How Blind Spot Ready Is Your Board?

By Margaret Rumpf, Co-founder & Partner | BoardLens Advisory

When you learn to drive, you are always taught not to solely rely on your mirrors, but to turn your head and check for blind spots, to avoid a collision when changing lanes, merging or turning. 

Applying this to governance, it is equally important for boards to not rely solely on management, but to ‘turn their heads’ and check for blind spots to avoid missed opportunities, catastrophic risks, and a loss of stakeholder trust. 

So how fit is your board to ‘turn their heads’ and identify blind spots?

5 signs that suggests your board is not ready, and practical ways to address it.

1. Insufficient Understanding of the Business 

Signs: Boards are not well-informed about the business, emerging industry trends, technologies or risks. In the boardroom, more time is spent educating and raising awareness, rather than building on insights and making decisions.

A lack of understanding of the current business drags the organisation down. Management loses trust in the board’s ability to make decision and provides recommendations that board are capable of making decisions on, rather than what the business needs. In today’s rapidly disruptive marketplace, this can be devastating to the business. 

How to address: 

• Create group and individual board development plans and dedicate time and resource to implement and track milestones. 

• Embed the development plan into the overall board performance review. 

• Review board composition and skills matrix, to complement broad leadership skills with deep technical expertise. 

2. Overconfidence

Signs: Boards are not receptive to alternate views, feedback or dissenting opinions. In the boardroom you hear more of ‘when I was CEO’ and less questions about the business like ‘how will we remain competitive?’

Overconfident individual directors typically dominant the boardroom discussions, regardless of their expertise in the topic area, and withhold critical concerns until executive sessions rather than engaging in open dialogue during the formal board meeting. As a consequence, valuable dissenting voices from other directors are silenced, along with a healthy debate, necessary for effectiveness governance.  

Individuals appointed to the board for their past experience, only remain valuable if they are able to translate their experience to the present business, augment different perspectives, remain curious and unsatisfied with status quo. 

How to address: 

• Agree on a ‘safe word’ or ‘gesture’ that can be used in the boardroom to gently call out self-talking overconfident directors.

• Openly provide permission in the boardroom to ask challenging questions, probe assumptions, and scenario plan. 

• Continue to review the boardroom dynamics, focusing on how the board communicates, builds trust, shares accountability and a commitment to continuous learning and improvement. 

3. Inadequate Risk Management Framework and Mindset

Signs: Risk management is a checkbox and rubber stamp, where too much time spent discussing risk is discouraged. In the boardroom, risk is a separate agenda, rather than regularly integrated into every agenda item. 

If risk management frameworks are seen to be too onerous there will be a tendency for boards to rely heavily on management to keep them informed of risks. This can be precarious, as management are likely to think short term, leading to a false sense of security and lack of preparedness for long term. 

It is important for boards to work with management to review the categories of risks the business faces, including the likelihood, impact, concentrations and inter-relationships of risks, and mitigating measures to safeguard the business. 

How to address: 

• Work with management to set up a risk management framework that’s fit for purpose and fluid. Confirm that individual directors and management fully understand the methodology and assumptions underlying the risk assessments, not just the final ratings. Scenario plan to stress test the framework. 

• Integrate risk discussion into every agenda item. Consider assigning a risk monitor role to different directors to ensure this is done. Consider incentives for safely managing risks. 

• Seek input from a variety of internal and external stakeholders such as middle management, critical roles, analysts, investors, customers, partners and policy advisors to increase the depth and breadth of risks reviewed and managed. 

4. Lack of Transparency and Trust 

Signs: Boards foster a culture where bad news is hidden or ignored. In the boardroom management only speak when spoken to, different data points are used each month to deliver positive news and critical information is delivered late. 

How boards react to bad news sets the tone for how management will deliver it. 

How to address: 

• For high profile programs, openly acknowledge the potential risk of failure and collectively own it with management. 

• Agree with management on how and when bad news should be communicated. 

• Engage with management outside of the boardroom to celebrate the effort, regardless of the outcome. 

• Instil boardroom discipline in how business performance is measured consistently.

5. Resistance to Change 

Signs: Board papers are sent as hard copies or via email or WhatsApp unsecured. In the boardroom, you hear ‘it’s a tradition, we’ve always done it that way’. 

If boards are unable to apply technology in the boardroom to safeguard governance then how will they grasp the implications of cybersecurity risks and decide on major investments in these areas. 

How to address: 

• Implement a secure board portal for all board papers and communication. Include an onboarding service to ensure the portal process is fully optimised and integrated.

• Create a buddy system to upskill board directors regularly on new technologies and risks and ensure depth and breadth of information is pitched at board level. 

• Continue to refine the board’s risk appetite and openly communicate it to management, with examples. 

• Ensure board succession plans are refreshed as part of the annual strategy review. 

Are Boards in Asia Any Different?

Many of the signs that boards are not blind spot ready are cultural in nature. Systems and processes can be put in place to address some of the gaps but ultimately it is the ‘how’ that will make the biggest impact.  

Without over generalising the diverse and vast cultures across Asia, it is fair to say that Asian cultures emphasise collectivism, respect for elders and harmony, which can: 

• hinder candour, challenges and collaboration between the board and management; 

• lead to an over-reliance on traditions, resistance to change; and

• favour high profile status board appointments over skills.  

At BoardLens Advisory, we believe Asian boards should remain authentic, play to our Asian strengths but recognise and mitigate against potential challenges to effective governance. A culture mapping awareness exercise to uncover individual directors and board preferences to communication, how decisions are made and feedback is given, could help to raise awareness and trust in the boardroom. 

Directors: Are You Asking the Right Questions?

• How would we describe our board culture? Do we have open, candid healthy debates, are feedbacks given and embraced? 

• How well is the composition of board fit for purpose in this rapidly disruptive environment? Should we have development plans? What is our succession plan? 

• Do we receive enough direct external signals about the business from our key stakeholders?

• How robust is our risk framework and registry? How are we mitigating against key global risks such as cybersecurity, supply chain, emerging technologies, regulatory and business disruptors? 

• How ready are we to identify potential blinds spots? 

At BoardLens Advisory we help boards health check their blind spot readiness and work with them to improve. With decades of practical boardroom experience, we can provide an external lens to the boardroom by translating what we see, hear and read into thoughtful insights and recommendations. Some of the services we offer include: 

• Quantitative reviews of the board’s performance 

• Qualitative deep dives through 1:1 structured interview 

• Observations at board meetings 

• 360 degree feedback from management and key stakeholders (analysts, investors, consumers) 

• Review of risk management frameworks, mindset and mitigating measures

• Board retreats to review strategy, develop scenario plans and conduct training 

• Board induction programs 

• Board culture mapping awareness exercises

• Board development plans

Resources for Further Reading:

• https://www.nacdonline.org/all-governance/governance-resources/directorship-magazine/online-exclusives/2023/December2023/blindspots-in-the-boardroom/

• https://hbr.org/2020/07/research-how-corporate-boards-in-asia-can-improve-governance

Boardroom Insights That Matter — a series by BoardLens Advisory 

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