Wednesday, December 4, 2019

The Digital Corporate Board’s Top Priorities and Responsibilities

The directorship in any organization must be able to make influence from mindset to behavior and evolve to what is needed next for radical changes.

The corporate directorship is the leadership discipline to steer the organization in the right direction. Whereby the BoD assumes the dual role of guidance and governance steering, whilst leaving the day-to-day leadership/management process in the hands of the C-level executives. The new breed of BoD as the directorial role should be able to think outside the box, bring a fresh viewpoint to pinpoint the possible blind spots and improve leadership maturity. Here is a set of digital corporate board’s top priorities and responsibilities.

Strategy oversight: Digital strategy is the process of specifying an organization's vision, goals, opportunities, and initiatives in order to maximize the business benefits to the organization. The corporate board’s strategic oversight is critical to identify and strengthen the weakest link in strategy management and ensure the business success for the long run. More specifically, the logical scenario of the boardroom guidance is to participate in strategy crafting and oversight, and offer further constraint or guidance to the implementation of the strategy.

A strategy-focused corporate board not only has oversight of strategy but also influences the process as well. The process of strategic planning is the best indicator of how well a corporate board really understands and invests time in learning about their companies and also identifies the levels of collaboration, synergy, trust, and confidence that exists between the board and executives of the organization.

Performance monitoring: The Corporate Board's role, in large part, is to make good decisions that enhance the value creation for the organization. Ultimately, the corporate board takes the praise or blame depending largely on their ability to influence the business outcomes. Performance monitoring is not limited to financial performance only, but also to the firm’s performance in creating value for employees and customers. The "performance" responsibility of BoDs should be focused on the maximization of the business capital allocation and improvement of the shareholder’s value.

The board of directors needs to focus on their own performance as well as the performance of the management team. Corporate boards should make a performance driven agenda focused on the progress toward the goals, targets, schedules, etc, of the value maximization plan. It's not only about the performance today, but also about the future and that means an open mindset to change with a long-term perspective.

Governance enforcement: The corporate board oversees risk/governance. Governance is a sophisticated process that if well executed, will lead the business to reach the next level of business maturity. The corporate governance has a direct link to each business and its processes not only from the financial results, but also from the involvement and signs being displayed inside the organization about what guidance, values, and principles governing the company's commercial activities.

High mature corporate governance creates effective decision-making system and good controlling system which can assure the corporation’s operation under the correct directions and behaviors correctly. Governance, auditing, risk management, regulatory issues, mentoring and coaching, openness to communication are some of the areas of boardroom competencies though it may be contextual.

Risk Intelligence: With the increasing speed of changes and digital velocity, the corporate board has the responsibility for governing risks, more specifically setting the risk appetite and risk framework for an enterprise on the advice of management. They are able to observe thoroughly, think critically, share profound perspectives, and build an effective framework for improving risk intelligence.

More specifically, corporate boards need to work closely with the senior management for mastering risk intelligence, identify both business risks and opportunities and keep focusing on doing fundamental things right. Boards need to master risk intelligence by identifying both business risks and opportunities and focusing on governance effectiveness and risk intelligence. The board should set good guidelines to manage risks holistically or in a more integrated fashion for the long run.

Leadership succession: Senior leadership such as board directors makes influence from mindset to behavior, and evolving to what is needed next for radical changes and societal advancements. The corporate board’s succession plan needs to be well aligned with the board composition, as well as the business’s strategy evolution and digital transformation. Like any type of leadership, The BoD leadership needs to be future-oriented, steer the organization towards the digital transformation journey with a clear vision, a solid strategic roadmap, and effective feedback system.

The criteria to select BoDs perhaps include experience in the industrial ecosystem, high-ethical standards, independent thinking capability, communication objectivity, sound judgment, and the ability to make effective decisions. Leadership strength is both innate and can be developed with the right mix of leadership mindset, skillset, and toolset. Leadership maturity directly impacts the overall business competency and maturity.

The modern digital board has many responsibilities, also gets a lot of distractions. It needs to laser focus on the most critical perspectives to steer the business in the right direction, prioritize and laser focus on the most important issues. The role of corporate board members must always focus on the strategic initiatives of the organization amidst the mounting pressure of governance, regulatory compliance and risk management responsibilities.

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