Boards play critical roles that include validating the corporation’s strategy, succession plans, validation of the numbers, and managing risks. There are several risks that must be managed: financial, environmental, talent, competitive, and operational. Of these risks one of the most important to monitor and manage is becoming obsolete because of technology/digitalization, which could lead to replacing the business’ products/services. We have seen this happen in retail, agriculture, transportation, and in services including healthcare. Significant events that have a substantial impact worldwide, like the pandemic, often accelerates the need to acknowledge that digital transformation allows agility and improved efficiencies, and it allows the enterprise to meet customers where they are, which improves relationships and lifetime customer value.

According to a survey from McKinsey, even before the pandemic, 92 percent of companies believed their business models would have to change given rates of digitalization at the time. COVID-19 has only accelerated that timeline, with estimates indicating we’ve moved three to four years forward in digital adoption in only a matter of months. Digital transformation has become a matter of corporate survival and needs to be a top priority for board oversight. Every company is a technology company and if the senior management and boards don’t think of their strategy as being a technology company, they will eventually become obsolete.

Boards play a pivotal role in their organizations’ journey to digital transformation. Asking the following three questions will help boards stay focused on critical digital challenges. Boards that put their attention toward these questions can be catalysts for companies to achieve the digital transformations needed to stay competitive in the current environment and to improve their overall profit margins.

1. What is the organization’s digital transformation strategy?
2. Who are the new competitors? And how will a digital transformation strategy help position the organization competitively?
3. How fast can the organization go and what resources are needed?

In the past, corporations viewed digital transformation as the implementation of their e-commerce, ERP or CRM system and it was the IT department’s responsibility to own implementation of these systems to support current products and their delivery.

Uber, VoIP (Voice over Internet Protocol), Amazon, Netflix, and more have transformed the taxi business in every city, the landline business for AT&T, the retail industry, and the entertainment business. Amazon can provide the majority, if not all retail products and services most consumers need, in contrast to brick-and-mortar establishments, like Staples which provides specific products and services. With the proliferation of online services/retail, most people can count on one hand how many times they walk into a bank, and specific retailers like Williams-Sonoma, Office Depot and Best Buy in a year.

Because I am the chief executive officer of a healthcare data analytics company, and I sit on Fortune 50 public company boards, I see many opportunities in healthcare systems and in traditional large corporations to think outside of legacy approaches as it relates to digital strategy.

In the execution of a digital strategy there is executive-level direction the CEO must give, and this usually focuses on what to buy versus build. We now recognize that an enterprise’s traditional competitors are not their only competitors. Many of their new rivals operate on eight-week sprints for software development.

Speed to market and time to execute are critical. There’s an enormous amount of capital in the market looking to solve business problems using technology, and speed to market usually results in market share. Using technology can also help with “customer stickiness.” The highest costs for businesses are related to acquiring new customers. Retention then becomes extremely important and increasing the lifetime value of customers by selling them more of your product and service becomes a number one priority.

The talent war is real. Do we have the right talent in operations that can think strategically about the integration of technology into our traditional offerings? To hire the right talent under the CEO’s direct reports, all members of the organization need to understand that the priorities of the CEO and the board are to win in the marketplace with a digital strategy.

Boards need to be catalysts for organizations to ensure that they are prepared to embrace and execute on a digital transformation strategy.