Tuesday, August 6, 2019

The BoD’s Knowledge Fit

The Board of Directors today needs to be knowledgeable, insightful, influential, strategic, and highly effective.

The corporate board plays a significant role in overseeing business strategy, setting effective principles and policies, making sound judgments and assurance of corporate actions within a framework of practical knowledge. Not only do today’s BoDs need to have sufficient knowledge to understand the business ecosystem, but they also should have the collective insight to present today and foresee the future.

Knowledge proficiency: As a senior leadership role, board directors should be the specialized generalists with “T” shaped expertise. Most of the board directors are top seasoned executives with years of experience. The T-shaped directors are in strong demand to bring the breadth of the business ecosystem or the across-industry perspective and the depth of the domain knowledge and expertise to the table. The vertical bar of the “T” represents depth in one field, the horizontal bar represents the ability to collaborate across other disciplines and to apply knowledge in areas of expertise. To reach the state of knowledge proficiency at the board level, it is important to identify and close the leadership gap between knowledge and insight, capture invaluable business insight to make sound judgments and effective decisions consistently. Forward-looking boards are looking for fresh knowledge and diverse experience for improving governance effectiveness. Collectively, the digital board with a blend of expertise and capabilities can foster a culture of innovation and improve boardroom digital readiness and leadership maturity.

Insight-driven: It is the paradigm shift from information scarcity in the industrial age to knowledge abundance in the digital era. At today’s digital dynamic, information is abundant and knowledge is only a click away. To quote Peter Drucker, knowledge is the most invaluable commodity. It couldn’t be truer in the digital era. On one hand, the fresh knowledge can be captured from the abundance of information; on the other hand, it doesn’t take long for that knowledge to become a commodity once the market is exposed to it. To reach the state of knowledge proficiency, it is also important to identify and close the gap between knowledge and insight, Boards directors shouldn’t be overwhelmed by the exponential growth of information and abundant knowledge, but be able to capture the invaluable business insight to make sound judgments and effective decisions.

Information savvy: The Board's role, in large part, is to make good decisions that enhance the value creation for the organization. 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 information savvy and IT-friendly. The board directors 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 has a new level of importance and competitive value. So, an insightful board will leverage information and analytics to make strategic decisions effectively and steer the organization in the right direction.

The Board of Directors today needs to be knowledgeable, insightful, influential, strategic, and highly effective, and the board as a whole is able to create the cohesive vision, shape a holistic view, and transform from compliance-centric to performance-driven.


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