Purpose. Culture. Ethics. Transparency. Strategy. Implementation. Performance. Risk. Uncertainty. Innovation. Technology. Entrepreneurship. Talent. Diversity. Sustainability.
These fifteen words – and that is without mentioning remuneration – highlight the enormous challenges currently facing boards around the world in what is probably the greatest period of change and uncertainty in international business for the last seventy-five years. The current feverish environment has been brought about by last decade’s financial crisis and its aftermath, political upheavals including Brexit and trade wars, climate change, the Fourth Industrial Revolution with the pace of technological change accelerating, as well as all the related societal impacts from these events.
Balancing competing priorities and goals to navigate high levels of change successfully
In times of great change there are generally more risks and opportunities than in steady-state times, and the rewards for the winners and the costs for the losers will be more significant: there will be a few mould-breaking pioneers creating whole new industries alongside those failing to keep up with the change and thereby threatening their very existence. In these highly charged times, successful boards will understand the power of striking the right balance between competing priorities and goals that determine how they lead and direct their businesses.
Let’s look briefly at each of the key areas involved:
Communicating an inspiring purpose aligned with culture and strategy
For most leading businesses their value is now primarily in their intangibles- their people, brands and culture, including the capacity to change , and how they interact. So the board must make sure the purpose of the business is inspiring and brings benefits to its main stakeholders and wider society. In addition, it needs a clear view on the desired corporate culture and to assess the actual culture carefully, addressing any gaps between them. The strategy and culture must be aligned for the business to prosper and the strategy implemented in a way that produces high-level performance. There is also a need for balance in how the board allocates its time between its different responsibilities, as well as in how it sets a clear direction for the business whilst recognising the need for flexibility in how it adapts to a changing world.
Striking the right balance between innovation and risk management
Innovation and entrepreneurship will have a key role in moving businesses forward especially through making the best use of technology both for shaping goods and services as well as for support functions, yet this needs to be balanced by a strong emphasis on risk management, including change management, to avoid betting the business recklessly through poor understanding of customers’ needs or weaknesses in change implementation.
Taking account of the competing needs of different stakeholders
The board also needs to focus simultaneously on the short and the long-term and on the competing needs of different stakeholders. A business has to be responsible to build trust with its stakeholders if it is to be sustainable, with a strong sense of ethics and a commitment to transparency. Sustainability also, however, requires it to earn a fair financial return in order to attract a talented workforce and make the necessary Investments.
Creating a diverse board for all seasons made up of capable individuals that works well as a team
Building a world-class business starts in the boardroom and involves getting the right board in place and ensuring it works effectively with balance to the fore again. Regardless of whether it is one or two tier, the board needs to have people who are capable in their functional roles including both executive and non-executive – Chair and CEO, for example – and board members also needs to work well together as a team recognising the need for both strong support and challenge in the boardroom to get the best outcome for the business. To cope with changing times, a diverse board is essential in terms of gender, ethnicity, experience and personalities but this needs to be accompanied by shared values and a shared commitment to a common goal. Moreover, it needs to be a board for all seasons – able to cope successfully both in ongoing times, albeit fast changing ones, and at times of heightened tension when there is a crisis to be resolved or a transformational deal to be undertaken.
Undoubtedly not easy, but fulfilling… if you are committed to the purpose of the business.