Bored of directors

How Boards can get in the way of change, and what to do about it

Board teambuild

I was lucky enough to be asked to speak a month or 2 ago to a group of data and analytics leads from retail, media and consumer businesses. They were a terrific bunch, energetic and generous in sharing ideas with each other about how to drive data-led change in their businesses.

My role? I chose to title my talk “How your Board of directors will get in the way and frustrate all those efforts to change”.

Unnecessarily cynical? Maybe, but as regular readers will recall from this previous post on corporate ownership, I find myself thinking quite a lot about how Boards function and how to get them to add value to the organisation they govern. And change, particularly in the adoption of new technologies is often an area where they struggle.

Those of you in retailing need only look at the speed of adoption of e-commerce across our industry for an example. The businesses fastest to embrace this new technology were often those led by a younger generation of executive or else those, like Next, who’s DNA was in catalogue selling and direct marketing.

Even a decade after the point where it became obvious that building a multi-channel customer experience was the right strategy for any retailer you could still find Boards (and, dare I say it, advisors too) moaning that “the margin is lower online, so we should stick to stores” as if that was a choice that was going to led anywhere but oblivion.

Every one of those fossilised retailers who resisted the growth of e-commerce will have had teams inside them building strategies for the new world, writing presentations and crafting business cases - but somehow the senior folks failed to listen and failed to invest.

So why does that happen? To understand we need, as so often when looking at change management, to shift our gaze from strategy to psychology.

The corrosive power of fear

If you grew up, became senior and then later became very senior in a business in the days before e-commerce, or data analytics, or AI, or social media were a ‘thing’ that businesses need to worry about, then those topics can feel like a real challenge.

At an intellectual level, that challenge is simply that you don’t know enough - don’t know the terminology, can’t judge the risks and can’t predict the future as well as you can with topics that you grew up with.

But at an emotional level, there is something even more dangerous going on - fear. Sitting in a Board meeting when the topic shifts to one of these new technologies you are suddenly struck by the fact that you may know less about them than the people presenting to you. Indeed, you may know less about them than the new graduates who have just joined your business. And that is an existential challenge - to your seniority, to your income and to your right to occupy that seat around the decision-making table.

And that emotional response can lead to one of two, equally dangerous, reactions:

Risk 1 - denial

“That stuff isn’t relevant to our business, it won’t ever catch on, our competitors will waste their time and energy chasing this stuff, we should focus on what we do best”.

All of which translates as “I don’t know anything about this and would like it to go away”.

If that sounds like the sort of thing we should all be far too grown up to fall victim to, consider the fact that my LinkedIn feed is currently awash with retail ‘influencers’ writing pieces about how the Metaverse will never catch on, it’s all a waste of time and money, and I told you so all along.

They might be right, of course, but they might just be scared.

Risk 2 - the magic bullet

The other dangerous reaction you can get from a Board challenged on a topic they don’t know enough about is that they throw themselves straight into the deep end with all the abandon of lemmings.

“I read an article about this in the Economist which said we should do x”

“I met a data expert at a dinner party, let’s get her in to tell us what to do”

“I’ll call our McKinsey partner, they are bound to know something about this”

And suddenly, out of that fear and nervousness comes a huge cheque, written to whoever is near at hand and might know some of the right terminology, to do a project that the leadership of the business doesn’t understand and the management in the business doesn’t want.

I’ve seen hundreds of thousands of pounds wasted on these magic bullet projects and judging by their reaction so had the data analytics people I was talking to at that event.

So what can we do about it? 3 tips for any business struggling with change

1. Embrace the fear – really smart Boards and management teams acknowledge that topics like data analytics and digital are new and scary and go on a journey together. Get your Board to spend a day building a simple website, or playing with databases and SQL queries or doing something else that takes some of the fear away. And the more senior the group doing that the better. If the Board is prepared to make a virtue out of the newness of the topic (“None of us know enough about this, let’s learn together”) they send a massively powerful signal to the rest of the business that it is OK to learn new things, and OK to embrace that change.

2. Take small steps quickly, not big steps slowly. It is always tempting to sign off the big project that delivers in 2 years, and sometimes it appeals to the ‘magic bullet’ seekers on the Board to approve it. But halfway through the organisation will have either lost interest or will have become genuinely angry at lack of progress. (Or indeed the world will have changed enough that the project is now irrelevant anyway). In this, as in everything, a series of quick wins, however small, builds confidence and proof points and through that builds momentum for change.

3. Develop a common language – creating an effective change programme is a 2 way street – at the same time as the Board needs to learn some of the language of (for example) data and analytics, so the analyst team need to learn the language of the business in order to help them create the right questions and understand the answers. When a Board says “our business is different from others”, some of that is a manifestation of fear of change, but not all of it - businesses genuinely do differ and so the right data or digital solution for that business will be born out of a knowledge of what is possible with these new technologies married to a deep understanding of the business itself

In summary

Boards do not have to be barriers to change and innovation in a business. Indeed, the best ones are exactly the opposite, embracing the new, learning about it together and exploring what it might mean for their brand. It is precisely one of the roles of the Board to ensure that the business has a viable long term future, and leaning into change instead of away from it is a big part of that.

But it is too easy to find examples where that isn’t working, and where innovation strategies are drowned out by the day-to-day.

Whether you are on a Board yourself or seeking to influence one, the key is to understand that the motivation for that resistance is not maliciousness, it is fear, and to adapt your influencing strategies accordingly.

P.S.

If you are a regular on Substack you’ll notice that they have just launched Notes, which is definitely not a Twitter clone, oh no.

It is well worth a look, though and if you felt like sharing this article (I’d be very grateful) then a Note is yet another place to do so. (Somewhere down at the bottom of this post next to the comment button is a pair of arrows in a circle which allows you to ‘restack’ this point into Notes).