The constant state of evolution we talk about often (most recently in last week’s Survival of the fastest post) requires tight alignment between C-Suites and their boards. In the same way that successful organizations push decision making to the edge of the network (i.e., to the team members most directly responsible for the decision), successful boards recognize that they need to empower faster and more agile responsiveness to changing market conditions while ensuring their fiduciary responsibilities are met. We’re a long way past the point where a quarterly board meeting is frequent enough to set strategy. Consider the last year’s worth of ever-changing COVID response and recovery as a prime example of the need to move far faster than before, especially for the level of decisions C-Suites should be making with their boards. Recent Gartner data reflects this trend, showing that 69% of the boards they surveyed accelerated their digital business initiatives following the COVID-19 disruption and that almost half of them anticipated changing their organizations’ business model as a result of the pandemic.
Changing board priorities
The role of boards needs to evolve as frequently and as quickly as the companies they serve. The kind of rapid increase in the rate of change and transformation we’ve seen in the last decade (and especially the last year) means boards need to change both how they interact with C-Suites and how they govern. EY has done an excellent job summarizing the Six Priorities for Boards in 2021, which provides a great overview of how quickly their role is shifting. A quick recap (read the full article for more worthwhile details):
- Overseeing strategy to create long-term value: maximizing long-term value requires solving for the now, exploring the next, and reimagining the beyond. This has always been true and is one of the primary objectives of a successful board. The difference now is in the rate of change — everything is moving faster and that’s continuing to accelerate. The now needs much more immediate responses, the next is the very immediate term, and reimagining the beyond is on ever shorter timelines before the curve of the future bends beyond the visible horizon, limited by our ability to predict with any accuracy. This requires efficiency in determining success metrics in advance with full agreement across geographically/functionally diverse teams and a single source of reliable truth about the results of experiments and strategic initiatives available in real-time. Strong governance design is necessary to ensure board members have access to aggregated data that supports their decision making while equally ensuring that project team members and contributors (internal and external) see only what they should see.
- Promoting enterprise resiliency in the face of uncertainty: a rapidly shifting business environment will require an agile approach to achieve resiliency. Resiliency will become one of the defining characteristics of tomorrow’s most successful enterprises. Where we once praised stability — think of the very architecture of banks housed in heavy stone fortresses buttressed by elaborate columns — we now praise agility, responsiveness, and resiliency. That need to respond to rapid change rises all the way to boards and must be reflected in the design of lightweight policies and the selection of tools and platforms that enable better decisions to be made faster.
- Focusing on workforce transformation and new ways of working: leading boards will approach workforce issues as a fundamental part of strategy. We’re obviously a little biased when it comes to new ways of working but we couldn’t agree more. As the authors note, boards used to focus on talent at the C-Suite level but now need to shift their attention to the safety and health of everyone. The importance of culture, engagement, and diversity and inclusion have become obvious over the last five to ten years and better boards are now pushing their executives to prioritize those initiatives. That often means changing the ways of working, both in the selection of tools and platforms but also in policies (e.g., hiring), culture, compensation, etc. The Gartner report cited earlier highlights that 86% of respondents deemed technology as having a transformational role in addressing strategic business priorities and most of the organizations surveyed are expected to create a new “Chief Digital Officer” role to respond to COVID-19 in the long term. We expect this to scope to include addressing topics like cybersecurity, especially as we continue to see more brazen ransomware attacks like the recent REvil hack of Apple supplier Quanta Computer.
- Leading on diversity, equity, and inclusion: companies must commit to act on and communicate diversity goals and progress. This underscores the importance of their third priority with a specific focus on DE&I. We fully support this for all companies and have crafted and implemented our own approach to DE&I that will continue to evolve as our company grows.
- Guiding an ESG strategy that drives stakeholder engagement and value: financial figures alone no longer tell a company’s whole story. This is becoming increasingly important in enterprise-level transformation projects. Environmental, social, and corporate governance used to often be thought of as the nice-to-have done for the sake of the annual report but ESG has now shifted to be front and center in the minds of customers and team members. Non-financial KPIs are harder to track in traditional enterprise platforms like ERPs and require a different approach to measuring success.
- Challenging board composition and effectiveness: changing stakeholder expectations and evolving business strategies call for a fresh look at the board and its operations. Companies are transforming themselves for the new ‘work from anywhere’ future and a much heavier adoption and reliance on digital tools, so it’s no surprise that their boards need to follow suit. This could include evaluating whether they have appropriate governance processes in place to enable timely review of real-time data and to set adaptive strategies that can rapidly react to changes on short, mid-, and long-term horizons. We’ve dedicated our next Enterprise Orchestration Era webinar to this exact topic, covering how boards and C-Suites can more effectively work together using platforms like Conductor.
Unintended ripple effects
Although we’ve focused on the board level for today’s post, much of this applies to any governing body or committee and their interactions with the teams they’re responsible for overseeing. Whether a Transformation Office reporting up to the C-Suite or a steering committee (aka ‘steerco’) overseeing a major, strategic initiative, the challenges are very similar. Our work with Fortune 500 and 1000 customers around the world often involves enabling the orchestration of critical strategic initiatives with significant reporting requirements. We often come back to this 2014 HBR article: This Weekly Meeting Took Up 300,000 Hours a Year (yes, you read that correctly). It’s worth trying their interactive graphic to understand how the effects of a single, weekly executive committee meeting can ripple out to requiring 300,000 people hours of time annually. A significant portion of that time is status reporting: gathering data, analyzing it, developing an understanding the current status, reporting up from each project to their workstream to a centralized PMO, assembling decks, presenting them, etc. That ripple effect is obviously entirely unintended and insidiously invisible to the people who created it: the executive committee in question only saw 7,000 hours a year of time or about 2% of the total.
We very consistently see status reporting take up about 25% of the work effort in almost every initiative – prior to us getting involved. Consider the dollar value of a quarter of the time everyone is at work. The unintended effect of operating without modern Enterprise Orchestration is vastly more expensive than almost anyone realizes.
Enterprise Orchestration Era webinar series
We launched our Enterprise Orchestration Era webinar series offering individual sessions, each focused on a topic that enterprises are grappling with. In each webinar, we share the knowledge and expertise we’ve gained over the years, customer case studies, and Conductor features that help leading enterprises orchestrate their teams. I hope you’ll join our next session on Effective C-Suite Management — Improved Board Visibility Orchestrated with Sensei Labs Conductor Platform, or take a look through our past sessions and watch some of the on-demand recordings.