It pays to have a digitally savvy board – Peter Weill, Thomas Apel, Stephanie L. Woerner, Jennifer S. Banner

Peter Weill, Senior Research Scientist and Chair of the Center for Information Systems Research, MIT Sloan School of Management

Stephanie L. Woerner, Research Scientist at the MIT Sloan Center for Information Systems Research, MIT Sloan School of Management

From MIT Sloan Management Review

Boards of directors have many issues competing for their attention, but being digitally conversant in an era of digital transformation is quickly rising to the top of the list. Nearly all companies are looking for ways that technology can be used to improve their business models, customer experience, operational efficiency, and more — and boards must help them move forward at a sufficient pace, advocating for change by supporting and sometimes nudging their CEOs. Those that do are likely to see better financial results than those that don’t.

That’s what we discovered when we did a machine learning analysis of the digital know-how of all the boards of U.S.-listed businesses. (See “About the Research.”) Our research shows that companies whose boards of directors have digital savvy outperform companies whose boards lack it. We define digital savvy as an understanding, developed through experience and education, of the impact that emerging technologies will have on businesses’ success over the next decade. We measured it by analyzing data from surveys, interviews, company communications, and the bios of 40,000 directors, extracting key words that signal exposure to digital ways of thinking and working.

Our discoveries are striking: We found that among companies with over $1 billion in revenues, 24% had digitally savvy boards, and those businesses significantly outperformed others on key metrics — such as revenue growth, return on assets, and market cap growth.

Doing business in the digital era entails risks ranging from cybersecurity breaches and privacy issues to business model disruptions and missed competitive opportunities. When a board lacks digital savvy, it can’t get a handle on important elements of strategy and oversight and thus can’t play its critical role of helping guide the company to a successful future. But companies can fix that by understanding what characteristics to look for in existing and new board members, managing board agendas differently, and cultivating new learning opportunities.

Read the full post at MIT Sloan Management Review.

Peter Weill is a Senior Research Scientist and Chair of the Center for Information Systems Research (CISR) at the MIT Sloan School of Management.

Stephanie L. Woerner is a Research Scientist at the MIT Sloan Center for Information Systems Research.

Thomas Apel is chairman of the board at Stewart Information Services Corp.

Jennifer S. Banner is CEO at Schaad Cos. and lead director of BB&T Corp.

Is your organization ready to become an ecosystem driver? – Peter Weill

MIT Sloan Senior Researcher Peter Weill

MIT Sloan Senior Researcher Peter Weill

From Xconomy

Dominating business-to-consumer sales, Amazon seems ready to take over the world of business-to-business too. In its first year, Amazon Business generated $1 billion in sales. However, there is still room for competition. It’s not yet an ecosystem driver in B2B, although the longer it takes for other business supply companies to catch up, the harder it will be to beat Amazon.

This is a good example of the importance of learning how to thrive in a digital ecosystem. Companies must learn to become ecosystem drivers – even if only for a subset of their customers – in order to survive. These drivers have become the destination for their spaces like Amazon with consumer products, Aetna with healthcare needs, and USAA for life events. So what does it take to be a successful ecosystem driver?

The first step is to assess your current business model. Are you an omnichannel business with an integrated value chain? Are you a supplier that sells through another company? Or are you a modular producer that adapts to other companies’ ecosystems? Most businesses today generate revenue with one or more of these models.

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Is your organization ready for total digitization? — Peter Weill and Stephanie Woerner

Peter Weill and Stephanie Woerner (Image credit: Harvard Business Review)

From Harvard Business Review

What do the following items have in common: credit cards and streaming or recorded music, robots for production, CAD systems, telephone networks, digital games, computers in products like cars and vacuum cleaners, sensors, and video consoles used in remote mining? Answer: They are all digital and connectable.

This is the world of total digitization: a multitude of digital devices and sensors creating streams of data, as well as any number of digital services and products for both internal and external use, distributed throughout the enterprise, and sometimes, but not always, connected. As the drive toward increased digitization continues, enterprises have to get a handle on this total digitization — and corporate CIOs have to step up to the challenge.

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Say “yes” to speak with a representative — service automation frustrating customers — Peter Weill

MIT Sloan Sr. Researcher Peter Weill

Have you tried to apply for a mortgage lately? If so, you might have some rather unpleasant memories of filling out endless forms and – if you had a question — trying to navigate through a voice recognition telephone system that didn’t understand you. If you were able to actually reach a real person, that employee might have been more focused on the procedure than actually listening to you. What is the result of this automation of processes? Not surprisingly, it’s disconnected and frustrated customers. Read More »