Amid growing pressure to meet or surpass the speed of disruptive innovation, executives and directors of technology, media and communications (TMC) companies worry that their organizations’ desire to innovate may outrun their ability to properly manage risks.
This culture concern and a deepening fear of obsolescence were key takeaways for the TMC industry group responses in a recent survey, Executive Perspectives on Top Risks for 2018, from Protiviti and North Carolina State University’s ERM Initiative. The top concern within the group, for the fourth consecutive year, was the risk that the rapid speed of disruptive innovations and/or new technologies would outpace an organization’s ability to compete and/or manage risk appropriately without making significant changes to the business model. Economic conditions and data security/privacy round out the top five risks.
Over the course of the past year, we’ve talked about some of these exact issues, both privately with our clients and on this blog. I discussed some of the ways TMC companies can make sure they don’t become overwhelmed by a resistant culture in this post from last year. The real story, for 2018, is how well companies are evolving internally to strategically transform business processes, technology infrastructure, workforce culture and more to compete effectively in an increasingly digital age.
This is reflected in the concern survey respondents showed for both risk culture and operational performance. These two risks showed the largest year-over-year increase among the top five risks – and rightly so. Innovation and digital thinking need to run deep. Over the next few years, many organizations will need to reinvent themselves internally – with a new digital strategy, digital skills, and perhaps more importantly, a digitally-comfortable workforce – as well as externally (with new digital products and services) to remain competitive.
Change on these two fronts must be managed in tandem, and at an appropriate pace. Often, businesses will try to accomplish this too quickly, too ambitiously or even superficially, with disappointing results. One successful approach is to use technology to improve operations, from simplifying and automating repetitive business processes to implementing new tools to enhance workforce communication and collaboration. Such internal improvements can be translated externally into the ability to innovate quickly, deliver better service to customers and meet stakeholder expectations.
Leadership and Culture
There has been a tendency among some TMC organizations to equate technology-enabled change with technology projects, and not with a business strategy shaped and driven by senior management and the board, with enterprisewide buy-in and participation. Conversely, many emerging companies, though “born digital” and indisputably tech-savvy, lack the seasoned business leadership required to evolve and maintain competitive advantage over the long term.
Transformation is, at its core, about people and culture. Corporate executives and directors of TMC companies are more awake to this than ever before, as evidenced by the sharp rise in concern regarding organizational culture over the last year.
Boards understand that that if a company’s brand or reputation is harmed due to a toxic culture, the impact will be swift and possibly irreversible. Conversely, a value-based corporate culture is a tremendous asset to the organization in terms of recruiting and retaining top talent, as well as to the company’s reputation and brand image.
As the pace of change accelerates, a healthy culture will only become more important. Oversight of culture, including the culture of innovation, must be a key board responsibility, inextricably linked with strategy, CEO selection, and risk oversight.