Disruption is the new world order - and business leaders have to be prepared to deal with it at a moment's notice. New technologies, a global marketplace and constant change mean that industries face challenges to their status quo and even threats to their very existence on a constant basis.
In the foreword to the publication, "Boards in challenging times: extraordinary disruptions"[1], Sir Peter Gershon writes: "Much of our established management thinking and research is based on companies operating in a steady state environment or one of incremental change. Businesses are increasingly facing extraordinary disruptions and the growth in shareholder activism will impose greater accountability for how leaders address these issues."
Boards need to ensure that they are well-equipped to deal with disruption - but, in practice, how many are prepared to embrace this reality? The current make-up of the C-Suite is not always conducive to change. This poses some difficult questions for board members. Are the current roles the right ones? Or do new positions need to be created and filled? What are the barriers to success? And, ultimately, how can the board adapt and evolve to survive in this new environment?
Agility in the C-Suite
Returning to the Alvarez & Marsal publication: "Boards are often focused on the known risks to a business and therefore need to allocate the time required to identify the 'unknown unknowns'." But how can you possibly plan for the "unknown unknowns"? The answer could lie in psychology.
In 2006, Caroline S Dweck, a professor of psychology at Stanford University, published the book:"Mindset: The New Psychology of Success". In it, she outlined two types of mindsets: the fixed mindset and the growth mindset. The former is a belief that "your qualities are carved in stone", while the latter is a belief that "your basic qualities are things you can cultivate through your efforts". When faced with a problem, individuals with a fixed mindset are more likely to be deterred by setbacks; whereas those with a growth mindset will tend to keep working to find a solution.
When it comes to business disruption, a growth mindset is important - agility is required in order to meet changing and variable demands successfully. When your organisation is faced with testing circumstances on a consistent basis, your leaders need to believe that they can find the right solutions - however difficult the task may seem. If a board believes that it is already doing all it can in the face of disruption, then its members risk resigning themselves to failure.
Is the make-up of a typical board changing?
There is no typical board; its structure and size will vary from business to business. However, the nature of the usual positions - chief executive officer (CEO); chief operations officer (COO); chief financial officer (CFO); etc. - is in flux. Additionally, the necessity of alternative approaches is becoming increasingly clear.
The Alvarez & Marsal publication found that the "CEO Superman" is in decline and, instead, boards need to be flexible and collaborative, looking both internally and externally for solutions to issues. For instance, an interim manager may be required if the leadership team finds that it requires skills and experience outside of its current knowledge base. This is not evidence of deficiencies in the board - it simply shows that business disruption creates previously unencountered scenarios.
In fact, across the board, a more diverse skillset is required. Writing for the Harvard Business Review (HBR), Boris Groysberg says: "Chief information officers need to know how to create business models; chief financial officers, how to develop risk management strategies; chief human resource officers, how to design a succession plan and a talent structure that will provide a competitive edge. In other words, the skills that help you climb to the top won’t suffice once you get there."
Other roles are also gaining more prominence - notably, the chief commercial officer (CCO). This position is focused on aligning marketing and sales and forging and cultivating relationships with customers, whose needs and demands are ever more-important in a digital economy.
Disruption as standard
Today, business leaders have to accept that disruption is unavoidable. The C-Suite needs to be agile, with a growth mindset, and open to outside influences. Dealing with disruption requires a willingness to flex and adapt to new approaches and to embrace an element of liquidity in traditional board positions.
Instead of adhering to defined roles and tried and tested processes, business leaders must look to the problem at hand and find the best way to overcome the obstacles in front of them using the people and skills that they already possess - while seeking out those that they don’t.
[1] "Boards in challenging times: extraordinary disruptions", Alvarez & Marsal and Henley Business School
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