Sunday, June 11, 2017

The Digital Board’s Composition and Leadership Inquiries

The board of directors is the de facto guardian of the modern organization and the mastermind of digital transformation.

The corporate board plays a critical leadership role in strategy oversight, business performance monitoring, leadership advising, and governance practices. The question is whether there are enough people with the proficient skills and expertise to do the job in the heat of today’s boardroom facing business uncertainty, rapid changes, continuous digital disruption, and unprecedented competitions. How should BoDs get an in-depth understanding of their role and responsibility while the business change is accelerated across the business scope and the knowledge life cycle is shortened significantly? Here is a set of digital board’s composition and leadership inquiries.

Change is inevitable, specifically on board refreshment, when and how do you tackle the issue of change in the boardroom? The corporate directorship is the leadership discipline to steer the organization in the right direction. While there are many components of leadership, one of the most important ones is the ability to adapt, model, and influence change. We live in a world where change is the norm and if either individuals or businesses don't embrace it, accept it, roll with it or make it happen, they are not going to be successful for the long-term. Either at the boardroom or the frontline of the business, three things that are inexorably linked together are change, growth, and learning. Effective leaders have a very high comfort level with change and understand standing still is not an option in today's world. Hence, Change Management should be one of the most frequent topics in the board discussions. From the board’s composition perspective, the board needs the diversity of thoughts and inclusiveness of culture, to make sound judgments and stimulate creativity. It's about people being willing to be held accountable, who have the gift of self-reflection, common decency, unique insight, and common sense as well. One of the biggest challenges in this complex, multi-polar world is the fact that we need different perspectives, different knowledge/expertise, and different ways to solve a new or old problem. BoDs need to incorporate their unique viewpoint on people, innovation, information & technology CSR, etc., into their solid understanding of overall business and practice the governance discipline effortlessly.  The board must set an example of leadership which permeates through the entire organization and even the hyperconnected digital ecosystem.

What is the role of the Board vs. management? Generally speaking, BoDs direct and oversee, like the steering wheel of the business vehicle. Directors need to be able to guide the senior management team through effective questioning, coaching, advising, and make an assessment of the business strategy and the organization's strategy execution. Board Directors need to understand the difference between being a Director and the Operator of the business. Strategy planning is usually a business management practice, and risk management is governance discipline, they have an interdependent relationship. On one side, they need to be managed independently at a higher level, such as, the senior executive team crafts strategy, but the board oversees risk/governance; on the other side, they are not completely silo, should always be interactive, communicative, and mutually enforce with each other at the operational level, to ensure business effectiveness and maturity. Governance, auditing, risk management, regulatory issues, mentoring and coaching, openness to communication are some of the areas of boardroom competencies though it may be contextual.

How does the board composition evaluation process help the board address the need for unique skills through its succession plan? How can you customize those for the unique facts and circumstances of your company? The directors need to be diverse by industry background, mindsets, professional capabilities, skills, experience levels, and perspectives. With emergent digital channels, it all comes down to discover the fresh new blood who can truly bridge the gaps in the boardroom and bring complementary skills to the table. This diversity along with deep knowledge of the business will allow BoDs to be real "thought partners" with senior management as they consider the long term goals beyond quarterly earnings. At the mentality level, the BoDs as the directorial role need to have the “insightful or understanding mind,” which requires a person's ability to grasp or comprehend information with contextual understanding, having the breadth of knowledge/experience and the depth of thinking and expertise for making competitive judgments and effective decisions. The criteria to select BoDs may include experience in the industrial ecosystem, high-ethical standards, independent thinking capability, communication objectivity and the ability to analyze information, also leverage intuition, and come to well-reasoned decisions.
If the composition of a Board must change, so be it, but the agenda is the long-term stewardship of reputation. The purpose is to build a high-performing board to direct the organization towards the digital journey with a clear vision, a strong strategy, a solid roadmap, and effective business oversight.


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