The Board of Directors’ Role in the 2020 Crises
2020 has been a year to stress-test people, governments, and companies. On August 19th, 2019, the Business Roundtable shocked many with a statement that the purpose of business was not just to make money for shareholders, but all stakeholders have interests that mattered:
“The CEOs of Business Roundtable adopted a new Statement on the Purpose of a Corporation declaring that companies should serve not only their shareholders but also deliver value to their customers, invest in employees, deal fairly with suppliers and support the communities in which they operate.”
This was welcomed by many, myself included, but they are just words unless converted into action. I believe the universe may have offered up 2020 as a response to this statement as if to say: “ok, prove it!”
At the company level, it is fair to say that we’re all in this together, but we’re also all in it differently. Some companies are trying to keep up with record demands, while others are trying to figure out what to do to replace almost all of their lost revenue. Either way, there is a balance between managing the crisis for survival, managing the crisis with a strategic mindset, and ultimately being strategic for the long-term good of the organization and its stakeholders.
The National Association of Corporate Directors, in partnership with Marsh & McLennan Companies, produced this document Facing Uncertainty: 25 Strategy and Crisis Questions for Directors. I was actually starting to put together my own list for 2020, but I believe this list is a great starting point. They lead off asking two critical challenges:
“1. How can we keep the strategy and mission resilient in the face of threats that have the potential to make existing business models obsolete, change industry structure or operating conditions, or derail growth? 2. How can we provide a transformative opportunity for the long-term strategy of the organization?”
As a short detour, this is one more demonstration of directors needing to be more conversant on the topic of business models, and not just copy strategies from their own industry that they’re familiar with, which is all too common with directors whose primary experience is a deep operating experience in their industry of choice. This is in part one reason I produced this video course on strategic thinking and business models.
Returning to the document, it goes on to list 25 questions. While these questions are intended to lead discussions inside the boardroom, I believe they are useful outside the boardroom as well. One of the critical roles of board members is to keep a wide-open aperture on the world that the CEO they support is unable to do. It is what they do outside the boardroom to keep that perspective so that whether in a one-on-one conversation with the CEO or in a board meeting with the entire management team, they aren’t just reacting off the cuff.
I recommend taking the questions and thinking about them independently. You don’t need to use them to craft an action plan, as ultimately that is not your role, but reflect on them and use them to help focus that wide aperture to increase your effectiveness and value to the firm.