Published by Gabriel Berczely
Adding value to strategic issues is not the only ability expected from a Board member, but for sure it is highly required as a means to reduce the risk of strategic obsolescence. Many companies fail in strategic matters not only because they lack strategic skills, but also because they keep doing what used to be the right thing to do for too long. Recent examples of companies like, Kodak, Nokia, and Blackberry, are good examples of it.
Our recent managerial research study shows that top management derives its capacity to anticipate strategic moves not only from prior experience and expertise, but also from three distinct forms of immersion in their eco-system: (1) upstream (with suppliers), (2) downstream (with customers), and (3) lateral (e.g. trade shows, benchmarking similar companies in other part of the world, having an international network of people related to the industry, signals from other industries, etc.). Immersion is understood in a metaphorical sense as for example video-game players completely immersed in their game through a constant and alert visualization of any signal appearing in the environment. The process for gathering information, assimilating it, and making sense of it is not systematic and explicit. On the contrary, it results from a tacit activity, like driving a car. That slow and constant integration and assimilation of relevant information generates small and continuous strategic moves that result, after a few years, in relevant business model changes. And this process works because of the immersion process in the eco-system and a constant learning process.
Our findings pose a big challenge for Boards. If anticipating strategic moves is a key element for business sustainability, if this capacity is related to being immersed in the environment, and if doing it is more tacit than explicit, what are the chances for non-executive Board members to develop this ability? They are so far apart from the trenches that capturing signals from the company´s eco system, and making sense of them, seems to be as far away from reality. As a result, these board members relinquish their ability to make an effective contribution of anticipating moves and avoiding strategic obsolescence. We posit that boards in general should allow their members to get familiar with their eco-system and to spend time in an immersion process. That is not of course what most CEO’s would prefer.