Monday, December 14, 2015

An Insightful Board

The board needs to extend its insight and innovation lens via cognitive difference.

At today’s “VUCA” digital dynamic, organizations face both unprecedented opportunities to grow and hyper-competition or great risks to survive. Therefore, the corporate board plays a more significant role in overseeing business strategy, setting principles and policies, making the judgment and assurance of corporate action within a framework of practical knowledge. Not only do today’s BoDs need to have sufficient knowledge to understand the business ecosystem, but also they need to have the collective insight to present today and foresee the future. But how to build an insightful digital board?

Cognitive diversity: 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 for minding 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 and crisis management, global empathy, international experiences, technological vision and some degree of financial literacy. At a deeper level, the Board diversity being sought should be “diversity of thought” and the “color of the character.” An insightful board built on the diversity of thought more often does not come from the diverse physical identity; but from one’s thought process, cognitive difference, learning habit, recombinant capability, diverse experience or skill sets., etc. The board needs to extend its innovation lens via cognitive difference. The board needs diversity, or even more crucially, cognitive difference, to provide a perspective that goes beyond the gaps in board discussion and shares the insight about the multitude of business disciplines and practices.

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 have a learning mind to absorb all necessary knowledge and abstract it into insight and wisdom. Directors of the Board with insight have a responsibility and be more skillful to ask ‘right’ questions. 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? BoDs with insight and foresight about the business can ask profound questions because they can observe thoroughly, have better critical thinking ability and learning capabilities. Being insightful means that you need to dig into the root cause, not just pointing out the symptoms, framing the questions first before asking them, having both content understanding and contextual intelligence.

Information savvy: The Board's role, in large part, is to make good decisions that enhance the value creation for the organizations. Insightful boards not just crunch finance numbers but also get a new charter to focus on understanding more about KIDM - knowledge-information and data management. To gain business insight, the BoDs need to become more information savvy and IT-friendly. The BoD may not be interested in data itself, but surely they would be interested in the V factor -VALUE it can bring to the table. KIDM improves measurably with analytics, as the speed, accuracy, and precision of the decision which has a new level of importance and competitive value. So an insightful board will leverage information and analytics to make strategic decisions.

The matter of fact is that the changes sweeping the world are hugely disruptive and there is nowhere to hide. The changes are touching every industry and activity, but they have yet to produce a wave of response at board level. Hence, boards need to be more innovation-driven and information savvy, more insightful and influential, focus on many prioritized issues regarding people, process, and technology to call themselves the corporate stewards.


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