Insights

Here's How To Bring Agility Into The Boardroom

Driving innovation from the top through four steps.

By Michelle Daisley, Margarita Economides, David Gillespie and Lisa Quest.
This article first appeared on World Economic Forum on November 28, 2018.

Today’s corporate world is being shaped by a near constant onslaught of unpredictable events. In such turbulent times the traditional corporate governance model risks becoming outdated and ineffective.

Boards must perform a complex balancing act, safeguarding their core business, discharging their social responsibilities and developing innovative new propositions. They face unprecedented levels of scrutiny from regulators, activist investors, employees, commentators, politicians, and – most importantly of all – customers. Whilst much progress has been made on board effectiveness since 2008, if they are to continue to help their companies remain relevant, boards should consider a new governance model: The Agile Board.

An Agile Board enables the organization to identify and respond effectively to changes in the internal and external environment. It is characterized by a forward-looking and exploratory approach that makes companies quicker, more adaptable and more innovative. Whereas today the focus is largely backward-looking and insular, the Agile Board flips it the other way around to better oversee, challenge and nurture their current and future businesses.

Making such a transition will often be difficult. Boards can be overly burdened by backward-looking tasks, an increasing volume of materials, and the growing complexity of the business model and market environment.

Many are not helped by the make-up of the board and how it operates; comprising people from similar backgrounds, meeting in the same rooms, following largely prescriptive agendas in unchanging formats. It doesn’t lend itself to the mental agility required to bring fresh thinking to the company’s future positioning and current challenges. The result can be a reduction in the organization’s ability to change at speed when the need arises. At worst, this can contribute to high-profile corporate failures.

If businesses are going to cultivate greater speed, adaptability, and innovation, it is time to address the elephant in the boardroom. You will not be able to build a business fit for the twenty-first century with a board model that would have been recognisable in the nineteenth century.

You will not be able to build a business fit for the twenty-first century with a board model that would have been recognisable in the nineteenth century.

Any agile transformation, be it board or business, is a journey requiring a commitment to change, experimentation, and practice. A “big bang” play-book approach might look attractive but is unlikely to change underlying mindsets and behaviours. Starting small and learning by doing is likely to be significantly more effective.

The journey to become an Agile Board comprises four steps:

• Discover – gather data on today’s board agility levels

• Experiment – develop and test new approaches, such as in sub-committees

• Refine – evaluate success and iterate, taking a co-creation not play-book approach

• Practice and embed – apply changes to formalize new behaviours into the main board

These simple steps initially facilitate a series of small changes that build in their combined impact over time. They are designed to reduce bias, focus more on the future, and fully capture the collective expertise around the table to foster innovation.

Other changes should be considered as part of this, notably board composition and board member training. It is often the small things that will have the most immediate effect – even just changing where members sit around the board table can have an effect.

Businesses could pilot a “studio style” approach to board meetings and committees, applying design thinking and co-creation principles to increase understanding, insight, and encourage creative challenges on key business issues.

Greater use of digital and analytical tools within the board environment will enable board members access to a much greater range of insights, generating deeper understanding and contrary perspectives.

A range of new digital tools for board governance have been brought to the market in recent years and businesses should experiment with these to find out what helps them work more effectively. If you’re still just using standard board packs and endless key performance indicators (KPIs), alarm bells should be ringing.

For example, using tools such as real-time, virtual focus groups to understand the direct perspectives of different communities on key issues, will provide much richer insight and understanding than a written report, KPIs, or face-to-face briefings can achieve by themselves.

As part of the journey to becoming an Agile Board, organizations should experiment with a differentiated approach to decision-making by taking lessons from tech disruptors.

Amazon’s “one-way, two-way door” model of decision making is one example: where full board governance is required for large complex decisions, which are irreversible, or “one-way”; but for reversible, or “two-way” decisions, the board’s role is to challenge management to distribute authority across the organization, and increase the speed of decisions, rather than escalate up by default.

Alternative decision-making techniques (such as “red teams”, “tenth man”, or “thinking hats”) can be a powerful way to create greater mental agility around the board table. Providing fresh perspectives to difficult issues will be key and, with the exponential rate of change in new technology, board members will need to find new ways to provide informed input and challenge decisions.

In an era where new digital businesses and propositions are springing up at speed across many incumbent organizations, the board will need the right combination of such tools and techniques to effectively discharge their stewardship responsibilities in the new environment.

Creating an Agile Board is a journey not a play-book. It takes experimentation, learning and practice. If businesses are to successfully navigate the waters of disruption, agility needs to be practiced and demonstrated from the very top. For many, it requires significant change to existing practices and mindsets, and a delicate balance between control and autonomy. If implemented successfully, it will provide a much-needed enabler to greater speed, adaptability, and innovation across the company.