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New tech and disruption on the agenda for the board

27. October 2017 - Ricci Carlsson

If boards are to continue to be successful in the future, then changes to the board’s role, tasks and composition are required. Find out why and how – before the future catches up to your board.

While Danish companies have been hit by major changes in the past couple of years, Danish boards have so far been relatively sheltered from the impact. That time is almost over. The future is knocking on the board’s door, and it needs to be put on the agenda – and it may include some requirements that you wouldn’t initially expect.

New technologies, digitisation and disruption are the holy trinity that most mention when talking about the future. These aspects play a large role, but in terms of board work, the future will bring new types of tasks and methods of cooperation that are equally important. The board work will thus become far more exploratory, incisive and dialogue-based – in sharp contrast to the controlling, reactive role played by most boards today.

This is where many board members will probably think, “Nonsense. We already have the future on the agenda.” That, however, is a claim that I would like to take the liberty of challenging. It may perhaps be the case that they are involved in some initiatives launched by the senior management, but when I say that the future must be on the agenda of the board, I mean that the board must be an active frontrunner, discovering new opportunities and outlining themes on its own initiative.

”If the board room needs to adapt to the future, it is also necessary to look at the composition of the boards.”

The future requires new competencies

If the board room needs to adapt to the future, it is also necessary to look at the composition of the boards. In my experience, it is typically men aged 60 plus with a successful career behind them who sit on the boards. We mustn’t get rid of them, because they have a lot of knowledge, but we must supplement their experience with competencies in, for example, new technology and digitisation.

You’ll find that new knowledge in people under 35 who have immersed themselves in the digital age in an entirely different way. They are digital natives, to use a common term. I’ve experienced it myself – my children will come home time after time with a new app they have created. I’ve never created an app myself, and I doubt most board members have.

But we need that knowledge that they have, which means younger people should be invited into the board room. The challenge, of course, is that people seldom have a long list of documented professional achievements at that age, and the boards must therefore look past that requirement and instead focus on their skills from a future-oriented perspective. During that process, the chairman of the board has a significant task to undertake in terms of inclusion, and must be capable of taking the slightly “greener” individuals under his or her wings.

This requires courage and training

The board work of the future will require, as previously mentioned, a new form of cooperation with the senior management. And it takes courage to walk down new paths. This is because the new path requires the creation of a new space between the board and the senior management where it is permissible and uncontroversial to put the future on the agenda. It is in that space where the untested should be discussed from an open and curious perspective. It’s easier said than done. The “classic” Danish board has traditionally played another, far more reactive role, which can trace its historical roots to the hierarchical type of cooperation between the land-owning class and the farmers.

There is also another element to the board work of the future that requires courage: the courage to upskill. It has unfortunately been my experience that a lot of people don’t think they need further education or that it’s enough to just learn from co-workers. But the future requires a lot more from the board members than before – in particular, in relation to new technology and digitisation. It’s actually quite obvious that if you seek to gain knowledge from someone similar to yourself, then you will not get the dynamic innovation that ensures future success.

”We need to disrupt the board format to create enough leeway to exploit the opportunities of the future.”

New technology is disruptive

Development is moving faster than ever before, and it is precisely this speed requires boards to also assume the task of helping to spot new business opportunities and business potentials. New technology can be disruptive and overwhelming, and the senior management needs the board to contribute with their perspectives on what the disruptions can mean in terms of challenges and opportunities – before the business might actually have an urgent need for the senior management to take a stand on the issue.

In other words, in the interplay between the senior management and the board, there needs to be a focus on spotting the opportunities in new technologies, identifying business opportunities, discussing the business-related uncertainties and making business-related decisions in unison.The implementation is then left to the senior management, and the decisions are fine-tuned in an ongoing cooperation between the senior management and the board.

This change in the collaboration will inevitably lead to shifts in the balance of power between the senior management and the board, and this can induce anxiety. Some boards and senior management teams will therefore resist initially, but a disruption to the existing form of the board is necessary to create enough leeway to exploit future opportunities. We also shouldn’t forget that the change is actually in the board’s interest, because senior management teams are being replaced faster and faster, and more emphasis on the future in the board will help the senior management future-proof itself.

Rewriting the board’s role

With the future on the agenda, board work will become more exciting, but also more demanding. To be blunt, the board will be held far more responsible for the company’s success, and will no longer be able to sit back and point the finger at the senior management if the results are not showing up.

Now and in the years ahead, Danish boards have a lot of work to do to put the future on the agenda. The board’s role needs to be rewritten, and it will require a truly courageous board to make it happen. In my eyes, however, there is no way around it; the tsunamis of both changes and new opportunities that are around the corner will require it.

6 tips for the board:

  1. Put the future on the agenda
  2. Be on the lookout for changes in the world around you – constantly
  3. Spot the opportunities inherent in the changes
  4. Set the strategic agenda in various necessary business tempos
  5. Have the courage to talk about changes that may not be imminent and may be invisible to most
  6. Work with scenarios for how the changes will impact the business

Ricci Carlsson

Ricci Carlsson has worked on development of boards for more than 10 years. She has been in charge of Denmark’s first strategic board training course at the Danish Agriculture and Food Council and she has been a part of developing and managing board training focusing on small and medium-sized business at BSS, Aarhus University. Prior to this, she held executive positions at several Danish and international companies.