The modern board
Beware the piranha, not the great white. This is the clarion call of Roy Vella – formerly head of mobile payments for PayPal and a member of our Advisory Board. Problem is that pretty much everyone that sits on the board of a FTSE 100 company grew up and learned everything they know in a great white. The great white analogy is deeply apt for big business – much like the ocean's feared killer today's corporates have evolved to win through size and efficiency. Open the FT and almost every headline you read about a big business will be about either acquisition or cost reduction.
In this context what is the role of the board? Ultimately it is to protect the interest of the shareholder and ensure no one sinks the ship. If you factor in investors' desire to see good returns almost every quarter then the modern board starts to look ill-equipped in the face of the piranhas coming at their business. Indeed the response of many a board is to push for more and continuous cost reduction, a vague exhortation to do 'digital', and a gentle nudge to go and learn from the world of start-ups.
But is the world of start-ups really relevant for a 20,000/75,000/200,000 person enterprise? How can a massive business set about building a digital capability that can compete with the digital natives who are out there beginning to run rings round them? What to do about the mass of employees who are weary of cost-cutting and wary of the new skills they know they need but do not possess?
Five key development factors
If the board are to be set up to help the executive team navigate through these and the other questions posed in this new era of business, then the following development actions are critical – and urgent:
- Dive deep into disruption: this isn't about doing a fun tour of Silicon Valley and spending an hour in each of Google, Apple and Facebook. It's about developing a deep understanding about every aspect of the digital piranhas that are coming after your business. 4/5 hours spent being beyond the PR gloss and understanding every aspect of leadership, culture, key processes, talent strategy and investment/risk models.
- Start living digital: this isn't about buying each board member a shiny new iPad. Rather it is about teaching them to build an app, removing all paper from the board meeting, playing quite deliberately with the length, location and rhythm of meetings, and maybe even setting up reverse coaching relationships with young and spunky digital talent.
- Study the extinct: this is about moving beyond superficial journalistic articles and one-dimensional business case studies to understand what truly led to the demise of big businesses that have already been submerged by the digital tidal wave. It's about taking time to talk to the leaders of those businesses, getting to grips with multiple points of view on what really happened, and debating and discussing key lessons for their own business.
- Build a productive friction culture: this one is more about the culture of the board team itself. Many of the worst traits of exec teams can still exist in the boardroom; dictatorial chairmen who quash true challenge, the dysfunction caused by clashing egos. It is important to invest skill and energy in developing a way of being that encourages and harnesses every viewpoint in the room.
- Learn the art of push/pull conversations: this is all about how the board relates to the exec team. Too often the conversations are not skilful enough in balancing enquiry with challenge. Both are critical if the business is to arrive at the right strategy and execute it well. Yet how many boards have spent time on developing the art of this type of conversation?
Building critical relationships
Who is going to take responsibility for making the above happen? In my view the HRD has a crucial role to play.
Working with your CEO, and with any HR professional that sits on the board, you can and should lead the charge on ensuring the board are ready to stimulate, provoke, and adjudicate with skill. Only then will the critical relationship between the board and exec team develop the skill and strength needed to take on and beat the piranha.