Monday, December 28, 2015

A Proactive Board

Modern “Boardship” is both art and science, the boardroom culture is engendered by board leaders.

Corporate Boards play a significant role in a couple of main functions such as strategy oversight (input, review, etc), governance practices (monitoring, risk management), advising (support to executives), and resource provision (opening their networks, etc.). With the increasing speed of changes and frequent digital disruptions across vertical sectors, how to build a proactive digital Board to lead digital transformation?


A proactive board is more performance-driven: In the siloed industrial era, Boards spend too much time on compliance or operational issues at the expense of the future. There is no doubt that the board only fulfills its role to shareholders and the management team when it is focused on performance. Some suggestion Boards should spend 20% of their time on the past (compliance), 20% on the present (operational and tactical) and 60% in the future. Boards find it very difficult to implement, simply because it deals with a lot of uncertainty and unknowns. Many boards think that the role of the individual director is conformance, which has the result to stifle probing questions and the natural tensions that allow for good decision-making. The Board's role, in large part, is to make good decisions that enhance the value creation for the organization. They need to focus on their own performance as well as the performance of the management team; and, that performance is not limited to financial performance, but also to the firm's performance in creating value for employees and customers. It's not only about now but also about the future and that means an open mindset to change with a proactive attitude.


A proactive board is more engaged in overseeing the dynamic digital strategy-execution continuum. The board has to have a good understanding of the organization's strategic direction and its strategic alternatives. This means looking into an unknown future and attempting to define the landscape with its risks and opportunities. While the Board needs to focus on landscapes, technologies, and uncertainties, the C-suites can translate that into competitiveness, products, and risks. The board needs to be engaged, and at the most senior levels to help influence and shape the business of the future. IT needs to proactively solve the problems with setting priority right. Ensuring a high-performing, high-effective, and high-proactive Board is the key success factor in organizational digital transformation.
It is important for boards to take a proactive approach that sets the tone for management innovation. Boards play a significant role in both innovation management and management innovation. It sets the right tone to build the culture of innovation, also reviews the innovation management progress, and benchmarks on the delegated goals. Innovation is an important component of business strategy. Management innovation means to accelerate innovation at the multitude of levels, to create the space for dialogue and debate about why it is important for their organization, developing a common understanding of it, creating the necessity and motivation for it. It also needs to align innovation strategy with key ingredients of management innovation, such as the development of an innovative culture or business eco-system, which requires grounding in values, culture, behaviors, systems, and artifacts as well as collaboration with key stakeholders.

Modern “Boardship” is both art and science, the boardroom culture is engendered by board leaders. It’s all about leadership from the top which sets the tone and governs boardroom behavior. With the fast speed of changes and exponential information, the digital board needs to be more proactive; business strategy, human capital, risk intelligence, culture changes are frequent topics at boardroom to adapt to accelerated changes facing in business today and practice digital leadership cohesively.

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