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The role of the board in knowledge management and digital transformation

Digital transformation is a standing agenda item for almost all boards, but what does it mean, exactly? Essentially, “digital transformation is about how an organisation uses technology to better compete“. It’s more than simply digitising documents and switching people from paper-based forms to web-based forms. It’s more than looking for ways to realise operational efficiencies by introducing automated processes, although this is how management are justifying the current spend on digital transformation projects.

True digital transformation takes the customer experience and fundamentally changes it, potentially creating an entirely new business model based on the way data is used and managed. At the very least, the transformation should remove any friction in processes, so effectively, that systems of engagement are so embedded and intuitive that they feel natural. An outstanding transformation effort, though, can produce new products and services from the digital byproducts of core services. At this point in time, I think most business are trying hard just to achieve the minimum, and the investments are often falling short, anyway.

Company directors are constantly discussing digital transformation because they’ve learned successful transformation is structural and strategic. Discrete projects aren’t cutting it. To invest in that kind of strategic shift takes foresight and a deep understanding of the current data flows and gaps within the organisation. When you capture the data from the ground up—from the customer voice and context all the way up to the board—needs can be anticipated and proactively met; better decisions can be made.

Digital transformation is centred around AI, right now, and in my line of work I hear of projects to introduce artificial intelligence into customer service all the time. If cost reduction is the motivation, prepare to be disappointed, because I’m willing to bet the necessary groundwork on consistently capturing and classifying data hasn’t been done. For a customer to want to engage with a virtual assistant or even basic self-service, the entire operations has to reorient around the customer experience and the way a customer understands, describes and interacts with a service. Traditionally, it doesn’t happen that way. Most self-help offerings force a customer into a predetermined decision tree or glossary that’s unfamiliar to them. Zero results returned.

Cost reduction should absolutely be a trend that boards look to achieve by introducing AI as part of a broader (and hopefully better) digital transformation program, but it’s the wrong KPI to set management. Instead, boards should be requiring the executive to meet increases in customer value from transformation. Granted, those metric for managers to translate into a simplified dashboard target for directors aren’t obvious, but it can be done when the board focuses on encouraging enabling behaviours from the executive. The board must drive the culture change that’s needed to ensure investment in digital transformation isn’t wasted. For boards, knowledge management is risk management.

International Standard 30401, Knowledge Management Systems, provides high-level guidance on establishing, reviewing and improving knowledge management systems within an organisation. Recently published, it isn’t without its detractors, but I think referring to the Standard is a powerful first step for future-focused company directors who want to develop the internal controls needed to shore up the foundations of transformative change.

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