Why your CEO needs to be a digital expert
13 February 2017
Technology is changing the world at an ever increasing pace.
The number of people participating in the global economy is increasing fast – greater population, connectivity, education, and decreasing wealth between nations. Climate change, artificial intelligence and novel routes to access capital are further increasing the pace of global change: exponentially.
To put this into perspective, one of my ancestors was born in India under the Raj in 1899 and died in the UK in 2002 – following two world wars, the first moon landing, the cold war, the birth of the internet and cloning. My children will see far more change to human society in their lifetimes than she did.
Digital technologies (“Digital”) underpin many of these “change factors”: improving education, greater connection to other people, artificial intelligence and access to capital. Digital also supports population growth through increasing food yields and medical advances.
Digital is changing our world.
CEOs need to be smart about Digital to drive “change”
The chief executive is the lynchpin between an organisation and its Board. Distilling governance (for instance the UK Corporate Governance Code), the Board is responsible for four things:
- Ensuring compliant operations today
- Setting strategy
- Making sure key stakeholder relationships are managed
- Ensuring strategy is being delivered.
Digital is disrupting all four of these responsibilities: “web 1.0” technologies support automation and increased productivity; innovation is changing the competitive landscape; “web 2.0” is revolutionising brands and customer relationships; and technology is a centre-piece across most organisation’s investment portfolios.
NGO-specific digital disruptions
Globalisation has seen inequality rise within countries, but decrease between them. Traditional aid flows from rich-to-poor are disrupting (see UN and CIA data on Gini coefficients). And globalisation’s effect on US manufacturing jobs appears to be a major factor in Donald Trump’s election, even though perhaps six times as many jobs have been lost to technology (FT)
However, there are two specific Digital disruptions, even beyond the items described above, that I want to highlight.
1. NGO mergers, acquisitions and consolidation?
Digital disruption is accelerating, both from existing technologies that continue to progress and the many new technologies becoming available.
These transformational new technologies follow an exponential path – as described by Peter Diamandis’ “6 Ds of Exponentials”. Crudely put, new technologies become free to customers and are adopted by the masses, which drives old ways of doing things into obsolescence. This is one major driver behind a really scary corporate trend: the pace of large organisations disappearing from bankruptcy, merger and take-over is accelerating.
Anecdotal support comes from the top three PLCs at the end of 2016 all being “tech” companies: Apple (founded 1976), Microsoft (1975), Alphabet [Google] (1998).
PLCs face direct market-forces, and these offer explanations to this increasing turnover. In contrast, the charitable sector is proliferating: Charity Commission recent figures and long-term trends show increasing numbers of larger UK charities, increasing sector revenue, and no particular signs of consolidation.
Are we overdue sector-wide consolidation?
2. Tech businesses that compete and challenge
Technology businesses are more likely to be socially driven than the 20th Century PLCs they have out-competed. They attract Millennial workers, who are more likely than older generations to be motivated by purpose (see Goldman Sachs).
Disruptive business models directly address customer value. And digital engagement means customer relationships are in real time: any example counter to perceived value may quickly go viral and destroy brand value.
As well as disrupting NGOs with new technologies, many of these businesses are seeing social value and profit in providing services that start to compete with (and complement) NGOs.
Consider the impact on “trade not aid” initiatives in Sub-Saharan Africa from Facebook’s free internet offer. By August 2016, Facebook had signed up countries with 635m population in Africa to free internet (Guardian). YouTube is probably now the world’s biggest classroom.
NGOs are “competing” (and “cooperating”) with other NGOs, and also now with a proliferation of disruptive businesses.
Are you ready to navigate this complexity?