Boards Provide Vital External Perspective That’s Key to Managing Uncertainty
"The future is uncertain...but this uncertainty is at the very heart of human creativity." ~ Ilya Prigogine
Indeed: uncertainty is ever-present. It can also be a catalyst for innovation and adaptation. Consider the use of 3D printing to rapidly enhance PPE (personal protective equipment) to support front-line staff. Or check out the Seattle restaurant that was among the first to completely rework its business model during the COVID19 shutdown. And AirBnB has changed tacks dramatically given a shaky future for travel. I suspect each of us can offer an example of creativity and clever leadership that’s driven opportunity amid various periods of uncertainty.
Before CEOs can manage uncertainty effectively, they need to have a solid understanding of their external context and the key drivers of change for their business. Reviewing both elements routinely and consistently is also a critical strategic discipline that should be at the heart of a CEO’s approach to executing strategy.
Boards can add tremendous value to the conversation.
In any time, a key role of the Board is to provide external perspective and insight about its company’s markets and the greater business context. This perspective helps guide their CEOs and senior leadership teams in setting direction and taking the right strategic decisions. With so much uncertain or changing in our world today, this role is even more important. Directors must ask – and answer – provocative questions to shape thinking about the future of work and the economy. By doing so, Boards adds tremendous value to the conversation.
What may be different about the business going forward?
The CEOs and Directors I’ve been speaking with are thinking about the broader implications of shifts in all aspects of the economy. Board members are particularly helpful in looking across industries, taking lessons from others, and helping CEOs to apply them to their specific context. Together, they are painting pictures of the nature of business going forward. Perhaps consider these ideas to spur your Board-leadership team conversations:
A PwC survey in mid-April indicated that 71% of CFOs fear a global recession. Consequently, 65% are deferring or canceling investments and 77% are actively engaged in cost containment programs. Many are hedging their bets – curtailing their own spending to offset projected lost revenue. Keeping a careful eye on costs is important during a downturn. Yet failure to invest can also backfire if it merely prolongs the pain. Which parts of your business are most vulnerable? Where are your greatest strengths? How do you shift resources (dollars, people, and equipment) or retool to seize the opportunities your strengths support?
Continued social distancing – both mandated and by choice – will likely reshape scale. Throughout the value chain, companies must reconsider how they supply, produce, distribute, and deliver products and services to customers. Economies of scale may give way to more customization, localized distribution, and personalized products and services. How will you adapt your operating model to accommodate or capitalize on that trend? In what ways might technology or partnerships help? How does this benefit your customers? What new competitors may emerge?
Global stay-at-home orders have forced all of us to rethink our shopping habits and desired experience. Brands that have adapted quickly to serve customers seamlessly and effectively online have worked through supply chain and distribution disruptions. Many have acquired new strengths, embraced creative partnerships, or shifted business models. I find in-store shopping to be stressful; I’m on hyper-alert to maintain distance and reduce time in store. That means fewer impulse purchases (I stick to the list) and likely, reduced overall spending. Shelf placement, promotions, and other tactics to get people in the store – and keep them there longer – may give way to tools for speedy check out and reduced interactions. That said, people do enjoy the tactile and personal attention they get in store. What new opportunities does this create for your company to facilitate convenience, safety, and a personal touch? What role might AI play?
Our need for and use of physical space has changed. Of course, that impacts both our real estate footprint and its design. Shared desks or cubicles, community work spaces, open plan layouts – all of these are epicenters of risk in spreading virus. Boards can help their companies to reframe their view of physical space. What will become of contracted meeting sites, e.g. offered by Regus, WeWork, or Work Social? Where might these concepts fit into your company’s office plan?
Teleworking is likely to remain a key aspect of how we work. “Management by walking around” will no longer be useful. Leaders must be skilled in connecting with staff and enabling team work using technology and learning to read (and provide) new visual cues. Staff must engage their managers and convey information differently, too. How will we evaluate and develop communication and team-building competencies for all staff? What will work processes look like? What new practices will the Board embrace to model these new leadership capabilities?
How, when, and why we convene has changed dramatically in just a few months. As regions and countries reopen, what might be different?
For individuals, travel likely means more pre-trip tasks at home, a greater reliance on self-protection and personal discipline, and new protocols for disinfection and human interactions. Without the personal touch and amenities that many hotels or airlines use to entice guests, how will you connect with and delight customers?
For associations and others that rely on events as a key revenue source, new realities require creative ways to convene experts and facilitate networking. And not every experience can be replicated online. Rather than canceling or postponing their annual conference, one association has designed a conference series, including a pay-per-event revenue model versus traditional multi-day event fees. What other revenue or event models have Board members seen elsewhere that merit review now? How will you reimagine your Board meetings as an example of what might work with members or donors?
The global, systemic shifts caused by the pandemic will change the business and economic landscape dramatically and in ways most of us haven’t seen in our lifetimes. As CEOs navigate forward, Boards can help by providing external perspective and challenging both conventional wisdom and the status quo. In particular, Boards have a responsibility to describe what is the organization’s tolerance for risk and establish or reinforce their duty of care to all employees and customers. By asking provocative questions and sharing diverse perspectives, Directors guide their CEOs in identifying the key drivers of change for their business and strengthening the company’s strategic discipline.