Time Warner CEO Jeff Bewkes is sweating bullets. He wants to launch HBO Online and he’s having a tough time selling his board on the idea because it’s so disruptive to the company’s traditional business model. Meanwhile Netflixx CEO Reed Hastings is breathing down Bewkes’ neck. He recently announced in the company’s earnings call that, “we need to become HBO before HBO becomes us.”
But this is only the latest example of a company leader who feels compelled to persuade his directors about a major strategic about-face as the CEO tries to maintain his or her long-term vision while keeping the company relevant in the short-term. How can CEOs become their own company’s disruptors and sell the idea of fundamental change to their boards instead of waiting for the company to become the disruptee in a fast-changing business environment? Here are 9 ideas for lighting a fire under your board.
1. Fill your board with flexible personalities and early adopters. Have a board that’s predisposed to being receptive to new ideas. CEOs should attempt to create a board-room dynamic that is aligned with his or her vision and yet open to positive disruption. This can be a challenge, however, because of the limited number of board seats and the relative infrequency with which they turn over, notes George L. Davis Jr., co-leader of the global board practice at Egon Zehnder.
2. Gain support in advance. Mitch Krebs, CEO of Coeur Mining, the largest U.S. silver producer and a significant gold producer, wanted to move the company from its long-time headquarters in Coeur d’Alene, Idaho, to Chicago, because he saw a vast need for significant cultural change at the company. He started at the top by gaining board support for “making significant organizational and cultural changes,” Krebs told Ivey Business Journal. “With a mandate in hand, I then leveraged our directors as a sounding board. Board member experience, along with director confidence in the direction I wanted to go, gave our change initiatives the tailwind needed to get off the ground.”
3. Create a culture of experimentation. Get directors used to small changes along the way, says Karissa Thacker, executive advisor and organizational psychologist to Fortune 500 companies and others. “Constantly be experimenting with new ideas, some of which are inexpensive, somewhat expensive, and others that are more expensive,” she advised. “Make constant experimentation part of the culture and update the board regularly.”
4. Show impact beyond the bottom line. Potentially disruptive moves can be positioned as having transformative promise beyond profits and losses. “Demonstrate the value of this new idea that goes beyond financial metrics and considers how it could improve a range of growth objectives, both commercial and human,” such as market expansion, employee retention, talent recruitment and enhancement of intellectual property, said Neena Paul, U.S. business director at consulting firm ?What If! Innovation Partners.
5. Expose them to external innovators. Get board members used to what forward-thinking companies are doing by taking them to hotbeds of disruptive thinking, such as the Consumer Electronics Show, TED and SXSW, advised David Nour, CEO of The Nour Group consulting firm. “Most often, they come back with a greater awareness and appreciation for agility and the need to disrupt their own value chain, before someone else does it to them,” he said.
6. Introduce directors to internal change agents. Set up meetings between board members and people in the organization who may be seeding the CEO’s strategy with thoughts of doing some really disruptive things, such as the CIO or head of R&D. Introduce directors to internal change agents “who see the opportunities that the board would perceive to be risky,” Thacker said. “Let your board interact with people who see the future in your company.”
7. Use stories, not numbers. Nothing beats data and quantitative analysis for setting business direction. But for really disruptive moves, examples and storytelling can be even more effective. “Put the damn numbers away,” advised Constance Dierickx, head of CD Consulting Group in Atlanta. “Provide them with qualitative, experiential data. Instead of saying, ‘This many millions of customers will flock to us,’ tell them or show them a story.” Or, as Paul put it, “A little bit of drama goes a long way.”
8. Create an “innovation committee”. Create a committee that would “specifically work with the CEO and leadership team to identify opportunities for real—often disruptive—innovation in the business, vs. the incrementalism that goes on at most companies,” Nour suggested.
9. Raise the specter of “the competition”. Like Time Warner’s Bewkes, paint a future in which a close rival has become the industry disruptor and has stolen your market share. “Cast it as, ‘If we do nothing, let’s imagine what will happen,’” said Dierickx. “’Competitors will invent this. And if they’re faster than we are—even if they’re imperfect—we’ll be a close follower at best, and will lose our ability to define the space.’” Paul called this creation of a “burning platform” that highlights “the cost of inaction.”
Disruptive forces increasingly surround most businesses these days. The CEOs that can best punch their way out of the box to a more promising future for their companies will be the ones who have their boards ‘on board’ from the very beginning.