Thursday, September 24, 2020

BoD’s “Self-Check” and Assessment

BoDs need to see further and perceive better than others in order to set guidance about what core to preserve, and what future to stimulate progress toward and steer the business on the thorny digital journey effortlessly.

Digital is the new paradigm shift to deeply connect the business nature to the natural ecosystem which is volatile and interdependent. High-performing boards need to make sound judgment and steer the corporate ship to the uncharted water or the blurred digital territories towards a well-defined vision at a steadfast pace. 

To improve their leadership maturity, they should do “self-check,” and regularly evaluate how they are performing as the board, as well as develop the best and next set of digital practices to get digital ready.

Information check: Information is the power, information precision directly impacts decision effectiveness and strategy management success. Contemporary BoDs oversee business strategy and they must become information-savvy. They need to do the regular “information check,” be able to capture the right information, apply it at the right time in the right circumstance with the right attitude. In the era with the exponential growth of information, the challenge for the board leaders is to discover how and where to find valuable information, not just the information being fed by the management. They need to learn how to discern information they trust from misinformation or information overflow, pull out the information they need, and learn what to ignore in order to make effective decisions.

Generally speaking, people form critical opinions based on facts, discerned data, common understanding, and clarified notions. This is particularly critical for top business leaders such as BoDs. They should have a clear vision of what they need to know, and how the information provided pertains to the strategic plan, as well as what they are going to do with that information. To improve the corporate board's effectiveness, the key point is to prepare crucial issues and collect information and feedback even before the meeting starts, and better to invest the time upfront to address concerns and achieve a workable agreement.

Gut check: Information and gut feeling are both important for making many critical decisions. Gut feeling isn't a random loose arrow. It's an internalized knowledge that has developed through theoretical knowledge and practical experience that guides the gut feeling so that people can make the right decisions intuitively. At the board level, often decision-makers have the business insight to make their decisions rich in information and significantly different from the available data. The sentiment of trusting your intuition is spot on, but attempting to break it down into conscious, and unconscious, etc, and consistently leading to a perspectival minefield. An informed gut feeling is more likely to be working with more information and possibly even relevant and accurate information, and could, therefore, at least, eliminate some poor choices.

We live in the “VUCA” digital era now, keep in mind though, the problem with intuitive decision-making is that it can seldom be quantified and so analyzed. It is not so good to go with intuition when there is an excuse not to put in the effort to pay attention to detail and think carefully. Besides leveraging quality information, the right dose of the “gut feeling'' of BoDs allows the decision-maker to exercise their judgment and helps them find "the right answer" intuitively.

Performance check: A corporate board only fulfills its role to shareholders and the management team when it is focused on performance. They need to focus on business performance as well as their own performance. High-performing boards set goals for their own performance and regularly evaluate how they are performing as the board and where the board’s performance bottlenecks are. “Performance check” at the boardroom enables BoDs to laser focus on performance-driven agenda and practice their judiciary power effectively. To monitor business performance, that performance check is not limited to financial performance only, but also to the firm’s performance in creating value for employees and customers. The board feedback on business performance and outcomes help the business management make the timely adjustment for making continuous improvement.

In achieving the role of the performance monitor, the corporate board needs to decide whether management is achieving expectations, gain an in-depth understanding of what’s blocking business achievements, targets, and advise the management on the maximization of the business capital allocation and improvement of the multidimensional shareholder’s value. It's not only about the performance now, but also about the future and that means an open mindset to change, with a long-term perspective.

The modern digital board has many responsibilities, and also gets a lot of distractions. BoDs need to see further and perceive better than others in order to set guidance about what core to preserve, and what future to stimulate progress toward and steer the business on the thorny digital journey effortlessly.


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