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In the latest installment of the Salzburg Questions for Corporate Governance series, company director Catherine Brenner explains why COVID-19 can't be an excuse to abandon traditional strategic planning processes
This article is part of the series, the Salzburg Questions for Corporate Governance by the Salzburg Global Corporate Governance Forum
In less than 12 months, so much of what we took as certain, stable, and predictable has changed. From the global pandemic to unprecedented bushfires, extreme climate events to changing geopolitical issues and alliances, and significant economic challenges, it is difficult to predict and forecast what the future holds and for organizations to make plans.
Whilst there is much to be learned from the past and immediate individual and organizational responses to crises have often surprised on the upside, we cannot put off decisions for the medium and long-term indefinitely.
The extreme unpredictability of 2020 is not a reason to abandon the rigor of the traditional strategic planning processes. Instead, boards and leadership teams can be emboldened to envisage a range of futures and test a series of scenarios.
Boards must provide their management teams with the confidence and courage to do this broader thinking, not retreat into risk-averse planning, but yet to be inquisitive and creative and think about the "what ifs." Directors who constructively challenge management and themselves to have clear-eyed but ambitious discussions about their organization and think about how they can shape the future are needed more than ever.
This change requires boards with a growth mindset. This movement can be aided by a reasonable proportion of non-executive directors from outside the industry and bringing external views and perspectives. Boards benefit from thoughtful directors who invest the time to help them:
It is helpful if directors are aware of two key behavioral biases: loss aversion and narrow framing. People fear losses more than they value equivalent gains, and people weigh potential risks as if there were only one potential outcome instead of viewing them as part of a larger portfolio of outcomes. This is where board-level thoughtful organization-wide discussions and assessments can be an enabler of effective, well thought through risk-taking where trade-offs are made, and a broader organization-wide perspective is taken. As non-executive directors, we should regularly ask ourselves:
Truly value-adding strategic conversations require directors to think hard about these issues, and there is no time more pressing for this than now.
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Catherine Brenner is a company director, having served in the past 17 years on the boards of various public and private companies, not-for-profit and government organizations. This list includes AMP, Coca Cola Amatil, Boral, the Sydney Opera House and the Art Gallery of NSW. She has chaired boards, risk, sustainability, remuneration and special-purpose board committees. Catherine previously served as a member of the Takeovers Panel and was a senior investment banker. She is a Salzburg Global Fellow.
The Salzburg Questions for Corporate Governance is an online discussion series introduced and led by Fellows of the Salzburg Global Corporate Governance Forum. The articles and comments represent opinions of the authors and commenters, and do not necessarily represent the views of their corporations or institutions, nor of Salzburg Global Seminar. Readers are welcome to address any questions about this series to Forum Director, Charles E. Ehrlich: cehrlich@salzburgglobal.org To receive a notification of when the next article is published, follow Salzburg Global Seminar on LinkedIn or sign up for email notifications here: www.salzburgglobal.org/go/corpgov/newsletter