CES® - ITS IMPACT ON BOARD DIRECTORS
At a recent NACD Texas TriCities Chapter peer-to-peer dinner, hosted by Grant Thornton, a group of directors gathered to hear about and reflect on the impact of the 2019 Consumer Electronics Show (CES). At this year’s event, Grant Thornton organized a curated experience of the massive conference, to help streamline and focus the experience of board directors faced with over 4,500 booths of technological innovations.
We learned about things that were coming: 5G connectivity (potential for instant simultaneous translation), 8K televisions (imagine watching sports), flying cars, armor-protected drones that can stop bullets, and various applications of artificial intelligence (AI) and block chain.
We could have spent all evening speaking about the fascinating gizmos and technologies that are being developed, but we reined the conversation back quickly to the implications for us, as directors, relative to how we guide strategic dialogue in the boardroom. There were three primary themes: (1) Creation of new business models, (2) How do existing companies recognize disruptive technology, and (3) the importance of being directors who are engaged in digital transformation.
NEW BUSINESS MODELS
There is no doubt that with the exponential growth of new technology applications, new business models will emerge. Whether it’s travel/entertainment, retail, healthcare, or financial services, the applications of the likes of AI, 3D printing, and 5G will undoubtedly create opportunities for more companies such as Uber/Lyft, Airbnb, Apple, and Tesla to redefine how we go about our day-to-day lives. To grasp the pace of change, one only has to consider today’s definition of what a “phone” does compared with what one did a generation ago. Learning today takes place not only in classrooms, but also in the circuits of machines that will be accessible through applications such as Google Mind. Augmented reality may today be thought of as a helmet worn over our heads for gaming, but as we consider its applications around human exoskeletons, it has implications for workplace health and safety yet undefined. Understanding the possibilities of new business models is crucial if we are to guide companies through this exciting next chapter of innovation.
CHALLENGES FOR ESTABLISHED COMPANIES
The fact that most business disruption happens from outside mainstream companies suggests that most large organizations miss many strategic shifts. This is mostly likely due to the past success of organizations that might have been yesterday’s disruptors. Countless case studies are written with the “how did they miss it” narrative, as though long-established, innovative companies (such as Sears, Kodak, Blockbuster) should have seen the advent of disruptors that wiped them out. It’s as though hindsight is a missing leadership skill. The difficulties are numerous; how to deliver of continued performance results in an existing business model while giving permission and space for innovation to create a wholesale shift, the ability to attract different sets of investors, and how to build a new skill base in the workforce to move from “old” to “new” economy. The emergence of corporate venture capital groups, creation of internal innovation hubs, and collaboration with start-up incubators are just a few examples of how established organizations are trying to create pockets of innovation that might end up sun-setting the very characteristics that define success today.
THE ROLE OF DIRECTORS
The role that independent directors play in understanding how technology can impact the business is crucial. As individuals who are not mired in the daily exercise of customer capture, cost control, and personnel matters, directors are uniquely positioned to help the executive team explore options and consider implications on the existing business. They should challenge executives to push the boundaries of “what could happen” that would wreak havoc to the revenue stream, and what skills are needed to answer future strategic imperatives. This requires a constant quest for learning and gathering external input, and participating in events such as CES, forcing us to consider a business horizon that goes far beyond our board tenures. Of the many memorable quotes from the evening, one that stood out was, “You can’t read a label from inside the jar.” Perhaps the greatest enemy of progress is a board that is too comfortable with what it knows and understands.
The most important characteristic of a world-class organization is that it consists of individuals – in both the executive suite and boardroom – energized by learning. The board’s processes must then allow that information to be integrated into regular, deep strategic dialogue. CES provides an incredible backdrop for a conversation around what “could be” which will undoubtedly, eventually morph into “what is”.