Wednesday, March 15, 2017

A “Balanced” Digital Board

Yin and Yang balance needs to be considered in the boardroom in regards to making strategic decisions.

Contemporary corporate boards play a critical role in strategy oversight, business advising, and governance practices. The directorship in forward-thinking organizations must have the capability to guide, inspire and motivate a group of people toward accomplishing shared visions and goal, set the leadership tones to influence digital “mindset,” and drive digital transformation. Yin and Yang's balance also needs to be considered in the boardroom in regards to making sound strategic decisions that deliver the real sustainable competitive advantage for an organization. But more specifically, how to build a “balanced” board to fulfill its duty effectively as well as setting the culture tones to achieve digital equilibrium?

The balance of multiple viewpoints to avoid group thinking, and make effective decisions at the strategic level: As to Board performance and competence, the challenge facing organizations these days is related to increasing complexity, unprecedented uncertainty & ambiguity, and increasing rate of change. Hence, digital BoDs need to be multidimensional thinkers who can reflect and offer diversified insight into such situations, to see things from a different angle and come out multifaceted perspectives and balanced viewpoints. The Board is responsible for ensuring an appropriate mix of thought processes, capabilities, skills, knowledge, and experience are present or available for it to fulfill its function. Applying deep insight and rubber stamping are such counter-propositions. Building a high-effective board requires thinking, requiring asking questions, to complement each other’s strength and balance of multiple perceptions, to avoid group thinking or extreme thinking, in order make the sound judgment and improve decision maturity.

The balance of performance and compliance: Boards need to perform and conform at the same time. Conformance without performance adds very little to the firm value. Performance without conformance is not genuine. To some degree, conformance is inherent within the value-driven performance. However, the current governance model is still skewed by too much emphasis on compliance, too much "hands off." Some suggest that a new conception of corporate governance is required. The Board's role, in large part, is to make good decisions that enhance the value creation for the organization. It’s important to structure the agenda so strategic and performance related issues come first and compliance issues towards the end.  More specifically, this "performance" oriented board agenda should be focused on the maximization of business performance and potential, business capital allocation, shareholders’ value. The board should also strike the right balance between logic and intuition. Logic and rationalism keep business on track, but standard businesses are not viable. Businesses must perform and perform well compared to their peers to be successful in the long run, and it takes some form of emotive connectedness by the board to touch the heart and lead effectively.

The balance of setting rules (digital principles) and advocating innovation - to practice innovation governance effectively: Boards need to advocate, steer, and sustain innovation.  Innovation needs a level of guidance. It has to deliver business objectives, but it needs the right kind of governance to thrive. Governance is to steer, oversee, and monitor business management, including innovation management. Governance isn’t just about putting restrictions on what you can do, it is also about monitoring and knowing when things are not going to plan so that you can take appropriate action at the right time. Look at innovation and governance as a continuum. The leverage point is to frame innovation and keep focused, but not adding too much complexity. Innovation cannot be separated from a specific business purpose and in a broad context, governance is critical for meaningful innovation. Innovation and governance seem to be the opposite practice. When you say innovation, you could really mean maximizing value to the business, when you say governance you could mean minimizing risk. So they are complementary to strike the right balance and achieve a premium business result.

Digital board should learn how to “balance” well, the capability of striking the digital balance can differentiate a digital leader from a follower; a change agent from a laggard; an innovator from a mediocre, and lead changes as well as digital transformation seamlessly.


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