Future Proofing With Innovation and Digital Transformation

To navigate global supply chain disruption, geopolitical concerns, and a volatile economy, pre-pandemic business leaders often focused on survival. Today's effective leaders, however, innovate out of a crisis—a cornerstone of many businesses' post-pandemic plans. The future of these businesses is often dependent on recalibrating processes and rapidly commercializing innovation into new products. Such companies' evolving business models disrupt and redefine the competitive landscape to their advantage.

Success today requires a different mind-set. Businesses must focus on the mastery of outperforming to deliver growth at scale; integrating digital transformation into business strategy with continuous investments and innovation is one enabler. This shift in mind-set relies on the belief that uncertainty is not a risk but an opportunity to learn, adapt, be resilient, and deliver sustainable growth. In fact, the biggest risk is being neither resilient nor relevant. The biggest potential rewards come from leading innovation and digital transformation to outperform competitors. Market leaders with this new mind-set will rise above performance laggards despite a down market.

The Strength Advantage of Private Companies

The COVID-19 crisis accelerated digital transformation from the adoption of new technologies and processes to the inclusion of digital transformation in operational playbooks to its integration into enterprise-wide strategy. Both private and public companies of varying sizes may have entrepreneurial leadership, investments for value creation, and frictionless ways to digitally engage customers. However, private companies have certain advantages. With their relative autonomy from regulatory and shareholder compliance, their digital strategies can be quickly recalibrated as environmental, market, and business factors shift. In addition, family-owned private companies often have a purposeful mind-set with a long generational view, allowing them to benefit from prior generations' testimonies of thriving through disruption.

Effective Private Company Boards

To complement management's efforts, the board's role becomes increasingly important in preparing for the future as the board inspects and oversees the company's transformative ability to be agile and digitally fluent. Published in July 2022, the 2022 NACD Private Company Board Practices and Oversight Survey reports that private company board members see the increasing pace of digital transformation as one of the top three trends that will impact their businesses over the next 12 months in addition to increased competition for talent and growing inflation.

Strong management and board performance is key to navigating these impacts. Exceptional board performance can be driven by strategic, structured decision-making, leadership, a willingness to test assumptions, and technology. As private companies position themselves for the future, these critical enablers can drive innovation and digital transformation. Agility can be increased by mapping out playbooks that address critical risks and opportunities such as digital customer engagements.

The success of private companies for future generations could be further improved by updating the board skills matrix to include digitally savvy board members as well as the board agenda to include governance of new and emerging digital technologies. Board agendas should include frequent management progress reports on innovation initiatives and aligned investments. In addition, updates on enterprise-wide digitization and digitalization that impact company and family cultural values and have organizational implications help drive a framework for governing into the future.

A Commitment to Innovation

Some companies might innovate out of the crisis; now is also the time to build strategic value and scale. Time and focus should be given to sustainable growth with bold, innovative digital initiatives that accelerate transformation. Private companies, like public companies, should prioritize digital transformation and continuously innovate and invest during these changing economic times. Overseeing a business during periods of economic volatility is no easy task, but investing in innovation to outperform competitors not only makes things easier—it sets the company up for future success.

Cheemin Bo-Linn, EdD, is CEO of Peritus Partners and former IBM Corp. vice president and has more than 15 years of board governance experience at private and public companies based in the United States, Canada, Europe, and Australia. As a C-suite officer, she leads enterprise-wide digital transformation for innovative multibillion-dollar businesses.