Duty of Care

An Executive's Guide for Corporate Boards in the Digital Era

Alizabeth Calder

• Publisher: Wiley
• Year: 2019
• Print ISBN:
  9781119578154
• Edition: 1
• eBook ISBN:
  9781119578192
• Topic: Business
• Subtopic: Corporate Governance
• Index: Business

An essential guide for board members and executives who need to understand the impact of digital on their thinking and decision making

Duty of Care: An Executive's Guide for Corporate Boards in the Digital Era offers a much needed guide for board directors and leaders who need to get up-to-speed and close their digital knowledge gap in order to make the right decisions about digital technology investment and deployments. Written in easy-to-read language, this book targets directors and executives who want to protect themselves from risks ranging from massive cyber security breaches to digital infrastructure investment mistakes.

Most board members don't have the information they need to understand digital information systems, modern high-speed networks, and rapidly evolving software and hardware ecosystems. They also don't have the time to seek out or filter what they need from the many diverse sources. Their lack of knowledge can lead to disastrous decisions that can cost shareholders billions of dollars in lost income or risk liability. Written by a globally recognized experienced business executive and expert in cyber security, this essential guide and blueprint can serve the strategic and governance needs of every company.

• Written by an noted expert in cyber security and digital strategy
• Designed to be accessible for board members unfamiliar with digital technology, with case studies and smart questions to support leaders on every topic
• Helps board directors, corporate officers, and corporate investors with the digital knowledge needed to make informed decisions

Duty of Care is a comprehensive yet accessible book that helps board members close their "digital knowledge gap" in order to better serve their corporations. 

Chapter 1
Basics and Essentials

Burberry's transformation did not start with the CIO (see Figure 1.1). It started with the CEO and the board asking questions. This chapter will give you the vocabulary to ask the questions and understand the answers.

Figure 1.1 The Case of Burberry

A couple of qualifiers:

1. Not everything discussed will be relevant for you, but you should understand all the concepts. If you don't know that a technology exists and what it can do, how will you know when to consider it?
2. Many technologists thrive on being opaque. They use overly complicated words. Do not let unfamiliar words stop you from understanding.
3. Your IT leaders are setting strategy with the tactical decisions they make every day. Your company may have to live with those decisions for a long time, and they may dramatically limit the options that you have. You need to set the direction, so the tactical decisions are aligned and enabling.

A capable director does not need an in-depth understanding of every new technology or trend. In fact, the pace of change makes it impossible for even technology leaders to stay abreast of every new concept. You can achieve an appropriate working knowledge by understanding four key dynamics that influence technology, and by periodically recalibrating your view of the implications for your business.

A simple model shows the core dimensions to basically understand, as shown in Figure 1.2.

Figure 1.2 Core Dynamics of a Technology Strategy

Consider how the model supported Burberry, as shown in Figure 1.3.

Figure 1.3 The Example of Burberry's Strategy

First, they engaged the customers on their mobile devices, at the top right quadrant of the model (between Social Media and Pervasive Technology). They used ad campaigns and in-store promotions to encourage Burberry as a place and a brand to talk about. Tools like Facebook let them see what was resonating with their customers – that is, what was trending – so they could stay closely aligned and drive the right messages and promotions to the right customers in the right way at the right time. Social media and pervasive devices let them see where customers were and what they were shopping for.

In addition to letting Burberry collect individual information about each customer, social media let them aggregate information from the customer's extended social network; if one customer's tweet or Snapchat photo caused people in their social network to look at more Burberry information, they knew they had a successful product or campaign.

Burberry also dialed up their data gathering by using pervasive devices like sensors in mirrors and product tags. Those sensors could recognize the customer by their mobile device and co-relate their interests and behaviors based on where in the store they were most engaged – what displays caused them to stop, and where in the store they tried things on. They were able to engage in real-time direct marketing, including offering immediately relevant messages to the customer's mobile device with in-store offers.

Continuing around the bottom of the model, delivery capabilities like cloud made it possible to aggregate data globally and tie together behavior at point-of-sale and online. Global capability let them bring together all aspects of the customer's activity, including purchase decisions.

