The Secret to a Successful Transformation? A Committed Board of Directors
The following contribution comes from the BCG portal and is authored by: Eric DeJong, Managing Director and Partner in New York; Kristy Ellmer, Managing Director and Partner in Boston; Matthieu Berthion, Managing Director and Partner in Copenhagen; Lynne Biggar, Independent Director and Senior Advisor in New York; Bob Black, Independent Director and Senior Advisor in Dallas; and Lu Chen, Managing Director and Partner in New York.
Key Findings: Board members often have crucial perspectives that can help companies implement large-scale change programs. Boards of directors should move from oversight to agile collaboration.
In a BCG survey, nearly two-thirds of transformation leaders said board involvement is mostly limited to status updates. Only 14% said board input is very helpful.
This represents a missed opportunity, given that many board members often have direct experience managing transformations, along with a unique perspective that can add value during execution.
To increase their commitment, boards can create a transformation task force with more engaged board members, establish more frequent points of contact beyond the usual meeting frequency, and link management incentives more directly to transformation goals.
The scope and pace of transformations are changing rapidly, but board involvement may not be keeping up.
Companies are transforming more frequently than before and pursuing a wider range of objectives: implementing digital technology or AI, reducing costs, seizing new growth opportunities, improving sustainability, managing geopolitical risk, and more. However, in BCG’s recent survey of chief transformation officers (CTOs), nearly two-thirds of these leaders stated that board involvement in their transformation is primarily limited to reviewing status reports. Board members receive information, rather than actively participating in decision-making and strategy alignment.
In fact, greater board involvement can lead to much better results in a large-scale change program. Board members typically have direct experience managing transformations, along with strategic discipline and an external perspective that can complement senior management and increase the likelihood of a successful transformation. To leverage this resource, companies need a different model of interaction between boards of directors and chief technology officers (CTOs): simple measures that can make the difference between the success and failure of a transformation.
Boards of Directors: An Untapped Resource
Our survey received responses from several dozen CTOs at large companies worldwide, spanning various sectors. Key findings include:
Leadership is critical. Support from company leadership, including CEO backing and consensus among the executive team, was cited as the most important success factor in a transformation.
Boards of Directors Enjoy a Positive Perception
Approximately 90% of CTOs stated that their board supports their transformation. In contrast, transformation leaders were less likely to report receiving support from the chief financial officer (71%), chief information and technology officers (69%), or business unit leaders (only 48%).
Many boards of directors are not directly involved. Only 26% of CTOs reported that their board is actively involved in transformation programs, and only 14% considered their board’s contributions «very helpful» to the point of having made changes based on their feedback or recommendations. A larger percentage, 55%, rated their board’s contributions as «somewhat helpful.»
Some boards of directors are less involved in defining the strategic direction of a transformation, making them less useful to management teams.
Part of the limited involvement in change programs may stem from the traditional oversight role of boards of directors. They have typically been more involved in supporting management before a transformation, determining its necessity and aligning or approving its scope and expected outcomes. Once strategic alignment was achieved, boards usually relied on quarterly (or, in some cases, monthly) reports on the progress of initiatives, substantial changes in scope, and confidence that the program would achieve its objectives.
In the past, when market conditions changed less frequently and companies didn’t need to evolve often or comprehensively, that level of oversight was sufficient. Today, it is no longer so.
From Oversight to Active Participation
For more frequent and large-scale transformations, boards of directors need to be much more involved. Specifically, companies and boards must shift from oversight to agile collaboration, with levels of involvement tailored to the scope and stage of the transformation. (See “Types of Transformations, Levels of Oversight”). In practice, this requires changes in the frequency of board involvement and the type of mechanism used.
Types of Transformations, Levels of Oversight
To achieve this, boards can adopt several approaches:
Assign transformation support to a dedicated board working group.
A smaller team can be more actively involved and provide deeper support to management. Some companies create temporary transformation committees; these strategies can work well, but boards may face logistical hurdles in establishing a new committee, as required by their bylaws, so this responsibility is often assigned to an existing committee.
