Following a crisis, here’s how boards can adapt and innovate
As the micro-management of a crisis abates, as reactivity gives way to proactivity, boards and directors can look to the future in a way that supports and encourages the day-to-day running of a company by the executive, a leading non-executive director has said.
This future focus drives confidence, giving scope for management to be innovative and adaptable and drive value creation for the business, according to Non-Executive Director of Citigroup, Ausgrid and Brisbane Airport Corporation, Belinda Gibson FGIA.
Ms Gibson, along with Global Head of Governance for Nasdaq Boardvantage, US-based Byron Loflin and Chair at MTPConnect, Sue MacLeman, will present the session ‘Forward looking boards’ at the upcoming Governance Institute of Australia’s virtual National Conference (7-8 December).
"[Over] the next few months you have to really look at your business model, look at how you’re going to deliver what you have to deliver,” Ms Gibson said.
“But once that model is buried in business as usual, you have to look up and say ‘what does this mean for the longer term?’, which is two to 10 years out, or whatever is appropriate for your organisation.
“The days of thinking ‘this is just going to go and go and go, and it’s going to be much the same, and our revenue initiatives or our expense initiatives will be enough to change things for the longer term’ - they are over. Modern times call for a deeper analysis of the business model over an extended time.”
The COVID-19 pandemic has been a good example of ‘threat rigidity’ – it exposed companies where the risk model had become static, Ms Gibson said.
Directors can help the executive to avoid this scenario by bringing the broader perspective of the operating environment to the executive in a way that doesn’t overburden or undermine.
“Who in a company can look ahead and say: ‘This is the new existential threat’? I believe this is the role of the board, to scale the horizon, for directors to keep stepping back, out of the template and bring this long-term view to the table,” Ms Gibson said.
“And it’s not that executives can’t have a view - they certainly should. You would assume executives are participating in that conversation, but probably have less time to commit to the much longer term, and so in a way the board is being a sounding ground.”
Ms Gibson cites emerging technologies like AI and automation as longer term trends to be monitored, investigated, and discussed at the board level. While discussion of these technologies may currently “occur around the edges of an agenda in a board meeting”, she believes that the rapid adjustments of the COVID-19 pandemic response - working from home, remote networking - should give organisations the confidence to consider more advanced technologies in depth.
“The discussion now becomes ‘what is technology capable of doing?’ and ‘what is our workforce capable of doing?’
“One of the lessons is that executives and directors have realised they can change their technology map and their kit in fundamental ways, much more quickly than they thought. That ‘we’ve got a big tech rollout over the next five years at mutli-, multi-, multi-million dollars’, has become ‘we can do this really quickly for far fewer multi-million dollars, but with a bit more risk’, because the changeover is not able to be as bedded down as before.
“So there are some lessons coming out of this crisis that I think people need to catch onto. And that’s sometimes good to say in board meetings: ‘what worked really well and let’s hang onto that’... it is a huge area of future development,” Ms Gibson said.
Conversely, the longer-term perspective will identify potential challenges and crises, based on what is happening in the broader political, economic and social environment.
Ms Gibson cites two current “existential threats” (in addition to further pandemics), as changes in Australia’s relationship with other countries - for example China and the US - and cybercrime. Both have the potential to impact Australian businesses.
Integrating a forward-looking practice into a board’s operation ultimately delivers to the role and purpose of boards as Ms Gibson sees it: to represent stakeholder interests and ensure the company can move forward in an agile and innovative manner.
“Times are changing greatly, there are many more challenges, and boards are there to assist companies to meet those challenges in the best way possible.
“It’s not about structures, it’s about the right boards, making sure the right discussions occur in that interaction between boards and executives, broadly.
“It’s drawing on directors’ experience to ensure that you do give executives the room and the encouragement to build a great business for the longer term, whatever that might be.”
Belinda Gibson is speaking at Governance Institute of Australia’s virtual National Conference on Monday 7 December in the session ‘Forward-looking boards’. This session is sponsored by Nasdaq Boardvantage.