FOR years, many of us talked about digitization and digital transformation as if it were mainly a technology problem. We focused on cloud platforms, data analytics, cybersecurity, mobile apps and, more recently, artificial intelligence. Yet after decades of discussion, many Philippine companies still move slower than their counterparts in the region. The real obstacle may not be technology at all. It may be governance.
This is why the new Securities and Exchange Commission (SEC) rules that limit independent directors to a maximum cumulative term of nine years deserve more attention. While the discussion has largely centered on corporate governance, investor protection and board independence, there is another benefit that deserves consideration: better board renewal can help accelerate digital adoption and modernization in Philippine companies.
The issue is not new. A 2019 Bloomberg research remains relevant because the underlying governance structure of many Philippine corporations has changed only gradually. The study found that Philippine companies had some of the oldest directors and longest-serving board members in the Asia-Pacific region. The average tenure was 10.6 years, much longer than the regional average of 6.5 years. One big reason was family-controlled corporations, where founders, relatives and long-time advisers often hold key board positions. A board that has spent decades succeeding under one business model may struggle to recognize when that model is becoming obsolete.
I was reminded of a study released by Microsoft Philippines in 2017. The research is admittedly dated, but its findings remain surprisingly relevant. The top barrier to digital transformation cited by Philippine business leaders was the lack of organizational leadership capable of ideating, planning and executing transformation programs. Another major obstacle cited was the lack of leadership from boards and senior executives. In other words, the challenge was not technology. It was leadership.
That observation still rings true today. In many boardrooms, digital transformation is discussed enthusiastically, yet often at a very high level. Directors approve digital budgets and ask for innovation initiatives, but rarely do discussions go deep enough into customer journeys, data strategy, operating models, talent needs or technology risks. The result is a series of disconnected projects rather than true transformation.
The rise of artificial intelligence has made this gap even more visible. Across industries, boards are directing management teams to “adopt AI” because competitors are doing so and because AI dominates headlines. Yet, many directors themselves are still trying to understand what AI can realistically deliver. Some have only a vague understanding of use cases. Others view AI primarily as a cost-cutting tool. Few ask the more important questions: Which business processes should be redesigned? What data is required? How will value be measured? What governance safeguards must be in place?
When directors lack this understanding, management receives broad mandates without clear direction. Companies then launch AI pilots, chatbots, or automation projects that generate publicity but little business value.
Board renewal can help address this. New independent directors often bring fresh perspectives from different industries, exposure to emerging technologies and experience from organizations that are further along in their digital journeys. They are more likely to challenge assumptions that long-serving insiders may no longer question. They can ask uncomfortable but necessary questions about customer experience, platform modernization, data governance, cybersecurity readiness and AI strategy.
This appears to be one of the intentions behind the SEC’s new rule. Independent directors are expected to provide objective oversight. Over time, however, independence can be diluted when relationships become too familiar. The SEC’s hard nine-year limit opens the pool of qualified professionals who can serve on corporate boards while reducing the risk of boardroom entrenchment.
Unsurprisingly, the policy has been met with resistance. GMA Network was among the most visible, initially challenging the SEC rule and later dropping its lawsuit. The company has since moved toward compliance. Many other publicly listed firms have likewise begun adjusting their board succession plans, reviewing director tenures and preparing for board refresh initiatives in anticipation of full compliance with the SEC framework.
This should not be viewed as a punishment for experienced directors. Rather, it is recognition that governance, like technology, must evolve. A company that refreshes its products every few years, but keeps the same independent voices around the board table for decades creates an imbalance. Fresh thinking matters.
If the Philippines wants faster digital adoption, stronger innovation and more effective use of AI, we need more than technology investments. We need leadership that understands change and governance structures that encourage new ideas. The SEC’s decision will not solve every problem. But it may help bring new perspectives into boardrooms at precisely the time when Philippine companies need them most.
Transformation starts with leadership. And sometimes leadership transformation begins with the board itself.
The author is the founder and CEO of Hungry Workhorse, a digital, culture and customer experience transformation consulting firm.