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Many directors are feeling outmatched by the ferocity of changing technology, emerging risks, and new competitors. Here are four ways to get boards in the game.

Today’s boards are getting the message. They have seen how leading digital players are threatening incumbents, and among the directors we work with, roughly one in three say that their business model will be disrupted in the next five years.

In a 2015 McKinsey survey, though, only 17 percent of directors said their boards were sponsoring digital initiatives, and in earlier McKinsey research, just 16 percent said they fully understood how the industry dynamics of their companies were changing.1 In our experience, common responses from boards to the shifting environment include hiring a digital director or chief digital officer, making pilgrimages to Silicon Valley, and launching subcommittees on digital.

Valuable as such moves can be, they often are insufficient to bridge the literacy gap facing boards—which has real consequences. There’s a new class of problems, where seasoned directors’ experiences managing and monetizing traditional assets just doesn’t translate. It is a daunting task to keep up with the growth of new competitors (who are as likely to come from adjacent sectors as they are from one’s own industry), rapid-fire funding cycles in Silicon Valley and other technology hotbeds, the fluidity of technology, the digital experiences customers demand, and the rise of nontraditional risks. Many boards are left feeling outmatched and overwhelmed.

To serve as effective thought partners, boards must move beyond an arms-length relationship with digital issues (exhibit). Board members need better knowledge about the technology environment, its potential impact on different parts of the company and its value chain, and thus about how digital can undermine existing strategies and stimulate the need for new ones. They also need faster, more effective ways to engage the organization and operate as a governing body and, critically, new means of attracting digital talent. Indeed, some CEOs and board members we know argue that the far-reaching nature of today’s digital disruptions—which can necessitate long-term business-model changes with large, short-term costs—means boards must view themselves as the ultimate catalysts for digital transformation efforts. Otherwise, CEOs may be tempted to pass on to their successors the tackling of digital challenges.

At the very least, top-management teams need their boards to serve as strong digital sparring partners when they consider difficult questions such as investments in experimental initiatives that could reshape markets, or even whether the company is in the right business for the digital age. Here are four guiding principles for boosting the odds that boards will provide the digital engagement companies so badly need.

Close the insights gap

Few boards have enough combined digital expertise to have meaningful digital conversations with senior management. Only 116 directors on the boards of the Global 300 are “digital directors.”2 The solution isn’t simply to recruit one or two directors from an influential technology company. For one thing, there aren’t enough of them to go around. More to the point, digital is so far-reaching—think e-commerce, mobile, security, the Internet of Things (IoT), and big data—that the knowledge and experience needed goes beyond one or two tech-savvy people.

To address these challenges, the nominating committee of one board created a matrix of the customer, market, and digital skills it felt it required to guide its key businesses over the next five to ten years. Doing so prompted the committee to look beyond well-fished pools of talent like Internet pure plays and known digital leaders and instead to consider adjacent sectors and businesses that had undergone significant digital transformation. The identification of strong new board members was one result. What’s more, the process of reflecting quite specifically on the digital skills that were most relevant to individual business lines helped the board engage at a deeper level, raising its collective understanding of technology and generating more productive conversations with management.

Understand how digital can upend business models

Many boards are ill equipped to fully understand the sources of upheaval pressuring their business models. Consider, for example, the design of satisfying, human-centered experiences: it’s fundamental to digital competition. Yet few board members spend enough time exploring how their companies are reshaping and monitoring those experiences, or reviewing management plans to improve them.

Board members also should push executives to explore and describe the organization’s stock of digital assets—data that are accumulating across businesses, the level of data-analytics prowess, and how managers are using both to glean insights. Most companies underappreciate the potential of pattern analysis, machine learning, and sophisticated analytics that can churn through terabytes of text, sound, images, and other data to produce well-targeted insights on everything from disease diagnoses to how prolonged drought conditions might affect an investment portfolio. Companies that best capture, process, and apply those insights stand to gain an edge.

Engage more frequently and deeply on strategy and risk

Today’s strategic discussions with executives require a different rhythm, one that matches the quickening pace of disruption. A major cyberattack can erase a third of a company’s share value in a day, and a digital foe can pull the rug out from a thriving product category in six months. In this environment, meeting once or twice a year to review strategy no longer works. Regular check-ins are necessary to help senior company leaders negotiate the tension between short-term pressures from the financial markets and the longer-term imperative to launch sometimes costly digital initiatives.

Boardroom dialogue shifts considerably when corporate boards start asking management questions such as, “What are the handful of signals that tell you that an innovation is catching on with customers? And how will you ramp up customer adoption and decrease the cost of customer acquisition when that happens?” By encouraging such discussions, boards clarify their expectations about what kind of cultural change is required and reduce the hand-wringing that often stalls digital transformation in established businesses. Such dialogue also can instill a sense of urgency as managers seek to answer tough questions through rapid idea iteration and input gathering from customers, which board members with diverse experiences can help interpret. At a consumer-products company, one director engages with sales and marketing executives monthly to check their progress against detailed key performance indicators (KPIs) that measure how fast a key customer’s segments are shifting to the company’s digital channels.

