Everything written since April/May 2020 about ‘Building Back Better’ seems out-of-date. This applies especially to my own material!
Is it just me, or is this second/third wave of our little pandemic going to require more resilience for our boards and management teams than we needed in round one to lead through the uncertainty?
You can do this.
Nine months after the early onset of the virus, our communities, societies, and boardrooms are now thinking and talking more about diversity, climate change, systemic racism, social unrest, and an election season that just won’t go away. This is all piling on to the original goal of staying safe, keeping people funded, and figuring out what the new normal will look like.
By early summer, we did our best (?) to re-open safely. As predicted, the colder weather has arrived in the northern hemisphere along with new community spread concerns. Our friends in Australia/New Zealand are now into spring and have seen their way through to the other side to re-open.
We can too.
I’ve set out to write an updated article about resilience in the boardroom and dealing with uncertainty. From the research I’ve done this week, I’ve learned there are specific steps and ways for our boards and management teams to approach what’s in front of us and to appreciate the wider set of issues that have emerged to compete for our attention.
Kudos to the big firm consultancies, boutique firms and print publications for continuing to publish and update on where we are at and how we might consider our next boardroom pivot. Rather than write a longer than needed article – it’s already long enough – I’ll provide some key highlights and point you to the reference links at the end.
While we’re always trying to connect you to the latest thinking and thought leadership on our Savvy Director topics, I think you’ll find this week’s list of resources particularly powerful. I really encourage you to return to this article in the coming days to dive into the referenced material.
As recently as New Year 2020, boardroom resilience was spoken of in the same breath as risk management, in an effort to anticipate and mitigate obstacles that could prevent the achievement of strategic goals and objectives. The ‘normal’ view included perfunctory planning for how to manage crises, industry disruption, and perhaps even how to deal with powerful exponential change along the lines of Amazon. Typical strategic plans had a shelf life of three years, maybe one or two more, depending on the industry sector.
Boards had a reasonable expectation that, although management could not identify every possible risk, there would still be a crisis response plan, clarity on who would do what (including the board), combined with some form of scenario planning or even ‘war games’.
Today is different. No strategy will survive fully intact. Leading companies are now looking at planning in six-month chunks. Maybe that’s your board too. The choices we face now about reopening economies and returning to work safely are more complex, difficult and impactful than the original decision to shut down. What does it mean to shut down and then try to restart entire industries?
As noted in the Forbes article referenced below, what is amazing is the amount of upheaval we are experiencing, all at once. The virus is challenge enough, now weave in advancing social justice and combating racism around the world.
So, what about uncertainty?
In July 2020, David Benjamin and David Komlos interviewed Jonathan Goodman, Vice Chair of Deloitte Canada, for a Forbes article. Their conversation revealed an interesting perspective on confronting exponential levels of uncertainty.
Their approach is to embrace uncertainty and build it into decision-making, instead of recognizing it and becoming paralyzed, or denying its existence by wishing it away, oversimplifying it or being falsely confident in the future.
Goodman says, “This means looking at your strategy and balance sheet through the window of different possible futures - mergers and acquisitions, partnerships and evolution of ecosystems. If your board and management teams do this necessary work, it gives you more courage and conviction of choice.”
Ignoring uncertainty can lead to unanticipated downsides – or missed upsides.
One thing that is different is that uncertainties look different depending on the time frame we are using. Potential scenarios for the next six months are related to the progression of the disease. Will we have to lock down again? The following six to eighteen months will be different as we begin the recovery.
And three-to-five-year scenarios will be about a world remade by the pandemic. We don’t know, and we can’t know, the ultimate severity, the degree of social activism, and how industries and small businesses will be reshaped.
The writers of the Forbes article call this a ‘reshaping moment’ – a moment where leadership, trust and strategy matter more than ever before.
Deloitte’s Jonathon Goodman was asked, “What will get in the way of people making the changes they need to make?” His response:
“First, you have to know what you know, know what you don’t know or can’t know, and know the difference. If you are confused about the difference, you will struggle to accomplish the things that have the best odds of success.
Second, it is easy to get caught up in the intensity of the moment, but you must hold a longer time frame in view as you’re dealing with the urgent.
Finally, this is the moment to seek out and incorporate different perspectives in decision-making, despite the accelerated time frame. Listen to that person who disagrees with you with the most clarity and specificity. We don’t get to the best place on the other side of the pandemic if we don’t take into account a diversity of experiences, opinions, and points-of-view.”
The PwC article referenced below asks whether it’s time to consider adding new directors, especially if your board hasn’t seen any change in composition in a number of years. Their interpretation of resilience was also about anticipating and adapting to change.
