Supporting CEOs: Boards Adapting to Disruption

Amidst increasing disruption, traditional boardroom practices are falling short in adequately supporting CEOs. A paradox exists: boards are filled with experienced individuals, yet many CEOs feel unsupported and overwhelmed.

The CEO Support Paradox

Data from the AlixPartners Disruption Index survey reveals that 72% of CEOs find it increasingly difficult to set priorities due to disruptive forces. However, a significant 87% believe their boards and investor groups have the necessary expertise to assist them. This disconnect highlights a need for boards to adapt their approach.

The issue isn’t a lack of knowledge on boards, but rather outdated structures and processes that weren’t designed for today’s volatile environment. CEOs report needing more support – 85% feel this way, compared to 59% of other C-suite executives – as disruption disproportionately impacts their role.

How Boards Can Improve Support

Directors can help by fostering interactions that encourage better questions, more productive discussions, and a focus on the right priorities. This represents a shift away from the traditional “certifying board” model, which primarily reviews performance rather than engaging in proactive problem-solving.

1. Move Beyond Straight-Line Thinking

Boards should encourage scenario-based planning and dynamic decision-making. Traditional forecasting becomes unreliable in uncertain times. Instead of focusing on variances from plans, directors should track progress toward strategic goals, anticipating course corrections.

Interactive modeling can be a valuable tool. For example, one industrial company used a model to explore different operating models – outsourcing versus vertical integration – in “real time,” leading to more insightful conversations and better decision-making.

2. Embrace a Portfolio Approach to Strategy

Directors can help CEOs prioritize value creation by adopting a portfolio approach to strategies and investments. Long-term, large investments are riskier than ever, making it prudent to place multiple bets and create options for future growth.

This approach encourages “fail fast” learning and allows boards to leverage the full range of experience and knowledge within the group. After-action reviews of both successful and unsuccessful investments can provide valuable insights.

3. Focus on Core Fundamentals

While pursuing new opportunities, boards should reinforce the CEO’s focus on key fundamentals:

  • Customers: Prioritize understanding customer needs and pain points through direct conversations and qualitative data.
  • Technology: Ensure investments in data quality and management to support AI and other disruptive technologies. Leaders in AI are twice as likely to have up-to-date legacy systems.
  • Risk: Shift from simply cataloging threats to emphasizing response readiness and scenario-based discussions, including operational risks like supply chain vulnerabilities.

Building Creativity and Resilience

These three approaches – scenario-based planning, a portfolio strategy, and a focus on fundamentals – are interconnected. They are forward-looking, prompting discussions about value creation and potential threats. They also foster creativity and resilience, essential organizational capabilities in uncertain times.

Boards can contribute by asking sharp, open-ended questions, offering both proven and creative guidance, and leveraging experience to shape the future. Disruptions present both threats and opportunities, and ultimately, valuable learning experiences.