Fine-tune the onboarding and fit of digital directors

In their push to enrich their ranks with tech talent, boards inevitably find that many digital directors are younger, have grown up in quite different organizational cultures, and may not have had much or even any board experience prior to their appointment. To ensure a good fit, searches must go beyond background and skills to encompass candidates’ temperament and ability to commit time. The latter is critical when board members are increasingly devoting two to three days a month of work, plus extra hours for conference calls, retreats, and other check-ins. Board members need to increase their digital quotient if they hope to govern in a way that gets executives thinking beyond today’s boundaries. Following the approaches we have outlined will no doubt put some new burdens on already stretched directors. However, the speed of digital progress confronting companies shows no sign of slowing, and the best boards will learn to engage executives more frequently, knowledgeably, and persuasively on the issues that matter most.

“eHorizon eBoard has added value to our organization in terms of our board meeting management processes. It is a great system that has greatly helped our organization in making our board directors proactive.”

Ms. Leah Mumbi- Head of ICT, Industrial & Community Development Corporation

Established in 1954, ICDC has over 60 years of experience and stability in promoting projects that create wealth and jobs for Kenyans in diverse sectors of the economy. We enjoy a heritage of expertise and stability as we promote businesses with the potential to become tomorrow’s blue chip companies. These include Manufacturing, Agro-processing, Energy, ICT, Infrastructure, Financial services and Education sectors.

THE CHALLENGE

WHY SOFTWARE TECHNOLOGIES LIMITED

Leah Mumbi, ICT Manager, states “I like that you are always upgrading the system. The system is constantly adding value to our organization. I feel like we are heard when we see the new updates put on the system. Once I saw the demo, I didn’t think twice about Software Technologies. She also highlighted the impeccable support Software Technologies provides.

RESULTS

Continuity and overall board management: With eBoard, there is continuity in managing the board’s processes. “With the Resources tab we don’t have to worry about where previous documents were stored, print previous bulky board packs as they are easily available” Leah mentions.

Easy updating and sharing of board papers: By providing the board with a central document repository, ICDC has seen an ease in the sharing of board papers. Leah is now able to share corrected documents from any board pack at any time. “I don’t have to worry when I have to send a corrected document, because I am sure everyone will be notified and it will be displayed on the homepage and stored in the briefcase.”

Ensured 24/7 secure access to data from anywhere in the world: Board members have all time access to the meeting pack. “Board members are prepared for the meetings and the CEO mentioned he had observed a sense of proactiveness among the directors.” Leah states.

Savings on time, money and resources: Previously, the organization’s time, printers and paper reams were all excessively used in preparation for board and committee meetings. With eBoard, ICDC has saved close to 50,000 USD in printing and distribution costs. They also continue to make an environmental impact by using less paper and saving more trees.

Data Security and Confidentiality: “eHorizon eBoard is a secure platform and when we use it, we are sure our documents are secure.” Leah states. Software Technologies is ISO 27001 certified and the management systems put in place maintain world class standards of information security.

 

Bain is one of the world’s top management consulting firms. The organization works with leaders across industries and geographies to solve industry-defining challenges in Strategy, Marketing, Organization, Operations, Digital Transformation, Sustainability and M&A. Founded in 1973, Bain has 6,000 employees in 58 offices worldwide. Bain has worked with over 4,900 companies, including more than two-thirds of the Global 500, Private Equity funds representing 75% of global equity capital, leading non-profits and innovative start-ups. Bain’s public clients have outperformed the S&P four to one.

Great boards help companies outperform their peers, delivering value to stakeholders, sustainably, and without compromising compliance or risk. Companies that achieve this are the bedrock of inclusive economic growth. In today’s environment the expectation for companies and the Boards that govern them is high. Ensuring compliance beyond reproach is critical, but it is not enough. Outperforming requires focus and clarity around strategy and culture as well as an ability to adapt and be agile in turbulent times. Based on extensive research, and the insights of prominent global Directors with over 240 years of cumulative experience, Bain & Company has developed an all-encompassing approach to effective governance called ‘The Great Board’.

Software Technologies co-hosted a conversation on the foundations of this approach and to discuss perspectives on what Great Boards do differently to outperform peers and succeed in challenging environments. The conversation brought together members from leading companies across sectors in Kenya for a discussion that went beyond compliance to focus on strategy setting and execution at the board level. The topics discussed were:

  • The changing role of boards in business
  • The board’s role in creating and driving a winning strategy and sustained value creation
  • Cultural traits of high performing boards, why conformity / lack of conflict does not equal agreement and how to create a virtuous cycle of trust and candour

“For me, eBoard has been an amazing experience. Using it has made it easy for me to manage the process of preparing for board meetings, distribution of board packs, capturing minutes and monitoring who has read the board pack”

Mr. Peter Rotich, Administrator / Trust Secretary, TelPosta Pension Scheme

The TelPosta Pension Scheme was constituted vide a Trust Deed dated 1st July 1997 by then Kenya Posts and Telecommunications Corporation. Its main purpose is the provision and custody of Pension and other retirement benefits of the employees and former employees of Kenya Posts and Telecommunications Corporation (now defunct) and Telkom (K) Limited.

