Four Exercises for Contemplating Digital Readiness

Jim DeLoach

Jim DeLoach

Over the next few years, the digital revolution will force many organizations to undertake radical change programs and, in some cases, completely reinvent themselves to remain relevant and competitive. Ask executives and directors what their company’s biggest threats are, and chances are the answer will include the threat of disruptive innovation. That said, is disruptive innovation sufficiently emphasized on the board agenda?

Our experience indicates that most boards do not fully grasp the opportunities and risks associated with digital transformation. There are four important activities for organizations to consider as they contemplate what digital means to their business and strategy.

1. Assess digital competencies. Protiviti’s original research has identified more than 30 competencies at which digital leaders excel. These competencies consist of empirically supported capabilities and structural characteristics that can be used to benchmark the organization. They are arrayed across six core disciplines that many traditional businesses struggle with:

  • vision, mission, and strategy;
  • management and employee culture;
  • organization, structure, and processes;
  • communication, marketing, and sales;
  • technology innovation and development;
  • and big data, analytics, and automation.

An example of a competency related to “vision, mission, and strategy” is that executive management must have a clear understanding of the potential impact of digital disruption in the industry segments in which the organization operates and be able to articulate a clear strategic vision fit for the digital age. In addition, digital strategy-setting and review should be a continuous activity for the business and in the boardroom.

Competencies can be useful when plotting the path toward digital maturity. The strategy should reflect the competencies that currently define the organization and address the absence of those which present barriers to success. This is important because the digital age is forcing organizations to radically rethink how to engage with customers and pursue design breakthroughs for improving processes and functions continuously. That means they must balance outside-the-box thinking with the practical considerations of repositioning the business. Many strategies ignore these fundamental issues, resulting in a business that is digital on the edges but not at the core. Our view is that a truly digital business has a digital core.

2. Define and refine continuously the digital vision and strategy. Organizations need to make a conscious decision about whether they are going to lead as the disrupter of the industry or, alternatively, play a waiting game, monitor the competitive landscape, and react only when neces­sary to defend market share. For many companies, the answer may be somewhere in between. For organizations choosing not to actively disrupt the status quo, their challenge is to be agile enough to react quickly as an early mover. Few are ready for that challenge, however.

A leader of the organization must own responsibility for understanding the competitive landscape, the opportunities emerging technologies present, and the threats to existing revenue streams. Management must frame the digital vision and the strategic initiatives supporting it around the enterprise’s core competencies. The vision must reflect the direction in which relevant digital technology is trending. It should express how technology can elevate the company’s differentiating core competencies and deliver unique customer experiences. With technology and regulations changing, and innovation happening so rapidly, the business needs to review and refine its digital priorities constantly.

3. Define the target operating model. Too often policies, processes, and organizational structures get in the way of a business becoming and remaining digital. The key is to empower, trust, and monitor people, not control them. That’s a different way of thinking for organizations rooted in “command and control” structures. The business should clearly define where it’s going in its vision and strategy, and management must recruit and train the right people while ensuring that the enterprise’s policies, processes, and systems are suitable to compete in a digital world.

Accordingly, management should define the processes, organization, talent, methodologies, and systems comprising a future operating model that remains true to the company’s identity and brand promise. In the rush to become digital, the importance of policies shouldn’t be forgotten to address risks and ethical questions leaders must consider.

With the current and future states defined, improvement plans should be developed to close the gaps based on industry best practices and reviewed with executive management and the board. The risks associated with the target state should be identified and assessed against the entity’s risk appetite. In this respect, management should be careful to avoid understating the hyper-scalable business model component of digital transformation. Digital thinking requires organizations to solve the problem of rapid growth and scalability to rely primarily on technology rather than people, as opposed to the traditional focus on scaling ahead of demand.

4. Align the organization with the needed change. Using digital technologies to improve products, services, and processes requires focus and discipline. To enable continuous or breakthrough change with confidence, buy-in must be obtained from executive management and the board for significant changes in strategy, processes, and systems. Support also is needed from business-line leaders, operating personnel, and process owners affected by the change. The communication of change and its implications must address why a digitally-focused culture is necessary for the entity to survive and thrive, and offer a compelling case that the interests of employees and the enterprise are inextricably tied to effecting change.

