Disruption is the New Normal
In the last five years, business models that have been around for generations have suddenly found themselves disrupted in new and surprising ways. Healthcare, retail, travel, transportation and entertainment, to name just a few, are still scrambling to respond and prepare for an uncertain future. Most companies have come to recognize that they don’t just use technology, that they are technology company. Technology weaves through the entire experience from back of the house operational procedures to front of the house selling products and services. A recent survey by NACD found that one of the top five concerns of private company directors is disruption and talent shortages and in the public sector, disruption to the business model remains a top concern For directors to be ready for oversight of disruption, you must test and questions your assumptions continuously as part of the New Normal.
Most board members and senior executives come to work with a certain set of assumptions about the world, the economy, the environment and their work force. Those assumptions are often built on decades of experience. But what if those assumptions are wrong or simply outdated? If you make strategic decisions on the wrong assumptions, then there’s a good chance you are on the wrong path.
There are several big disruptors impacting every industry. Cybersecurity, for example, does not discriminate by industry or size. Every board and executive must constantly question their assumptions about security risks to properly oversee not just the risk, but opportunities. Likewise, every company must consider new and emerging technology trends like AI (artificial intelligence), blockchain, IOT (internet of things), virtual and augmented reality, driverless cars, drones, 5G, all tied to data. Even if you’re “not in that business” these trends will disrupt how you sell, make and deliver your products and services. And, every business must address the future workforce and talent gap. How will robotics and AI change what you need from your human workforce? How will you build the skills needed? What will Millennials and Generation Z want and expect for you to recruit and retain the right skills?
To be prepared for disruptions you need to continually push your thinking about the assumptions on which you base decision making. I’ve been in way too many companies that when faced with new information that contradicts an existing “roadmap” or project underway that they ignore it because they don’t want to address it. While it’s perfectly understandable to want to complete a project before you tackle a new one, you have to ask yourself if your project will be obsolete by the time you finish it.
Let’s consider a few key questions to ask each other in the board room and to ask of senior management.
What does oversight of disruption mean in the boardroom? Overseeing disruption means the directors ask management to define the assumptions they are making in developing their strategy. Ask questions to HR about how you ensure that ideas challenging current plans or strategies get heard? If you aren’t willing to listen, you will miss important signals – sometimes your front line people see things you can’t higher up in the organization. Ask your CLO how lawyers might be a roadblock to new ideas and what can be done to ensure that fresh new ideas and projects get heard and not shut down because of risk or lack of vision. Ask how test projects that may not have an initial return on investment are looked at by the senior executives? Do they shut things down before they start? Ask your CIO how he/she ensures that there are the right incentives to report potential security problems. Oversight of disruption is all about creating the right culture and asking the right questions.
How can c-suite executives brief the board on future trends and disruptors? All too often, reports to the board may be focused on information that isn’t really telling of the disruptive forces. Ask your senior executives to begin each report with the assumptions they based their report on and how they look for new disruptive trends. Ask what assumptions could be wrong or if there is an underlying business shift occurring that means you are on the wrong course. These are difficult conversations, but it’s the only way to ensure the thinking is sound.
How do you trust, but verify the information presented and avoid asymmetrical status quo mentalities? A big threat in the boardroom is that if you only get a point of view from internal thinking, you might miss another way of looking at an issue. While you definitely trust the people you hire, you may also want to get outside perspectives. In some instances, it could mean engaging in a full audit and review of a specific issue. In others, it may be a smaller more targeted engagement to have someone outside with an objective reference point review what’s going on in the company and report back with a different point of view. I often give programs in boardrooms to do exactly this – shake up everyone’s thinking, connect issues in new ways, and ask how the company avoids the status quo. I always hear from directors that dedicating just a few hours to think about disruption and have someone push their thinking is invaluable.
How do you prepare yourself to understand these issues? There are so many converging forces across security threats, emerging technologies and shifts in our society that it’s hard to keep up. Attend education events with people from other industries to understand different points of view. If you think something sounds obvious, you may not be paying enough attention because it’s often things that seem obvious that sneak up and disrupt your business. It seems obvious that AI and IOT will change everything, but what are the unintended consequences that impact your supply chain or your customer base? How you are mapping the future landscape? Ask yourself deeper questions than just assuming you realize it’s a disruptor. And, read as much as you can. Set up Google alerts for articles on topics that will impact you and take time to read the articles. Don’t get all of your news on the topic from one source and always question its veracity or if there is an agenda from the author that might taint the analysis. Wrong assumptions are built because you reinforce existing beliefs instead of getting different perspectives.
When is a separate strategic planning session or workshop appropriate? An offsite or workshop is a good idea at least every 12 – 18 months to address disruption as a stand alone topic. This is a time to ask questions and engage in dynamic discussion outside of the normal board meetings. This is a time to think about other industries or signals of change that you might not directly tie to your business and again, ask yourself what assumptions you are making and how you might change those.
Should this be done by a committee or by the entire board? Logistically, it may need to be done by a committee, but it would certainly benefit the entire board. Board agendas are already over committed and there are so many important topics it may not be realistic to expect the entire board to participate in a workshop. If you can build it in to a retreat or something outside the normal scope of a board meeting to also include team building and critical thinking on other issues that could be a very productive use of time. Or, if you need to squeeze it in, consider adding a half day session before your formal board meeting begins. Many boards will also plan for this session to be prior to a strategy session so it reframes assumptions and generates ideas for discussion. Some boards seek out a keynote speaker before a dinner to spur impactful dinner conversation.
What is a good approach to use in understanding disruption? There are many great approaches to understanding disruption. I am a big believer in mapping your company against your competitors, suppliers and customers and ask how these disruptive forces will impact your business model. I focus on understanding how it impacts your core business, as well as how it impacts your operations and sales. I call this Digital Mapping. A sample digital map of issues for discussion includes the big signals or trends in cybersecurity, emerging technologies and societal shifts.
Think through each of the issues on the map and ask yourself how it impacts your business model? Consider it from two perspectives: front of the house (i.e. how you sell and market and brand to your customer) and back of house (how you make your product or service and run your backend operations). Now, consider what your competitors are doing. Push yourself to really define your core business so that you can determine what might disrupt you. There are many other potential topics based upon your industry.
Disruption is not an easy topic. It often involves challenging assumptions and long-standing beliefs among the board and senior leaders of your organization. But if the senior leadership team and board isn’t willing to test assumptions, who will? The board’s role is oversight. Oversight means verifying the company is managing risk and pursuing opportunities for the best interest of the shareholders. The new normal is a state of continual disruption. This means boards have to adapt to doing more homework and critical thinking to engage in discussion that challenges assumptions.
If you are interested in a dynamic keynote speaker at your next meeting or a half-day facilitated workshop to discuss the big disruptors, contact me for sample materials and videos. Read more about Jen at www.jenwolfe.digital