform how brands create experiences and engage with consumers."
On top of what’s been happening through this digital reimagination there is already an enormous shift in thinking and doing across boardrooms in Australia, and beyond. Given how today’s world works, most midsize and large organisations will be in a constant state of “digital transformation”—it’ll be a permanent state of what Sadin calls “digital optimisation.”
Speed, speed and more speed
While all the usual attributes of a successful business ie: great people, a customer-centric culture, excellent products and services, a well-defined category positioning, seamless supply chain and so on, have to be continually interrogated and understood by Boards, that won’t be enough in an accelerating and evolving economy.
Every company, in every industry, in every region of the world must now start to master the art and science of speed. So, what does this mean?
It means a faster aggregation of and access to data, faster analytics, faster decision-making, high-speed operations, the elimination of quicksand bureaucracy, and a culture that inspires every person to push for success not just at scale but also at speed.
One big question, does this concept of speed and agility fit with the corporate governance rigour and processes of today? Is the regulation keeping up fast, and with relevancy, and do we as directors have comfort in this new pace and our ability to work within the practices of good governance and ethics?
This puts enormous pressure and responsibility on Boards to know what to ask, how to ask it, how to encourage and support it and where to invest. On top of that, how much do we need to spend to do this, knowing that it will not be a finite number or have a finite end in sight, ever.
The role of the future-fit board
There is an inherent future-fit call on Boards right now. Regarding the metaverse and the unknown journey to understand and apply the implications of Web3 means our senses need to be heightened to undertake ideas and ask questions, which are generally right out of our comfort zone.
This is not business as usual. It’s not enough to have a strong corporate career in a traditional role. It’s the addition of those career skills with thinking, absorbing, querying and constantly learning that will set apart the directors worthy of serving our organisations going forward.
The 30% Club and Deloitte joint report articulates that directors need more than foundational governance skills, including financial proficiency and operational experience. They also need to add value through their heightened sensitivity to ESG issues, stakeholder capitalism, social licence to operate, elevated employee expectations, or through bringing digital fluency. On top of these, an entrepreneurial mindset or systems thinking are the way of the future.
As Web3 and the metaverse begin to penetrate Boardroom discussions, this call for diverse thinking has never been more important.
Security, availability, visibility
These are the key 4 core areas directors need to question;
● How do we keep data and proprietary information and products secure?
● How do we maximise availability of what we offer but in the right, governance appropriate and secure way?
● How and where do we do it? Which of our assets (products, services, skills) do we make visible and who and how do we manage that?
● Where are my customers likely to be and who are they, have they changed?
This is an immersive era. It will demand a radical shift in companies’ approach to customer engagement, branding, product development, innovation, resourcing and ultimately their entire business model.
According to EY, already many organisations are experimenting by leveraging existing gaming platforms to build virtual social spaces, selling virtual items like clothing or shoes for avatars, creating digital twins of factories to optimise operations, and even conducting interviews and onboarding new employees.
The Questions we need to ask
As directors, we need to consider how to think about the metaverse as we plan the strategic future of our businesses. Don’t put it off as “just an extension for gamers and gamification”.
Consider what investments should we be making today to be ready for the metaverse tomorrow? How do we know it’s the right amount of energy and resources, how do we account for it, how do we reward it? The latter will begin to play into remuneration models and incentive performance measures will eventually have a prospective focus, accounting for speculation and seemingly esoteric outcomes.
Will the shareholders and proxy advisors be able to accept this, in the same way technology development is an investment now, rewardable, yet not delivering an immediate bottom-line result?
How do we keep a pulse on the new innovation models as they emerge? What new skill sets will be required in the business? How does it all impact talent management, the way we recruit, the people and overall the cultural pulse of the company?
Although the pervasive use of the metaverse as the main customer engagement interface is likely a few years away, enterprises need to start factoring it into their short-term and long-term vision today.
Ultimately, the convergence of digital and physical in the metaverse presents enormous challenges. But equally, it presents an enormous opportunity for customers, employees, and organisations — and economic growth — and directors need to be at the forefront of guiding and encouraging and measuring this new era.
Cheryl Hayman is an independent non executive director in Ai Media Technologies Ltd, Beston Foods, Hancock and Gore Ltd , member of the 30% club education working group and member CEW.