In a recent report called “Radical Innovation and Growth: Global Board Survey 2016 ” (link opens the pdf) we have results from a survey jointly conducted by Deloitte Denmark and Board Network – The Danish Professional Directors Association, that opens up much that can concern us about the current boardroom and its great difficulty with managing more radical innovation.

It seems within our boardrooms they are ill-equipped to managing in today’s world, grappling with the past, holding on, perhaps too tightly, to the present and certainly being unsure of the future. It is struggling to adjust to all that is entering their world.

In this report, they surveyed 614 global board professionals from a total of 50 countries during the period covered from November 2015 through to February 2016 and then published in February 2016.

I quote extensively from the Executive Summary and Introduction and urge you, the reader, to delve into the report which I found an easy read to understand and grasp the magnitude of this present boardroom discomfort.

It comes as no surprise to me, or many out there working to disrupt the incumbent but it makes for difficult reading that this is not addressed far more head on. This is a more than timely report in my view.

Corporations are under increasing attack and are really struggling to become more radical in how they can defend, secure and achieve growth. A lack of understanding innovation in all its forms is coming back to haunt them. They can’t seemingly handle radical innovation and there is even more of an imperative to learn.

The Survey wanted to understand the current mood within the boardroom

The survey set about understanding the current boardroom thinking about how to address  the exponential technology is affecting growth (and indirectly competitiveness) in international companies and organizations, they have gathered insight on how global corporate boards address and work with radical innovation and to what extent they see growth stemming from their efforts. Radical innovation is defined here as:

The report dug into the boards’ appetite for growth; how high is the bar? It looked at their risk profile and tolerance of failure. It examined the role of innovation in company strategy and its strategic importance on the board’s agenda. Is radical innovation a bulleted point at board meetings?

It questioned whether there is a clear alignment of innovation and growth goals. Do boards spend enough in terms of man hours, consultants or other expenditures on new initiatives? It asked if companies actually own a Division-X and if yes, to what extent they are successful.

It wanted to address the skill-set at board level to handle digital disruption and the urgency to act proactively. It set about the identifying of board barriers to handle radical innovation and finished with a set of recommendations based on their quantitative findings topped with first-hand experience and opinions from a number of selected global board chairs.

The respondents describe that competition and technology are among the four most important external challenges their companies are facing now. The issue was on how are the boards taking on the challenging responsibility of overseeing their companies’ radical innovation efforts?

It concludes: “At board level, what we are seeing is the beginning of a shift among board professionals’ responsibility. As if oversight of company strategy, risk management, succession planning, budgeting and forecasting, sales and marketing, operations, auditing, IT, remuneration and tax was not already a fight.

Now corporate governance includes overseeing new business development with its itchy elements of experimentation, demand for scalability, risk of failure and navigation in a fully digitized and unpredictable new business world. On top of this new business today is developed at a pace that leaves little time for thorough analysis and precise risk mitigation”

 The Common trends they found were:

• The two dominant barriers for boards working with radical innovation are lack of insight (47%) and lack of organizational design to handle radical innovation (46%).

• 40% of respondents have no director with sufficient knowledge about digital disruption and 43% feel their management invests too little to achieve their long-term growth goals.

• The boards’ failure tolerance is low as seen 18% try to avoid failure in all their dealings.

• The financial risk scenario is also conservative, 34% of respondents characterize their board’s risk appetite as one where they try to avoid big financial risk.

• There is a clear tendency towards expecting radical change coming later (in five years) rather than sooner (this quarter).

• A staggering 75% of companies with the highest growth expectations for the coming 24 months (above 10%) also own an actual Division-X (or equivalent). We see this result as a clear indication of Division-X actually driving growth. (Note: only 22% have a so called Division- X, with 58% of these starting this in the last two years)

• Radical innovation is still a new idiom at board level with 65% not having it as a formalized item for discussion or action at the board meetings. (Note: Understandable but not forgivable in this disrupting world)

Welcome to the era of disruption, it is a tsunami of issues being grappled with.

The report suggests that while global boards are taking action now, there is room for improvement. Especially when it comes to the need for greater insight into the area of innovative initiatives, grappling with organizational design, dealing with risk and failure, and sheer experience in working in the huge discomfort zone driven by accelerating technology.

