Monday, July 13, 2015

An Adaptive Board

The measure of intelligence is the ability to change. - Albert Einstein

Corporate Board plays a significant role in over-sighting strategy and practicing governance discipline. The board needs to retain the ability to capture immediate and future opportunities which will enhance its shareholders’ benefit. What makes a board adaptive and effective has to do with cognition, skills, and attributes of BoDs, and that is the most difficult to access. With the increasing speed of changes and unprecedented business velocity and uncertainty, what is the composition of the board in terms of minds, skills, and experience need to be in order to add value to achieving the shareholders' expectations? And how to build an adaptive board with learning agility and complementary capabilities and skills to lead through the ongoing changes and radical digital transformation?

An adaptive Board embraces heterogeneous BoDs with cognitive differences and diverse background and experiences: While turbulence is not new, and uncertainty is the new normal, there is an ever-increasing need for executive-level strategic acumen to capitalize on opportunities and mitigate risks in the ever-more-sophisticated business environment. As boards look to identify new director candidates, those with thought leadership and extensive experience in the twenty-first-century drivers of change such as digitization, global competition, and business model innovation can add value, innovate board and catalyze boardroom digital transformation sooner than later. While adding “new blood” via digital talent pipeline is a step away from traditional board recruiting practices, the advantages can far outweigh the risks. As Einstein well stated, “The measure of intelligence is the ability to change.”

BoDs with an adaptive mind can ask profound questions because they have better learning capabilities: Adaptability is to be understood as the ability to adapt self efficiently and fast to changed circumstances. The adaptive BoDs, therefore, have an open mind that is able to adjust the thinking processes according to the changes in the business environment, or a learning mind to absorb all necessary knowledge and abstract it into insight and wisdom. Directors of the Board with an adaptive mind in attendance have a responsibility and be more skillful to ask ‘right’ questions. Good board culture is essential, but too many boards assume that a "good culture" to fit in is one where there are compliance and group thinking only. BoDs need to probe with great questions to identify the key issues that should lead to their decision. Organizations should expect nothing less from the board. Either a new director or an established experience director needs to utilize their knowledge, experience, and wisdom to help their company strategize and focus on areas of opportunity. That needs to be the mantra for participation through open, honest discussion with ground rules based upon equality of all members and the sole focus of ensuring the company's success.

An adaptive Board goes beyond compliance and makes changes to enhance performance: Organizations are made by people and people are the key element in a self-adaptive organism - today’s digital organization. An adaptive Board has a better collaborative attitude and collective creativity to practice governance and risk management. There is a strong ethos element to corporate governance which cannot be measured by check-box compliance methodologies. Complying with regulations and guidelines is not only just the beginning, but such a perspective upon the "legality" of past practice can also be inimical to the development of forward-looking, risk intelligence mechanisms of management. A forward-looking and adaptive Board has to regularly evaluate their performance, brings circular vision and enriched information and knowledge, scrutinize the governance principles down to individual directors contributions to decision making for enhancing board performance with a focus on business’s long-term survival and profitability more likely.

So how adaptive your Board depends on the Board’s current makeup, culture and which "gap" needs to be filled. Adaptability and creativity are to challenge the current level of 'group' think. The important issue is how the board accommodates diverse opinions and how they assess them and converge the diverse thought into wise decisions all BoDs support and build a high functioning governance body to bring values and make the leadership impact on the business for the long run prosperity.


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