Digital upheaval shouldn’t just be rattling the C-suite. Chairmen, too, should be placing all hands on deck assessing non-stop risks to their business. And that could mean directors spending more time in the boardroom.
New guidance published by Boston Consulting Group has recommended that directors stop seeing transformation as a single cost-cutting or acquisition-driven event that might require a few concentrated months of hard slog.
“Boards must embrace the concept of always-on transformation,” BCG partner Lars Fæste said. “This affects every aspect of the board’s work.”
One chairman from a large company, who wished to remain anonymous, told the consultancy: “You need to be paranoid about how the world is changing.” Boards, BCG suggested, should meet as often as weekly, while chairmen might want to consider being involved several times a week to assess disruptive risks and opportunities.
Boards of public companies typically meet at least four times a year to sign off on quarterly accounts. Many companies, however, are already making their directors work harder, while offering more seats to technology experts.
A recent McKinsey survey of more than 1,000 company directors showed most spend an average of 41 days a year in their role. “Our own experience is that the time required to do a good job is usually more than directors initially expect,” McKinsey said.
When they do get together, making sure they have the right CEO is critical.
In the past, managers were often selected for their personability and talent for balancing the books, often by running tight ships with little waste. BCG, however, said today’s CEOs must have a knack for understanding disruption and the ability to motivate staff to change the way they’ve always done things.
“Many CEOs are still focused on cost and efficiency,” BCG partner Jim Hemerling said. “But what firms need now is growth. It’s always easier to trim and optimize and cut costs than to figure out something new.”