Over the last year I have become increasingly concerned that boards do not understand the pace of technology change, let alone managing the impact it will have.
When I heard a farmer on the famous radio programme, the Archers, looking at automating their milking and considering the future of robotics, I couldn’t help thinking these farmers are way ahead of most businesses.
My most recent blog looked at the sorts of technology changes that will transform businesses in the next three to five years. Here I want to look at what boards should be asking their strategists.
Good boards meet regularly (once or twice a year) to think about strategy. They have well tried and trusted processes, generally starting with last year’s strategy, updated with input from the business and maybe an external view of the market. It’s all good, solid, sensible stuff. But it is incremental. It starts from the assumption that the world will change slowly and that tomorrow will only look slightly different from today.
If you were in the transportation business in America in 1906, you would have concluded from this process that your business would grow with the growing economy. And probably conclude that what you needed was more horses, more carriages, more carts.
Yet in 1908 the first Model T rolled off Henry Ford’s assembly line. Suddenly a technology that had been very niche was now mass market. Disruption happens and it almost always comes from unexpected places. Right now disruption is happening like never before because of the speed with which technology is changing.
So how does a board learn to think the unthinkable and make sure the company it serves, survives?
5 questions for boards to ask their strategists
I have 5 questions for a Board to help them through the strategic process:
1. What is it we really do?
This is a classic marketing question but one that boards and strategy departments really need to think through again. What is it that you really do for your customers and how much do they care about the product or service you provide? Is it personal and local, could someone else deliver it, could it be delivered in some other way? Is the product or service you deliver something that can be broken down into a series of products or services, each one of which can be delivered separately? Could they, for example, be printed close to your customer – as Robox inventor Chris Elsworthy foresees.
2. What intelligent technologies could impact our business?
The first step here is to look at what technologies are available now, in prototype. What is available in prototype now, will be mainstream in five years. If you are struggling with this thought, just look at what your mobile phone did five years ago and what it does now. Remember that machines are already safer car drivers and more effective at diagnosing cancer than humans. Boards will need help here because this field is moving so quickly. You need specialists to tell you what is happening, not just in the areas that you believe are relevant to your business but in those areas that could threaten you.
3. Which technologies could transform our business?
There will be both opportunities and threats from technology – how do you make sure that your company is in the lead? This is the core to your strategic work and again, you will need help to work through what the opportunities are and how you can take advantage of them, You need to take each element of your business and look at how it could be changed. Just as an example, these are the sort of questions you might ask.
Could some or all of the products that you currently make in one place, with current economies of scale, be made on 3D printers at the point of consumption? Could some part of them be made locally? Would machines be better than people at doing a particular task? Machines are not merely better at cancer diagnosis than humans but people find them more attentive and more polite! Could your business model be transformed by outsourcing work to machines that is currently done by humans? A lot of administrative work currently done by lawyers and accountants can be done in this way. Talk to people in your business who are under 30 and ask them these questions – and also those who are early adopters of technology.
4. Do we have the courage to tear our business apart?
– and before someone else does? And if we do, then what are we going to do next?
This is hard for boards to do but remember, turkeys may not vote for Christmas (or Thanksgiving) yet somehow they end up on the table.
Think about the companies that failed to see the future happening. You don’t want to be the next Kodak?
5. Do we have the right people on our board?
You might not want to go quite as far as the Hong Kong firm that has appointed an intelligent algorithm to its board (and given it a vote) but you might want to look at the individuals on your board and ask if they are smart and diverse enough for the future?
Do these issues resonate with you or your company? Have you got tips to share about how you are looking at the impact of future technology?
I would love to have a discussion with you on any of these aspects and learn what you are doing and share my own thoughts to help you.