We are experiencing two major crises at once: a pandemic causing a global health and economic crisis, and an accelerating Fourth Industrial Revolution — also referred to as Industry 4.0 — changing the way social and economic organisations are formed and operate, and radically realigning which people, social organisations, businesses and nations are successful. As directors, we must focus on doing things differently if we want the organisations we serve to succeed. It’s very exciting.
The future of work and society
The deep question we face is: “What does the future of work and our society look like in an era of automation?” It was an ominous question before the pandemic, now it’s inescapable. Any board that is not determinedly wrestling with this question is failing in its fiduciary responsibility, because if it is not addressed, the organisation will likely not survive.
Machines are replacing some jobs, enhancing human performance in many jobs, and enabling the creation of totally new jobs. The Internet of Things can drive major upgrades to mission-critical parts of the economy, such as healthcare, social services, logistics, housing, agriculture and defence.
If there is a blessing to the COVID-19 pandemic, it is that it forced all organisations to take stock and reset. Anyone who thinks that their organisation can go back to pre-pandemic days is fooling themselves. Smart organisations are using the crisis to leapfrog into this automated and highly connected age — and a few are well on the way. Great organisations have a fanatical focus on adding value and excellence in everything they do, from the ways they serve clients and evolve their offerings, to delivering processes efficiently and investing in growing their people.
A successful director
Successful directors synthesise their own life experience with their lucidity about the reality of the environment in which they are operating and the specifics of the business they have been challenged to govern. They bring their passion, learning and skillsets to the organisations they have been called to nurture — and it is difficult.
Directors are not there to run the organisation, but to guide, nurture and challenge management, holding them to account for doing what is mutually agreed the organisation needs to do.
The term “director” is rather ironic, because the role is mostly not to direct or tell. Instead, we are meant to impart wisdom through listening, questioning, challenging and sharing frameworks and personal experiences.
It is very hard to thoughtfully convey what you know — and perhaps the hardest thing in the transition from being an operator to a director is to empower management and give them permission to fail. But change will not happen if you are not willing to take risks.
Successful board leadership
In a crisis like the pandemic there are no such things as good options or good scenarios, only good decisions. You must make the best decision you can with the evidence you have. And when new evidence comes along, make a new decision.
Most organisations were forced to speed up their adoption of connected technology early in the pandemic, just to stay operational. As a result, they’re more agile and ready to face the next challenge. Telehealth and online education are two very public examples of major transformation, while behind thousands of closed doors, we’ve experienced a (mostly) quiet revolution in how boards operate.
We’ve become better at communicating to all stakeholders, from daily update emails to the chair and CEO, to webinars and town hall meetings via video. Video calls might not be everyone’s favourite way of meeting, but many have learned to make board discussions shorter, focused and better-facilitated.
We’ve also learned to focus more on the things that really matter. Too many organisations were caught short when the pandemic hit because they weren’t really clear about what matters — and what’s unnecessary. Stop doing the unnecessary, stop managing the unnecessary and stop meeting about the unnecessary.
As the old saying goes, “The best time to change the roof is when it is sunny”. So when things are going well, take the time to discern what is important. Anticipate what crises may impact the organisation and document a response. If a crisis hits, everyone will be clearer on what to do.
Diversity of thought
Some boards are too focused on a formula-driven skills matrix. Boards need an “unholy alliance” of people from different backgrounds, ages, genders, cultures — and skills. But don’t put people on the board who have skills that you can buy in. If you have lawyers and accountants on the board, it should be for their skills as directors. Their legal or accounting expertise might not be up to date if they are now more “professional” directors than practising professionals.
The point of gender diversity is not simply what special attributes women and men bring to the table to achieve positive results, it’s also what the absence of women on boards implies. Lack of gender diversity in an organisation’s management team or board sends negative signals of a conservative mind-set, an inability to look beyond a tried circle of directors and a proneness to damaging groupthink.
Women and men board members also often have a different perspective of the customer. Likewise, a diversity of ages will bring different perspectives. So don’t be afraid to put an “inexperienced” young person on the board. If they are passionate and knowledgeable about the cause then they are not “inexperienced”, just “differently experienced”. After all, what does an ageing board and executive team know of the expectations millennials and the iGen (aka Generation Z) cohort have of leadership and organisations? With diversity on the board, decisions are likely to be more thoughtful, less rushed and less competitive, resulting in less groupthink and a more enduring consensus.
Enthusiasm delivers excellence
I believe successful organisations manifest excellence in everything they do at every stage of the journey. To paraphrase [a quote attributed to] Aristotle: “We are what we repeatedly do — excellence, then, is not an act, but a habit.”
One sign of excellence in an organisation is the people are having fun and unbounded in their passion for their work. At the personal level, you can use enthusiasm as a personal benchmark for deciding the worthiness of an action, a role, a job or a quest. Does it have meaning for me? Is it worth it? If you are not engaged in what you are doing — don’t do it. If you are not having fun on the board you are sitting on — resign. Life is too short and you probably won’t help build a great company, anyway. That’s not to say you should avoid challenges. Sometimes, you might need to take a break or find it within you to push through.
Contentment comes in striving for excellence in all you do, even if you fall a little short of your aspirations. But if you’re not driven to get back up — if you’re not excited by what you’re doing — get another vision and do something else.
Is your board set up to succeed?
- Does the service provided solve a real problem for which people will pay for 10 to 20 years?
What many organisations are doing today — and how — may be irrelevant in five to 10 years. Firms that will succeed in a decade’s time are developing four things: deep domain expertise, people with high interpersonal skills, individuals and teams with rapid problem-solving abilities, and a corporate culture that creates resilience and wellbeing.
- Is the strategic vision clearly articulated?
Many directors and CEOs of large organisations can’t clearly spell out where they want their company to be in five years — or how they’ll know if they’ve got there. Organisations don’t grow or survive just because they have a loyal client base, funding, breakthrough technology or an unbeatable idea. A laser- sharp view of where you want to be in three to five years is critical to defining the strategies you need for success.
- Does the leadership know what to measure?
And do they produce board and management dashboards that show how they’re performing? You must measure financial performance, but too often, measurement at board level is limited to finances/sales, not a broader set of metrics in a scorecard. Successful organisations know what to measure and are disciplined in reporting it in a simple, graphic way to board and executive.
The CFO role is so critical, telling management what levers to pull to keep the business healthy. At board level, I like a balanced scorecard in:
- Finances, sustainability and productivity
- Service and quality
- Client experience
- Research and innovation
- Talent, diversity, safety and culture.
4. Is there the right leadership commitment, culture and talent?
Culture and strategy require co-creation by the board and executive. Great organisations are tight on culture and strategy, loose on control; bad ones loose on culture and strategy, tight on control — they look at R&D, innovation and training as cost, rather than strategic investment.
Directors of highly regulated organisations must ensure management respect for the regulators.
I’ll always back a team player with 85 per cent of the talent who lives the culture, over someone with great skills who is selfish.