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.

Join the #MITSloanExperts “What’s Your Digital Business Model?: Six Questions to Help You Build the Next-Generation Enterprise” Twitter chat, June 13

What’s Your Digital Business Model?: Six Questions to Help You Build the Next-Generation Enterprise by Stephanie Woerner and Peter Weill

MIT Sloan’s Stephanie Woerner and Chirag Kulkarni, CMO of Medly, a digital pharmacy in NYC, and writer for Forbes, Fortune, and Entrepreneur, will discuss Woerner’s new book, What’s Your Digital Business Model?: Six Questions to Help You Build the Next-Generation Enterprise, during a Twitter chat on June 13th at 1 p.m. EDT.

Stephanie Woerner is a Research Scientist at the MIT Sloan Center for Information Systems Research. She studies how companies manage organizational change caused by the digitization of the economy. Her research centers on enterprise digitization and the associated governance and strategy implications. In previous National Science Foundation-funded work, she studied distributed work teams and their use of multiple media, electronic communication technologies, and coordination mechanisms to get work done. She was also project manager for the 5-year grant.

Woerner will discuss her work with host Chirag Kulkarni, the Chief Marketing Officer of Medly, a digital pharmacy in NYC that has embraced digital innovation by integrating the pharmacy experience for patients, doctors, and insurance companies. Previously, he’s helped companies like Expedia, LinkedIn, and Alexa increase their revenue online through digital marketing. Forbes named him one of the top 25 marketers. He frequently speaks at organizations like Infosys, Accenture, and IIT about digital marketing.

Join us on Twitter on June 13 at 1 p.m. ET, follow along using #MITSloanExperts, and potentially win a free copy of What’s Your Digital Business Model?: Six Questions to Help You Build the Next-Generation Enterprise.

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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