This blogpost is shared as part of a series of insights from INSEAD Directors Network, based on INSEAD Directors Forum October 2018 and roundtable discussions held there. The Directors Forum Round Table Discussions were held with IDN members led by IDN board members or IDN Ambassadors.
Overseeing culture, talent pipelines, diversity and succession in a time of innovation & transformation.
by Helen Pitcher OBE, President IDN, Chairman in the Public, Private and Charity Sectors
- Remember the time before electricity, maybe not!
- Remember the time before computers, some may?
- Remember the time before mobile phones, a few more maybe?
- Remember the time before Facebook, Snapchat et al, you may be showing your generational age!
The are many and numerous quotes in the business world about the need to adapt and change. From the elegant Peter Drucker’s “The greatest danger in times of turbulence is not the turbulence—it is to act with yesterday’s logic.”, to the more acerbic W. Edwards Deming, father of the Total Quality revolution, “It is not necessary to change. Survival is not mandatory.”
They show us that change, and transformation has been and remains an inevitable part of business life and that Boards and companies are presented with constant threats and opportunities to prosper and grow.
We are, however, in a time where the role of the Board is becoming increasingly directional and formative, acting to shape the long-term sustainability of the companies and businesses in their charge.
While there is a significant level of catching-up to do for many Boards, we can start to identify the Best Practice leaders. They have caught onto the fact the current CEO and Leadership team has a shorter limited ‘shelf-life’. These Boards are focusing on the 10-year life-cycle of the business, with an average tenure of 5 years for the CEO. They are seeking to create agile and flexible leaderships teams, who can respond and lead change in response to the increased speed and dynamics of the emerging and disruptive ‘digital world’. In another succinct quote for the business world, “Change before you have to.” —Jack Welch.
One of the key leverage points for this 10-year cycle is to have great antenna out into the external environment to inform a progressive strategy in the short to medium term. Increasingly, however, both through necessity; investor, regulatory and societal pressure, Board’s are stepping into ‘quality assurance’ of the culture, talent pipeline, diversity and succession of the business. They are seeking to create a balanced leadership team to meet the diverse challenges of the ‘maelstrom’ of; deep innovation, rapid transformations and dynamic global business environments, with the added bonus of the demands and expectations from an actively engaged millennium generation.
This oversight of culture, talent, pipeline diversity and succession, as seen through the withering lens of innovation and transformation, should stimulate and leverage a Board’s wisdom and insight, providing a truly critical thinking challenge.
Boards need to focus on seeing more clearly into the structured elements of Talent Pipeline, Diversity and Executive Succession of the Business, with a sense of getting from a known place to a future space.
This is not an easy, ‘position paper’ to the Board, as we wrap these elements of talent, diversity and succession in the cloak of culture. The picture starts to blur; from an unclear current culture? to what the future cultural landscape needs to look like.
As we pierce this organisational environment with the arrows of innovation and transformation, the role of the Board becomes a much more crucial strategic partnership with the executive team, seeking to create an agile business, where the strategic antenna are fully engaged.
The inevitable questions for a Board will be, how do they understand and assure this Cultural landscape which is so all pervading and elusive? not I suggest a ‘auditing’ question, but one which should fully engage the AI data potential, scanning the business for the ‘reality’ of the situation. Or are Boards sleep walking into a minefield of value destruction as the ubiquitous social media environment, means reputational risks to the business can spin out of control rapidly.
Do Boards really understand their own systems and culture of innovation and recognise these as strategic drivers of the Business. How open is the Business to new ideas and radical innovation, or is it creating ‘roadblocks’ to success? In discussion about one organisation where ‘thinking outside the box’ was valued, a more sceptical participant suggested this was only valued if you stayed within your organisational box.
In the transformation game, this is where a diverse and experienced group of NEDs can come into their own, they can recognise the signposts of change and the challenges of radical transformation. They should have the wisdom and experience to recognise the pitfalls and elephant traps ahead. They should be able to temper the inevitable over-optimism of the CEO and Executive Team, while maintaining an enthusiastic engagement. This requires an open, honest and trusting relationship to manage the journey ahead.
It is important that Boards should be stepping up to assure the rigour and strategic nature of the resourcing and succession process, to get what they want for the future. This will impact the CEO who traditionally see this as their territory. It will also require the HR Director to be able to both think strategically and balance the demands of the CEO and the Board to create an optimal solution. Again, this will require the reporting of the ‘reality’ of the situation in hard data terms as opposed to platitudes of engagement and enthusiastic sound bites. The recent Gender Pay Gap disclosures in the UK and spluttering of excuses and explanation, somewhat dented the ‘we value all our employees and subscribe to equal pay’ pronouncements. The ‘reality’ did indeed shock many Boards, which shows how easy it is to be out of touch.
This strategic stepping up to meet the challenges of the future is not easy, it requires a Board to do things it does not really have to do? they can always be done later! It is often ‘easier’ to make radical calls when your ‘back is to the wall’ and everything is crumbling around you. Being pro-active in this space requires a Board to have a positive and forward-looking dialogue with its shareholders and other stakeholders to be able to carry them forward, not an easy task, but one of their responsibilities. As custodians of the business risks, it is equally about taking measured risks, as otherwise the business could die and value be destroyed! It is about having a long-term view with the confidence to manage the changes and risks and create a business ‘enabled’ for the future.
This blogpost is shared as part of a series of insights from INSEAD Directors Network, based on roundtable discussions held during INSEAD Directors Forum October 2018. The Directors Forum Round Table Discussionswere held with IDN members led by IDN board members or IDN Ambassadors.
This roundtable discussion Overseeing culture, talent pipelines, diversity and succession in a time of innovation & transformation, was led by Helen Pitcher OBE, President IDN Chairman in the Private, Public and Charity Sectors, with the introduction
The oversight of culture, talent, pipeline & succession, as seen through the withering lens of innovation and transformation, should stimulate and leverage a Board’s wisdom and insight, providing a truly critical thinking challenge.
We can see more clearly into the structured elements of talent management, pipeline diversity and executive succession, with a sense of getting from a known place to a future space.
As we wrap these three elements in a cloak of culture, the picture starts to blur; from an unclear current culture? to what future cultural landscape?
As we pierce these four constructs with the arrows of innovation and transformation, the role of the Board becomes a much more strategic partnership with the executive team, seeking to create an agile business on a journey where the strategic antenna are fully engaged.
What do boards need to know about corporate Culture? By Spencer Stuart
Other blogpost in this series:
Governance in a Disruptive World by IDN Board Member Liselotte Engstam
From Board oversight of Strategy, to creating a Sustainable Business, by Helen Pitcher OBE, IDP-C, Vice President IDN
Anticipate and manage for geopolitical trade, corporate governance codes and regulatory changes by Cleopatra Kitty, IDN Cyprus Ambassador
The impact of technology on Strategy & Business Models by Mary Francia, IDN Board Member
Align Risk Management with Strategy and Operating Performance, Reward and Remuneration by Susana Gomez- Smith, IDN Portugal Ambassador
Accelerate Board Effectiveness by IDN Board Member Thomas Seale
More insight from INSEAD Directors Network, will be shared based on INSEAD Directors Forum 2018, Round Table Discussions – Look out for more upcoming blogposts!