Sunday, January 12, 2014

A Cognitive Board

Ultimately, A Cognitive Board is seeking the "Diversity of Thought" & "Color of Character."

The corporate board plays a significantly crucial role in exemplifying leadership qualities and practicing governance disciplines, but how to build a cognitive Board to strengthen independent thinking; enforcing the multitude of innovation, capturing profound insight and catalyzing rapid growth at the age of digitalization?

First, Boards need to have qualified candidates who bring identity and cognitive diversity to a Boardroom. Anyone who is selected to sit on a corporate board should be fully qualified to bring fresh insight to mind the cognitive gap. They should be selected based on performance, experience, and qualities the candidate brings to a board. Some of these credentials are proven experience in executive leadership, entrepreneurship, strategy development, risk & crisis management, global empathy, international experiences, technological vision and some degree of financial literacy.

At the deeper level, the Board diversity being sought should be “diversity of thoughtand 'Color of Character': What can get lost in the profound understanding of the diversity is the fact that identifiable community sectors reflecting (say, gender, age, and ethnicity) themselves each encompass a wide range of diversity of thought. By simply appointing representatives of each sector to a Board may well add some degree of diversity, and yet may well fall considerably short of the breadth of diversity properly sought, as the diversity of thought more often does not come from the diverse physical identity; but from one’s thinking process, cognitive difference, learning habit, experience or skill sets., etc. 

The composition of Boards should reflect approximately the profile of the company' stakeholders: shareholders, employees, customers, and suppliers. The non-executive members should be selected for their ability and willingness to constructively challenge management and this is less likely to happen if they are related to, or are close pals of, the executive members. From the business case standpoint, candidates from diverse groups don’t necessarily always bring better insights; but, a different perspective. These different perspectives will help mitigate “group think” and can help the board better relate to their stakeholders.

Independent thinking enforces governance, and diversity strengthens independence: Diverse candidates (race, age, and ethnicity) have a lesser chance of being interlocked, over-boarded, over tenured, and socially, management captured. These are a few examples of factors compromising board independence. In the context of the desirability of diversity in the Boardroom, one continuing theme has been an examination of the existing Boardroom make-up, and by identification and description of who currently sits at the Board table, consideration of the identification and description of who therefore is missing. 

The board needs to extend its innovation lens via cognitive difference: Diffusion of Innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures. The board needs diversity, or even more crucially, cognitive difference, to provide a perspective that goes beyond the gaps in board discussion. They need to incorporate their unique viewpoint on people, innovation, CSR, etc into their solid knowledge of overall business & technology. Until then, they will be seen as the 'diversity' contributor- the ones who fill in the gaps.

Therefore, a cognitive board needs to embrace diversity; but a diverse board may not always be filled with “the diversity of thought”; a high mature Board should have the cognitive difference, complementary skills, and collective wisdom.


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