“If work has become steadily more demanding for the global board member recently, at least there was a predictability associated with that work but it is all about to change.

Now, in light of massive technological disruption, the new workload for a board professional revolves around a risky, failure prone and unknown innovation territory as they can start seeing themselves as largely inexperienced new business development leaders”

I do recommend reading this report.

I certainly do recommend this report, it confirms much, it conveys much, it certainly helps to frame many of the issues the boards are less than certain about; of the uncertainties they are facing, of where their business will come from in the future.

Indeed how they are presently ill-equipped to fight on these new battlefields of future business creation in this disrupting world, as these are “largely inexperienced new business development leaders,” in a radically changing world of radical innovation.  With lots of uncharted waters entering the boardroom they need to become far more radical within themselves or will be drowned from not navigating this at all well, the worry is who and what else sinks with them?

It does seem the board members need a lot of help and it needs to come from well beyond the usual advisors but are they prepared to take different advice? It does not auger well as there does seem a real stubbornness to make real change and perhaps a belief that these disruptive forces are not knocking on their boardroom door. How wrong they so are!

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Can you imagine the CEO sitting opposite the consultant, explaining the organization’s present difficulties to regain growth.

They explain no matter what they are doing through the existing practices and the assorted business approaches they have taken for many years, they still seem to be ‘treading water’ or even losing ground. They are beginning to worry seriously about their future.

The consultant has heard this already so many time before  across many worried organizations. He looks right into the CEO’s eyes and (sort of) snarls back: “You can run but you can’t hide”. This was a famous quote attributed to Joe Louis before one of his boxing fights back in 1946.That might get a CEO’s attention! We are in a digital transformation evolution.

The consultant quickly goes on to explain: organizations are running harder than ever yet they seem always caught out in what they do, other existing competitors are second guessing, anticipating their next moves and executing faster, new ones are constantly emerging.

The organizations ideas are just not gaining the traction; they just always seem caught out by others, more nimble, increasingly exposing the weaknesses. There is this certain time of recognition that much has to change, the organization needs to transform itself completely too firstly survive, and then hopefully thrive.

What the consultant is recognizing is the need for change the CEO certainly needs to consider, one that gives a more focused approach on all aspects of digital and what it might provide.

One that is a massive transformative one, as the current approaches seem to be running flat-out, all the time, twenty-four by seven, yet this is not helping the organization to stay competitive as everyone else has got them in their sights, sensing their vulnerabilities. They are missing new options to transform their business. New innovation options through digital knowledge.

Then the consultant discusses how does the CEO break out of the constant current ‘dog fights’ he is constantly embroiled in and constantly reacting too, that are equally sucking up most of his top team’s valuable time?

We are close to a future that will work very differently from the past.

The consultant begins to outline some radical options. Yet he starts with yet another famous boxing quote “Float like a butterfly, sting like a bee” by Mohammad Ali. Mohammad went on to say: “His hands can’t hit what his eyes can’t see. Now you see me, now you don’t. George thinks he will, but I know he won’t”.  Perhaps the CEO is already running for “cloud” cover.

The emerging world coming out of the clouds offering digital revolutions.

Welcome to the world of digital opportunities that technology is bringing in an array of possible solutions, that the cloud is enabling faster than we can individually absorb. We need to see the value of connecting the digital pulse into innovation through new business models, its all around us.

We often look at fast-moving start-ups, jealous they are not burdened down by legacy systems, outdated policies and entrenched silo’s.  Yet fast growing companies are not limited to start-ups, there are growing stories of organizations becoming more nimble, highly focused on core areas and being extremely innovative.

They are rapidly learning to capture and translate the emerging business benefits faster and turning their organizations into better innovation machines. These changes are stretching across many different industries.

One missing transformational key for nearly all organizations is embracing digital that combine social media, mobile technology, analytics and embedded devices to change customer engagement, radically alter internal operations and adopt different business models.

The need for recognizing this is down to the leadership drive and recognition of the considerable changes already under-way affecting all business activities.

The CEO really does need to exercise their leadership if they see a radical transformation as necessary as they will face obstacles all the way. This will call for strong transformational management intensity which is hard to sustain without outside help and expertise as many close to the top will be themselves dramatically impacted.

