Getting growth back on your agenda

28 May quote

The board’s greatest source of influence was in the questions it asked and the decisions it made, Australian Institute of Company Directors chairman Michael Smith FAICD noted last week. In his opening address to Company Directors’ annual conference on Hamilton Island, Smith pinpointed some of the ways directors could best ignite growth in their own organisations, rather than just complying with their legal duties, signing off on accounts and mitigating risk.

“Insightful questions asked about corporate strategy around the board table enable better strategic thinking, deliberation and decision-making,” he said.

But he added that as directors adapted to a high degree of volatility and change in their environments, they were required to engage in a wider flow of information.

“We need to increase our awareness of what is changing, how things are changing and, in turn, make more effective judgements and decisions,” he said.

“While our individual knowledge has held us in good stead to date, we need to think about how we can adapt, so that we’re not tripped up into thinking that the paths we have taken before will secure our future.

“We know that it is human to suffer from confirmation bias, so it is important that we also try to remind ourselves of how to be aware of it and take steps to ensure we prevent this from hindering our ability to consider new ideas or new markets.”

Smith noted that the link between innovation and growth was clear, but it also required directors to have the courage to potentially abandon some traditional strategies: organic growth, incremental product innovation or process improvement, or even growth by acquisition.

“What other, more inspiring growth opportunities can we explore?” he asked, noting that theory suggested that the pursuit of growth started with an open mind as to what was possible.

“We need to keep asking ourselves how we can change the world for the better just like entrepreneurs do,” he said.

“How can we create or grow new markets and commercialise the best ideas through exploring and believing the ‘adjacent is possible’? In other words, we need to not accept everything we have believed to be true or sacred, but instead consider how we can create a better future. Rather than just detect, we can also create new trends (such as Apple has done so famously), so we’re not just responding reactively to the trends others might establish.”

Smith added that in order to achieve their growth objectives, directors would need the ability to articulate their strategic vision beyond rhetoric.

“In an era of increasing distrust and scepticism, we need to be authentic and transparent about why we are pursuing growth and align around a central vision. We need to consider how the stories we might tell inspire our people and encourage customers to do business and engage with us.

“To this end, we can leverage what is emerging from the field of neuroscience to better understand human motivations, habits and behaviour. What do we really understand about our customers and their goals of growth and contribution?”

Smith added that growth would take root in directors’ ability to truly listen and demonstrate compassion and empathy for their stakeholders, whether they be customers, employees, suppliers or society at large.

“We need to be cognisant of how the focus on a company’s single best interests – which we are of course required to do at law – may be in contradiction with the emerging fields of co-creation, collaboration and collective impact that are being explored in various communities.

“The rise of stakeholder activism (such as class actions, GetUp and Occupy Wall Street) means that while seeking to ignite growth, we also have no choice but to deeply consider the direct and indirect consequences of our decisions and corporate actions in a broader context. There is clearly an expectation that socially responsible businesses must do whatever they can protect and enhance the well-being of all in our economies and societies.”

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