Depending on a director’s perspective, the exciting or worrisome truth is that the digital revolution is just getting started. Even when executives are aware of emerging technologies that obviously have disruptive potential, it is often difficult to have the vision or foresight to anticipate the nature and extent of change. That is why every organization must chart its own digital journey.

To that end, the board should be engaged in all of the above activities, from readiness assessment to organizational alignment. When addressing digital, directors should recognize the signs of organizational short-termism and executive management’s emotional investment in traditional business models. Ultimately, the board must ask the necessary questions to encourage management to advance the enterprise’s digital journey at a pace that will sustain the company’s sources of competitive advantage and market position.

Jim DeLoach is managing director of Protiviti. 

Social Media: Questions the Board Should Ask Management

Kimberly Simpson

Global marketing officer Karin Timpone recently participated in the NACD Capital Area Chapter’s season kick-off program on social media. Timpone, who leads the integrated global marketing and consumer relationship management strategy for Marriott International, suggests that in the long term, boards must consider the broader impact of companies like Facebook, with its two billion users, and, with an estimated number of customers at well over 200 million, having digital empires with deep customer data. “Consider how your company will fit into the new digital world order,” said Timpone.

In the meantime, boards should be asking the right question about the status of current efforts in the digital realm. Specifically, Timpone recommends that they ask five key questions:

1. What is the company’s content strategy?

Social media has disrupted business as we know it. “The upside of this disruption is the opportunity to have a two-way conversation with your audience,” said Timpone. “You can also amplify your marketing efforts, allowing the social graph to carry your message.” However, the downside is that a company cannot expect its messages to follow a company calendar. Instead, the company has to be constantly vigilant about being a part of the conversation.

The board should be informed about what the company is planning to talk about, why, and with what voice. Also, ask about the media mix—that is, what has modeling shown in terms of where money should be spent? Is “brand safety” (where the brand appears and what is near it) being considered?

2. How are crisis management and customer care intersecting in the social world?

Timpone emphasizes the need for processes in social media crisis management. “The board should know how crisis management and customer care intersect,” she said. “Social media should be governed in a multi-faceted way; it’s part of an ecosystem that has the customer at the center.”

Marriott has set up newsrooms around the world in order to stay abreast of news and social media. “We have to make sure we aren’t publishing something that is tone deaf and that we are dialing up our communication when needed.” Software helps power these newsrooms, using geofencing technology to pick up company-related tweets, for example.

3. How do employees fit into the company’s social strategy?

Companies must have clear policies about employees’ use of social media. Timpone said, “Be clear whether it’s a person’s job to post on social medial for the company.” Also, human resources departments—along with other key stakeholders—should be part of management’s internal communications governance group.

4. Is the company keeping up with quickly changing technology?

The risk of not keeping up with the latest technologies must be mitigated. For example, Facebook is now emphasizing video and live features. “The social media program metrics have to change with the technology,” said Timpone.

5. What are the business outcomes of the social media strategy and how is the program being measured?

Metrics for a social media strategy may be counterintuitive compared to traditional media. For example, not doing anything can sometimes have more impact than doing something. In one instance, a company got extensive press and positive social media results for not buying a Super Bowl advertisement. Whatever the company’s strategy, “the board should ask about the program’s key performance indicators,” said Timpone. “What is measured gets done.”

NACD Capital Area would like to thank sponsor WilmerHale for hosting the program and Timpone’s fellow panelist, William Bethune, for also sharing his views.

Kimberly Simpson is an NACD regional director, providing strategic support to NACD chapters in the Capital Area, Atlanta, Florida, the Carolinas, North Texas and the Research Triangle. Simpson, a former general counsel, was a U.S. Marshall Memorial Fellow to Europe in 2005.



Reviewing the Corporate Counsel’s Playbook

Hurricanes. Hostile Mergers. Data breaches. A misconstrued comment on social media. These are a few of the real and figurative storms that companies weather regularly with the help of internal and external staff, and regular advice from their general counsel (GC).

