Wednesday, August 29, 2018

Three “S” to Digitize Boardroom

The Board is responsible for contributing to both protecting the business values and creating the business value through effectively steering, strategizing, and scrutinizing.

The digital organization is a living thing with the ability to continually change as the world changes and evolves with an intersecting and interacting business ecosystem seamlessly. If a Board is to fulfill its fiduciary responsibilities to its stakeholders, it needs to take a professional and systematic approach for assessing strategy, prioritizing agendas, advising changes, overseeing risks and keeping track of business performance by applying efficient tools. The corporate board is also the mastermind of the digital transformation by focusing on the following three “S.”

Steering: Digital organizations are complex systems that are dynamic, self-evolving, self-adaptable, and self-perpetuating. Although you cannot predict every event happening on the journey, surely you need to proactively create a clear vision. Digital boards are like the steering wheel of their company, leading the business toward the uncharted water and blurred territories for reaching the well-selected destination. Thus, the directorship in any organization must be able to lead, build abilities to advise, inspire and motivate. The board directors as senior directorial roles have both privilege and responsibility to “talk the walk,” make the good policies or set digital principles to drive changes and lead digital paradigm shift. In order to steer effortlessly, it’s important for the board to avoid groupthink, gain the contextual understanding of people, process, and technology, embrace the diversity of thoughts to fill blind spots or cognitive gaps. The effective board brings together such tremendous skills and experience mix to steer the change confidently.

Strategizing: The board should be highly accountable for strategy oversight about the future of the company. Effective strategy oversight requires sincere commitment to be independent, insightful and timely. But in some companies, a strategy exists only as a "dust collector" on some shelf. A truly strategic Boards can add real value to management in the strategy arena. Especially if management confuses strategy with the longer-term financial plans. A strategic board should be knowledgeable enough to help the management set broad strategic goals. They need to educate themselves by hearing different views about the organization, its environment, and strategic alternatives. The hot topic about strategy must be followed (with some flexibility, of course) at every board session, to ensure that management follows and does not "forget" the strategy. The boardroom sponsorship, "executive management buy-in" or "executive management's unconditional collaboration" are all critical to achieving the seamless strategic alignment. Objectives and tactics are the appropriate points of delegation to management.



Scrutinizing: Having critical eyes to scrutinizing the management in a constructive way means BoDs are able to see underneath the surface, ask insightful questions, and discover the hidden connections. It involves significant critical thinking elements relying heavily on the judgment in evaluating ideas, planning implementations, assessing risks, and evaluating business results. Consider each risk in terms of its immediacy, impact on the organization and the organization’s ability to absorb the shock and survive to repair itself in the worst case scenario. In practice, the board's role is to pull management out of the trees to see the forest; to understand the business landscape through the broad digital lens, to continue questioning on important issues where the management's answers do not make sense, and to continue looking for the new perspective or alternative solutions. Digital BoDs with the right dose of “doubt” show the constructive skepticism for brainstorming changes and advocating innovation. They are able to quickly assess any numbers and facts they are given, ask tough questions, collect invaluable feedback, update digital principles for harnessing communication and enforcing governance effectiveness.

The Board is responsible for contributing to both protecting the business values by monitoring the risk and creating the business value by inspiring the growth and lead the organization forward through effectively steering, strategizing, and scrutinizing. 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.

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