“Individual board members should be thinking about the right and deliberate questions. Haphazard or lazy questions can drive waste and take the organization in the wrong directions; conversely the right ones can provide the provocations that help their organizations best deal with the crisis and beyond.” – Jonathon Goodman
We ask questions to help the executive team peer into the future, try to see around corners, and consider how that future connects to the choices and actions we make today. Provocative board questions can help pull executives out of the today and encourage them to talk about how to redesign for the future.
There’s an excellent article listed below entitled “The Perseverance of Resilient Leadership,” by Punit Renjen, Deloitte Global CEO. He starts with this statement:
“A few months ago, we imagined ‘thriving’ as leading our organizations to a better normal after the COVID-19 pandemic. Yet our responsibilities as leaders now are further compounded by concurrent challenges of racial injustices, climate change, and economic uncertainties. Getting to ‘Thrive’ appears more arduous and lengthier than many of us imagined … or hoped for.
As resilient leaders, one of our most critical roles right now is to sustain: to sustain our people, many of whom are experiencing not only fatigue, but more stresses than they ever have; to sustain our organizations in continuing to create value for all stakeholders; and to sustain society as it experiences multiple existential threats. But just as important, we must also sustain our own ability to lead so that we can continue to serve over the long journey ahead.”
I’ve provided some highlights and a few of the questions Punit Renjen poses for directors to consider, but I’m pretty sure the savviest directors will want to read the entire article for ideas that can be adapted to their boards and management teams.
“As leaders, we need to empathize with and acknowledge the myriad challenges our people are currently coping with - many of which have no end in sight.”
“Courage also means making short-term decisions with the long view in mind. Now more than ever, our organizations need to preserve and create value over the long term for all our stakeholders by supporting employment, our industries, the community, and the overall economy. Sometimes, implementing new business models requires bold decisions to invest, even when capital is tight.”
“Sustaining society requires us as resilient leaders to take an even more active role in influencing social systems and structures for the greater good. Given each of our organizations’ vast web of relationships – with customers, vendors, ecosystem partners, governments, communities – how do we connect and leverage the full potential of these networks to reform social systems and structures?”
“We owe it to our people, our organizations, and society to be personally fit in mind, body, and purpose to serve them over the long haul. Facing what may be the most extraordinary leadership challenge in our lifetimes, the risk is that we will cross the depletion point before we recognize it. We must not only sustain others – we must sustain ourselves. Doing so means asking ourselves difficult questions.”
“None of us know how long the COVID-19 crisis will last or the path the virus will take. Likewise, the major disruptions stemming from racial injustices, social inequality, climate change and economic stress may further lengthen the path to a ‘better’ normal. As boards and CEOs, we are called upon to sustain through the crisis.”
Authors Seymour Burchman and Blair Jones of Harvard Business Review argue the pandemic should be seen as a ‘black elephant’ – a term derived from a cross between a black swan and the ‘elephant in the room.’ It describes a looming disaster that’s clearly visible, yet no one wants to address it.
A black swan event is so unexpected and devastating that companies could not have prepared for it. Given that experts have been predicting a global pandemic for years, it doesn’t qualify as a black swan. Yet few companies considered a global pandemic to be among their highest risks.
“Boards have a special responsibility for building the necessary resilience in this environment. They have a fiduciary responsibility to ensure the business is sustainable. But in the past, the short-term focus of capital markets often pushed directors away from resilience.”
“A new strategy is needed. The companies that thrive in the future will have built resilience into their systems, and they’ll have a ready playbook for getting through black elephants.”
Let’s remember the other black elephants mentioned in this article – climate change, racial injustice, diversity, and social unrest/justice. These topics are now getting more traction elsewhere.
What about your board?
I still believe in our boards’ capacity to build back better. I still believe in your ability as a savvy director to proactively collaborate and ask the deliberate and courageous questions that are most relevant to the next six-month chunk in your planning cycle.
Perhaps, in collaboration with your board or committee chair, you might find a way to kickstart the black elephant discussions to get these topics on your board agenda, and maybe in your risk matrix.
We’ve all been working to get beyond a compliance checklist for board governance. Huge progress has been made. This is the next right move.
“People now want a place where they feel safe.” - Sandi Peterson, Board Director, Microsoft Corporation, from ‘The New Director’s Chair’ newsletter by Adam Bryant
Leave a comment below to get in on the conversation.
Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online hub with hundreds of guideline questions and resources to help prepare for your next board meeting.
Share Your Insight: How can boards best organize themselves to have ‘Black Elephant’ discussions?