During the recent National Association of Corporate Directors summit in Washington, DC, there was lots of time spent on shareholder activism, executive compensation, and several other key in-the-moment issues. But Jane Stevenson, Korn Ferry’s vice chairman of the firm’s Board & CEO Services practice, says that those issues overshadow three, considerably more existential issues modern board directors have to address. Before her own panel presentation, Stevenson laid out what she thinks board directors should have on their minds.
1. Risk Management: Figure out what’s an opportunity and what’s a threat.
In today’s global and active economy, the lines between competitive markets have never been blurrier.
is Amazon a consumer company, for example, since it sells everything from groceries to garage door openers? Or is it a technology company, since it owns and operates the legions of computer servers that make e-commerce—its own and others—possible? With all the crossover, it’s very difficult for board members to assess whether all the disruptions are accelerators to the organization’s growth, or roadblocks.
2. Talent Alignment: Close the gaps between strategy and talent.
This is a huge topic because of the rapid pace of change and needs of leadership with the onset of artificial intelligence and the changing nature of commerce, as our society potentially moves from an exchange of goods to a thought exchange. Typically, there is a good amount of lead time for any transformational innovation, but once it takes hold it tends to be exponential. Boards really need to be able to see around hairpin turns and to fly at a high enough elevation to anticipate appropriately.
Boards needs to step up in a different way and think with a different level of expansiveness, involvement and opportunity building. The day of boards just evaluating based on what’s happening today is not enough, it takes years to build those outcomes. It’s not just about identifying problems, but also about awareness. Boards need to ask the right questions (not just regulatory) that help to improve leadership. Boards need to look at the world and create a lens that the CEO would not have complete access to without the directors.
One way to think about it is: Do you have the right board to pick the next CEO? Do you have the right CEO in place to have the right leaders? Are the right leaders the ones to really define the right workforce of the future? How much of that workforce is human and how much of it is evolving into artificial intelligence and robots?
3. Information Overload: Everyone has information, learn how to connect the dots better.
Access to information used to be a huge cost for businesses. That has gone down enormously. Today, the real questions are: What does the information say? What does it mean? And how do we use it? Whole businesses are changing. The boards have to adapt. What boards have to do is to step up to a different kind of leadership, anticipating what will create value, how that impacts the organization, and evaluating if the right leadership is in place to make those pivotal operating decisions on a day-to-day basis. Boards of the future must look forward in a different way and think with a different level of expansiveness, involvement and opportunity building.
In the end, it all comes back to talent and succession, which are tightly aligned. Talent starts with the board and goes down to the lowest level of employees. It will take different kinds of thinking in the boardroom to effectively anticipate all of these issues. The need for diversity in the boardroom to do that effectively and anticipate things effectively has never been higher, not because it’s a do-good cause but because it will require nimbleness in thinking and diversity of perspectives to make that happen.