The board should challenge management to leverage technology to create a differentiated customer experience and sustainable competitive advantage. Then, management must embed technology in the business strategy and deliver the results.
This series explores how the board of directors can help the company leverage technology to create a differentiated customer experience and sustainable competitive advantage. That means management will need to set clear strategic objectives that challenge the company to innovate. This article explores how to make that happen.
Role of the Board
The board has two key roles. One involves fiduciary responsibility, including governance. The other is to approve strategy and budget, which includes challenging and sometimes guiding management.
As mentioned in the introductory article, two critical items that the board should expect in the company strategy are cyber resilience and technology strategy. That means cyber security, disaster recovery, and business continuity need to be integrated in the company strategic plan. As the company defines new business initiatives, these cyber resilience features need to be factored in and not be afterthoughts.
While there may be a separate, detailed IT strategy, the use of technology to drive desired business outcomes must be emphasized in the company strategy. That may include initiatives like:
- Leverage technology to create a differentiated customer experience, or
- Apply predictive analytics to better target products and services to specific markets.
The board must challenge management to demonstrate how technology will be used. Management will develop and execute the strategy. Without the board’s challenge, many companies will not think this way.
Embedding Technology in the Business Strategy
Every business strategy should include either digital transformation or technology innovation as strategic objectives in addition to the cyber resilience we mentioned above.
Many businesses were forced into full digital transformation as the result of the pandemic. That meant they had to apply technology to create a new customer experience. Educators went to online learning. Retailers were forced online. Many businesses had to figure out how to engage their customers digitally, rather than in person.
For these businesses, technology was the strategy.
In normal times, businesses may not be looking to transform but, rather, to improve through the use of technology. These companies need technology innovation as an ongoing strategic objective. Business initiatives that will exploit that innovation must be defined, funded, and measured as they are executed.
The board may challenge management to create a differentiated customer experience to provide a sustainable competitive advantage. Management may respond with strategic initiatives to improve the online experience, create an app, automate customer service, or proactively recommend maintenance to avoid product failures. Any of these initiatives must have a strong business case, measurable objectives, and then the technology to support them
In another example, the board may ask about artificial intelligence or the Internet of Things (IoT). Management may come back and report that these are simply not applicable to the business. But, in most cases that I’ve seen, those inquiries from the board resulted in value-add innovation. Initial, small steps often lead to broader, more extensive initiatives. But they are often triggered by that question from the board.
Strategic Planning and Execution
As technology and innovation are embedded into the business strategy, it does not mean that IT owns the initiatives. Rather, strong executive sponsorship is required to drive market research, product or service development, changes to internal processes, or even creation of new business units. Innovation is led by the business, and IT plays a key role in delivering the underlying technology.
Step one is developing a business case and reviewing with the board. Business and IT leaders need to collaborate to determine what is possible, how it may benefit the business, and estimate the return on investment. I’ve been in board meetings where approval was instant and others where it took several quarters of discussion, debate, challenges and, finally, agreement.
Once the concept is approved, it can then be built into the strategic plan. Each initiative should have specific, measurable goals and must be resourced. I recommend engaging employees at all levels of the organization to define the action plans, or projects, that will make up the large, strategic initiatives. You’ll be amazed at the ideas that emerge from those closest to the customers and operations.
Complex initiatives that are comprised of multiple, related projects must have a program plan that serves as an umbrella over the associated projects. The program plan may simply consist of the milestones that define the critical path of each individual project, along with inter-project dependencies.
By tracking projects at the detail level and rolling up to an overall program plan, you can quickly summarize progress, risks, and budget adherence to report to the board.
The board should challenge management to leverage technology to improve shareholder value. Major initiatives, once approved by the board, need to be represented in the company strategic plan. Management must then provide transparency for the board by tracking critical milestones, risks, and budget, and reporting to the board regularly.
Coming up are Measuring the Risks and Impact of Technology, Questions the Board Should Ask, and How the CIO Should Prepare for Board Meetings.
These articles are purposefully brief and aim to provide high level guidance and trigger ideas. As always, if you want more information or don’t want to wait for all the upcoming articles, email Emily Ford at Emily@WolffStrategy.com and she’ll set up a complimentary 30-minute consultation with me.
Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management, Digital Transformation, IT Leadership, and Executive Coaching. Larry has served as CEO, COO, CIO, Chief Digital Officer, and management consultant for public, private, international, and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues. His methodologies span industries and scale to companies of all sizes.
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