Today’s boards need future focus now

News & Press: Articles

Tuesday, 10 November 2020 (1 Comments)

Share |

By Parmi Natesan and Prieur du Plessis

“Boards still see their role as primarily one of control, but to fulfil their duty to promote sustainability, a future focus is equally important.”

The inventor and businessman Charles Kettering once wrote: “My interest is in the future because I am going to spend the rest of my life there.” His words ring especially true at a time when the future seems to be hurtling towards us at breakneck speed. Truly, disruption has become the real “new normal” we hear so much about.

As Covid-19 ̶ and particularly the response to it ̶ has shown, even events that have been long anticipated can morph in utterly unexpected ways. If we didn’t know it before, we know now that organisations that have been thinking (and preparing) for what might come found themselves at an advantage. Even if they did not precisely foresee the future, their future orientation gave them the edge in responding to it.

For company boards, this all means their traditional focus on monitoring ̶ an orientation towards the past and present ̶ urgently needs to be complemented by scanning ̶ the process of looking into the future in an attempt to understand what may happen. This obviously intersects with strategy, long considered a board responsibility, but the creation of strategy is often seen as primarily the responsibility of the executive. Given the velocity of change and the certainty of disruption, it’s clear that boards (so to speak) need to spend as much time looking through the windscreen as in the rear-view mirror.

It's no accident that the King IV Report defines strategy as “The setting of the organisation’s short-, medium- and long-term direction towards realising its core purpose and values”. Safety and sustainability are no longer associated with maintaining the status quo but rather anticipating and preparing for change.

An excellent tool for driving future focus is the Integrated Reporting framework with its emphasis on the long-term view. This framework requires the organisation to report on its ability to create value not just in the short term, but also the medium and long term. As such, it forces boards and organisations to look at all the various relationships on which they rely to create value across this expanded timescale, including the dependencies and connections within the organisation, and between it and the six capitals (financial, manufactured, intellectual, human, social and natural) it uses. These are essentially the tools and environment in which value has to be created over time.

How to become future-focused

The argument that boards should be as much concerned with the future as the present is unanswerable, but how to achieve that future focus might be less clear. Here are some things about which boards should be thinking:

Ensure the board is agreed about the need to focus on the future. If the board is not already spending time thinking and talking about the future, then the first step should be to reach consensus on this issue. If necessary, an outside advisor could be used to help convince the board.

Create time for future-focused thinking. Once convinced, the board needs to find the time to act on its convictions. Ways to do this would include putting strategy items at the beginning of board meetings, and shifting more monitoring work to board committees, so the board simply receives a report. Another tactic could be to convene special meetings for future-oriented thinking̶the South African obsession with “bosberade” or lekgotlas will help here! One writer makes the very good point that the board needs to distinguish strategic thinking from strategic planning̶ the latter being an important annual cycle of planning documents as opposed to a change in the organisation’s mindset.

Foster a culture change. Following on from the preceding points, the board will need to set about intentionally changing not only its own culture but also that of the organisation as a whole. Needless to say, board culture must be conducive to active participation and blue-sky thinking.

Pay attention to board composition. As we’ve argued over the years, board composition is vital in providing a board that can help the organisation understand its stakeholder universe and a complex global business environment. It’s equally important that the board ensures it has the skills and perspectives among its members to understand the competitive landscape and developing market trends. Having members who are up to date on technology is becoming critical.

Boards have always played a critical role in monitoring and governing organisational performance and strategy. It’s increasingly clear that their role in positioning the organisation to prosper in an uncertain future is growing in importance.