This issue can be fixed quite easily. As we have seen with Qantas and Fairfax appointing Todd Sampson to their boards having a different perspective can help companies see differently, identify new opportunities and keep ahead of the digital curve.
Back in 2001 when I delivered my impassioned speech in Sydney, no one seemed to take any notice. I received warm applause and knowing nods, but perhaps I was too young or too naïve to think business leaders at the time would or could take the threat of digital disruption seriously.
THE RISE OF THE DIGITAL DISRUPTOR
Over the last few years there have been a number of high-profile digital disruptors. I have highlighted just a few below:
- WhatsApp – the messaging platform bought last year by Facebook for $US19 billion. In January, WhatsApp reported that they now have 700 million users, and that they send 30 billion messages a DAY, through their website. This is compared to SMS at 20 billion a day when you add up all messages sent worldwide.
This is digital disruption in the telco space at a massive scale. The question that investors need to ask is what are the mobile operators doing to ensure they don't get locked out by over the other top messaging players like Snaptchat, Facebook Messenger and Apple's iMessage.
- HMV in the UK was an iconic record chain. Two years ago in 2013 they went bust. What went wrong? The company did not predict the rapid uptake in streamed and online music.
In 2015, I don't own a single CD. I sold them all last year as I can access each and every single one for the price of a cup of coffee each month on Spotify.
WHAT ARE THE CHARACTERISTICS OF TODAY'S DIGITAL DISRUPTORS?
The emergence of small, nimble competitors in the music (Spotify), video (Netflix), transport (Uber) and accommodation industries (Airbnb) is making established companies sit up and take notice.
Spotify and their competitors are massively disrupting the record industry model. Their model still hasn't been proven, and even artists like Taylor Swift continue to boycott the site, but consumers are moving to always on, always available music.
The future of video is of course with companies such as Netflix, who have just launched their service in Australia. Almost overnight, Australia's internet bandwidth doubled as a direct result of the Netflix launch. Senior executive in Australia in any industry cannot afford to ignore the signs.
These nimble start-ups don't have the legacies that many ASX listed companies have and the reason they can outmanoeuvre older, more established companies is because digital is in their DNA, providing them the ability to leapfrog technological advances.
Which board wants to be the one that was disrupted by the next Uber?
LEARNING THE LANGUAGE OF DIGITAL
Across the board, I still see senior executives and board members that are struggling to keep up with the effects of digital disruption. In some ways this is linked to their ability to become fluent in the new language of digital.
This is not something that can be fixed overnight and it is far more complex than placing the nearest millennial in front of them to explain what all the social and digital jargon means.
Importantly, the skills required to operate digitally in the C-Suite cannot be imparted in a simple training course.
My view is the unstoppable impact of digital disruption it can only be properly conveyed by someone who:
- is young enough to have been playing with digital for a number of years, and;
- experienced enough to be able to understand the inner workings of a complex business and translate this into 'digital speak'.
People who have these characteristics can be found as non-executive directors (NEDs) sitting on boards across multiple industries around the world.
They don't provide infrequent advice or come in for an inspirational session then leave. Instead they ensure the business is seen through a digital lens at each and every board meeting.
ENGAGING DIGITALLY SAVVY NEDS
So where can digital NEDs be the most effective? To work this out, I turned to a report by Deloitte Australia from 2012 entitled “Digital disruption, short fuse, big bang”.
In it Deloitte look at industries very likely to be disrupted by digital and identify industries at risk of a 'short fuse, big bang'.
Companies most at risk of being disrupted, such as those in finance, professional services and retail, need to be looking for digital NEDs right now.
A digital NED is also unique in that they are young enough to have been playing with digital all their life, and experienced to be able to operate at board level as a senior executive. They sit in this unique sweet spot.