Boards Need To Think Outside The Box

Advances in technology bring greater responsibilities for boards


The accelerated pace of technological innovation creates an increasingly complex and interconnected business environment. In this rapidly changing world the role of a company’s board, as a guiding hand through this unchartered territory, is paramount. Although the bottom line is at the heart of all business operations there is now a host of additional factors that have to be considered in tandem with those purely finance driven decisions to ensure overall and long term success.


Technological advancements are fundamentally changing the landscape in which businesses operate. They bring greater information gathering and sharing capabilities which in turn drive the demand for greater transparency. Investors and stakeholders now expect more detailed and regular up-dates on performance.


As the business landscape evolves it is crucial that boards remain abreast of the changes, maintaining clear sight of their business’ aims and objectives. Although investors and stakeholders require information on performance, and even though quarterly reports and audit reviews play an essential role in the efficient day-to-day business operations, it is important that the board does not focus purely on the past. Having a clear vision for the future is one of the key functions of the board, which is why the inclusion of executive directors and non-executive directors with a broad perspective is essential. The combination of different experiences and backgrounds brought to the table by all directors will add strength to the board.


Setting, communicating and evaluating the strategic aims of the business form part of the board’s responsibilities. The financial health of the business lies at the very heart of its success or failure, and yet, there is more to consider. The importance of looking beyond the numbers and instead evaluating business strength in a broader sense is highlighted in the recent trend to include strategic aims in annual reports.


These strategic aims should also be reflected in the business model. However, the sheer volume of information now available through the advances in technology, as well as the increased complexity of this interconnected business environment, create a plethora of possible outcomes, which a board will have to consider when drawing up its aims and developing the business model. A sound business model is central to the resilience of the business and should take into account risk vs. reward. Understanding the business model will help to identify weaknesses and articulate risk.


The retail sector offers an excellent example of the opportunities and pitfalls that exist in this rapidly evolving landscape. Supermarkets, for example, now have to rethink traditional models and respond to their customers’ needs, namely convenience, as seen in the boom in internet shopping, delivered at low-cost. Boards need to respond to, and often predict, their customers’ needs. The only way to do this effectively is to understand the basis on which their business is making money; its focus now and into the future.


All of these factors culminate in the need for boards to ‘think outside the box’ and to be prepared to address many different considerations that, at first sight, may even seem completely unrelated to their business.


In this era of technological change, with the exponential growth and availability of information, we are seeing a shift towards data-driven business. The use of ‘big data’ is now becoming a competitive necessity. By gathering and analysing this data, within and across industries, new insights can be found. Supermarkets have already harnessed this function to their advantage, using data to gain customer insight and tailor the customer’s shopping experience to their individual needs.


Big data creates opportunities for business. It is vital that boards have access to the right information now available through the analysis of data to enable confident decision making. This in turn can be used to communicate the business’ strategic plan, its aims and objectives, and its vision to its stakeholders, investors, employees and customers. It is the responsibility of the board to not only develop the best strategic plan to promote the success of the business, but also to ensure the information the company provides is communicated clearly and in a timely manner.


As the opportunities to understand and even predict customer behaviour develops through the advances in technology companies, and their boards, must widen their focus beyond the balance sheets in order to meet the constant challenge of balancing opportunity, costs, value and risks. As never before, it is vital that a board can use to its best advantage the information available and yet, be able to rise above this oft-times all-consuming data swamp, to retain the conviction and clarity to create a vision for the future.


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