The common criteria to select BoD may include experience in the industrial ecosystem, high ethical standards, independent thinking capability, communication objectivity and the ability to make sound judgments.
Organizations today have to live up with the business dynamic which is uncertain, ambiguous, complex and flux. The rapid changes are touching every activity, function, business, and industry. The board of directors is the de facto guardians of modern organizations because they oversee strategy management and set the policy for driving changes. With more and more organizations are on the journey of digital transformation, from the board composition perspective, what are important perspectives to build a digital savvy board?
Organizations today have to live up with the business dynamic which is uncertain, ambiguous, complex and flux. The rapid changes are touching every activity, function, business, and industry. The board of directors is the de facto guardians of modern organizations because they oversee strategy management and set the policy for driving changes. With more and more organizations are on the journey of digital transformation, from the board composition perspective, what are important perspectives to build a digital savvy board?
How will new board members be assessed to determine “fit” with the desired culture? From the variety of industry studies, the supply of high-quality BoDs is far lagging behind of the demand, because corporate boards today are like the “mastermind” behind the digital transformation, play a critical role to complement the management skill set, and help businesses improve decision effectiveness and get digital ready. Organizations need to hunt for qualified, independent Board members who are aware of their responsibilities and duty to the shareholders. The effective board brings together such tremendous skills and experience mix that there are bound to be board members whose ideas could feed into new value creation. Under the “VUCA” digital new normal, now the benefits of adding that "fresh eye" or “inquisitive mind” will become more apparent. Board members should be revisited in the environment in which we live - away from cronyism to objective criteria which might lead to choosing someone other than the old circle. The board needs diversity, or even more crucially, cognitive difference, to provide a perspective that goes beyond the gaps in board discussions and brainstorming. Like all other senior-level executive roles, the “T” shaped talent- the specialized generalists are the better fitting BoDs. Board gives the optimum of experience and sound advice/judgment to the senior executive teams of the company.
Generally, what tends to be the biggest gaps and “blind spots” in achieving board maturity?
An effective and efficient Board can identify and mind the gaps on their own Boardroom turf. The boards should develop policies and practices to ensure ongoing evaluation and education of current directors and expand their channels to recruit new BoDs who can bring new perspectives to the table and bridge digital leadership gaps. Because cognitive gaps will cause the blind spots for either defining the real problem or solving it. The directors need to be diverse by industry background, mindsets, skills, experience levels, and perspectives. At the digital age, status quo only cannot make one a real leader, if they don’t have a purpose of leading or lack of insight or vision upon the directions, and in-depth understanding and expertise to connect the mind and touch the heart and improve leadership empathy. The differentiator between a digital leader and a laggard is not about the title and authority, more about the mindsets and attitude. Digital attitudes are about being experimental and persistent. Digital leaders today also need to show intellectual curiosity, creativity, learning agility, and risk tolerance, etc. One of the significant tasks for BoDs, leaders, and managers is to make either strategic or operational decision. Decision effectiveness is often compromised by group thinking (group polarization means that a group of people can make a more extreme decision than an individual.\) which is often caused by the homogeneous team setting with cognitive gaps.
What are the practical benefits of board succession planning and how can you maximize those benefits for your company and its shareholders? The board governance involves the alignment of interests among the stakeholders. It is the trust and confidence that allow the board to positively influence organizational performance through the executives. There are positives impacts from corporate governance good practices on business performance. Hence, the BoD agenda should be good for management as well as reputation. Getting some new blood into the C-Suite who are actually interested in active participation can only help. The different perspectives will help mitigate “groupthink” and can enable the board better relating to their stakeholders. Corporate governance indicates a relationship with the Board, shareholders, management and the stakeholders. If all these parties would perform to the vision and mission of the organization, it would increase the performance and maximize business benefits. For all companies, the definition of the roles, and drivers to the board and committees are essential to lead and to maintain a productive relationship with the executives. It is the recipe of characteristics derived from the construct that creates high levels of synergy within and between the board and executive, ultimately achieves high-performance business results and unleashes the full digital potential of the business.
The high-effective board with BoDs having the mixed capabilities and skills can make effective decisions in deliberation, moving the enterprise forward, ensuring the organization makes sense, etc. The common criteria to select BoD may include experience in the industrial ecosystem, high ethical standards, independent thinking capability, communication objectivity and the ability to analyze and synthesize, and come to a well-reasoned decision. If the composition of a Board must change, so be it, but the agenda is the long-term stewardship of reputation.
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