: Michael Hilb, Lee Howell, Beat Bühlmann, Florian Möslein, Roland Müller, Laura Georg, Andreas Hesse,
: Michael Hilb
: Governance of Digitalization The Role of Boards of Directors and Top Management Teams in Digital Value Creation
: Haupt Verlag
: 9783258480961
: 2
: CHF 22.90
:
: Management
: English
: 114
: Wasserzeichen
: PC/MAC/eReader/Tablet
: ePUB
Digitalization creates unique opportunities and poses transformational challenges for many companies across industries. In that context, the governance of digitalization has become the key success factor in mastering digital innovation and transformation. It requires boards of directors as well as top management teams to fully understand digital trends, identify their implications, derive adequate digital strategies, execute them swiftly, and monitor their diligent implementation. This book presents 12 perspectives on the governance of digitalization, bringing together viewpoints from different disciplines, including business, law, and information technology, with contributions from practitioners and academics. It provides practical insights and thought-provoking inspirations for board members and managers alike.

Prof. Dr. Michael Hilb is Founder and CEO of DBP Group, a business group that develops growth platforms in Asia and Europe. He serves on various supervisory boards, including Klingelnberg and the Board Foundation, is Titular Professor at the University of Fribourg, Switzerland, and lectures on issues of strategy, entrepreneurship and corporate governance at universities in Asia and Europe. Michael graduated from the University of St. Gallen with an MSc and a PhD in Management, was a Visiting Fellow at Harvard University and INSEAD and completed executive education programs at IMD, HBS and MIT.

[22]A.2 The Fourth Industrial Revolution as a Strategic Narrative for Board-Level Discussions on Digitalization

Author

Dr. William Lee Howell has been a member of the Managing Board at the World Economic Forum (WEF) in Geneva, Switzerland since 2011. As Head of Global Programming, Lee is responsible for the design and development of the WEF flagship Annual Meeting in Davos, Switzerland; the Annual Meeting of New Champions in China (“Summer Davos”); and the Annual Meeting of the Global Future Councils in the United Arab Emirates. He was Editor-in-Chief of the Global Risks Report (2012 and 2013 editions) and also served as Senior Director for Asia (2004–2009) at the WEF. Dr. Howell is also affiliated with the International Center for Corporate Governance at the University of St. Gallen, Switzerland, where he completed a doctoral dissertation on the topic of uncontrollable risks and the role of the board of directors.

Abstract

Digitalization requires boards of directors to develop a strategic narrative about existing and emerging technologies that will drive both innovation and disruption across their industry. In this regard, the Fourth Industrial Revolution is a compelling framework for boards to begin crafting their own narrative about their company’s future digital ambitions and business model.

 

[23]1 Digitalization as a New Phenomenon

The digitalization phenomenon of the twenty-first century differs significantly from the digitization process of the last century, in which data was converted from analog to digital format, i.e. Digitalization 1.0. Digitalization 2.0 entails adopting digital technologies (and the accompanying mindset) to change a business model rapidly or to create new value at scale. Companies that master digital technologies “have two advantages when it comes to speed: they are often light weight in terms of assets and people—and they are exponential in approach” (Hagemann-Snabe, 2016, p. 12). Uber Technologies Inc. (Uber), operating in over 70 countries, exemplifies digitalization as a transportation network company that does not own any vehicles. Mobile technologies allow Uber to serve as a digital platform by connecting a network of drivers to a network of travelers. A well-executed digital platform can essentially reduce marginal costs to zero while enabling exponential growth: “[I]n fact, today more than 60 % of the market value of the 10 most valuable companies in the world are young IT companies with a strong digital platform” (Hagemann-Snabe, 2016, p. 12). Facebook and Google took only five and six years, respectively, to reach revenues of $1 billion. How then should a board of directors approach digitalization in a global context? If a digital technology operates worldwide, then “globalization means that firms must confront themselves with increasingly complex competitiveness requirements regardless of their size” (Hilb, 2008, p. 65).

Acquiring contextual intelligence and maintaining situational awareness are both critical attributes for boards in this regard. Contextual intelligence is “the ability to understand the limits of our knowledge and to adapt that knowledge to an environment different from the one in which it was developed” (Khanna, 2014, p. 58). Situational awareness refers to “developing an understanding of what is happening around one at present and thinking ahead as to what is likely to happen in the near future, while continuously updating one’s knowledge of both” (Endsley, 1995, p. 50). It is possible, but not probable, that a board could acquire and develop both attributes concurrently given the speed and scale of digitalization globally. Instead, boards should focus on developing a conceptual framework or a strategic narrative in response to the digital technologies that already connect billions of people, devices, and machines to unlock new value (seeFigure A.2.1). The World Economic Forum (WEF) estimates that “it could deliver around $100 trillion in value to business and society over the next decade,” and “if stakeholders are incentivized correctly, the majority of that value should accrue to societ