Much is made of the importance of organisations investing in new digital talent and skills if they are to rise to the challenge of the digital economy and find their place in the Fourth Industrial Revolution. Far less is said about another digital skills gap though – one that exists at the very top of the company.
Rialto has long been an exponent of ensuring there is ample digital representation at board level. Our 10-year research project, which explores the skillsets leaders need today, as well as in future, confirms that digital-savviness is a prerequisite. And it is rubber-stamped by the Rialto Accelerated Leadership Index (RALI) tool, which continually benchmarks the in-demand leadership skills.
A digital-savvy leader understands the relevance of digital technology to their own organisation and in the wider business context. It isn’t about being a techie but rather understanding how technology like artificial intelligence (AI) can benefit the organisation and how it should be implemented.
For too long, many of those in the top tier have absolved themselves of the responsibility for bringing digital technology into their organisations. A lack of digital leadership is frequently cited in surveys as one of the reasons digital transformation programmes fail.
Digital-savvy leaders have the knowledge and insight to work with senior management to explore potential new business models arising from digital and devise a strategy and roadmap of how the organisation will maximise the benefits of digitisation. These leaders have the confidence to experiment and assess the risks of potential projects as well as accept that failure might be a possibility first time round.
They can also identify where the digital skills gaps exist further down the organisation and what needs to be done to address these and generally upgrade digital literacy throughout the organisation.
What is the optimum way digital technologies can transform the business? And how aligned is the board’s thinking when it comes to these new technologies?
In our experience, when digital-savviness is lacking at the top, businesses risk missing out on bright new business opportunities, efficiency and productivity gains and tangible bottom line benefits.
Indeed, a recent study from the MIT Centre for Information Systems Research (CISR) reveals that those organisations with three- or more digitally savvy directors performed far better, delivering a 17 per cent higher profit margin, 38 per cent higher revenue growth, 34 per cent high return on assets, and 34 per cent higher market cap growth.
Among companies with over $1bn in revenues, only a quarter (24 per cent) had digitally savvy boards though.
Leaders need to ask themselves and their organisations some searching questions when it comes to implementing digital technology. Rialto director Richard Chiumento sits on the All-Parliamentary Party Group on Artificial Intelligence, which was set up with the aim of exploring the impact and implications of AI. Informed by work and research carried out by the group, he points out that executive boards must consider very deeply what digital transformation and technologies like AI mean to an organisation.
“What is the optimum way digital technologies can transform the business?” he asks. “And how aligned is the board’s thinking when it comes to these new technologies?”
Chiumento adds that they must also ask themselves a wider question about identifying what are the key investment priorities in order to re-engineer the workforce and ensure it is fit for the digital future.
Digital-savvy leaders will mean the difference between success and failure for many companies going forward. Indeed, a gap in digital knowledge at the very top threatens the future of the business and, if not addressed, will turn into a gaping void. And the pace of technological change will only see it widen.
Rialto has both expertise and specialist tools like the Rialto Accelerated Leadership Index (RALI) to help leaders to assess their readiness to lead their companies through the digital age. To learn more, contact us today