An Inquisitive Board as Strategic Explorer

Great boards are heterogeneous, inquisitive, intelligent, effective, innovative, and influential, to be the strategic explorer and wise advisor. 

Due to the “VUCA” characteristics of business dynamic, overloading information, and continuous disruptions as the new normal of business expansion, corporate boards should leverage multidimensional lenses to provide an “outside-in” view of the organization and steer the business in the right direction.

Analogically, the corporate board's role is about pulling management out of the trees to see the forest. They see the development of strategy as a collective effort between themselves and management, rather than a question of “us versus them.” The corporate board represents ownership, acts as an inquisitive explorer, and they really cannot do a good job if they don't have the knowledge to ask profound questions, challenges and sets the broad strategic goals, as well as takes logical steps in practicing GRC disciplines effortlessly.

Does your strategy tap a true source of advantage? Organizations of the future are increasingly exhibiting digital characteristics in various shades and intensity to seize the competitive business advantage which has three elements with substantial multicollinearity - value, rareness, and imitability, etc. The corporate board oversees business strategy and asks whether the competitive advantage is conceptually possible such as: What is our strategic advantage? What is the cost point to be competitive? Which capabilities already exist and which must be developed or changed? Where are the customers heading? What percentage of that market do we expect to capture over what period of time? Why would someone prefer to buy from us? What's going on in the market? Where are the suppliers headed? Where are the competitors headed? Etc. Good questions like the magnets to attract excellent feedback for business executives to digest and improve manageability.

Keep in mind, strategy management is about creating tomorrow's organization out of today. Therefore, the corporate board’s strategic oversight is critical to identify and strengthen the weakest link and determines practicality. The longer-term advantage comes if the rare valuable resource is quite difficult or expensive to imitate. But all that said, organizations seem to then have to capture so much, all the organizational and managerial capabilities, plus implementation and systems development. Plans only survive until the first instance comes where you have to deviate. With the board’s strategic oversight, the business can reach those moments in which you've taken the time to identify the contingencies; you can seize the initiative or competitive advantage and, in the long run, achieve the strategic goals you've identified.

Does your strategy put you ahead of trends? The rate of change has accelerated, indicating that business leaders must learn how to strike the right balance between managing complex issues today and forecasting the trends and uncertain issues of tomorrow. Insightful leaders with strong “digital awareness,” have to look into an unknown future and attempt to define the business landscape by seeing beyond what all others could see, sharing opportunity oversight and risk prediction, work closely with the management team to chart new business revenue or growth through the creation of a new product or market, cast the vision for the ways in which tomorrow’s business technologies can create sustainable business value for building the business's long term perspective.

The digital era upon us means the exponential growth of information, the increasing speed of change, and fierce competition. At the board level, creating trends is about anticipating direction. Gaining first-mover advantage is all about foreseeing and applying trends, that’s where you win the competitive edge. The BoDs need to ask profound questions such as: What will change about the business over the next five years in order to achieve the strategic plan? And what are the impacts of those changes on IT? Higher transactional volumes? Heavier investments in product development? Does the business need to make decisions faster? With rapid changes and high velocity of the business ecosystem, the idea of moving fast and becoming highly flexible and responsible requires companies applying emerging new technologies and leveraging increasingly diverse information to move up the learning curve, gain knowledge about their customers via empathy, capture growth opportunities or prevent risks for adapting to the business dynamic timely.

Is your strategy contaminated by bias? Most of what poor decisions have boiled down to lack of updated information/intelligence and decision-maker bias. Bias or cognitive gaps come in many forms and are difficult to recognize if you are the decision-maker. Therefore, a team perspective with a heterogeneous setting is crucial for novel decisions because no individual has all the necessary expertise. The board should work collaboratively with the management team to enable the "wisdom of crowds" as a source of improved decision-making. Corporate governance could be part of strategic planning because if it isn't, strategic planning becomes a synonym for wishful thinking - corporate governance is where resources are allocated to turning the strategy into a reality.

At the group level, the homogeneous team setting spurs groupthink and creates blind spots in decision management. A great way to manage bias is to simply get it out in the open communication environment. Keep in mind, try to eliminate all biases and you are likely to reduce the use of heuristics, leading to analysis paralysis. The key principles for making effective decisions are to keep the value set transparent, share and manage the bias with different stakeholders who have cognitive differences and diverse experiences, and improve strategic decision maturity.

Is your strategy granular about where to compete and how to take a step-wise approach to implement? Companies across the vertical sectors are at the different stages of the business life cycle, some run down a diminishing returns pathway, others do the best they can with existing products/services/customers and spend a lot of time on future products/customer exploration. Therefore, organizations should examine the entire customer life-cycle from acquisition through disposal, and isolate wherein the experience they choose to invest, where they choose to compete, and where they choose to innovate. To improve their strategic oversight effectiveness, knowledge is no doubt important, but more than that is complete awareness of what is happening in the context. The corporate board needs to ask insightful questions about their marketing positions and strategy such as: Where to compete and how to take a step-wise approach to implement, to help clarify and make the strategy implementable.

Every organization must chart its own course, and take an integrated approach to dynamic business planning and actions. If there is a crisis or visible material decision with immediate consequences, you can see if the decisions and actions of the board were done right with good results. Charting a course on how the business achieves the strategic goals with intermediate objectives over time is pivotal to success. It is from vision (where do you want to go, what do you want to achieve)–Gap analysis (the current state assessment) –Strategy (How to get there - the roadmap) –to execution as an iterative continuum, with governance as a complementary discipline.

Does your strategy balance commitment and flexibility? Effective business oversight and governance practices require a strong commitment to being knowledgeable, independent, and forward-thinking. The culture of commitment and flexibility advocated by effective board leadership is about bringing out the best in others and enforce accountability. They do not focus on hierarchy but on ideas, creativity, and openness. Building a high-effective digital board with strong commitment requires critical thinking, asking good questions, complementing each other’s strength and balance of multiple perceptions, to avoid extreme thinking. A highly committed corporate board and top executive teams are able to both talk the walk and walk the talk all the way, for setting good policies and exemplifying digital leadership.

The effective board with strong commitment brings together tremendous skills and experience to the table, sets the updated business “policy,” and digital principles for effective problem-solving. Digital organizations achieve strategic flexibility by developing the lego-like module design architecture and capabilities with quality and reusability. There are logical steps to follow in strategy execution, but sometimes you need to be flexible when implementing the strategy, It often starts with the end in mind - the "VISION."  Do not forget that the strategy is not written on stone and, therefore, it can be changed if the environment requires it. More often, strategy-execution is not in linear steps, but a continuum, with adaptation to the changes.

Great boards are heterogeneous, inquisitive, intelligent, effective, innovative, and influential. Running a corporate board as a strategic explorer requires thinking, dots connection, asking insightful questions to complement each other’s strength, and balance of multiple perceptions in guiding businesses in the right direction and achieving expected business results.

Posted in: Board Room,Leadership Master