In today’s rapidly evolving business environment, boards must embrace risk, develop dynamic capabilities, and prioritize sustainability to drive long-term value creation and organizational impact. This was the core message from a recent webinar hosted by the Boards Impact Forum, BIF, where experts shared their insights on navigating the complexities of modern governance.
Table of Contents
Key Takeaways from the Webinar
1. Redefining Risk Agenda
– Boards must redefine risk as any obstacle preventing the fulfillment of their purpose. This shift in perspective enables boards to make critical strategic decisions and attract capital more effectively.
– Embracing risk and overcoming emotional triggers are essential for fostering innovation and avoiding the competitive fade cycle. Good governance, transparency, and strategic communication build trust with capital providers, facilitating long-term economic value. Embracing risk-taking is crucial because innovation and corporate renewal are intrinsically linked, making them not merely executive decisions but central to the board’s agenda, as highlighted by David Koenig, CEO of the DCRO Risk Governance Institute.
“The human brain in handling risk is very much the same as it has always been, we respond with a fight or flight response, we make emotional decisions, and we need to be aware of our biases to make cognitive decisions instead.” – David Koenig
2. Dynamic Board Capabilities
– The webinar emphasized the necessity for boards to develop dynamic capabilities to navigate risk governance and sustainability. Boards must transform their practices to embrace risk, understand the implications of sustainability, and leverage AI to enhance their dynamic capabilities.
– Research indicates that boards need to balance risk and opportunity, adapt to changing environments, and influence innovation and economic performance.
– Effective board work for renewal is crucial for long-term value creation. Professor Mats Magnusson shared that Boards that perform well in sensing market trends, pivoting strategies, and aligning operations with strategic goals tend to achieve better innovation outcomes and firm results.
3. Future-Focused Governance
– Boards should actively gather information, discuss pivoting capabilities, and focus on steering the company into the future. This proactive approach involves co-creating the future and making strategic adjustments rather than merely supervising execution.
– Professor Ludo van der Heyden emphasized the importance of understanding and applying AI and sustainability concepts in decision-making to bridge the gap between knowledge and action.
“Innovation may not always be efficient, but overemphasizing efficiency can lead to long-term losses. Boards needs to steer through uncertainty and actively co-create the future, rather than reacting passively to changes.” – Ludo van Der Heyden
4. Collaborative Approach to Sustainability
– Sustainability challenges require industrial-level collaboration. Boards need to prioritize non-financial measures and work together to address issues like greenhouse gas emissions and biodiversity.
– The impact of AI on governance was another crucial topic. Boards must understand AI’s implications and collaborate with startups to develop innovative strategies.
When participants voted on the biggest challenges for their boards Sensing and Pivoting was proving the hardest for most, but also Aligning was challenging.
Poll Insights
5. Balancing Responsibilities and Exploring Uncertainty
– Boards should balance known responsibilities with exploring uncertainty and risk. Establishing committees for sustainability, AI, innovation, and change can help in addressing future challenges effectively.
– Board members should possess a tolerance for dissonance, continually update their knowledge, and work collaboratively to address market changes, as shared by Chair and NED Helen Wiseman.
6. Cultivating Innovation and Curiosity
– Boards need to engage with innovation by embracing the scientific method, conducting experiments, and fostering a culture of curiosity. Asking the right questions and reframing ESG queries are vital for deeper organizational insights.
– Building relationships and collaborating across traditional boundaries can lead to significant organizational impact.
“As board members, it is essential to balance known responsibilities with the exploration of uncertainty and risk. Embracing a culture of curiosity and innovation can significantly enhance our strategic decision-making and long-term value creation.” — Helen Wiseman, Chair and Non-Executive Director.
In conclusion, boards must embrace risk, develop dynamic capabilities, and prioritize sustainability and AI to navigate the complexities of today’s business environment. By fostering innovation, collaborating on sustainability challenges, and continuously updating their knowledge, boards can drive long-term value creation and organizational impact.
Webinar and Peer Exchange Agenda and Presenters
– Introductions: Opening remarks and introduction, facilitated by Fernanda Torre, BIF Operations Director and followed by Liselotte Engstam, BIF Chair.
– Changing Agenda of Risk Governance: Presentation by David Koenig, President and CEO of the DCRO Risk Governance Institute, board member, and author focused on risk governance.
– Insights from Academic Research on Boards’ Dynamic Capabilities: Presentations by Professor Mats Magnusson, expert in innovation engineering and management at KTH Royal Institute of Technology and Professor Ludo Van Der Heyden, Professor Emeritus at INSEAD and expert in governance, leadership, and innovation.
– Poll and Breakout Room Discussions: Interactive sessions for participants to discuss key topics and share insights.
– Feedback and Panel Discussion: Discussion on the role of the board in guiding business, featuring the presenters and Helen Wiseman, experienced board chair and non-executive director, recognized for her expertise in audit committees and board dynamics, Henrik Forzelius PhD Cand and NED and Fernanda Torre, BIF Operations Dir and NED.
– Conclusions and Next Steps: Closing remarks and discussion on future actions and events.
Insights from the Academic Research
The webinar featured insights from recent research “Board Dynamic Capabilities: Deveoping Board Practices that impact Corporate Renewal and Performance”
highlighting board’s pivotal role in steering the business towards innovative thinking and redefined strategies, including sustainability and AI integration, and explore the board capabilities;
- Sensing: Understand how boards can develop a keen sense of anticipation for market trends and emerging threats, laying the groundwork for resilient and adaptable strategies.
- Pivoting: Explore the art and science behind strategic realignment. Learn how boards can lead pivotal changes that respond to shifts in the business landscape, ensuring long-term sustainability and growth.
- Aligning: Dive into the mechanisms through which boards can foster alignment between a company’s strategic goals and its operational execution, particularly in the domains of sustainability and AI.
The research was done by Boards Impact Forum Chair, Digoshen Founder Liselotte Engstam, PhD Cand & NED Henrik Forzelius, Professor Mats Magnusson, Boards Impact Forum Operations Director Fernanda Torre and Professor INSEAD Professor Ludo van der Heyden.
Link to Paper HERE and Learn more about the paper HERE
Presentation and Recording
For a deeper dive into these topics, watch the full webinar below and find the presentation HERE.
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