There are really important times for that  need of external help

I am beginning to see one external consulting company make an impact as they have re-invented themselves.

The one consulting company throwing its considerable hat into the digital transformation ring is Capgemini Consulting and well worth exploring how they are setting about this.

They argue digital change is with us all in business but to bring about the changes they are suggesting you have three change ‘intensity’ points that need addressing to bring you to a realization that something radical has to replace the existing.

These intensity points for necessary change are based on being open and honest about your abilities to manage the transformation taking place within your business sector, as going ‘digital’ is equally needing to be worked through across all business sectors. There is a need for a more cohesive set of solutions to this.

Capgemini outline here their thinking in this short video clip of digital transformation and where they can help support this. I think it provides a useful understanding.

They argue that being absolutely clear on the transformation, having a well thought-through roadmap towards this transformation is essential and this is being driven by three drivers of change as the need:

 1) Understanding, really understanding the customer experiences going on and what is needed,

2) The level of internal transformation that needs to really take place and

3) The extent of the business model changes you must make.

The key question is “how do you want to use technology to transform yourself?” Then it is driving the answers to the new business outcomes you decided were needed. To make this ‘transformational’ these will not be less than approaching this with a highly radical solution that evolves the learning, step by learning step.

A recent set of reports from Capgemini discusses much of this digital transformation need and their approach to this

Some of the critical steps suggested by Capgemini  I thought I’d summarize here:

• Capgemini talk about your ability to “absorb” and “adapt” and these come by putting in place a strong transformation management set of capabilities, that align the digital efforts under a common vision and coordination structure and set about engaging the organization in making this a reality.

• This ‘transforming’ approach needs a clear vision to frame the journey and result in people’s minds of how the organization will be different in the future and why that is seen to be important. This vision also helps people to understand what former assumptions may no longer be valid.

• The value of ensuring clear digital governance is in place is equally essential to deploy effective investment rules and make sure there is effective coordination mechanisms to keep the transformation moving in the right direction.

• Getting that essential engagement in this vision and fostering a culture of change is never easy in any transformation story but this must be one shared to give the vision the reality it needs. The level of re-defining, challenging existing practices, especially in IT related ones are significant.

• There is a need to structure a new collaborative balance between the CIO and business executives. This is where the CEO needs to work hard to achieve this new set of working relationships at the top, where nearly all will be caught up in these changes.

• To begin this transformation Capgemini argue that you must put the organization into motion as early as you can.  To have in place a wide array of digital channels for continuous two-way communication channels between the leadership wanting to enact change and the organization. This can include broadcast, web, video and social networks to break down the hierarchy and ensure the correct message is going out not sabotaged by ‘vested interests’.

• The organization needs to encourage, explore and identify changing practices and what these opportunities can bring in faster response times, greater understanding of value recognition by customers and the opportunities to deliver innovation that matches the expectations or unmet needs discovered.

• Clearly anything transformational has many aspects to consider but you need to be absolutely certain you have the right skills available, bridge the gaps and coach existing personnel in exploring and experimenting on the different digital channels to gain experience and growing insights. All these can be in rapid sprints iterate and improve with the learning from these being open and honest.

None of this will be easy but the CEO today is recognizing he has to rip up the existing structures, rid himself of the legacies of the 20^th century and define a new set of business models, those built far more on agility and responsiveness and finally, focus the innovation capacity in highly focused, intense ways to ‘absorb and adapt’ quicker than the competitors.

Capgemini is shaking a few trees and will be interesting to watch for digital solutions.

For me, we are seeing Capgemini embracing digital transformation in far more open ways as consultants, in their thought leadership pieces, their clarity on their site and their own focused view of their own future, channelling their growing expertise on where they core business lies. They themselves are perhaps living at the edge of discovery.

 I sense they are ‘walking the talk’ themselves and presently very focused, moving away and gaining clear distance from many existing consulting firms, still intent on adding more one-stop capability just when the business world needs intensive focus on tough issues, and digital is certainly one of those.

Innovation and technology need to combine more, digital transformation will matter in this for sure.

This digital transformation space that is transforming before our very eyes the shapes of the future organizations to adapt around new challenges that technology is bringing into the business value generating equation that drives innovation and the growth.

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