What is the role of the Board from your perspective?
The role of the Board remains a critical one in ensuring sound governance, appropriate support and questions of management while ensuring key stakeholders are well served.
The pace of change in digital disruption is putting pressure on boards and management to future proof their business by ensuring a closer, more relevant relationship with their customers as well as with their investors and employees.
Looking forward five years, do you think the board dynamic will change?
Half a century ago, the average Fortune 500 Company would last 75 years, today that same company lasts 14 years and declining.
Businesses are being digitally disrupted, their core product offerings commoditised and if they are competing on price today, they are sitting in a red ocean with new agile players taking their market space. Depending on the industry, regulatory pressures are also increasing with the Board playing a key governance and oversight role.
Board dynamics need to change to reflect these new market realities, asking the right questions, challenging and supporting management, to mitigate such risks with a clear eye on building a sustainable future that preserves and enhances shareholder value.
Customer centered experience design coupled with agile business oriented digital strategies are key new competencies. Ensuring management has a clear plan to move up the value chain away from being commoditised, building value networks with fresh new end-to-end services centered on customers helps to mitigate such risks.
How should we best prepare the next generation board member for the future?
Start now by encouraging a more diverse and multi-skilled Board, enabling the next generation to get more experience today. Succession planning needs to be driven by the need for increased generational, ethnic and gender diversity. These 'next generation' Board members will add critical new value as NZ companies compete globally, particularly in Asia, and in an increasingly VUCA world where the enterprise topple rate is increasing.
Experienced Board members can make great mentors to those who are less experienced.
Should boards be tracking brand value or leave it to the marketing department?
The Board should be looking at all strategic matters that affect business performance. We are not there to do management's job, but rather to ask the right questions, provide good governance, and constructively challenge or support to ensure executing in the now while building the future.
What should worry directors in 2015?
Future proofing the business. There is a new digital chessboard emerging. The strongest players will be those businesses which are closest to the customer, that have the strongest customer relationships down to a segment of one, that have customer insight and the data on which that insight depends. These businesses will be able to rise up their value chain, move into adjacent and transformational business models, and move from being commodity players competing purely on price to high value players, delivering fresh, new end-to-end services to their customers.
Google, Alibaba, and Amazon are good examples of successful players. Many other nimble players are also emerging, such as AirBnB, and Uber. All are disrupting existing business models by using Digital platforms to build close and direct customer relationships.
There has been a consumer revolution; there is more power in the hands of the customer than at any time in the history of the planet. Millennials will drive change at a rapidly increasing velocity. Millennials are social digital natives. They want authentic experiences. They don't want to fill in forms on static websites, or yet another, ephemeral App generating App fatigue.
The key exam question for management is: What is your disruptive digital strategy to ensure you are a disruptor rather than being disrupted? Supplementary questions are: How can you make your customer's life easier? How can you remove friction in the customer experience? What fresh new end-to-end services could you enable for your customers? What new adjacent and transformational business models and profit pools could you create building off our your core capabilities?
Turning back the clock, would you do anything differently in your career?
Nothing really. It's been an amazing journey so far and the best is yet to come. I have had the opportunity to transform businesses globally and am delighted to be back in New Zealand helping companies successfully navigate being winners in the new digital revolution.
Henri Eliot is CEO of Board Dynamics.
