Wednesday, March 28, 2018

How can BoDs Overcome Barriers to Get out of the “Comfort Zone”

Performance Evaluation and strategic or long-term planning should top the list in the digital board’s agenda.

With the increasing speed of changes and frequent digital disruptions across vertical sectors, the role of the corporate board also becomes more dynamic and strategic. No longer are boards sitting in a room and just voting on various policies for business compliance. They need to focus on their own performance as well as the performance of the management team. Dynamism means free and progress. It is the power of BoDs as dynamic leaders to drive changes. But what are some root causes of the board ineffectiveness, and how can they get out of the comfort zone and ride the change wave for steering the board in the right direction?

Lack of communication around assumptions, expectations, knowledge, and speculation: Corporate boards oversee strategies. When trying to determine the macro environment and how the factors there influence business strategy/plan one way or another, it is difficult to move away entirely from assumptions. If the assumptions are WRONG, the CONCLUSIONS also go wrong. The homogenetic boardroom setting with groupthink often create more blind spots and make wrong assumptions when change becomes nonlinear, and uncertainty & ambiguity become the new normal. Everything has more than one side and you have to master them all, including assumptions. This is particularly critical at the board level as they oversee business strategies, advise top executive teams, and make business policies. Every situation has choices, every situation has known unknown and unknown unknowns, the only way we get to understand these is by leveraging multidimensional thinking to handle issues mindfully, understand the systemic wholeness with contextual intelligence, and communicate around those assumptions, knowledge, speculation, and expectations thoroughly. “Seeing” the context you are part of, allows you to understand the problem with context, identify the leverage points and then choose the decisive factors, in an attempt to scrutinize the strategy objectively and make sound judgments to steer the organization in the right direction.

Fail to understand the gap between knowledge and insight: Many Boards and independent Non-Executive Directors (NEDs) are unfortunately focused on the data and information fed to them, and not on how and where do they get the information, as well as how to capture insight. Understanding the gap between knowledge and insight helps digital leaders such as board directors to be not overwhelmed by the exponential growth of information and abundant knowledge. Discover how & where to find valuable information, not just the information itself. Also, try to capture the Insight that enables identifying the root cause of a problem or the core issues of a situation which leads to understanding and resolution. You need to build your own trustful and diverse resources for absorbing knowledge, learning to activate and use your own mental band-stop filters, but always be objective, to avoid unconscious bias or silo thinking. There are clear sources of appropriate material that will help you find "the right answer." At the board level, the collective insight is superior. If a team clicks it may reach shared insight on the situation and improve governance effectiveness.

Some directors get too "comfortable" in their role on a board, but complacency stifles change and innovation: Contributing to the business strategy and business change agenda are the two places where most value can be added by BoDs. With rising digital tide and cascade change waves, the business ship must get to the New World to grow. You don't have any choices but to change your sails to move forward. The only way to get there is to be a proponent of change. The energy for changes needs to flow down from the top (boardroom). When the board gets stuck in the comfort zone for too long, they will slow down the pace of changes, and decrease the directorship effectiveness. If you want the business ship goes in the right direction, you must adjust your sails with the direction of the wind for getting you to the defined vision. Digital is the age of innovation, it is one of the requirements of the Board members to participate, or even lead, in constantly suggesting areas of innovation. A highly diverse BoD almost always accelerates innovation dramatically as well as spurs creativity proactively.

Performance Evaluation and strategic or long-term planning should top the list in the digital board’s agenda. From the leadership perspective, besides years of experience and vertical expertise, BoDs also need to have the digital acumen for setting key tones of the digital paradigm shift and getting out of the comfort zone in driving changes and catalyzing innovation.

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