In my governance portfolio, I very much enjoy leading across a variety of industries. My board roles at companies like Dunkin Brands Group, Brighthouse Financial, and Tailored Brands allow me to both contribute my expertise and deepen my knowledge of different operating models. I find that I am constantly honing my ability to encourage management to consider ideas from disparate business models, and that can make a critical difference during times of disruption.
In order to succeed, corporate directors must connect the dots about what modern businesses need and strive for growth and positive change through every stage of the business’s operations: while the sailing is smooth, during times of disruption, and when preparing for long-term sustainability. While I’m always learning, the following ideas have helped me fulfill my duty to govern and create value through times of disruption.
Identify, Understand, and Mitigate Turnaround Issues
Corporate directors must be courageous, independent voices in the boardroom. Navigating disruption can bring out the best—and the worst—in everyone. It is imperative during crises that directors check their emotions at the door and prepare to provide creative guidance and advice to management. This also is a time rife with possibility. While it can be difficult to navigate sensitive issues around business change, it is easier to create change when the platform is burning and the need for change is apparent.
Name and identify the issue at hand. Is your business in crisis because of a recession or at risk if the bull market goes bust? Is your business facing disruption from changing consumer preferences or decreased buying power? Once you understand the complexities facing your company, it is easier to work on a holistic oversight strategy. Many leaders will not want to dig in and uncover additional issues during a time of turnaround or crisis, but it is in the best interest of the company for directors to buckle down and urge management to reconsider its strategy.
When navigating industry change, it’s the board’s role to point out the hazards while management fights the fire. Because the board is not involved in the day-to-day operations of the business, its members will not be as focused on specific aspects of the company’s operations that may be blinding management to an opportunity or risk. Directors would do well to read often about the broad changes impacting not only our businesses, but the world at large. The board’s oversight might be just the key to saving the burning business—or seeing it collapse because a hazard was missed.
Stretch yourselves by having difficult conversations in the boardroom. Collaborative thinking in the boardroom is overwhelmingly considered positive, as consensus is important to guiding management toward strategic change. During difficult times, however, this type of environment can stifle conversations, hamper free thinking, and restrict exploring different management strategies and approaches that could strengthen the business. Of course, a board should be a unified voice in public, but in the safe space of a boardroom it is important to push boundaries and force hard conversations to the top of the agenda. In times of crisis this paradox of conflict and exploration inside the boardroom and unification outside it is the board’s duty.
Keep Consumers Top of Mind
The demographics of our nation are changing. Our nation is becoming more and more diverse, as well as globally oriented. Many businesses are at a crossroads, and if they do not react to their changing consumer base, they may face an existential threat. Understanding consumer needs and preferences is the first step in successfully navigating industry change. It is never a misstep to put yourself in the shoes of your customers in order to meet their needs.
Be aware of current events. Analyze customer data and community engagement where your customers live. Board leaders who think with a customer-first mindset are an asset to organizations and leadership. In this changing economy boards must concern themselves with how disruption by certain technologies and business models impact their current and potential customers. Choose to engage management in conversation about how adopting those disruptive concepts can be used to improve customers’ experiences.
Your board should set clear expectations for innovating through disruption. The board can partner with management to include goals for innovation into the company’s strategic map, and also can incentivize managers to meet certain metrics by including expectations as part of their remuneration plan. Disruption can actually spur innovation. For instance, when the fresh bread category at Dunkin was hit with the low carb eating trend, it not only sparked thinking on ingredients in bread’s current format, but also helped us to step back and think about what the consumer’s base needs were. In the end, bread is a “carrier” for many foods, so our innovation funnel began to populate with many more breakthrough ideas on carriers instead bread as a static format.
On the Horizon
There is a tremendous upside for companies willing to incorporate aspects of corporate social responsibility (CSR) into their operations and products. Consumers are becoming more aware of environmental and social responsibility and they want to support companies whose CSR values are in line with theirs. Investors are also keeping an eye on a company’s ability to monitor and report on their footprint on the environment.
The world grows more connected every day. The board can play an important role in helping the company’s culture to become one that places digital innovation first. Putting an emphasis on addressing the needs of a digital world must be addressed sooner rather than later. Be a futurist for your organization. The bulk of corporate leaders cut their teeth in a world where complex technology was science fiction, and while directors are digitally savvy at an increasing rate, they ascended to their role in a business world that looks very different from the one that their management team is operating in. But all directors can be students of technology. Boards may want to consider directors who have both a digital and an operational background to help their companies innovate and be on the forefront of emerging technologies.
NACD gives their members the tools so board members can find their voice, encourage innovation amid disruption, help businesses thrive, and much more. The discussion on these topics and more will continue at the 2018 Global Board Leaders’ Summit, happening September 29 through October 2 in Washington, DC. I look forward to seeing you there.