Webinar Summary of Lifelong Learning IDN Webinar
How do boards and board directors best equip themselves to deal with the challenges of innovation and disruption, and how do they add value?
INSEAD Directors’ Network (“IDN”) members Denise Koopmans IDP-C, Roy Ling GEMBA, and Hagen Schweinitz IDP-C shared their diverse views and experiences on these questions in an INSEAD Lifelong Learning session by IDN, sponsored by the INSEAD Alumni Association on 19 January 2021. The session was chaired by IDN Board Member, Liselotte Engstam IDP-C.
Prior to the session, participants were surveyed and asked to share their views on the effects their boards have on company value. The key findings suggest that the top area which boards have been focusing on in more recent times is value adding strategies.
The panellists shared their candid views and insights, as well as practical feedback on key developments in corporate governance in more recent times. These included:
- How boards can be successful at creating value – Successful boards invest sufficient time on board work; maintain a well-rounded team; and have an effective chairperson who runs meetings well, as good leadership sets the tone for the board as a whole and sets the stage for a more value enhancing board. As Roy Ling shared:
“Boards should maintain a well rounded team with a culture of trust and respect, where directors and management challenge each other with constructive feedback”.
- Changing dynamics in the way boards work – Boards are becoming increasingly agile and forward looking, working together through many challenges. They are discussing strategy and scenario development more frequently. More backward-looking topics are being discussed in committees. Decisions are being made faster, there is more focus on task forces to deal with certain topics, and more open flow of information.
- Having board diversity – Not just in the areas of gender, age or experience, but diversity of opinion, personalities and capabilities. Directors need to be comfortable with differences of opinion. A question which was discussed was how good companies are at finding independent directors. The panellists also shared that whilst specialist skills such as digital, innovation and sustainability are important, directors also need to have other skills such as leadership and being able to operate in a team to be effective in the boardroom.
- A growing focus on board reviews – With the increasing need to further professionalise boards, leading boards undertake regular self-assessments on board performance on Board composition and dynamics, how boards perform specific board tasks and how boards operate. More advanced organisations focus more interviews and less on questionnaires. Annual review processes including the use of peer reviews with 360-degree feedback are also becoming more common. Many also obtain external third party periodic “health checks” to evaluate the feedback process.
Participants highlighted that they believe that the top area of focus of their boards in 2021 will be digital innovation. The panelists also shared that areas such as talent management, human resources and effective board processes should not be ignored by boards in 2021. As Denise Koopmans shared:
”Boards have become more leading, agile and forward looking. They have speedy and resilient decision making processes with ad hoc committees, deep dives and task forces as support. The board agenda is more geared towards strategic challenges and the role of the Chair as facilitator is critical.”
On board processes, many boards remain focused on upholding corporate governance and compliance with regulations. However, a challenge is that directors who have extensive views on how to reinvent the company and its business model may often not receive adequate attention from the board due to limited board time. One suggestion was that perhaps an ‘Innovation Committee’ should be formed to get more board attention. The innovation committee role is to actively motivate and facilitate management’s ideas and initiatives on innovation and productivity.
Another idea was that a review of the board’s agenda is a good way to measure board effectiveness. If the same items are appearing on the agenda with no resolution, it may be an indication that the board lacks the necessary expertise to deal with the issue.
How can directors keep up to date?
A challenge for most directors is how can they keep up to date as a board member. In addition to leverages such as the IDN network, recommendations included:
- Engaging between board meetings. Not just about spending more time on board strategy, it’s also about being able to connect with management in between meetings and staying current. But how often should they meet? Boards need to experiment to figure this out, but the key is to remember that boards are only as good as the information they have access to.
- Engaging with strategy as it is forming. Directors can participate early in the formation of strategy and stress-test it along the way, as opposed to reviewing a strategy that’s been fully thought through by management.
- Engaging on the tough questions. It is important to ask uncomfortable questions that extend beyond strategy sessions to a wide range of issues. Every board member does not necessarily need to have industry experience, but you must have the courage in the boardroom to ask the difficult questions.
As Hagen Schweinitz shared:
“Being a board director is now a profession with a lot of obligations. And future board reviews will look at how board members behave, interact and how independent they are.”
COVID-19 has reshaped board strategy
COVID-19 has certainly disrupted and reshaped how boards undertook strategy work in 2020. While many boards are tempted to refocus from long-term growth to short-term survival due to COVID-19, this could be a grave mistake. Instead, boards should capitalize on the COVID-19 opportunity to reposition and pivot their companies to strengthen their positioning and come out ahead. The participants suggested that boards need to be aware of three areas.
- Resilience comes through speed. COVID-19 gave rise to many uncertainties and changes. But boards need to guide management processes for fast responses. The point isn’t to have the right answer. The point is to build organisational capability to learn quickly why your answer is wrong and pivot faster than your peers do.
- Beware of a gulf between board and management and workers. While it is relatively easy for boards and management to switch to remote working, and they see it as effective and efficient, those in the trenches may not see it as so.
- More than ever, a bias to action is essential, which will frequently mean getting comfortable with boardroom disagreement.
While 2020 has been a year of disruption, 2021 is a year of renewal. Some areas for board directors to watch out for are:
- Always work on your own game as a director – Continuing education remains important.
- For people who want to join boards, carefully check if there is a match between your skills and the needs of the company, as well as a good fit and trust. Remain resilient and have sufficient time for your board roles.
- Spend even more time on board strategy – Manage through the COVID-19 crisis and into the new normal. Renew board processes to make them more effective and efficient. Balance trust with challenging discourse. Consider appointing an ambitious Board Chairman and rethink the annual agenda in 2021.
INSEAD Directors Network (“IDN”) – An INSEAD Global Club of International Board Directors
Our Mission is to foster excellent Corporate Governance through networking, communication and self-improvement. IDN has 1500 members from 80 countries, all Alumni from different INSEAD graduations as MBA, EMBA, GEMBA, and IDP-C. We meet in live IDN webinars and meet-ups arranged by our IDN Ambassadors based in 25 countries. Our IDN website holds valuable corporate governance knowledge in our IDN blog, and we share insights also to our LinkedIn and Twitter followers. We highlight our member through quarterly sharing of their new board appointments and once a year we give out IDN Awards to prominent board accomplishments. We provide a peer-to-per mentoring and board vacancy service and we come together two times per year at the INSEAD Directors Forum arranged by ICGC. We also engage with ICGC on joint research.
INSEAD Corporate Governance Centre (“ICGC”)
Established in 2010, the INSEAD Corporate Governance Centre (ICGC) has been actively engaged in making a distinctive contribution to the knowledge and practice of corporate governance. The ICGC harnesses faculty expertise across multiple disciplines to teach and research on the challenges of boards of directors in an international context and to foster a global dialogue on governance issues with the ultimate goal to develop boards for high-performance governance. Visit ICGC website: https://www.insead.edu/centres/corporate-governance
INSEAD Corporate Governance Centre (“ICGC”) research and articles
A checklist for boards in the new normal (INSEAD Knowledge Post)
Leadership in Risk Management (report)
The market for corporate directors (report)
IDN Blogposts with related insights
Related webinar recordings
Related Podcast Interviews