How to manage transformation from the boardroom table

Over the past two and a half years many businesses have transformed themselves. Some have been forced to due to lockdowns, border closures and changing consumer habits. Other businesses have used the pandemic to look hard at the way they operate and transformed to grow, or simply to survive.

During a time of transformation, what is the role of the board in helping the business and its leaders to manage this process? How do we understand what the transformation is required to deliver and how do we measure whether that has been delivered or not? In any transformation, there are tangible results (more sales, reduced operating costs, higher employee retention, expansion) and intangible results (reputation, brand, culture) to measure.

There are differing views on the level of engagement board members require, yet accountability stops with the board. Stakeholders expect that we have interrogated, questioned and convinced ourselves of the need for transformation and that we are clear on what the transformation will deliver.

The route to transformation can be messy, diversionary, scary and noisy. Learning and working on decluttering the noise and distraction to find clarity and purpose is crucial. The ultimate lens for any board is, “did we get the outcomes we required?”.

Digitisation vs Digitalisation

We know that the emergence of new technologies leads to a significant transformation of society, business and industry and the cornerstone for change is predominantly driven through digitisation and/or digitalisation. ‘Digitisation’ is about the conversion of analogue information into digital, while ‘digitalisation’ refers to the use of digital technologies to change a business model and provide new revenue and value-producing opportunities. At the end of a digitalisation transformation, a company is a digital business.

It is, however, worth noting that technology doesn’t alone provide value to a business. Technology’s value comes from doing business differently because technology makes it possible. It is an enabler, a system, a process that delivers results - reduced operating costs, faster response times, enhanced customer service, and improved employee experience, for example.

The role of purpose, vision and the customer

When a business and its board are approaching transformation, the main influencing factor and line of questioning should go beyond the architecture. Consider the business purpose, vision and customer insights as a framework for evaluating every proposal and the results each claim they will deliver.

Transformation must deliver sustainable growth - rapid at times, but sustainable. And the results must ensure the business moves ahead of its competitors. Transformation is about ensuring the business stays relevant to its industry, customers, and community. It’s about knowing the landscape, the culture, the people (in and out of the business) and the geography. This is where the leadership team and the board must understand the business in detail to know what can and can’t be achieved by transformation.

Three transformation trends in 2022

According to Mulesoft, there are three key transformation trends in 2022:

Hybrid experiences for both employees and customers
Composability - to foster agility and innovation
Hyper automation to increase productivity and maintain business continuity

For business, the implications of an immersive, persistent and decentralised digital world, such as these above, could be enormous. It is a new set of opportunities to select a few from, consider and implement. We now have multiple technologies converging and transforming in new ways. It will require even more changes to operations, thinking, governing, and communicating.

What to Ask

In the end, the job falls to the board and directors to wade through the changes that come with transformation, utilising enough contemporary exposure and experience to know what to ask.

I use a 4 C’s structure to frame my questions when one of my boards is navigating an impending transformation: Customer insights, achievement cost, the organisation’s capacity, and organisational capability

Specifically, this structure leads me to know what to ask for:

Technology - how will the proposed new technology deliver transformational opportunity? How we can adapt that technology to the specific needs of the business? How will it integrate with existing systems?
Data - has the CEO and senior leadership thought through, resourced and communicated the data they need now? What data will they need after transformation?
Process - Transformation requires an end-to-end mindset, so I ask how management has been rethinking the ways the business change will meet customer needs. I consider and interrogate whether the transformation will deliver the seamless connection of work activities. Then I couple that with querying the organisation’s ability to manage across any existing silos going forward.
Organisational change capability - this is perhaps the hardest to judge. We need to evaluate more qualitative aspects of the organisation, which include leadership, teamwork, courage, emotional intelligence, and other elements critical to successful change management.

The Final Judgment

Transformation must ultimately be pitted against the organisation’s greatest needs. It is the central point around which the company, the culture and the people will gravitate and collide. In the end, success will be judged, not by what was done, but by what it delivered. Above all else, that is the guiding force behind every question and challenge that you must pose when you are on a board on the precipice of transformation.

Cheryl Hayman will be participating in the Brand Purpose panel at this year's Digital Nation Live conference on October 25. Visit the conference site today for the full program. Cheryl is an independent non-executive director on listed boards Ai Media, Beston Global Foods and HNG Ltd as well as unlisted CAANZ.