Thursday, September 26, 2013

How to Shape a Culture of “Learning Board”

''Learning'' and ''Performance'' are key fundamental themes of better organizational governance.


Due to the increasing velocity and variety of changes in the digital era, corporate board, as one of the most significant governance bodies, also faces the unprecedented changes, including the new perspective of boardroom composition, the priority of boardroom agenda, the stakeholder engagement, as well as the merging strategies or risks driven by the latest digital technology. So what kind of board should be ideal, and how to shape a culture of “learning board” in adapt to the speed of changes?

1. Board’s Collective ‘Learning Capability’ 

The first principle of an effective Board (Decision-Ready Board) needs to be knowledgeable, capable and committed in order to contribute to decision-making quickly when required and effectively at all times.

  • In order to build such an effective and innovative board, start with a series of self-assessment questionnaires in the boardroom: Do we have cognitive diversity for genuine discussions? Do we have experience from good and bad days? Do we have persons with new ideas and approaches? Do we have a balance between the driving style and analytic style? Do we have board members devoted to their task? Do we have persons to bring different perceptions for strategy or governance issues; the board, as a whole, do we have the sufficient learning capability in leading the changes?., etc.
  • ''Learning'' and ''Performance'' are key fundamental themes of better organizational governance: And it is the organization as a whole, not just in the boardroom, from top-down, needs to systemically learn how to adapt and renew itself over time reducing potential disruption risk.
  • The board's role is to enable that dynamic governanceIt purposefully embeds by design of these fundamental notions of ''Learning'' and ''Performance,'' in the design and linking, the dots get connected across culture, strategy, execution, and reporting, so that everyone can see and agree on what has been done and what should be done next all these with proper check and balance. A governance approach drives organizational clarity throughout instead of complexity and ambiguity.
  • Board learning capability' is cultivated via 'mindful' learning not 'mind full': It's about removing the roadblocks to collective learning, focus more on performance and less on conformance. The spirit of the organization comes from the top, as a culture of ‘learning board’ will set the tone to shape the corporate culture, pointing better decision making for everyone, in the allocation of limited resources with the clear purpose to drive sustainable performance. The richer knowledge is shared and leveraged in a learning organization which is shifting from what's next to what should be next! 

  • Boardroom diversity goes beyond gender or race. it’s more about the cognitive difference: Every board member, especially those belonging to diverse Boards by the structure are different observers of the "reality" and should add her or his self-reflection so the anticipation issue should be tackled. The board also needs oversight and development to enable, to oversee if the group is working effectively and to boost the learning processes inside the board by resolving a number of learning challenges.

2. The Board Governance for Value Creating and Value Protection

The Board is responsible for contributing to both protecting values (the risk side) and creating value (the growth side) for the organization.

  • Risk vs. Growth: Assessing the organizational strategy is one of the key roles of the board: It must be done in consideration of the risks associated with these strategies. The one part of the governance process is to create value depends on understanding the intrinsic risk of the strategies.
  • WHAT & HOW: The corporate values (WHAT) board governance needs to create and protect includes such as, legality, prudence, empowerment, quality standards, etc, as they are vital to business success; then, finding or researching the most effective HOW(s) to accomplish the WHAT. Without the understanding of the WHAT, the HOW will wonder all over the place and be debated endlessly.
  • Diversification is a component, and in some cases a very good initiation of value creation: If it builds on and across supports other assets, people start to think, understand, learn and work together leading to better decisions and better performance, as we live with complex systems, it takes a ''different'' thinking, uses the right tools and leverage effective process in governance practices.
  • Although a Board should be long-term oriented, the perspective of a Board must encompass the past, present, and future when assessing risks and growth opportunities: Board governance (as opposed to other entities with governance authority and responsibility) is the delegate process by which a board carries out the governance of the organization.
No organization today wants to keep looking in the rear view mirror to move forward, the strong governance can eliminate the risk of dysfunction. With experienced and competent NEDs on board and a culture of a "learning board", there is plenty of opportunity for boards to improve their effectiveness.





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