Continuing around to the top of the model, Burberry leveraged deep data analytics to inform “artificial” intelligence (AI), enabling computer systems capable of understanding the customer's behavior to make relevant offers.

Each step that Burberry took around the model gave them more intelligent data, which was at the center of their technology strategy. Gathering data at each step around the model let Burberry move the customer closer to both purchase and loyalty.

The pages that follow break down each of the four core dynamics to help you think your way around the model and find ideas that will add value. Use the model to have satisfying conversations with your CIO, your CEO, and the rest of the board.

(Note: Definitions for jargon and acronyms are also summarized in a table at the back of the book, for reference later.)

Social Engagement

At the top of the core dynamics model is social engagement. Not that long ago, the focus was simply on the power of social media to have people pay attention to your company. The leverage came from having your marketing team work to keep the attention positive. Today, social media has become a powerful source of engagement that can directly work to grow your business and measure your effectiveness.

Social Media ROI – Social media contributors can be measured and provide insight in four areas¹:

1. Consumption – You should know how many people view or download your content.
2. Sharing – You should know if the content you are putting out there is gaining momentum.
3. Lead Generation – You should know exactly how your content is generating leads, or creating real interest in making a purchase.
4. Conversion to Sales – You should know what specific content drives sales, and you should be measuring the monetary value of those sales.

With the right measurements in place, your board should see a direct relationship between social media and ROI.

Social Media Leverage – The new power of social media is realized when you become part of the user's lifestyle. That leverage comes from new technologies like wearable devices, sensors, gamification, and personalization. Consider some examples:

• Fitbit is an example of a wearable device that helps people improve their health and lifestyle by using sensors to track and report on activity levels.
• Users of Fitbit also use the Fitbit app. They can invite their fit-focused friends to join a group, making their fitness activity a shared lifestyle. By encouraging fitness enthusiasts to challenge each other through the app, Fitbit created a game that could be shared by socially connected communities. That use of gamelike features to improve engagement is called gamification.
• Bing, Yelp, and Yahoo are examples of companies transforming their business model using geo-fencing, which is the creation of a virtual perimeter that represents a real-world geographic area. When you are online, and your computer asks if it can identify your current location, the site you are using is applying geo-fencing to be more relevant for you. On a mobile device, apps dynamically make shopping and dining recommendations that are specific to exactly where you are at the time.
• Retailer Urban Outfitters saw a 75% increase in sales by tracking customer devices in the store and then sending offers tied directly to the section of the store that the customer was in.²
• Our earlier Burberry example took social media engagement to new heights by talking to customers real-time and getting those customers to share their shopping with social media friends. Engagement worked – customers bought more.
• International airports are leveraging the most powerful strategic “social” tool so far – personalization. By knowing that the app user is in the airport, and offering faster check-in or automated customs processing, airports now provide offers that are uniquely relevant to the person, the place, and the time. This self-focused trend is also known as the Internet-of-Me.

Digital marketing experts believe that these combined social-media experiences are becoming more important than either price or product³:

• By 2018 over 50% of companies will redirect investments toward customer experience innovation. Source: Gartner
• Eighty-one percent of consumers want brands to understand them better and know when and when not to approach them. Source: Accenture
• Sixty percent of marketers struggle to personalize content in real time, yet 77% believe real-time personalization is crucial. Source: Adobe

Social Media Risk – There is an important paradox developing around social media. On one side, consumers want their experience to be hyperpersonalized, and they want their brand...

Table of contents

• Cover
• Table of Contents
• INTRODUCTION
• Chapter 1: Basics and Essentials
• Chapter 2: Risk
• Chapter 3: Cybersecurity
• Chapter 4: Enterprise Risk Management (ERM)
• Chapter 5: Litigation and Fraud Risk
• Chapter 6: How Much to Invest – Digital Maturity
• Chapter 7: How to Prioritize
• Chapter 8: Clarity
• Chapter 9: Oversight
• Chapter 10: Governance
• BUZZWORDS, ACRONYMS, AND LEGITIMATE TERMINOLOGY
• RELATED SOURCES AND OTHER READING
• INDEX
• End User License Agreement