Boards Lack Confidence in Digital Transformation Progress, Survey by Corporate Board Member and PwC Reveals
In the 2020 Digital Transformation research, a survey of more than 200 public company directors conducted by Corporate Board Member with PwC’s Governance Insights Center, three directors out of five say their company is behind on the process of digital transformation, with 54 percent having embarked on this journey only within the past three years.
The notion that directors believe their companies are lagging digital leaders reveals somewhat of a disconnect between the board and the senior executive team, with management teams reporting greater confidence in their digital transformation efforts, according to PwC’s 2020 Global Digital IQ survey of 2,380 global executives. More specifically, 70 percent of U.S.-based executives surveyed by PwC say their company is ahead or substantially ahead of its competitors in encouraging rapid innovation across the business, compared to 35 percent of directors in the board survey.
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“Executives may be naturally inclined to have a more positive view of their company’s progress than the board,” says Paula Loop, leader of PwC’s Governance Insights Center. “They are in the trenches day-to-day and see the effort and work being expended. They may be used to looking for the positive when it comes to results and goals. And they may rely on a positive outlook to help motivate the organization during these large-scale transformations.”
Part of the discordance also appears to stem from the time horizon used to benchmark and measure the transformation. According to the research, directors are more inclined to adopt a long-term view of the issue, with 47 percent saying the process of digital transformation will never be over, compared to 72 percent of executives who see a timeline with an end date.
“Directors are entrusted with the long-term health of the company, and they have a fiduciary duty to look beyond short-term gains,” says Melanie Nolen, director of research at Corporate Board Member. “While management may be assessing progress by looking at their ability to deliver on established objectives for the near term, the board must continually push the long-term view to make sure the company is set up for sustainable growth over time.”
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Nevertheless, the survey also finds optimism. Despite seeing their companies as lagging digital leaders on transformation, directors say they are relatively positive when assessing specific areas of progress across the vast pool of competitors. Most rate their companies as on par or ahead of their peers across areas like integrating new technologies into products and services (70 percent) and training workers with skills for the digital era (67 percent).
Anecdotal evidence collected from a series of interviews conducted as part of the research also reveals that directors believe the Covid-19 crisis will act as a major tailwind for accelerating digital transformation and help companies move along a more agile and flexible path.
“Regardless of where companies were in digital planning, this pandemic has thrust most, if not all, into some form of digital transformation,” says Loop. “As management teams and board directors have been working around the clock to guide their organizations and people through these unchartered waters, technology has proven critical to continue work, serve customers and clients and remain competitive.”
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