James Barron

The National Association of Corporate Directors (NACD) recently convened its General Counsel Steering Committee. Crisis communications counsel James Barron, a managing director of the New York office of Sard Verbinnen & Co. (SVC), a specialist financial and crisis communications firm, led a discussion of more than 30 GCs from top companies in a discussion on topics that keep them awake at night, including cyberattacks, scandals, and the delicate art of communicating to stakeholders when a crisis occurs.

Barron emphasized that often times the GC plays “the role of the company quarterback,” having witnessed this many times during his tenure at SVC. Directors often turn to their GCs to understand the roles they should play during a crisis, being cautious not to open themselves to future liability. General counsel can also be instrumental in ensuring that leadership proactively creates a response plan and then follows that plan should a crisis arise.

Concepts to include in the GC’s crisis playbook follow:*

1. Create a crisis response plan that is usable. No one has time to read dense policies in a crisis. “While there are some crises that can be anticipated and materials can be prepared in advance, I don’t believe in crisis plan books that are six inches thick,” Barron said. He pointed out that companies should take the time to identify and drill on the most likely crises, then use the lessons learned to refine crisis response processes and assign senior executives and board members to appropriate tasks.

2. Drill the plan. No company can prepare for every scenario that will emerge in a crisis, Barron noted that tabletop exercises can help GCs and boards identify their blind spots and fine-tune assignments of who will be responsible for what portion of the response. One Steering Committee member also pointed out that tabletop exercises surface differing opinions about how to handle a crisis. Consider, for instance, that the GC and the director of public relations often times have very different opinions regarding messaging and speed of outreach. Hashing out disagreements before an event occurs will encourage the GC, executives, and directors to present a united front when a crisis occurs.

3. GCs are Quarterbacks. Barron said GCs often play the role of organizing the team and breaking down silos. “GCs find themselves corralling multiple groups, including senior management, the Board, operational management and communications functions. In addition, they have responsibility for outside counsel and often specialist PR firms such as Sard Verbinnen,” he said. “Their role is often to balance competing needs, particularly where there is a tension between the business needs and legal requirements.”

4. Identifying the need for public communication. Barron reminded the members of the Steering Committee that during times of peace at the company, they should consider mapping out which scenarios will need to be communicated publicly and which shouldn’t, what regulatory and legal ramifications exist for disclosing and not disclosing certain matters, and communicate the plan to the board and senior executives accordingly.

5. Understand who must be included in a crisis response plan. One Steering Committee member brought to the group’s attention that sometimes regulations demand that the CEO is involved in response to a crisis. Still another mentioned that the board at his company could not be involved in crisis response because they could not move at the speed that their senior management team could respond.

6. Seek outside counsel when a key player acts out of step with the plan. Barron pointed out that even with a plan in place, sometimes a key executive speaks out of order during a crisis, causing tension and discord between the board, and other executives. In this case, Barron notes that it’s “sometimes easier for an external legal advisor or communications group to ensure that the right decisions are made.”

7. Update your corporate contacts regularly. Several participants pointed out that having the right phone numbers for the right people is essential when management, the board, and GCs have only minutes to respond to a crisis. While this seems like a fairly simple task, Steering Committee members pointed out that having a list of who needs to be contacted immediately should exist in the crisis-response playbook—including every possible phone number or other contact needed to reach that person. Contacts should also be kept fresh for essential regulators, outside counsel, and other stakeholders who may need to be contacted.

8. Plan for the long-haul. One GC pointed out that some crises require weeks and even months of attention from top-level executives and the board. In addition to planning for immediate response, Steering Committee members agreed that a chain of assistance should be built to support the work done by responding executives and GCs. Not doing so could create undue risk within the organization caused by neglected leadership.

NACD’s General Counsel Steering Committee brings together progressive general counsel from leading companies to engage in frank, informal discussions with each other and with NACD leaders about corporate governance practices and the changing business and regulatory environment. These conversations help inform the development of NACD resources, education programs, and events with a goal of strengthening the partnership between the general counsel and the board. NACD thanks the Steering Committee for its participation, and for strengthening and supporting the work of corporate directors across the country.

*All General Counsel Steering Committee meetings are held under Chatham House Rule. The names of GCs and companies are removed accordingly.