Establish more agile points of contact between the CTO, CEO, and board. For example, companies can move beyond the usual frequency of in-person quarterly meetings and schedule online meetings timed to key transformation decisions or milestones. According to our data, 55% of CTOs only interact with the board during plenary meetings. Only 17% interact outside of board meetings, for example, with individual directors, and 14% interact with a transformation committee. More frequent interaction with a smaller group of directors can help ensure that CTOs have access to the right people with the necessary skills and the willingness to engage more directly.
Link incentives more directly to transformation goals
Financial incentives for the CEO and senior management team can ensure that the right stakeholders are properly motivated, but according to our data, they are not a commonly used tool. Among chief technology officers (CTOs), two-thirds said their company uses only standard incentives or, at most, adjusts them slightly based on a transformation. Only 29% have a specific incentive plan for transformation, with a clear link to the improvement of financial indicators.
How Board Involvement Helped a Company Execute Its Strategy
To see how this level of commitment plays out in practice, consider the board of directors of a financially struggling healthcare company. The board initiated a transformation, established strategic milestones, such as financial improvement targets, and remained highly involved throughout the execution phase, which included a strategic review of the product portfolio. This review led to a significant restructuring of the product investment strategy (strengthening the focus on some product lines and eliminating others) and the acquisition of a target company with a set of enabling capabilities. The program also involved several transitions within the management team. Throughout the process, the board was involved monthly in monitoring key milestones, improvements in financial metrics, overhead costs, and other factors. The result: the company achieved its financial targets as planned and, consequently, became one of the best-performing stocks in its index that year. More importantly, the strategic portfolio decisions and increased discipline resulting from the transformation repositioned the company for long-term success.
Boards of directors can be a critical asset in helping chief technology officers execute a successful transformation, but as our survey shows, this is not always the case. When boards are more frequently and directly involved—setting expectations before the program launch, communicating more often during the execution phase, influencing key decisions, and contributing critical expertise in key areas such as technology—companies can fully leverage the resources and experience that board members bring. As transformations become more critical to a company’s future, boards must adapt their approach to ensure success.
How to Anticipate and Adapt to a Crisis
The following contribution comes from the Psychology Today website, which describes itself as follows: Psychology Today is the world’s largest online portal for mental health and behavioral science. It is the original and largest publisher dedicated exclusively to human behavior. Our motto is «We’re here to help,» and the resources you access now are the world’s leading source of expert information on psychology and mental health.
PsychologyToday.com is the world’s largest psychotherapy portal, offering free access to hundreds of thousands of professionals. While Psychology Today has expanded its mission and reach across decades and continents, we continue to enjoy satisfying humanity’s innate curiosity about our favorite subject: ourselves.
This article is written by Jennifer Goldman-Wetzler, PhD, a leading expert in conflict and organizational psychology. She is the founder and CEO of Alignment Strategies Group and the author of «Optimal Outcomes: Free Yourself from Conflict at Work, at Home, and in Life» (HarperBusiness, February 2020), a Financial Times Book of the Month. For two decades, she has advised senior executives at global corporations across a wide range of sectors, as well as large non-profit organizations and government institutions.
Anticipating future crises will help us cope with this one and avoid the next.
In a 2015 TED Talk, Bill Gates predicted a global outbreak and urged us to take steps to prevent it; similarly, epidemiologist Larry Brilliant attempted to warn us in 2006 about the imminence of a potentially catastrophic global pandemic.
Unfortunately, these compelling, intelligent, and respected voices were not enough to spur us into action before the current pandemic became a reality.
Perhaps if more of us had the habit of thinking ahead, we would have paid closer attention to epidemiologists and those who tried to show us what they were observing.
As human beings, we have the capacity to anticipate the consequences of our actions. If more of us did so, we would have a greater chance of effectively addressing the current crisis and preventing the next one.
