Estimated reading time: 8 minutes
Look at the executive boards or boards of directors of most companies you know.
What do you see?
- People who look like each other
- Trusting relationships
- Team of one mind
Let’s be honest. Wouldn’t it be a dream to have all your friends on a board with you, who think like you, like what you like? It would be a blast!
Let’s get back to the essentials of a company’s decision-making.
- Strategic direction
- Governance of risks, finances and other resources
- And increasingly, governance of the sustainability agenda
We could summarise these functions by:
- Seeing further
- Seeing before
- Seeing the invisible
- Linking the dots between all factors (internal and external, visible and non-visible)
But you might say: “The most important is to carry the vision and purpose of the company”.
And you are right.
However, there are significant risks:
- To be blinded by the vision
- To be unable to question the highest-level leader
- To try and fit, and therefore
- To not challenge the status quo
Therefore, the board can become the “guardian of the temple”, protecting the status quo, the way we are doing things, and the way we already decided we will do.
And I believe this fails the missions and the goals of the board.
Lehman Brothers’ board didn’t see the risks of the residential real estate crisis.
Kodak’s board didn’t see the digital camera taking the market (although they own the patent for it!)
Blockbuster’s board didn’t see the streaming video services’ threat
And the list goes on.
I believe that there are five reasons:
- Not enough diversity on the board
- Not enough inclusion on the board
- Discussions focus on finding agreement, not alignment
- Too authoritarian leadership
- Not enough ability to listen to different opinions
Wow, that’s quite a list.
Yes, it is.
Let’s unpack together the five steps that could lead to significant business innovation on your board:
The first step is to add more diversity to the board members.
Many countries and US states have mandated this stage, mainly for gender equality and, like in California, for underrepresented groups.
“To truly embody and govern inclusion, the board should reflect the diversity of [the organization’s] customer base in its composition, create an inclusive culture within the boardroom itself, and integrate inclusive thinking and behaviors into all of the ways that the board operates.”—Trudy Bourgeois, founder and CEO, Center for Workforce Excellence
Why is this important?
One Executive Board I worked with comprised over 50 white males from a single culture. Our clients were globally active and trying to target younger clients. When we presented a mobile solution to order a car, one executive told us, “I would never order a car on a mobile phone!”. That is the problem: board members see the business as their issue, and usually, it turns out that the boards are too conservative, slow for innovation and risk-averse.
Another benefit of diverse leadership is improved financial performance. A McKinsey study conducted in 2019 shows that “companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile.”
Diversity is not just gender, ethnicity, LGBT+, or disability but personality. At CEO Talks, we have been working on a tool to provide a dashboard of individual personalities leading the team’s composition, strengths, weaknesses and how hiring can complete the team for ultimate performance.
You probably notice that not every company that brings the right people on their boards and committees sees such benefits. Why?
Because you need to take one more step: inclusion.
Now we have the people around the table.
Do we see the results that we discussed in the diversity section?
Not always. Why?
Because being at the table is not enough.
I noticed that not everybody has a say in the executive boards I observed. Some are there for a statistic or to listen and convey the official message to their department.
In addition, to be present (diversity), we need to pay attention to welcoming and giving a voice to everyone we have invited. This is inclusion, and it is required for the actual value of innovation to be experienced.
The point is that these diverse options and voices are required to come to balanced, complete and wise decisions, as Janet Foutty, Executive Chair of the Board of Deloitte US, says it so well:
“Diversity is having a variety of voices and people in the conversation and inclusion is an environment where all those voices really can be heard. We could have very diverse boards but still not get to better answers and better outcomes for organizations and our society unless we create a really inclusive boardroom and inclusive governance.”
Fossil is another company that understands the long-term value of inclusion:
“Shareholders ask about diversity and inclusion because they know [diversity and inclusion] add to long-term shareholder value,”
—- Kosta Kartsotis, chairman and CEO, Fossil Group.
Create a divergent opinions discussion
I think we have now reached the heart of this exciting topic of an innovative team.
This point is one of the most significant learnings I gained in management, strategy, leadership and coaching during the last years.
Why is this important?
Because the real answer is not obvious!
You can find an ideal solution in just a few minutes. Coming quickly to a decision is not a good sign.