10 Turn-Around Lessons from Zale Corp.’s Theo Killion

Jill Griffin

When former Zale Corp. CEO Theo Killion shared his leadership lessons of turning around Zales at a recent NACD TriCities Chapter program in Austin, Texas, it jogged some childhood retail memories for me.

Growing up in the 1960’s, my small hometown of Marshville, North Carolina, boasted a thriving town square of mom-and-pop stores. Because my family’s home was a hop, skip and a jump from these businesses, they became my playground. I was their frequent visitor, and with those visits came benefits. For example:

  • Remember when white go-go boots were all the rage? Mr. Gaddy, who owned the shoe store, made sure my sister and I scored pairs from his first shipment.
  • As a child, I received a personal call from Mr. Creech, the toy store owner, when his long-awaited skateboards arrived.
  • One spring, I stood with other locals as the Chrysler dealer eagerly removed the drop cloths revealing that year’s beautiful new big-fended models. (The fact the dealership offered up lots of free doughnuts, coffee, and soft drinks didn’t hurt either.)

I was rapt throughout the program as Melissa Fruge interviewed Killion, a modern-day version of my favorite childhood shop-owners, but on a grander scale.

Zales was on the brink of bankruptcy in 2004. Something had to be done. The bold and unvarnished self-assessment undertaken by the company’s senior leadership uncovered the business’s truths. These revelations, combined with sheer perseverance not to fail, brought the national jeweler back from the edge.

Here are some of my top take-aways from Killion about what executives and boards should do to turn around a struggling business:

1. Stay humble. Killion prefaced his remarks by stating that they were his opinion, and that many of the tenets he spoke about originated from great thought leaders. A mark of a strong leader is his or her ability to acknowledge with humility the admired ideas of others.

2. Interim in any title keeps you focused. By the time Killion took the reigns, Zale Corp. had had six CEOs in 10 years. When Killion’s best friend was fired as CEO, the board needed a quick fill. Killion was named interim CEO—leaving him keenly aware that he was considered temporary. He entered the role ready to make the most of the time he had.

3. Follow the money. Zales had six short months before its cash ran out. The company was in desperate need of an equity infusion. From day one, Killion and his finance team were reaching out to possible providers.

4. Dig deep for insight. Over a three-month period, Killion and his two-member strategy team worked 12- and 14-hour days, including weekends, to put a decade of operational decisions under a microscope. They carefully ferreted out what worked, what didn’t work, and why. They then presented these findings to the board.  Killion observed and reported that management’s bad decisions were made on the board’s watch. He wanted the board to feel the same deep discomfort that the executive leadership team was feeling.

5. Detail the new strategy. Zales’ new strategy document totaled 150 pages and spelled out in clear, concise details what the company would do going forward—and why. For example, severe cost cutting had reduced the customers’ experience of buying an engagement ring into a commodity. Consider, for instance, that the customer left the store with the ring—which often times is one of the most meaningful, expensive jewelry purchases a person will make—in a plastic bag.

The new strategy brought customer emotion and meaning back to a purchase at Zales. The purchase process was no longer treated as a transaction, and store training ensued to make it a well-crafted, loving, and memorable customer experience.

6. Flip the pyramid. Before Killion stepped in, the leadership philosophy of the company placed management at the top of the pyramid. The pyramid was inverted and a customer-focused culture was born. It looked like this:

  • Top tier: customers of Zales’ 1,100 stores;
  • Middle tier: 12,000 employees; and
  • Bottom tier: corporate management.

7. Think like Jeff Bezos. Bezos has built to be customer-obsessed, keen on technology and analytics, and is always testing new concepts. Killion sees this as a road-map for any retailer succeeding today.

8. The nominating and governance committee is key to matching strategy to board composition. Killion pointed out that Zales needed board directors with skill sets that matched the company’s five-year plan. Retail expertise was a must, and the nominating and governance committee needed to ensure its goals matched those needs. This committee must ask itself what skill sets the business needs. In retail today, Killion advises, a board member with deep literacy in e-commerce is essential.

