Last week I attended a conference in New York City hosted by the National Association of Corporate Directors. Core to this organization is the belief in education of directors who serve shareholders and other important stakeholders.
Here are some directional issues that will redefine standards and behaviors and will require boards to transform their governance and strategic models. By defining systemic risks and identifying opportunities, you put your company in the best position to prosper –being supported by a governance structure that embraces learning. This dialogue defines the roles and responsibilities of senior leadership and their board.
One of the cutting edge issues today for boards is understanding IT. Information technology holds both great promise and risk for companies today. A recent poll by one of the major accounting firms indicates that 50% of board members are unhappy with their board’s ability to provide IT oversight. They believe they’re not getting the right information. 27% say that the expertise within their firms is inefficient. With the new regulatory environment, combined with social media and its legal implications and the hot new IT trend, “The Cloud”, where technology can be accessed anywhere, anytime through the internet, the amount of learning and knowledge required on the part of the board is increasing exponentially. Cloud computing is like going to the grid to get electricity – technology is being outsourced to a service provider which enables fast deployment of applications, synchronization, and cost effective ways to increase data, locations and provide 24/7 access. However, being highly reliant on The Cloud, puts companies and even countries at risk. So understanding what this means for your company, and your customers is critical.
One leader at the conference, Richard Levick, Esq., President and CEO, Levick Strategic Communications, asked why directors function as reactors and not leaders when it comes to technology in the boardroom. Moving beyond tech as a tactic and not a strategy is what we mean by Transformational Governance. The way he described it, many company responses to technology are like going to the gym on January 1 and not going for the rest of the year. Understanding Search Engine Optomization, knowing what terms your company owns, being aware of high authority bloggers who provide an “overnight gallup poll” for Congress, following those who twitter and connect directly with customers, knowing your industry fans and using grass roots to communicate directly with your customers is critical.
Contemporary CIOs today understand the complexity of today’s environment. They have frank and open conversations with their board through quarterly CIO reports — sharing business IT risks, strategic threats and opportunities. It’s important that your CIO work with the people developing and implementing strategy and become an integral part of your planning process. Increasing the leadership capacity of your CIO in terms of being able to communicate effectively with your board and key business people is critical. Our firm has worked on these critical personal development issues through executive coaching and mentoring to provide the leadership skills that enable CIOs to share their ideas in a way that boards will understand them, which in turn encourages boards to not be afraid to ask the right questions of the CIO – to participate more aggressively, by taking deeper dives into the exponential speed at which technology is changing the world and our companies.
Know how to surface bad news which often gets filter out, and have candor in the boardroom to effectively and openly discuss risks. Do you have enough information to sense that disruptive events may be occurring at the periphery or fringes of your company? Is your company connecting enough with young people who know where the world is going? Are you going back and doing debriefs on your deal proposals to review whether promises for synergies, savings and revenue enhancements actually occurred based upon your capital investments? Did you actually achieve what you set out to do? Do you have enough clarity in your mission to see what went wrong, what went right and what you’re going to do differently? Boards can gain valuable learning from managing successes, failures and near misses.
Having the right resources at the right time is the only way that companies will be able to compete. What about having Duty of Competence in addition to Duty of Loyalty and Duty of Care? It’s hard work to sit on a board. They should be balanced eco-systems with engaged individuals who can establish a trusting culture that achieves innovative strategies for shareholders.