Tuesday, April 18, 2017

What are the Barriers and Pitfalls to Build a High-Performance Board

The high performing Board shows the ability and openness to "question itself and its decisions/ discussions."

The contemporary corporate board plays a crucial role in overseeing business strategy and monitoring organizational performance. An effective board enables and directs management towards good outcomes, and ensure the business is on the right track to reach well-defined business goals. If the results are lacking, and then the board effectiveness must be questioned. More specifically, what are great inquiries which can help you deepen the understanding of the barriers and digging through the root cause of ineffectiveness, in order to build a high-performance and digital ready board?


What are the greatest barriers to building and maintaining a high-performing board: Corporate board as one of the important top leadership teams plays a significant role in overseeing strategies and leading changes. The real boardroom dilemma is that driving the business forward is extremely difficult. This means looking into an unknown future and attempting to define the landscape with its risks and opportunities. Thus, having "deep common sense" is very important for the high-performance board. The more complicated the strategy, the worst the rates of return. Lacking "common sense," can complicate the matter, get trapped by the complexity and lose focus on critical issues.  Some call common sense "informed judgment," defining it to include providing wise counsel on the broad range of issues, being able to think strategically about complex issues. High-performing boards can sense emergent opportunities, and predict potential risks, to steer the business ship to the uncharted water or the blurred digital territories. They have to prioritize and put significant efforts into governance and risk management. The board's ‘Deep common sense” leads toward ”Effective Judgment," which has been defined as applies common sense, measured reasoning, knowledge, and experience to come to a conclusion.


What tends to be the biggest gaps and “blind spots” in achieving and maintaining the right board composition? The composition of Boards should reflect approximately the profile of the company' stakeholders: Shareholders, employees, customers, and suppliers. It's the diversity both from a cognitive difference or functional perspective; as the diversity of thought more often does not come from the diverse physical identity; but from one’s thinking process, cognitive difference, learning habits, experience or skill sets., etc. The question now becomes who (can or should) drive such diversity in the Boardroom and how can you make that happen? The non-executive members should be selected for their ability and willingness to constructively challenge management and this is less likely to happen if they are related to, or are close pals of, the executive members. Therefore, the “deep diverse” BoDs should be able to practice independent thinking, bring the differentiated point of views, ideas, and capabilities to the table, and fulfill the board duty more effectively.


What steps is your board taking to position itself for the future? Leadership is all about future, change management and also the ability to take initiative (change leadership). BoDs as top leadership roles should have multi-intelligent wisdom, to envision and lead the organization towards its future confidently. Nowadays, the speed of change is increasing and digital transformation is an inevitable journey. While there are many components of leadership, one of the most important ones is the ability to adapt, model and influence change. The corporate board as an oversight and guidance role needs to be ultra modern and super-advanced. BoDs should set the tones for change and proactively drive change with the step-wise approach and accelerated speed. The modern digital board has many responsibilities, also gets a lot of distractions. It has to laser focus on the most critical things to steering the business toward the right decision. The catalyst for the question is what appears to be a chasm between what directors claim as the priority and what actually occurs when boards are in session. Change leadership concerns the driving forces, visions, and processes that fuel large-scale transformation. Hence, a high-performance board needs to set the priority right, it has to laser focus on the most critical things, pulling enough resources and pushing the business model of technology, trustworthiness, innovation, and mastering digital fluency.


The high-performance board makes the disproportional impact on running a high-performance business. The high performing Board shows the ability and openness to "question itself and its decisions/ discussions." It’s not talking about "second guessing" but the ability to validate and double back on decisions past and present discussions. This is basically getting the "oversight" closer to the forefront (if not within) of every board process. High-performing boards set goals for their own performance and regularly evaluate how they are performing as the board. They frequently brainstorm issues such as board composition, structure, and leadership - take the periodic risk assessment and well-tuned succession plans. They have to continue removing the barriers, filling the gaps in improving the performance effortlessly.

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