9. Apply lessons from Vanguard’s 2017 Open Letter. Killion admires Vanguard CEO F. William McNabb’s open letter to public company boards of directors. Vanguard has 20 million investors, and currently is the second largest fund manager in the world. McNabb is keenly aware of the responsibility boards play in the success of the companies that the fund invests in. Here are the highlights of McNabb’s message to directors that especially resounded with Killion:

  • Sell quality things.
  • Practice good governance.
  • Pay close attention to the compensation program crafted for senior management.
  • Understand the company’s risks, and especially the role of climate risks.
  • Inclusion of women and other directors from diverse backgrounds on boards is important.

10. Brick-and-mortar retail is not dying. Instead, Killion believes retail is entering its golden age partly because of the many ways today’s retailer can reach a customer and make a sale.

The program is available to view via NACD Texas TriCities Chapter’s YouTube channel. It’s a meaty discussion and well worth your viewing time.

By the way, to this day I’m a recreational bargain shopper.  Simply walking into a favorite store lifts my spirits, and I’m glad that Killion and the directors of companies are working to help the retail industry thrive in the twenty-first century marketplace.

It’s the Best Networking Time of the Year!

Many job seekers think that they need to slow down their job seeking through the holidays, because nothing is going to happen between now and the end of the year.  Businesses are hard at work closing this year’s deals as well as preparing for next year.  Job seekers need to be doing the same thing.  Holidays or not, businesses need talent.

Smart job seekers capitalize on holiday networking opportunities to find smart ways to build their job search momentum.  They challenge conventional wisdom, and find the reality is a whole lot different than the myth!  Here are six reasons why the holidays are a great time to accelerate your job search.

Competition decreases

Conventional wisdom may be widely accepted, but it is not always wise.  The belief that nobody is hiring during the Holidays is a good example.  This is great news for you, the wise but unconventional job seeker!  Less competition!  It’s time for you to intensify your search and take advantage of the fact that others have slowed down their efforts and made an early start on ugly sweaters and egg nog.

Business travel slows down

One benefit of being a job seeker is that you don’t have to fight the airport crowds doing yet another business trip.  And maybe you’re not the only one.  Maybe those busy executives – the ones who are always on the road and hard to reach – have decided to give the TSA a miss, too.  They’re back in town over the holidays and available to meet with you to give some valuable advice and key referrals that will help you in your job search.

People are more receptive

Tis the season to be jolly!  Holiday parties with family, friends, and industry associations give you many opportunities to network.  Decision makers, like everyone else, are in the holiday mood and more accessible.  What’s more, if you play your cards right, they might invite you to that holiday party where you can meet other senior execs for more advice and information.

Budgets drive decisions

Without budget approval, there is no job.  When budgets expire at the end of the year, no hiring manager wants to have to go to their boss and ask for new approval to hire next year simply because they didn’t get around to filling the position this year.  They need to get that vacancy filled in a hurry!  Target that hiring manager and show them you are the talented person they have been looking for.  It’ll solve their problem – and yours!

Recruiters want their commissions

If there’s a recruiter involved, you can rest assured they want to maximize their year-end commission.  And they don’t get paid unless you – or someone like you – gets hired before the end of the year.  You’re well qualified, experienced and prepared.  So, why shouldn’t it be you in that position?

You want to maintain your momentum

Winning that great job does not happen over night.  You have to work at it diligently and persistently.  Building and maintaining momentum is key.  Your competition, having decided that partying and shopping is more important than job seeking, has dropped back to the end of the line.  And, even if you haven’t already won the job, you’re ahead of the game and at the front of the line come the beginning of January!  Ready, willing and able!


So, re-write the lyrics of the familiar holiday tune and sing “It’s the Best Networking Time of the Year!”  Ask your Career Coach to help you change your thinking and adopt a different approach, to end up with the job you want, one where you can succeed.  Remember that finding employment is a business transaction – you win the job because you demonstrate that you can solve the business problem that keeps the hiring manager awake at night.  Become effective and impassioned in selling a product you know best – YOU!



Brian Hinchcliffe is Director, Executive Career Transition Services, with Career Partners International in Houston, Texas.  He prepares executives for their next career opportunity.

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