Recently read a report on how my native country Sweden on average has among the oldest board of directors within listed companies in the whole western world. This is interesting for a country who proclaims to be quite progressive in terms of gender equality compared with its peers. But it also represent a risk for the companies. A risk that they have board members that doesn’t understand the shift of digital, thus missing out on opportunities and ultimately risk becoming disrupted.

Having long experience on the board isn’t necessarily bad thing though, of course. Some of the young startups such as Klarna have realized this and recruited more senior board members recently. However, it does become a problem when the whole board of directors of old companies are significantly disconnected from the customer behaviors and trends of today in an increasingly digitalized world. Or for that sake when the whole board consists of primarily men in the same age and with the same socioeconomic background.

When it comes to the concept of efficiency, some boards have embraced it as a way to save money by using digital instead of the old way. Although this is perfectly fine as a business case at many times, it is only possible to save so much, and it is not going to make you survive long-term. A very outspoken and growth-focused business-leader I once had in a workshop compared efficiency savings as a strategy with peeing in your pants when you’re freezing – “it becomes warm and nice for a while, but after that it gets colder and worse than it originally was”. Another way to put is is to say it’s purely tactical.

We are at the edge of the next phase of digitalization, which is when digital will become intertwined in the whole society, making products into services, utilizing the power of humanized data and disrupt manufacturing as we know it. To stay relevant, digital needs to be at the core of every business process within each company and not (only) considered as a marketing channel or makeup added at the end. This will need some though decisions. It will need old truths being challenged. And in most cases it will need new competencies on the board and new capabilities within the organization.

When the board of a manufacturing company misses out on 3D-printing and how that will change the balance of power, the business models and the value chain of tomorrow, that company will be at risk. When usage of data changes the way value is created, companies not understanding the potential in an asset they might already have, or who doesn’t see the need to transform, are soon to be either fully obsolete or further commoditized. And, when superior customer experience is by far a stronger differentiator than physical assets on the balance sheet, backend-heavy old organizations risk being very vulnerable.

As line- and functional management within corporations start to understand the importance of digital transformation, and to bring on new competencies to drive transformation, the board risks becoming a limiting factor rather than the visionary enabler it needs to be. The shareholders have an important role to play here, together with the nominating committee, in setting the requirements on the future board and making sure they have the right mix of competencies to disrupt before they become disrupted.

Image credit: Katja Hasselkus @ Flickr