Expecting the unexpected

In the early days of the pandemic there was a lot of talk that life, as we knew it, might be about to change, perhaps forever. People talked about the new normal. Three years on, it seems the more apt expression might be the new abnormal.

Each passing month has brought a fresh shock, a fresh upheaval, something new to upend the smooth order of things: a global pandemic, a war in Europe, geopolitical tension in Asia, weather events, earthquakes and cyber threats. Each has to some degree had an impact on our people, our customers, physical assets, and our ability to do business. In an increasingly globalised and interdependent world, there is almost no such thing as significant change that will not affect your organisation.

And each passing month seems to bring more. We know climate change and adaptation, technological disruption and a rebalancing of the work environment are certainties. They are the known unknowns, to use the Donald Rumsfeld formulation.

But the unknown unknowns – the ones we haven’t yet thought about – may bring the largest convulsions. For a board, they stand to demand the most of all: the most adaptation, the most agility.

How does a board equip itself for unknown unknowns? A relevant articulation, credited to Charles Darwin but probably not his words, is this: “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”

In this new state things, in this new abnormal, what will make a board most adaptable? How does it develop the agility necessary to adapt to constant change? Let’s consider some possibilities both for preparation and for execution.

Planning and preparation

At least half of the challenge is mindset. There will be challenges and upheavals you simply can’t yet anticipate. You need to know your board will have the competence and capacity to deal with them. In assessing your preparedness, you might ask the following questions:

1. Who are you as a board? Do you have a diverse range of voices and experience? Will the voices you have around the board table be the ones you need tomorrow?
2. How do you operate? This is a question in the largest sense: not in terms of whether you use Teams or Zoom, but in terms of, for example, issues that come to the to the board. How are they determined? Does the board drive them, or management, or both? How quickly can you move from information to decision? What systems and processes do you have in place to avoid groupthink?
3. How well do you know your business? Most people would say pretty well (or they shouldn’t be in the role), but what about your suppliers’ business? Where do they source those silicon chips that you depend on, for example? How do they get from them to you?
4. How much time do you spend as a board looking to the future horizon? Where might those challenges be coming from? How do you balance business as usual with future planning? What information sources does your board have outside of the day-to-day BAU?
5. Do you practise your crisis management plans, or are they in a folder in the third drawer down in the archives room? Plans are all well and good. However, anyone who has run scenario exercises knows that plans rarely survive contact with reality wholly intact. Practice may not make perfect, but it certainly can make improvement.

Execution

When change does come, and it will, how do you respond? Even a well-prepared board will face challenges it did not expect. What you do now matters. Here are some key considerations:

1. Govern, don’t manage. Under stress, the temptation for many is to get our hands on the problem and try to solve it ourselves. That is not the board’s role. Boards need perspective that can’t be achieved if you are in the weeds. Your role is to identify the issues that need decision, the information you need to make them and the levers to ensure decisions are implemented when they are made.
2. Know what you don’t know. What external expertise do you need to fill the gaps your board has in its expertise? Most importantly, use external expertise to challenge the things you think you know well. Doing this effectively requires established, trusted relationships with your key advisors. Now is not the time to be upskilling your advisors on your business.
3. Be disciplined. You need to accept you will never have all of the information you would like before you make a decision. This is particularly true for board chairs. In a crisis a chair needs to facilitate a full discussion but needs to know when it is time for a decision to be made.
4. Learn. Crisis over? Don’t just go back to BAU. Debrief with (and without) management. Identify what worked, what didn’t, and what you need to do differently. Each encounter with the unexpected is training for the next.

Conclusion

It used to be often intoned in political and economic debate that business craves certainty. That may still be so, but we can no longer expect it. In this new abnormal, these issues have become more than what a good board should do. Expecting, and being prepared for, the most unexpected has now become basic best practice.