A Value-Added Board

The value-added Board brings wisdom, ‘deep common sense,’ balance, improved strategic thinking, creativity, and more.

Corporate Board is one of the most significant governance bodies in modern businesses. Generally speaking, Boards have a couple of main functions such as strategy oversight (input, review, etc), governance practices (monitoring, risk management), service (providing advice & support to executives), and resource provision (opening their networks, etc.). However, from industry research, a very low percentage (less than 30%) of BoDs understand how their organizations create value. This is an absolutely abysmal statistic and is reflective of the fact that most public company boards have not correctly understood what their primary responsibility is. What’re the principles and practices to run a value-added digital board though?

Value Management: There was a time not so long ago that "values management" was recognized as an important adjunct to an extension of "rules management." Generally speaking, Value Management is about satisfying the expectations and the resources to achieve them.
-Rules can't cover every situation; when there's no rule extant, multi-dimensional business values must guide BoDs’ judgment in making sound decisions.
-Values Management requires a close examination by all of the organization's Vision, Mission, and Values, with a thorough examination, and leadership - driven operationalization of the values with examples from organizational memory and role-playing to achieve the values in a situation where the rules don't provide adequate guidance.

Strong Intent and learning agility: Board members should be joining the boards because they have the strong intent and learning agility to contribute to the maximization of the company's full potential and are unwilling to settle for anything less. They need to go beyond "understanding the strategy" to a deep dive into the businesses to further understanding the culture, the business capability, and competency, etc. Only by doing this, can the board genuinely understand the value creation opportunities and risks available to the company which will then enable the board to engage with management in the development of a value maximization plan.

The laser focused agenda: At the majority of the time, the board agenda should be focused on the progress toward the goals, targets, milestones, etc. of the value maximization plan. In other words, governance should be about business. The meeting should not entail just polite conversation but should be highly engaging and even heated at times if issues are to be debated in the manner necessary. Further, much of the process of deep debate and discussion around the plan progress is the process that facilitates high-level management accountability. What is needed is clear context, and this is achieved by precisely defining that the board's primary responsibility is to ensure the maximization of capital allocation, company performance, and shareholder value. Boards need to be held more accountable and it all starts with ensuring the governance are sufficiently robust to force transparency and acknowledgment that the directors are responsible and accountable to the shareholders for successfully leading the business and protecting the shareholders' investment.

The value-added Boards bring wisdom, ‘deep common sense,’ balance, improved strategic thinking, creativity, focus on shareholder and stakeholder communications, practice better governance, better oversight, multi-dimensional value management, and better risk management with strong discipline and self-assessment.

Posted in: Board Room,Digitalization