As the 21st-century market is diverse, so must the board of companies aiming to serve these markets. This is particularly important when considered against the backdrop of the constant flow of innovations spurred by technological advancements. Rather sadly, most companies have been slow to integrate change and diversity into their corporate structure, priding themselves in rote processes, and systems, justifying the resistance to change on slavish loyalty to the past. The truth, however, is that technology and innovation have come to stay not as visitors but permanent residents in the global economy and its steady march is now at the weakened doors of precedents – to fight is futile, to be flexible and tactical is wisdom.
Oftentimes, companies struggle with a weak response to changing market conditions amongst other organizational challenges, most of which have now necessitated the need to leverage on diverse insights and perspectives through multifaceted lenses including age, gender, background etc. The board is responsible for amongst other functions: formulating strategies to guide the activities and foster effective management of the company; monitoring the activities of the organisation to ensure they are in alignment with its underlying principles, objects and values. As a result of the ever-dynamic nature of businesses particularly in the 21st century, companies must maintain a flexible approach by constantly evaluating the constitution of its board, leadership structure and strategy.
This is particularly important as we live in a virtually borderless, post-industrial age, driven by technological innovation, where companies face the risk of organizational atrophy for continuously clutching to the straws of the past by adopting analogue solutions to digital problems.
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In the maiden edition of this series, I had emphasized the need for an experienced and tech-savvy board. However, it is equally important to ensure a hybrid of experience and innovation in the selection of board members.
Much importance is attached to the qualities of individuals who constitute the board of directors of companies. This is because these individuals are pivotal to the success or otherwise of these companies. In selecting members of the board, a key consideration for most companies is the experiential value of the potential board member. The general trend in these parts is appointment by reference to age, with the belief that age is a true determinant of experience and technical expertise. Whilst this belief may be true in some industries in the past, the stark commercial realities of the 21st-century market calls for a fundamental shift in this regard.
The business world has become unrelentingly disruptive, as established belief and practice are now struggling to catch up with neverending innovations. The tides of civilization are sweeping in the direction of technology, and the population of most countries, especially developing ones, is abundantly comprised of technocentric youths. Presently, breakthroughs and the pace of development are set by young people, adding incredible value to the future of companies, through innovative and disruptive approaches.
This has necessitated the push for the inclusion of millennials on the boards of companies since board appointments are usually made to afford the Company the expertise and business experience of the individual elects. Unfortunately, the current global picture in this regard shows exactly what age diversity does not look like. The market is becoming increasingly diversified in product and people. As these markets expand, their potential customer base grows younger and younger—it is simply good business sense to have board members who can relate to this massive pool. It must be noted however that there is no merit in appointing a young person just to satisfy an “age quota”; a potential addition to the board must possess a demonstrable threshold of meaningful experience and quality of character expected of a director.
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It is generally assumed that older and more established directors regularly come up with fresh ideas; however, a younger director, unhindered by age-induced biases, may share fresh perspectives to issues that may not have hitherto been considered due to the generational gap. Furthermore, experience has evinced that new ideas from the younger generation incorporated in board discussions would surely be a company asset, as exemplified by the comprehensive transformation experienced by the Fashion mogul, Gucci under the management of Mario Bizarri as a result of the incorporation of millennials into the decision-making process of the company.
Rather sadly, while board rejuvenation with fresh drive and attitude is constantly preached and applauded theoretically, being a proposition that looks good and resonates with most of the population; statistics on boards members’ ages has shown little progress. The general perception of board membership is a set of relatively old persons.
On a comparative note, incorporating diversity into positions of governance is a growing trend, even more, notable within newly elected government administrations in Nigeria, evidenced by the appointment of commissioners within the age brackets of 25 and 28 years. This in itself represents a leaf to be borrowed by corporates in their governance structure. Relatedly, the lessons from the Kodak story are quite instructive. Although companies more often than not are aware of the disruptive forces affecting their industry and divert sufficient resources towards expanding the frontiers in emerging markets, they nonetheless, sometimes fail to see the self-created enemy, not at the gate, but in the boardroom: lack of diversity.
