Valley over Machiavelli — Why we are in urgent need of more digital supervisory boards

While the whole world is looking at the digital strategies coming out of boardrooms, the significance of the supervisory board in the digital age is still being underestimated. The problem: trying to find digital expertise in supervisory bodies is like trying in vain to find rare-earth elements in the suburbs of Berlin. However, in order to successfully advance the digital transformation of Germany Inc., we need a new generation of supervisory bodies with a stronger connection to the digital world than their grandkid’s iPad.

Wave after wave, digitalization is washing over the country, it is mercilessly paving the way, and pulling the big and the strong into the floodwaters when they don’t learn how to swim quickly enough. That much we know — there is no shortage of digitalization metaphors, intimidating scenarios all sketched out to rouse us, to somehow make the epic proportion of the transformation tangible. And, things have since started happening. The harbingers have been heard. Germany Inc. got the message and is delivering. Germany industry is driving full speed ahead on the digital trail, investing heavily and ready to rediscover itself.

The Age of Cannibals

CEOs are often the center of public opinion: their digital drive, their determination to achieve a comprehensive transformation become the symbol for the future sustainability of their companies. And many industry leaders are making an increasingly improved impression. They have discarded their fear of contact with the digital world. Even more so, they have literally breathed in its peculiarities and interwoven them into their own self-image. “I am cannibalizing my business before someone else does”, wrote Gisbert Rühl, CEO of Klöckner, a while back. There is hardly any other statement that so clearly summarizes the new role of the CEO. All of a sudden, steel and chemical corporations are turning to startup methods. Suddenly, the B2B e-commerce innovations are coming out of Essen and Duisburg instead of Berlin Mitte.

Supervisory boards hitting the brakes

However, while the winds of change are blowing through boardrooms, the glaring lack of digital expertise in the most important regulatory bodies is being overlooked. It is the supervisory boards that are increasingly hitting the brakes on this transformation instead of accelerating it. All too frequently they are insufficiently equipped with fundamental digital expertise, or plain and simple, access to an alien digital world. Prof. Dr. Julian Kawohl of the University of Applied Sciences in Berlin researches the role of supervisory boards in the digital transformation and is of a similar opinion: “The digital expertise of supervisory boards is becoming more and more of a mission-critical factor in the digital transformation.”

We need more of a connection to the digital than the grandkids’ iPads

The demands placed on the supervisory board are multifaceted. It not only has to steer the board. It also has to act as an advisor and sparring partner in an effort to ensure a dialogue about the company’s future sustainability. But how are the supervisors supposed to converse with their boards eye-to-eye about digital business models, disruptive technologies and the threats they pose to the company when their best point of reference to the digital world is their grandkid’s iPad? The lack of digital expertise on German supervisory boards not only leads to a risk of no longer being able to sufficiently fulfill a core function — steering — for want of expert knowledge. It can also halt the transformation of the entire company thanks to an outdated mindset and interminable decision-making processes.

From macho to mighty moderator

The dying out of the alpha male in top management has initiated a leadership transition from machismo to an empathetic mighty moderator. In the future, this updated leadership culture must also be reflected in the staffing of supervisory board positions. The quota of women in supervisory boards — regardless of the debatability of quotas — can only be the first logical step towards modern company leadership. The next step must consist of the consistent appointment of those with digital know-how to the supervisory bodies. If for no other reason than that they in turn will decide on the appointment of the operative leadership as Management Professor Julian Kawohl emphasizes: “At the end of the day, the supervisory board appoints the board, which means they choose the most important digital leaders in the entire company. It seems to me like a profound understanding of the digital world is fundamental for making the right strategic decisions.”

There is a need for young, digital supervisory boards that from time to time view their role as a perceptible public duty, and who not only have a clue about Machiavelli but also about the Valley. The principle of seniority will become obsolete because, in the world of the future, technology — and digital expertise along with it — is replacing knowledge for the sake of domination. The highest regulatory bodies have to become adept driving forces in order to reforge their raison d’être in the digital age.

Digital expertise is not an add-on but a must-have

It is not that a young generation of managers and companies hasn’t long been ready and waiting at the starting line — minds that have had an impact on the development of Berlin into a global magnet in the tech and startup scene over the last decade. Minds that are ready to take on responsibility. But with the exception of a few example — namely Lea-Sophie Cramer at Conrad, Fränzi Kühne at Freenet, and Lars Hinrichs at Telekom — a head of silver hair still appears to be an unspoken prerequisite for supervisory board positions. In order to not just merely cope with the digital transformation, but to proactively and successfully shape it, German industry has to once again push for a close alliance with the start-up world, increase the accountability of the big players in the tech and digital scene, and integrate them in a strategic and useful capacity. Digital know-how can no longer just be a neat add-on in a job profile. It has to become a must-have when appointing the supervisory board.