Because we need to look at a situation and a decision from different points of view.
Here are a few examples:
- Who is affected?
- What difference does it make for all stakeholders?
- What happens if we do/do not take action?
- What are we missing?
Those questions are complex and require input from people with different opinions, angles, experiences, ages and backgrounds.
It also requires authentic discussions where every contribution feels emotionally safe to share a critical view and
It is safe to share an idea without being criticised and judged.
You get better answers and perspectives by having a diverse and inclusive board,” Foutty said. “A variety of voices and perspectives around the table, I believe, leads to much better outcomes for the organization.”
Why should we have all these perspectives?
Vittorio Colao, CEO, Vodafone Group Plc, summarises it in the following words:
“In a world that is changing at a faster rate than ever before, a variety of sensors are essential to enable businesses to effectively interpret different signals, both mitigating risk and seizing opportunity”.
We discovered this with the Leadership Table Workshop that CEO Talks conducts with executive teams. By creating a surprising, differentiated environment to discuss several essential questions on the team, the company and the individual, the teams start to discover not only answers but even new questions, new areas that we have not necessarily discussed. Every team has its taboo or topics that we “don’t need to discuss (again)”. This is accomplished by having two experienced external executive coaches use their intuition to lead the conversation on the topic they suspect is instrumental. At the same time, not knowing “the whole story”, we have experienced more profound, strategic and liberating discussions in a team. In summary, authentic, safe and creative conversations are what every team needs.
I already hear you say, “But we need cohesion, not divergent options and ideas”.
Thanks for raising this point! You are right.
In the coaching framework that we use for executive leaders and teams, after exploring the options discussed in the above section, we evaluate them and choose the right one at this stage and in the current context.
This is a delicate moment. The participants have, until now, brought their contribution to the thinking process. They are sometimes asked to accept that their solution is not the best and that other colleagues might have got something of more value at this stage. Something a solution might combine different opinions, but not always.
This joint solution development, the acceptance of that collective solution and the support of such a solution is called alignment. It is instrumental to the success of any strategy and innovation.
For such a stage to work well, humility is required. Do I want to see the right solution for the good of the team or the organisation, or do I want to be always right and the recognised expert in every topic?
In my opinion, this is one of the biggest traps of leadership, but that’s a topic for another day.
Empower others to innovate
Now that you have reached a great solution, supported by all the executive team members, how do you implement it?
By having all the executive team members fill all the roles and keep them to themselves?
No, I was joking.
The answer is so evident that I am almost embarrassed to share it with you:
Finding the best possible team to do the job without looking at their cultural background, age, gender, or other areas, except their skills, experience, and potential.
Here again, you need to look widely. Finding the “right” person in a few minutes is not always right.
The good thing is that If you have a diverse and inclusive team, you will be able to identify suitable candidates.
And when you have found them, keep them motivated!
This topic comes up so often in my coaching.
I often share that we cannot motivate people as they must devise their goals and reasons for doing the job.
What we need to do is to “un-demotivate them”. This word doesn’t exist? Too bad, somebody should invent it!
Would you like to see your teams being
- 25% more engaged
- 47% more creative
- 41% more loyal (feel that they belong)
- 43% more likely to stay
The results came out of research conducted by Russell Reynolds Associates in 2017 have shown benefits when senior leadership implement a diversity and inclusion culture in 57 companies.
The goal of diversity & inclusion should not be just about KPIs or hitting the correct balance of diverse profiles in your boards. We have seen that this does not create diversity, inclusion, or innovation. Therefore, it should be about creating a company culture conducive to authentic, open and critical dialogue, starting at the board level and impacting the entire company.
Once you have experienced this diversity, inclusion and innovation transformation in one team, repeat the same processes (steps 1 to 4) in each team.
The lowest level of the team, closest to the daily challenges, will probably find the most efficient and sustainable answer, and the innovation transformation will happen.
Why not start directly there?
The senior management must first show the example and set up the right culture. That’s what transformative leadership is about!
- Redefining board responsibilities to support organizational inclusion
- How Diversity & Inclusion Matter
- Why inclusion is just as important as diversity in board governance
- Driving diversity and inclusion, the role for chairs and CEOs
- Dysfunction in the boardroom