Three strategies to inspire better questions and more strategic conversations.
In uncertain and disrupted times, the usual patterns of boardroom discussion have to evolve. But there’s a paradox at play. Boards are stocked with people with tremendous business experience, wisdom, and insight; nevertheless, many CEOs feel at sea.
Consider some data points from the AlixPartners Disruption Index survey: 72% of CEOs say they find it increasingly difficult to set priorities amid a storm of disruptive forces. Yet nearly nine out of 10—87%—say their boards and investor groups have the right people and knowledge to help them cope with those forces. If boards have the knowledge CEOs need, why do many CEOs still report feeling adrift? The reason is that too many of the traditional structures, processes, and customs of boardroom discussion were not designed to serve well in times like these. I’ve seen several leading practices that can help. Some represent significant changes, and some are tweaks. But together they change the agenda of board meetings and the tenor of conversations in ways that help CEOs sort through the choices they face and make better decisions about how to identify, create, increase, and protect value in a uniquely challenging environment. Let’s start with the fact that CEOs themselves say they can benefit from additional support: 85% said they need more personal and professional support to be successful, whereas just 59% of other C-suite executives feel the same need. And it’s no wonder. Disruption hits CEOs harder than anyone else. All the vectors of change converge on the corner office: the needs and wants of every internal function and business unit, as well as those of employees, customers, investors and creditors, governments and regulators, and other stakeholders. How can directors help? By working with CEOs to design interactions that help get better questions into the room, provoke better discussions, and focus conversation on the right priorities. This stands in contrast to the outdated “certifying board,” which stays informed about current performance but rarely gets deep into sleeves-rolled-up conversations and whose members tend to simply proffer advice. Here are three ways board members can ensure boardroom discussions keep up with today’s constant change: 1. Avoid straight-line thinking. Boards can encourage a shift to more scenario-based and dynamic planning and decision-making. Uncertainty makes traditional forecasting difficult and less reliable. Voluminous board books, prepared for the board’s critique or blessing, assume that the path to value is known and relatively straightforward. This leads to discussions that emphasize explaining variances to plans. Instead, directors should be tracking progress and pace toward strategic goals, recognizing that it’s not a straight line. They should expect course corrections and not put management on the defensive about them. They should be setting up scenarios, debating what needs to be true for a scenario to come to pass, and considering how the company should prepare for alternate futures. We worked with a large industrial company that was considering which of several operating and organizational models would best support its strategy. One option involved more extensive outsourcing, while another involved more vertical integration. These options had radically different implications for skills, locations, capital spending, and more. We helped them create an interactive model that allowed directors and executives to explore options in “real time” rather than shuffling through pages of static PowerPoint, resulting in an entirely different kind of conversation. Discussions like these allow CEOs to test assumptions and discern priorities. 2. Create strategic options, not just plans. Directors can help CEOs set priorities around creating and expanding value by taking more of a portfolio approach to strategies, investments, and returns. In today’s environment, traditional, long-term, big investments are riskier and less certain than they once were. It therefore stands to reason that companies should place more bets, creating options if some don’t pan out. This is a more sophisticated version of “fail fast.” If boards recognize that they’re helping the CEO oversee a portfolio of strategic investments and opportunities—not just monitoring a single-minded strategy—they can take advantage of the full diversity of experience, ideas, and knowledge the board possesses. This also opens the door to board discussions that are akin to after-action reviews that look at successful and unsuccessful investments, not to assign credit or blame, but to learn. The idea is to help the right priorities emerge in a process of experimentation, testing, and discovery. 3. Keep the core strong. Even as executives tackle new marketplace challenges and opportunities, boards should speak up for and support the CEO’s focus on “North Star” fundamentals, including: Customers When uncertainty is high, organizations tend to turn inward. It’s understandable, but there’s no better way to know what’s important than to listen to customers—who face the same issues your company does and will reward people who listen to them. For the board, this means that it’s not enough to pay attention to numbers alone. Board members should ask about the conversations the CEO is having with customers, what customers’ pain points are, and other questions that elicit qualitative information as well as data. This way, boards can support the CEO in setting priorities about how to create and grow value with a customer mindset. Technology CEOs need to make sure their organizations are attentive to the value of underlying data as they pursue disruptive opportunities from AI and other technologies. The reason? Solid data is the foundation on which new technology depends. AlixPartners Disruption Index data show that leaders in AI are nearly twice as likely to say their legacy systems are up to date and problem-free than companies that lag in AI. Investing in data quality and management is a key way companies can make sure that their technology investments and innovations generate attractive returns. Risk Risk management is a board issue par excellence. Traditional risk management focuses on cataloging threats and complying with regulatory risk disclosures—which are important but don’t necessarily cover all of the bases required to deal effectively with “what if?” strategic risk questions. A more creative, productive approach emphasizes response readiness instead of building Maginot Lines to fortify against known or predictable threats. I see growing numbers of boards, risk and audit committees, and executive teams move toward scenario-based discussions, using real-time data and more dynamic forms of engagement. Supply and trade risk are good examples. Boards’ risk committees spend most of their time examining financial risk, in part because of compliance rules, and as a result may overlook operational risks. I’ve helped boards and CEOs use tools that monitor their own supply chains to observe—dynamically and in near-real time—how a company’s competitors are dealing with tariffs and other geopolitical tensions. That’s a shift from guessing the future to stress-testing operational agility and resilience. With those insights, boards and CEOs can see which risks could have the most impact on value and where strategic threats or openings are occurring. . . . These three approaches—scenario-based planning, a portfolio approach to strategy, and a clear focus on fundamentals—are connected in two ways. The first is that they’re forward-looking, which can support CEOs in setting priorities. They provoke conversations about where value is coming from and where it might be endangered, rather than just reviews of performance and plans. Second, they’re designed to encourage the CEO and the board to build two organizational capabilities companies most need in uncertain times: creativity and resilience. Boards can help by asking questions that are both sharp and open-ended; by offering guidance that’s both proven and creative; and by not just relying on experience, but leveraging it to shape the future. Disruptions might be threats or opportunities , but they’re always learning opportunities.
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