Digital Transformation Payday.

• Author: Brownstein, Howard Brod

Digital transformation is a common theme among the issues and decisions currently facing boards. It can involve elusive concepts and may seem simple to talk about but complicated to implement. Even the most long-standing industries and businesses are affected by digital transformation. It permeates every area of a company's activities, including production, supply, marketing, sales, human resources or regulatory compliance. Digital transformation also may change the appropriate measures of performance as well as the methods of measurement.

Fortunately, a recently published book, Digital Transformation Payday: Navigate the Hype, Lower the Risks, Increase Return on Investments, provides some valuable information for executives and board members who want to understand and deal with these issues. The author, Dr. Tim Bottke, is a senior strategy partner at Deloitte in Munich, Germany, as well as an associate professor at SDA Bocconi School of Management in Milan, one of the top business schools in Europe. He has done extensive research into companies' investment in digital transformation as well as the degree of benefit that such investment has created.

Board members must educate themselves about digital transformation and how it affects their company and industry. Indeed, knowledge of cyber issues is one of the most sought-after attributes in board member searches, and educational programs for board members focused on cyber are increasingly popular.

Such rapid change by definition involves increased risk--preexisting risks as well as newly emerging risks. And achieving any degree of digital transformation typically involves substantial investment in equipment and systems, as well as in educating the company's organization and adding new personnel. This combination of substantial required investment and increased risk should be attracting prioritized attention by boards, especially since stories abound about attempted digital transformation delivering disappointing results or worse.

Companies too often jump into digital transformation without really understanding the anticipated benefits or the costs. They sometimes feel a desperate need to catch up with competitors or may be trying to keep up with industry change, perhaps falsely assuming that everyone's in the same boat. And, of course, the purveyors of systems and equipment are effective at getting companies to sign off on substantial investments without any guarantee or even clear...