Making Board Meetings More Agile

Given my belief that the world we live in today has changed irreversibly and has become unpredictable, volatile and fast-changing, the regular annual Board cycle must be re-examined if companies are to move from reacting to frequent external changes to proactively shaping their own destiny.

Boards must de-emphasize the ritualistic rigour of the annual planning and budgeting process and incorporate more forward-looking strategic discussions at every meeting during the year—moving closer to a 30-day cycle to become more curious and open to the rapidly changing landscape.

As I gained more experience being a non-executive external director on other boards, I could compare the different styles employed. One refreshing experience that continues today was being on the Board of Advisors for a Malaysian financial technology company as part of my mentorship work with Endeavor, a global non-profit organization dedicated to catalysing entrepreneurial growth and job creation in each local economy. The Advisory Board acted as a non-executive board for the three co-founders of the company and we met each quarter.

The most outstanding thing about this Board experience was that we flipped that 80:20 airtime equation from management spending 80 per cent of the time presenting to the Board and the Board reacting only 20 per cent to one where the Board took up 80 per cent of airtime. The management team would send out a maximum two-page memorandum to Board members outlining the one or two strategic questions they were wrestling with, and the Board meeting was structured for each member to respond to these questions by sharing their experiences and insights and then jointly discussing how best to come up with actions to recommend to the management team.

This meeting approach infused a higher degree of curiosity into Board deliberations. As Board members, we were expected to come to meetings with thoughtful questions or insights on external market trends and opportunities and to challenge the management team to keep adapting their execution instead of rigidly following an annual plan.

Background information on the ongoing financial and operating performance of the company remains important but this is dealt with through monthly reports that are sent to Board members who are expected to read and be prepared for each meeting because the management team would not spend time presenting it there and then.

While there were occasional issues that required us to review and discuss past performance, most of the time spent at the Board meetings was forward-looking. The discussions were incredibly focused and thorough because the agenda contained only one or two issues that were prioritized by the management team. Everyone was clear on the big purpose of the company and we didn’t see a need to have a full agenda that covered every aspect of the business from finance, operations, marketing, human resources, legal, etc. Instead, management needed to pick the few issues they believed could benefit the most from Board member input. If Board members felt that the agenda didn’t cover an important strategic topic, they could raise this beforehand online so that the final agenda at the meeting took this into account.

I felt that the management team of this financial technology company received substantial benefit from their Board meetings, where they got guidance, support and encouragement compared with the adversarial relationship I experienced presenting to my AirAsia X Board, where I only wanted to ‘survive’ the grilling.

Balancing strategic, forward-looking discussions with traditional governance obligations

Today, with the Boards that I chair, including MoneyMatch, another financial technology company that operates a licensed activity and is strictly regulated by the Central Bank, we benefit from adopting the focused Board agenda on a few strategic questions, and ensure that Board members add value by preparing in advance and contributing 80 per cent of meeting airtime.

Yet, besides the highly volatile and complex external environment today, many Boards are also under a lot of pressure to fulfil their controls and compliance governance obligations. With many visible corporate scandals, regulators and minority shareholders are pressing Boards to scrutinize and audit all the key actions undertaken by their companies. The challenge boils down to how Boards can become more strategic and spend time with forward-looking deliberations while balancing these controls and compliance roles.

From my experience, there are no shortcuts or magic solutions, but non-executive directors must spend more time with the company, and that means they should not commit to more than a handful of Board positions at any one time.

Additional time requirements need not take place at formal Board meetings. Instead, directors can engage more with the company by having separate meetings with management teams in between board meetings and reviewing financial and operating performance reports outside of the actual Board meeting. Audit committees should actively engage with the management team and internal and external auditors on an ongoing basis instead of just convening meetings at the statutory minimum frequency of twice a year.

While both controls and compliance as well as strategy and innovation are critical Board functions, they generally don’t fit well as two topics in the same Board meeting. The mindsets for each are different. For controls, directors must pay attention to detail, looking back on past performance and looking for mistakes or deliberate transgressions.

Strategy and innovation require an open, curious and inquisitive mindset about possibilities and smart risk-taking. A director who is competent with both mindsets and skills is very rare, and Boards are best placed if they’ve a good balance of directors from each of the two backgrounds.

This raises the issue of how Boards will move ahead if half the Board is risk-averse and conservative and the other half is strategic, innovative and entrepreneurial. Will this result in deadlock, which often favours the status quo and suffocates disruptive innovation? One principle to consider is adopting a venture capitalist’s portfolio mindset. Companies should anticipate that a majority of new initiatives will fail but a small number of breakthrough successes could make up for all the other losses. This requires getting comfortable with failures and not expecting or insisting that every business proposal succeed. If this were the case, management teams would hesitate to take ‘moonshots’ and only play it safe. Failures that are new and not repeated and generate new insights and learnings should be embraced and the company’s leadership should be judged on the overall portfolio, not on individual proposals.

A chairman who embraces curiosity as a principle to stay ahead of the industry will set a clear framework for how much of the company’s capital and resources should be deployed across ventures that are high-risk, create a diversified portfolio of initiatives, and not punish teams for failure.