By Betsy Atkins
Betsy Atkins is a director at HD Supply, SL Green Realty, Schneider Electric and Volvo Car Corporation. She is also the CEO of venture capital firm Baja Corp.
The digital industrial revolution has blurred business lines and altered what “buying” and “employment” mean. Boards that are rooted in the past will get left behind. Instead, they need to ensure their management team is positioned to be flexible.
Everything Is Blurring
Silos are being destroyed, such as with a blurring of lines between marketing/communications and engineering. For example, a chief marketing officer needs to be able and willing to bring marketing and engineering teams together, which can result in product teams becoming more nimble and consumer-insight-driven. Digital marketing using data mining and analytics will require investment in experiment-driven marketing and research, either through building internal capabilities or partnering with specialists. This kind of work will demand executive-level acceptance of small failures as part of uncovering scalable opportunities. Building a corporate culture of experimenting will yield fast wins or fast fails through quick proof of concepts, which can help companies innovate and then move forward.
Not only are lines blurring between business units, but the lines between how companies sell and how customers transact are also changing. On the United Airlines app, for example, you can book a plane and book an Uber . And social media platforms are already tying e-commerce features into their networks. From Instagram ’s “Shop Now” to Pinterest ’s “Buyable Pins,” today’s hot platforms are blurring the lines between Web, social, app and e-commerce. This is only going to speed up, and boards need to review whether their management teams are on top of this phenomenon.
The Sharing Economy and the Gig Economy
Globally, the sharing economy was around $15 billion in 2014, and it is projected to reach $335 billion by 2025. The success of companies such as Uber, Airbnb , Thumbtack and TaskRabbit aren’t a fad; it’s new way of doing business. These companies created affordable solutions for cash-strapped consumers to connect with individuals looking to provide services, which has the dual effect of changing how people purchase things and creating unique income streams for those offering their services. And the sharing economy’s story doesn’t end with taxis and vacation rentals. As consumers share and recycle their belongings, overall product demand might decrease. If that happens, companies will compete with millions of consumers willing to rent the same products they sell for a fraction of the cost.
Related to the sharing economy, the gig economy has emerged, where workers pick up shifts like a musician booking a gig. Now and increasingly in the future, companies won’t hire head count directly. Instead, they’ll outsource it, either through gigs or through companies like Global Logic that do outsourced software product development. Millennials are now the largest segment of our workforce, and many are freelancers, who overall make up 34% of the workforce. Employment will become increasingly uncoupled as more opportunity for flexible part-time work becomes available. Millennials also want to work for and purchase from companies with more authenticity and transparency. Without a clear purpose and high ethical standards, companies will find themselves floundering. To meet this need, companies need to create a culture of external orientation. Focus on your customers’ needs and desires first, and then build a set of tactics and strategy around this.
Companies will also need faster innovation around the edges and quicker trials that answer certain questions: Did we solve the problem or not? How do we make it better? And how do we learn faster and iterate more often?
To meet these challenges, boards must take on a new strategic oversight role, encouraging management to actively listen and seek out these new macro innovation trends around digitization, customer-centric experiences, cross-silo collaboration, fast experimentation and the sharing and gig economy. Boards must also evaluate their CEO in light of this new reality.
A best practice for boards is to specifically request that management present the company’s plans on how it will deal with these fast-moving innovations. Doing so demonstrates that the board is evolving beyond oversight to become a competitive asset for the company and its shareholders.