Why Board Directors And CEOs Need An AI And Data Expert To Accelerate Growth and Digital Transformation
Did you know that a staggering 70%[1] of digital transformation efforts fail, even though companies have invested a combined total of more than $1 trillion in these initiatives?
Despite this, companies must succeed with these efforts as success brings with it complete rethinking of how a company uses technology, people, and processes in pursuit of new business models and new revenue streams, which are driven by customer expectations around products and services.
The question, however, is: Why do digital transformation efforts fail? There are several reasons, including a lack of expertise, but one of the main reasons is a lack of dedication from the company’s leadership team.
The immediate question is what a solution might be. In this post, I’ll argue that one of the ways to prevent failure is for a CEO or CXO who wants to pursue digital transformation initiatives in their companies to appoint an AI and Data expert on their board.
The reason for this is that data forms the foundation of any successful digital transformation effort, so it’s crucial to have an expert as part of the company’s management team. Conversely, without an AI or Data expert as part of management, CEOs and companies will lose out on the benefits digital transformation promises.
Let’s look at the reasons for my argument a bit closer.
Reason 1: Ensuring That the Digital Transformation Changes the Way the Company Creates Value
Digital transformation extends beyond digitizing business processes. At its core, it fundamentally changes the way companies position themselves in the digital economy to capitalize on new opportunities and generate more revenue. In this way, digital transformation creates value for the company.
To achieve this, the capital invested into digital transformation must, therefore, lead to opportunities for the company to scale, followed by a higher valuation. In fact, according to Harvard Business School professor Suraj Srinivasan[2], the valuations of companies that successfully implement digital transformation are between 7% to 21% higher than their peers.
This increase in value fits in perfectly with the board’s primary obligations towards the company. By following the proper process to plan and implement an effective digital transformation strategy, and with the necessary dedication, boards can thus ensure that digital transformation increases value for their company. And it’s here where AI and Data experts play a vital role.
Reason 2: Data Is the Foundation of Digital Transformation
Companies generate massive datasets through all their interactions with their customers. This, ultimately, makes data the foundation of any digital transformation effort. By gathering and analyzing this data, companies can gain valuable insights into the market, customers, and business processes.
Using these insights allows companies to make their processes more efficient and align their offerings with their customers’ demands and expectations. Ultimately, the result is that they’re able to generate more revenue.
Reason 3: An Understanding of Technology
Data, however, is of little to no value without the right technologies to unlock its potential. According to McKinsey[3], the speed and complexity of technology change can make it challenging for the board of directors of a company to focus on technology as a crucial strategic priority.
The solution to this problem, according to McKinsey, is to appoint a member on the board with the skills and experience that align with the company’s strategic priorities. For example, the skills and expertise of Data and AI experts will demonstrate to a board how technology, coupled with data, will be able to change their business processes and what value it will add to the business.
As a result, an AI or Data expert on the board of a company will be the driving force behind its digital transformation initiative. This makes the board member more engaged than in a traditional model to make the company successful.
Reason 4: Developing an Effective Digital Transformation Strategy
The lack of digital transformation strategy from company leadership is one of the main reasons why digital transformation efforts fail. This flows directly into the lack of planning and articulation of these initiatives. At its foundation, the digital transformation initiative should create insights for the company and unlock valuable data that will empower the company to grow.
To achieve this, companies must plan digital transformation strategies and align their goals with what the strategy can achieve. In turn, this requires complete buy-in from the company’s leadership.
Here, a Data and AI expert will enable the board to understand what their goals should be and how this strategy should be shaped to align the data and technology with their goals. This, ultimately, ensures dedication and buy-in and ensures that the digital transformation strategy will succeed.
Reason 5: Tracking Whether the Digital Transformation Initiative Is Working
It is essential to measure the impact of initiatives that matter. This is the only way for companies to see where they need to make changes to improve their strategies. Companies must strive to select the critical OKRs (Objective Key Results) to know which metrics to track and measure to determine whether the digital transformation initiative is making an impact. It is crucial for the Chief Data Officer and the C-Suite to know that the results of the digital transformation investments may not be visible in the subsequent quarterly results. The board and the C-Suite should define the north-star metrics and then work backward to get there.
Ultimately, digital transformation is the key for companies to unlock profound insights into their business processes, customers, and product offering. To ensure that they successfully implement an effective digital transformation strategy, CEOs and CXOs should consider appointing AI and data experts to their boards.
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