Digital strategy and cyber security have climbed to the top of boardroom agendas, as the competitive and regulatory landscape continues to shift.
That’s a key finding from the Harvey Nash/Alumni Board Report 2018-2019, created in partnership with the London Business School’s Leadership Institute.
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The fifth edition of the International Board Research Report, which was released today, notes directorships are changing as boards are forced to embrace new skill sets and have difficult discussions about topics such as diversity and climate change with people that don’t all look like them.
“There was a time when taking on a chair role was considered the first step towards a comfortable retirement, but increasingly the role of the chair is becoming more complex,” the authors write.
The report, aptly titled The Uncomfortable Boardroom: The New Normal? found cyber security has jumped to first place on the agenda from fifth place last year, with 72 per cent of boards discussing it more now than three years ago.
This increase is likely a response to high-profile breaches and the start of General Data Protection Regulation (GDPR) in the European Union.
For the past four years governance and risk has taken first place on the agenda and this year it is in third place behind cyber security and digital innovation.
The quantitative research this year is comprised of contributions from 674 chairs and non-executives from across the globe. A panel of 68 experienced chairs and non-executives also provided in-depth interviews for their qualitative insight. More than a third (35 per cent) of contributors were women.
Digital transformation is accelerating, however skills shortages remain a problem for the majority of respondents and the most frequently stated barrier to success.
“There is an increasing sense of urgency that is removing many of the blocks to digitally enabled transformation within organisations. Change is now the new normal,” the report states.
Respondents stating that a lack of urgency is a major stumbling block have fallen 25 per cent since last year.
According to the report, 29 per cent believe that they have no blocks to digital enterprise transformation, up slightly from 26 per cent last year. However skills remaining a sticking point, with 30 per cent saying a lack of technology skills is the biggest hurdle to digitisation. This continues to rise every year.
However, the authors note, having the digital knowledge and awareness at board level can dramatically alter the success of enterprise-wide digital and boards continue to seek to enrich their technical knowledge.
This year’s research shows that more than half (53 per cent) of respondents feel their board has the correct skills to drive digitally enabled business transformation. But more than half (56 per cent) would still like to have more digital experience in the boardroom – a 17 per cent rise on last year’s research findings.
The report notes that need to create a pipeline of board candidates with digital skill and strategic decision making, “The two capabilities must converge to create candidates capable of maximising the opportunities of digital,” the report said.
The pace is slow but boards are slowly moving away from appointing new members moulded in their own image, according to the report.
- More than half of UK respondents are concerned with diversity in the boardroom compared with 36 per cent in the US.
- 62 per cent of Nordic respondents are concerned with diversity of the executive team compared with just over half in the UK.
- 29 per cent of respondents are dissatisfied with the pool of talent they are offered for non-executive appointments.
Spotlight on APAC
Looking specifically at the APAC results, digital was a strong theme.
APAC respondents are firmly placing digital innovation further up on the boardroom agenda, with almost three-quarters (74 per cent) discussing it more this year compared with last. Strategy at 59 per cent and governance at 56 per cent come a significantly distant second and third.
They were also the most likely of all regions to feel disrupted by digital, with 44 per cent stating that this is the case.
“Customer demands for instant, digital, new services are driving innovations across all regions. In response the majority of the top 250 banks in Asia Pacific are expected to deploy open APIs in the next two years. They recognise they need the right infrastructure to respond to the demand for new digital services for their customers.”
“What we are seeing locally in the APAC region is not just the realisation of the need for digital enterprise transformation, but a conscious proactive move towards ensuring we have the diversity of skills and experience on boards to make it possible,” said Bridget Gray, MD, Harvey Nash APAC.
“The majority of organisations have made enterprise-wide commitments to customer and employee centricity, given the critical need for relevant products and services in order to remain competitive; equally the engagement and retention of top talent and leadership are essential to make truly enterprise-wide digital transformation a success.”
According to the report, 73 per cent of APAC respondents feel that their board has the correct skills to drive digitally enabled business transformation.