We have all been transported to Tokyo recently, watching in admiration as teams worked together to produce outstanding results, often against all odds. In fact, many world records have been broken, even without the roar of the crowd cheering the athletes to push even harder, faster and better than ever before. What we don’t see is the preparation – the years of training, the dogged determination and the hardship that has gone into producing outstanding results. It has many parallels to business teams working together over months and years, so they produce the result when it matters – to launch that new product, to digitally pivot the business model or to acquire the competitor who takes them into a new space. But many businesses don’t feel future ready. In fact, MIT Sloan estimated that only 23% of businesses feel they are ready for the future challenges and opportunities they face.
The board of directors clearly plays a pivotal role in ensuring organisational growth and future readiness. Board members have a responsibility to adopt a forward-thinking mindset by envisioning the future, scanning the environment, identifying opportunities, embracing innovation, and helping shape and steer a future strategic course for the business. The best boards are setting the assumption of constant change to access critical skills sooner, innovate faster and operate more effectively, ensuring the organisation is building capability in experimenting and executing – engaging around the board table with a ‘what if’ mentality.
I believe there are five areas where boards could play an even bigger role in ensuring future readiness.
- Their role in corporate strategy
There is strong sentiment across all board members that not enough time is spent on company strategy. The natural inclination is to focus on performance in the here and now and spend less time on the long game. The focus on quarterly, half yearly and annual performance, tied to executive compensation, drives this short-term thinking and planning mentality. Boards also have to balance a seemingly endless list of priorities, with governance and performance matters often crowding strategy out of the agenda. Strategy is not a short conversation tagged on to the end of a board agenda or a reliance solely on an annual strategy day. Rather strategy should be an ongoing agenda item with the board playing four pivotal roles – custodian, governor, shaper and co-creator. They are responsible for ensuring the strategy is fit for purpose, inputting to it, reviewing and stress testing it, owning it and providing critical oversight to ensure robust execution.
Tactics to deploy include:
- Consider if the board is playing the four key strategy roles – custodian, governor, shaper and co-creator with equal effect
- Build strategy execution review and monitoring into the regular board agenda
- Understand the extent of transformation needed to deliver on the strategy to gauge how significant it is from what it is today, perhaps by asking what new and different resources are required to deliver it?
- Contributing to the evolving the business model
What the pandemic has given us all is an opportunity to take a fresh look at our businesses and determine how we can start to lead a disruption in our market. Technological, social, geopolitical and environmental changes require boards to do the work needed to guide their companies to seize the upside of disruption, manage risk and drive performance. Now is the time for bravery. I have found, maybe you have too, that a year ago companies that rejected opportunities for being too disruptive are now finding they have not been disruptive enough. Many companies have had to pivot much faster towards digital. The role of the board is to ensure the business model remains fit for purpose and ensure it is stress tested against all future scenarios. A diverse and inclusive board tends to act as a catalyst for innovative thinking in this regard.
Strategies to deploy include:
- Take a fresh look at your business through the lens of, say, an entrepreneur or an activist investor and ask ‘What would you see as the biggest opportunities?’
- Investigate what new or adjacent spaces have emerged to explore. This involves looking beyond the immediate organisation to determine where future growth could come from.
- Seeing culture as a key value driver
Culture, and its importance in maintaining brand and reputation, connectivity of workforce and wider social licence to operate has never been more important. This has recently been brought front and centre by the fact that the new norm is a hybrid and asynchronous model of working. Culture has quickly risen to the top of the agenda of most organisations. Today we all face constant scrutiny of what our organisations say and do by activists, investors, social media and a much broader set of stakeholders than there might previously have been. On top of this, we are in the midst of a workplace revolution where the expectations are much higher around trust, empowerment, inclusion, responsibility and innovation.
The role of the board in respect of culture is changing too. Board members are being tasked with more formal stewardship of employee engagement, with the board as a whole needing to set and meet a much higher standard. In the past, culture was reserved for the board meeting where you got the Employee Opinion Survey results, but this is no longer enough. Good boards are being innovative in their oversight of human capital and see culture as a key value driver.
Tactics to deploy include:
- Look at a broader set of cultural data points including observing how the organisation works day to day, looking at the organisational narrative – what stories are being told and by whom, assessing who stays and who goes, looking at HR metrics, for example retention, tenure, progression and gathering direct customer insight as examples
- Check on the how inclusive, accountable and collaborative the culture really is – a key indicator of whether an organisation will thrive in a hybrid and asynchronous model of working
- Consider what message the board is sending – a clear tone from the top about culture is symbolically important to the rest of the organisation
- Get digital into the design
The role of technology is changing the business landscape at a rapid pace, propelled by the pandemic. New products, new services and different business models have emerged, while others have become obsolete. Boards, it would seem, are less well prepared in this area, with many studies concluding that few boards have a fully comprehensive digital strategy. This is compounded by a smaller number of digitally experienced board directors. A diverse range of skills and experience is critical to future proof your board and boards must continually evolve to embrace transformation and ensure effective performance. The hyper connected world also makes all of our lives infinitely more hackable, and boards need to fully understand the assets they are protecting and the risks to those assets. With digitalisation affecting everything from operational efficiencies and revenue generation to the risks of cyber-attacks and security breaches, it’s unlikely any business is immune to potential disruption.
Tactics to deploy include:
- Take a mental snapshot of the board and ask, ‘Does this group of people have the future relevant skills to shape, challenge and govern the business?’
- Build diversity into everything you design, ensuring all voices at the table
- Ensure the board has an expanded view of risk with technology-enabled compliance, monitoring and mitigation
- Understanding the organisation’s impact
This is about understanding the impact the organisation is making on the world and ensuring this is going to inspire future generations of employees, consumers and advocates through a clear purpose. Board members have a responsibility to ensure the purpose ‘why we exist’ is well articulated and to test leadership commitment to the purpose, ensuring it is being ‘lived’ at all levels. Strong boards are also proactive in collecting a diverse set of perspectives which could impact the business from a wide range of stakeholders, including investors. This helps to inform decisions about strategic direction, emerging risks, purpose and the long-term health of the business in the context of the broader economic environment.
Tactics to deploy include:
- Get deeper proximity to customers to build trust and understand their deepest challenges
- Consider what you are hearing about how your stakeholders view your strategic priorities
- Determine how assured you feel that the purpose and values are being really lived
With these five strategies deployed, boards can help ensure the organisations they are part of become future fit and ready like the Olympians we have just witnessed.