Study Finds Board Level Digital Experience Lagging in Asia

Asian firms are lagging behind their counterparts in the United States and Europe when it comes to attracting board directors with digital savvy, according to new study of the top 100 companies in the U.S., Asia and Europe respectively, drawn from Global Fortune 500 companies by global executive search and assessment firm, Russell Reynolds Associates.


Of the 300 companies assessed worldwide, 18 had highly digital boards, 69 had digital representation, and 210 had no digital board members


In Asia, none of the 100 largest companies could be said to have a highly digital board and only 8 of these companies had at least one digital member.


State ownership or family control of firms in Asia seen as an impediment to change in the digital area.


The lion’s share of highly digital boards (88%) occur in the United States.


Companies are scrambling to attract senior digital talent to their boards. 


Digital increasingly factors into every layer of a business, and businesses need digital board members to drive transformation from the top, as the digital economy grows.


“In an increasingly digital environment, boards must command a certain level of digital expertise in order to provide counsel to the CEO and ask the right questions of senior management,” said Tuck Rickards, Partner at Russell Reynolds Associates and a leader of the Digital Transformation Practice.  “Through our recently established digital transformation practice, we hope to further assist companies in building digital DNA into their senior leadership ranks.”


So why are US companies leading the pack?
Russell Reynolds Associates’ analysis suggests that Europe and Asia lack the strong pool of digital talent regularly funnelled into US companies from Silicon Valley.  However, there is light on the digital horizon for Europe, with signs that the need for digital expertise is being fulfilled.


Last year in Europe, the percentage of new board members with digital backgrounds more than doubled to 5%, and is projected to increase to 8% in 2013.


In the U.S., digital director appointments are projected to hit nearly 20% this year, from a base of 15%.


Why is Asia (and China) lagging?
In Asia, none of the 100 largest companies examined can be said to have a highly digital board and only eight of these companies have at least one digital member. On its face, this might seem counterintuitive, given the fact that Asia has a stronger digital infrastructure than much of the world, boasts an active base of digital early adopters, and is home to companies like Samsung, Tencent, Alibaba, China Mobile and Sony that have been significant drivers of digital innovation.


All this is true. But many of Asia’s largest companies are state owned or controlled; even those companies that are not government controlled are for the most part still addressing the role of the independent director—since many are controlled by a dominant shareholder or family.


A board dominated by independent directors is a prerequisite for being able to think about board composition in a strategic way.


Highly digital boards have three or more digital board members, while companies with ‘digital representation’ have at least one.


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