The Importance of Being Agile
The current wave of uncertainty, combined with the breakneck speed of technological change, means public company boards must be nimble and able to retool strategy far more quickly than ever before.
John R. Engen
The Corporate Board Member Magazine cover story, “The Importance of Being Agile,” quoted Russell Reynolds Associates Consultant Constantine Alexandrakis on his thoughts on how boards can remain nimble in an ever-changing market. The article is excerpted below.
The year is 2019, and the wave of protectionism that began as talk and bluster three years earlier is now sweeping the globe, with game-changing consequences for everyone.
At home, higher import taxes under President Trump's "America First" program have forced many companies to move plants, offices, and people around. There's been a mini-manufacturing boom domestically, but also unhappiness over higher prices on imports at Walmart stores.
Overseas, Brexit, Frexit, Nexit, and other "exits" have left the European Union teetering. Skirmishes between trading partners have become regular occurrences, placing a pall over the global economy.
Mexico's new populist leader has taken a tough stance with the Trump administration after major parts of the North American Free Trade Agreement were abandoned. In response to higher US tariffs on steel and other imports, China has retaliated with tit-for-tat clampdowns of its own on American products, such as agricultural goods and airplanes.
Companies and boards have been put through their paces. Complicated supply chains, painstakingly put together over decades to take advantage of trade agreements and efficiencies, no longer make as much economic sense. Neither do strategies based on imports or outsourcing.
The changes, both at home and abroad, have been a boon for companies that were able to adjust quickly to the new order and a disaster for the laggards.
This is all just speculation, of course, and almost certainly won't come to pass in the way described. The problem is, no one knows for sure what will happen. Is your board nimble enough to respond adeptly when what-ifs become reality? If it's like most, the answer is, um...maybe.
On the surface, being nimble enough to steer the company through unexpectedly rocky waters, is part of the very definition of being a board member. But responding effectively to changes in the playing field is far from easy.
There's no real best-practices sheet or how-to manual for staying nimble, at least not yet. Directors describe it as more art than science - like navigating a ship on the open seas, as opposed to driving a car down the highway - and very company specific.
The formula for enhancing agility, directors and advisers say, includes equal doses of anticipation, preparation, and a light-footedness that allows for reasoned-yet-prompt responses to changing circumstances.
It's about processes and structures, including robust scenario planning and risk management practices, as well as building efficient information flows. It's also about the individuals around the table - their skill sets, experiences, intuition, judgment, and understanding of the company's strategy - asking management the right questions.
"Ideally, you want a board filled with current CEOs' skills and knowledge who are able to pick up on cues from the market, whether they're macroeconomic or disruptive, and react quickly," says Constantine Alexandrakis, US region head for Russell Reynolds Associates, a global search firm.
To read the full article, click here.