How prepared is your board for this world of rapid change?
“Technology is making boundaries between industries more porous and providing opportunities for attacker models. For example, in the banking industry, online consumer-payment products such as Square—a mobile app and device that enables merchants to accept payments—are challenging traditional payment solutions. Free Mobile, a French telecommunications attacker, has captured significant market share by offering inexpensive mobile voice and data plans, in part by offloading some of its traffic onto the home Wi-Fi access points used by its broadband customers.
For incumbents in many sectors, technology is becoming an arms race. Companies are harnessing technologies such as social media and location-based services to reinvent the customer experience and capture market share.”
PAUL WILLMOTT www.mckinsey.com (June 2013)
As I interact with businesses, something keeps coming back to worry me. Most major corporations are run with proper stewardship from their boards of directors; but do those directors actually understand the issues on which they have to offer judgement and direction?
This problem has always been there – the bottleneck is always at the top of the bottle, as many a wit has quipped over the years. But the danger has become increasingly more serious in the recent era. There are two HUGE forces about to wreak havoc in the eastern African business arena: technology and the youth bulge.
We have the world’s youngest population in this part of the world. That itself is going to become a huge disruption, as businesses struggle to adjust to a world in which their employees and their customers are very, very young.
But that’s not the only thing. Those youngsters simultaneously have connected devices in their pockets, and more and more pockets have them as prices for smart gadgets fall. This affects so many things: they way young folk gather information; the way they share opinions; the way they make buying decisions; and the way they pay for their purchases.
As the excerpt from consultants McKinsey shows, technological disruption breaks down the barriers between industries – think Safaricom eating the banks’ lunch, or Apple and Amazon destroying traditional publishers, or Google whacking ISPs with free wifi – so that competition can come from anywhere now, and is in fact LEAST likely to come from entities that are similar to yours.
By observation, I can confirm the following: the average East African board is not young, it is not fresh, and it is certainly not technologically savvy. This is beginning to matter a great deal. Once upon a time, it did not matter much that wise old fellows would make decisions on behalf of a wider market. The wider market was not that different from the world occupied by the mature folks, after all.
That’s all changed. Boards that have been used to stable markets and predictable technology are getting snookered regularly by rapid change. We live in a world where, increasingly, social peer opinions drive buyer behaviour more strongly than advertising; where technology is more about which stream of tablets, apps, social media platforms and cloud systems to adopt than about enterprise-wide software, 3-year projects and lumpy procurement.
Is your board keeping up? I seriously doubt it.
Most board members I know do not understand ‘generation Y’ and are increasingly irritated by it. They dismiss social media as a frivolous irrelevance. They don’t see the sea-change in consumer behaviour, because they have little idea how young consumers think.
This is going to really matter. I think we will have no choice but to rethink our board structures, processes and composition, and the wiser boards will do this ahead of the pack. A more switched-on board that has its collective finger on an ever-changing market pulse is now a strategic necessity. May your board have the wisdom to realize this in time.
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