We can all begin to practice anticipation, like a chess master at the board, to mitigate the unintended consequences of our actions and prevent disasters. In «Optimal Outcomes,» I offer specific practices for anticipating and ensuring that our actions improve any situation, rather than worsen it.
But today, instead of focusing on the word «anticipate» in the phrase «think ahead,» I want to emphasize the word «think.»
Just as our current circumstances are helping us realize many things we previously took for granted, like the possibility of going to a live concert or meeting a friend for coffee, I hope we also stop taking our ability to think for granted.
Pay attention to how you think.
We have the power to intentionally direct our thoughts if we choose to.
The best way I know to do this is to identify a series of questions and then allow ourselves to reflect on them. In other words, to think.
Chess master Josh Waitzkin suggests a process for identifying questions and then selecting what he calls the Most Important Question (MIP) for each day. The MIP process can help ensure we are formulating constructive, future-oriented questions. (In fact, the process we use to identify our questions is a valuable thought experiment in itself.)
Once we have identified our MIP (or a series of MIPs), then we need to think.
However, if you’re like me, you may never have specifically learned how to think. Although I’m grateful for the excellent education I received, I somehow managed to complete 13 years of public schooling in New York City, plus nine years of college and graduate school, without ever specifically considering how to think more effectively.
If this also happens to you, take a moment to ask yourself: What do I need to truly think?
Lately, reflecting on this question, I’ve found that taking a walk helps. (If I have my phone with me, I put it in my pocket and promise myself that I’ll only take it out in an emergency or only use it after some time for reflection.)
I must create the right conditions for actively using my thinking capacity.
This means I don’t meditate, identify my emotions, talk, listen, or use any of the five senses. These are all different and valuable exercises.
If I want to think, I ask myself a question. Then I reflect on it and write down the ideas or answers that arise. Finally, I ask myself what small, experimental steps I can take to move forward, based on my answers.
Some important questions we should be asking ourselves right now:
How might this quarantine/coronavirus impact my life, my industry, and the world in the long term? (For inspiration, see the answers from some experts here.)
How can I reorient my life, my career, my business, and my industry to contribute to creating a new reality I can be proud of once the quarantine is over?
What lessons can we learn from this experience as a global society?
How can I live my life differently and do my part to help prevent another crisis like this?
If you take the time to ask yourself these or other important questions, you will find the answers.
You might need patience. It may take time. But the answers will come. And when they do, make sure you have a pen, a recorder, or a notepad handy to jot them down. Then, be prepared to take small, step-by-step actions based on your answers.
What other important questions would you add to the list? Let me know in the comments.
No Time for Trial and Error: How to Lead in a Crisis
The following contribution comes from the CityChangers portal, which describes itself as follows: Nice to meet you!
We are united by a passion for transforming cities for the better (and writing about it). Meet our fantastic editorial team: everyone who currently writes for CityChangers.org and those who have written for it in the past, listed alphabetically.
The author is Tanja Polonyi, who describes herself as follows: I can’t imagine my day-to-day life without my bike (and my coffee!). But cycling often means competing for road space with cars. That’s why I want cyclists and pedestrians to have the space they deserve. I want green spaces, pedestrian streets, and fresh air!
I can’t imagine my day-to-day life without my bike (and my coffee)! But cycling often means competing for road space with drivers. That’s why I want cyclists and pedestrians to have the space they deserve. I want green spaces, pedestrian streets, and fresh air!
Over the past year, we have found ourselves in an unfamiliar and distressing situation. The pandemic and its impact on people across all continents have demonstrated the importance of strong and competent leadership during a crisis. But how do you best lead in a crisis? We have analyzed academic research and reports from leaders’ experiences to give you an overview of leadership in times of crisis.
Even, or especially, in the early days of the pandemic in early 2020, differences in leadership styles became apparent. We saw the good and the bad. Because the coronavirus pandemic was an unprecedented event, many of our capabilities were put to the test. Leaders around the world learned as they went, many using trial and error to determine what was effective.
Since we don’t recommend making mistakes in a global pandemic, it’s time for leaders to reflect on their strate