The Challenge

“As the Trust Secretary, I am primarily in charge of the board meeting process. For every board meeting, I had to put together board packs; print, assemble and distribute hard copies. Factoring in last-minute updates and amendments to meeting materials after board pack has been released -where a change in one agenda item affects several pages – board meetings were very stressful situations.”  Mr. Rotich recalls

Why Software Technologies

Software Technologies has excellent customer service. It’s not a one-time thing where you get the system and never hear from the company again, it is a consistent and empowering journey. They promptly respond to any queries I may be having and are constantly improving my experience as a client through the continuous development of the system.” Mr. Peter Rotich profoundly states.

The Results

Seamless board evaluations and easy report tabulation: With eBoard, TelPosta Pension Scheme’s Board of Trustees now has an effective, online and dynamic way of carrying out the assessment together with an automatic report generating system. “When we got an external performance evaluation expert, he stated that your evaluation module adheres to set regulated policies by the Law.” Mr. Rotich recalls.

Easy updating and sharing of board papers:  By providing directors with a central document repository, TelPosta Pension Scheme has seen an ease in the sharing of board papers. Mr. Rotich is now able to share corrected documents from any board pack at any time.  “I don’t have to worry when I have to send a corrected document, because I am sure everyone will be notified and it will be displayed on the homepage and stored in the briefcase.”

Ensured 24/7 secure access to data from anywhere in the world: Board members have all time access to the meeting pack. “We upload everything on eBoard and board members can access the details wherever they are, whenever they want, 24 hours a day. The board members can review and annotate from wherever they are. It’s saved us so much time,” said Mr. Rotich. “I regularly see our Board Trustees viewing documents at any time, day or night.”

Savings on time, money and resources: Previously, the company’s time, printers and paper reams were all excessively used in preparation for board meetings.  With eBoard, TelPosta has saved close to 40,000 USD in printing and distribution costs. They also continue to make an environmental impact by using less paper and saving more trees.

Access to previous board papers: It is easy for members of the board to refer to board documents from previous years as they are conveniently stored in the Resources. “We don’t have to interrupt a meeting so as to get a previous board paper as it is readily available in the Resources module.” Mr. Rotich states

 

“We now have a refined approach when preparing for and documenting Board and Committee meetings together with relevant documentation.  As a result of eBoard, we now have paperless meetings, a central document repository accessible to all from anywhere as well as the ability to carry out board performance evaluations and other evaluations/surveys with reports captured seamlessly. When I think about eBoard, efficient, confidential, transparent and effective are the words that come to mind.”

Ms. Betty Kanyagia, Company Secretary, Bamburi Cement Limited.

Bamburi Cement Limited, a subsidiary of LafargeHolcim, was incorporated in 1951 and is listed in the Nairobi Securities Exchange.  It is the leading cement manufacturing and marketing company in the Eastern Africa region. Bamburi Cement has grown to be the leader and Industry Captain with a bold vision for the future, which is to be the undisputed leader and the preferred partner by providing innovative solutions for nation-building with Health & Safety as its overarching value.

The challenge

Large volume paper use: The Company Secretarial administrative staff compiled Board and Committee packs for all Board/Committee members for every single meeting. The Company then made arrangements to collect the packs after some time for destruction due to their sensitive nature.

Lagged process: Compilation, printing and binding of board packs for each director took days after which the physical copies had to be delivered to the Directors wherever the Directors were located, including outside Kenya.

Manual evaluation: Evaluation forms had to be printed, delivered to the Directors for completion and collected after which the Company Secretary had to manually enter the ranking and compile the reports.

Access to Documentation: the Directors had to have the hard copy documents if they wished to make reference. This proved a challenge if the Directors required access on the go.

Why Software Technologies

“For us, ease of use as well as the adaptive and accommodating nature of eBoard as a product to our specific needs and requirements was a key feature in the selection of a board management software. Software Technologies’ support is commendable with feedback wholly accepted and implemented, where possible,” Ms Kanyagia states.

The Results

Paperless Board Meetings: With paperless meetings, Bamburi Cement has significantly reduced the amount of paper used for Board related purposes. Further, Board members have access to the meeting packs and other documents at all times irrespective of where they are, which has increased the productivity of the Board.

Easy updating and sharing of board papers: By using eBoard, Bamburi Cement has seen ease not only in the sharing of board papers but also in the ability to update or amend them, when necessary. Betty explains, “I do not worry when I have to update a document, because I do not have to send notice that a document is updated then send hard copies of the updated version – the system automatically notifies everyone and the updated version is immediately available.”

Seamless board evaluations and easy report tabulation: With eBoard, Bamburi Cement’s Board of Directors now has an online and effective way of carrying out the assessment together with an automatic report generating system. “Performance evaluations are seamless, easy to analyze and generating reports is just a tap away,” Betty states.

Savings on resources: Previously, significant time, printers, paper and staff resources were used in preparation for Board and Committee meetings. With eBoard and, in line with its environmental agenda, Bamburi Cement continues to reduce its environmental impact by using less paper thereby saving trees. It has also saved on resources previously spent on the preparation and distribution of meeting packs.

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