Good governance: the secret of success in digital transformation

MarKeith Allen at Diligent explains why good governance is the secret to successful digital transformation

Any business transformation process comes with a degree of risk – but as with any other strategic change of direction, good governance can make the difference between success and failure. This is especially the case when it comes to the pursuit of a digital transformation agenda.

In the wake of last year’s COVID-19 shutdowns, organisations in every sector had to pivot fast, initiating everything from remote work to distance learning and new online customer channels. In the process they discovered that digital transformation isn’t just about the fast-tracking of technology deployments. It also has a profound and lasting impact on people, processes, and business models.

With digital services and disruptive technologies such as AI, big data and robotics enabling organisations to respond to internal and external events faster and more efficiently than ever before, governance will be critical as business leaders re-imagine the art of the possible. Because digital doesn’t just enable you to do the same things faster – it also changes what you do.

Ultimately, digital transformation goes to the heart of an organisation’s culture. Which means board members will need to confront some fundamental questions: why are we in business, and what does the company stand for?

Getting to grips with ethics

Ethics is fast becoming a key consideration for organisations operating in highly competitive markets, where reputation and values are just as important as products and services. Delivering enduring success in today’s digital world now depends on making principled choices, doing the ‘right’ thing and acting in an ethical manner.

With intangible assets like reputation accounting for more than 80% of an organisation’s S&P value, and 83% of millennials looking to transact with brands that align with their values, organisations must commit to explicitly putting core ethical values and behaviours such as honesty, fairness, integrity, trustworthiness and respect into practice in the workplace. Creating a cultural foundation that helps people engage in appropriate actions and decisions that deliver sustainable and competitive advantage.

In terms of the ethical principles underpinning digital transformation, organisations must ensure they use data in responsible and ethical ways that are not intrusive, manipulative or disrespectful to others. This should include being transparent about how they collect, use or monetise data and evaluating how consent is managed when giving customers access to digital services.

With consumers becoming increasingly distrustful about how companies use, manage and protect their personal data, the issue of trust and informed consent is rising up the agenda in terms of the value exchange between customers and service providers.

Similarly, robust governance and audit procedures will need to be in place to ensure that issues like algorithmic bias can be identified and addressed. As organisations become increasingly dependent on machine learning algorithms that are used to make millions of decisions every day, digital professionals will need to be on high alert for any hidden biases that could prove damaging for individuals or the organisation as they develop and deploy digital services.

Prioritising governance

Organisations will be only too aware of the numerous risks associated with digital transformation; the threat of cyber-attacks, increased reliance on IT tools to support critical processes, or supply chain partners failing to adhere to data privacy standards. For this reason, organisations and their boards need to prioritise digital transformation governance and ensure it is an intrinsic part of the digitalisation strategy – not a bolt on or afterthought.

The key governance questions that should be top of mind for business leaders from the outset include what are our controls for this process; how will our digitalisation strategy be monitored; what will the success measures be; and how will we know when things are going wrong?

Addressing the top governance challenges

Achieving buy-in for a digitalisation strategy can be an uphill struggle and governance of the strategy can prove a similar challenge. Assigning owners who have clear accountability for each strand of the digitalisation change process will be critical, as will having the right mechanisms in place to capture and interpret governance data that can be used to drive improvement.

Since digitalisation embraces issues ranging from security to user experience to supply chains, governance needs to identify and capitalise on synergies between processes in all these areas to ensure a comprehensive and non-duplicative approach.

Because digital innovation is by its very nature new, business leaders will also need to ensure that the policies, processes and governance models used support digitalisation, rather than block it, and are commensurate with the technologies that are being utilised.

Ultimately, the digitalisation of governance processes and control mechanisms should help reduce any risk of regulatory compliance or legislative breaches. As part of this process, organisations should also look to ensure they are monitoring and measuring performance around environmental and corporate social responsibility issues too.

Understanding what good digital transformation governance looks like

Ultimately, digital transformation depends on enabling a culture that is open and accepting of digitalisation and board directors can lead by example here, for instance, by adopting a digital approach to meetings and board management. However, while the board can suggest new frameworks and ask questions that inform managerial approaches, their true value comes in oversight and accountability rather than operational management.

For this reason, appointing a core team of accountable leaders will help to create focus and clarity around responsibilities. These digital governance champions can help push the message home that when it comes to driving digital transformation across the business, the desire to ‘do the right thing’ is an ethical corporate imperative.

Ultimately, better ethics drive better decisions that can help improve business performance, so taking a methodical approach when applying governance to digital transformation programmes will reduce the likelihood of omissions or inaccuracies in the governance strategy itself.

In this respect, technology can play a key role in enabling effective digital transformation governance. Today’s governance platforms remove the guesswork from digital governance programmes and make it possible to devise a highly structured framework that organisations can use to lower systemic risk.

Creating a roadmap towards a well-governed digital future

While the journey towards a digital future may be non-negotiable, success is not always guaranteed. Adopting a systematic stance on digital transformation governance can make the difference between achieving digitalisation goals or falling at the first hurdle.

Encompassing everything from how organisations align their business models to wider societal values, to pursuing a more sustainable future in terms of both climate and stakeholder concerns, governance and reporting will be key to creating the clarity and accountability that is needed to underpin a successful digital transformation process.


MarKeith Allen is senior vice president and general manager for mission driven organisations at Diligent

Main image courtesy of iStockPhoto.com

© Business Reporter 2021

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