The New Corporation: Reimagining Organizations In The Age Of Amazon

© AdobeStock
Ram Charan shares his insights on the need for boards and companies to embrace digital transformation. He has practical advice on how boards can help their companies take advantage of this new opportunity.

The power of digital technology makes it easier than ever to track the success of digitization efforts. The consumer is the boss. You ask for consumer data, consumer behavior, consumer location, what the consumer purchases, consumer frequency. All that data should be available. If not, you are behind. Assess whether those things are improving or declining. Which way is it going?

There is your own data, which may be constrained by privacy concerns. But there is also publicly available data, because consumers talk in social media, they tell you what is happening. This is more important than just looking at revenues in a boardroom presentation and seeing how the numbers compared with the past quarter. Those are results. But you need to understand the causes. And the cause is the consumer—that’s how you see how you’re doing compared to your plan and the competition and where you need to go.

To know if the organization is digitizing fast enough, the board needs to visit the people who are actually working on it. Go to the third and fourth layer of the company. If you have six board meetings a year, each board meeting you visit the teams and team leaders in the third layer. And so you get to know what’s happening. The whole board can go, or you can pair into two or three directors at a time, and spend a day. This way, you will see firsthand, unfiltered. That’s one of the best ways.

A second way is to have people come in to every board meeting and make presentations of what they are doing.

The third way is to have the board divide into subcommittees, and pick one business at a time to not only meet the internal people but also actually meet consumers, so that they see the connection and learn what’s happening. In the future, the CEO and the top team could arrange what I would call an exhibition. When the board meets, directors would spend an hour or so in this exhibition to see: What are these new apps, for what, what’s happening, who does it, etc. So this way, it’s a continuous operation of what’s happening in the area and the company.

The last way is for the board to ask for a report every quarter of how the money is being spent, and the failure rate, because a good failure rate is a good sign. This is a technology that can’t be perfected. You try some things; you see some things are not working well; you ditch those things. Because failure here is the best method of learning how your platform is being developed.

Final Thoughts

Boards must come to terms with the fact that they have bosses. One boss is the consumer. Your CEO and the top team also have to understand that the consumer is boss.

But now, you also have other bosses. These are the activists and institutional investors. They’re going to hold you accountable. They will work against you if you’re not performing. They have made individual directors pointedly infamous for not meeting their responsibilities.

A strong leader will make sure the board has these discussions in executive session and digs into those points that may cause real provocation.

It is now very serious that the board take the view and mindset of ownership.

Without that, new directors will come in. Not long ago, nobody imagined that GE would be almost forced to have an active shareholder on the board because the board was not meeting expectations.

The good news: When it comes to digital transformation, there are only 10 or so companies really driving this change right now. Most other companies undergoing digital transformation are in the very early stages. So the opportunity to be out front still exists. You have time to be a disruptor, be a creator.

Think like Amazon. Imagine a market that is 100x. If you fire up your imagination, you can see that this is a once-in-a-lifetime chance to build a really big company, a place that attracts the world’s best talent and creates great shareholder value. Or you can do nothing and let the opposite happen. The time to act is now.

  • Get the Corporate Board Member Newsletter

    Sign up today to get weekly access to exclusive analysis, insights and expert commentary from leading board practitioners.



    Directors Forum

    Dallas, TX



    20th Annual Boardroom Summit

    New York, NY