Multiple research reports counsel against short term thinking and decision making in boardrooms. Regulation seeks to prevent directors capitalizing on short termism. Governance codes highlight the importance of balancing short term performance with long term stability. Working across different time horizons is recommended.
When a crisis occurs like a global pandemic, thinking beyond survival becomes more difficult. It is a brave board which sponsors significant changes in strategic direction and major investments. We will hear the stories of these brave boards, navigating their organisations through transformational change. We may hear less about the teams who enabled their informed bravery.
Behind every high performance board are professionals from many disciplines, accountable for providing intelligence to inform strategic decision making. Working in partnership with the board, they enable holistic questioning and are responsive to constructive challenges. From disciplines including corporate governance, compliance, strategy, risk, legal, internal audit, investor relations and communications, these experts enable board effectiveness.
To sustain a range of initiatives which simultaneously maximises short term survival/performance, while planning changes to the current business model and exploring innovative and transformation changes, calls for courage, imagination, stakeholder engagement and excellent programme management.
The Board’s future thinking is often overtaken by the time required to solve problems in the ‘now’ and ‘soon’. A recent McKinsey Sustainability at COP26 event predicts the emergence of ‘50 new Tesla’s’ led by innovative technologists engaging multiple stakeholders in their ambitious plans.
Beyond auditing the time investment each board makes in operational problem solving and designing the future, exploring board health and dynamics is often an effective means of identifying the quality and effectiveness of strategic thinking, decision making and monitoring. With better understanding of their effectiveness and the support of internal stakeholders, each board is well equipped to improve their strategy formulation process and outcomes.
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