In today’s constantly evolving business landscape, responding to disruption requires new strategic thinking. It is no longer enough for directors and leaders to rely solely on what they know. We must learn to work with what we don’t know and embrace the uncertainty that comes with it. The challenge lies in breaking free from outdated conformity and unconscious bias. We must embrace positive uncertainty and be ready for the unknown unknowns.
Part one of this article looks at the critical areas where Boards are frequently immersing themselves in the unknown. From risk and compliance, to HR and financial complexity, our increasingly dynamic business environment is thrusting Boards into previously uncharted situations. As chairs and non-executive directors are placed for their experience and expertise, charting the unknown can be a little scary or uncomfortable but it is something we need to get comfortable with. And fast.
Shifting board thinking in the unknown
It’s known fact that companies are increasingly navigating unforeseen events. From quiet data breaches that go unreported to the Optus crisis, every chair and non-executive director needs to be prepared for how they will help their company to navigate the unknown.
So how can boards shift their thinking to operate more effectively in unknown environments and respond to crises while maintaining oversight of an organisation’s function?
The key lies in developing what John Keats called ‘negative capability’: the ability to deal positively with uncertainty, complexity, paradox, ambiguity, and the anxiety that comes with not knowing what to do next. The gap here is that chairs, directors and executive teams have all been appointed for what they know, not what they don’t know. But in our increasingly dynamic business environment, boards and executives are managing through what they don’t know more than what they do. And this understandably feels uncomfortable.
Board directors may experience fear in various areas when it comes to navigating changing business environments. Some areas of fear for board directors include:
1.Uncertainty about the Future: Board directors have an expected role of grappling with uncertainty about the future direction of the business and its landscape. This can incorporate concern for things such as rapid technological advancements, shifting consumer behaviour, the economy, climate impact and geopolitical challenges, all of which can create caution, anxiety and uncertainty about the long-term sustainability and relevance of the organisation’s strategies.
- Risk Management and Compliance: Directors are responsible for overseeing risk management and ensuring compliance with regulations and industry standards. Fear of unforeseen risks, regulatory changes, or legal issues can lead to concerns about the organisation’s ability to adapt and remain resilient in the face of evolving external pressures.
- Talent and Leadership: The ability to attract, develop and retain top talent is critical for the success of any organisation. Board directors may fear talent shortages and leadership gaps and the onboarding of new employees with different expectations. These all then need to be developed into a cohesive group who can cultivate a culture of innovation and agility to meet changing workforce demands.
- Financial Performance and Market Volatility: While not new, economic downturns, market fluctuations and fiscal challenges can evoke fear related to the organisation’s financial performance, liquidity and ability to sustain growth amidst unpredictable macroeconomic conditions. These are more difficult to predict than perhaps in the past, and the impacts far reaching.
- Reputation and Brand Protection: Safeguarding the organisation’s reputation and brand integrity is a paramount concern for board directors. Fear of reputational damage, public scrutiny or brand erosion due to external events or missteps can create apprehension about maintaining stakeholder trust and confidence. In a world of “fake news” and unknown ‘influencers’ predicting the messaging coming at you is hard and concerning. We have only to observe recent examples of Qantas, Optus and Rugby Australia to see the impact of brand deterioration and consumer trust.
- Digital Transformation and Cybersecurity: The acceleration of digital transformation brings about fear related to cybersecurity threats, data privacy breaches and digital disruptions that could jeopardise the organisation’s operations, customer trust and overall resilience in the digital realm.
- Stakeholder Expectations and Sustainability Factors: Heightened awareness of environmental, social and governance (ESG) factors has placed additional pressure on directors to meet evolving stakeholder expectations. Fear of falling short in ESG performance or failing to align with societal values and with their own personal ethics, and interests, can weigh on board directors’ minds.
- Geopolitical and Geoeconomic Change: Global geopolitical shifts, trade tensions and geopolitical risks may instill fear about the impact of such changes on any international operations, supply chains, manufacturing processes as well as market access and traversing.
- Business Disruption and Innovation: The fear of disruption from nimble competitors, technological innovators, or unforeseen market entrants can prompt concerns about the organisation’s ability to innovate to remain competitive in an ever-changing operational environment.
- Crisis Preparedness and Resilience: Board directors carry the responsibility of crisis preparedness and resilience planning. Fear of unanticipated crises or inability to manage emergency situations effectively can create concern about the organisation’s ability to safeguard its people, assets, and reputation.
Zoom Out
Leaders often get stuck in the challenges they face because they are too immersed in them. Based on the list above, it’s hard not to get stuck when there are multiple unknown variables imposing themselves on business at any given time.
“Zooming out,” or moving from “the dance floor to the balcony,” as described by Ron Heifetz, Marty Linksy, and Alexander Grashow provides a broader perspective and a systemic view of the issues and can shine a light on unexamined assumptions that would otherwise not be visible. From this “balcony” or elevated vantage point, interdependencies and larger patterns become observable, potentially revealing unforeseen obstacles and new solutions.
This more holistic perspective allows for greater adaptability and course correction, when needed, and today, boards, their executive and their companies need it more than ever.
In part two, my December column, I will build on the critical areas where boards are managing the unknown and move onto the skills they can call on to handle new challenges and change.
PART 2
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PART TWO – UNDERSTANDING UNCERTAINTY AND MANAGING THE FEAR –how board directors can reassure themselves through uncertainty.
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In part one of this article, I looked at the critical business areas where boards are increasingly navigating the unknown. The concept of the unknown is uncomfortable for most chairs and non-executive directors – we’ve been placed in our roles for what we know. So, if we accept that navigating the unknown is increasingly on the horizon for boards and companies, what tools and strategies can we use to ensure we navigate the unknown?
We all recognise that if we manage the unknown with courage and calm, we can make our companies and the people stronger and keep them on track.
Managing fear – pragmatism and mindset
Breaking this down further, overcoming fear involves a combination of practical strategies and mindset shifts so that we can make good decisions no matter the circumstances. Whether it’s fear of failure, uncertainty, or change in the business context, there are some effective ways for boards to manage fear:
- Acknowledge the fear you are experiencing and accept it as a valid emotion. Acknowledging the fear, rather than pushing it away or trying to pretend it doesn’t exist, robs it of its power as it allows you as an executive to see yourself as separate to the fear. You will see you can operate add value despite the fear that is present for yourself and your colleagues.
- Understand the source of your fear. Is it a specific risk, a potential outcome, or a broader concern about the unknown? Identifying the root cause can help you better address and manage the fear. Understanding the source of your fear will enable you to make decisions that address it directly and potentially make it dissipate entirely.
- Knowledge is a powerful tool in managing fear. Educate yourself about the factors, whether market trends, regulatory changes, or technological disruptions. Understanding the landscape to reduce uncertainty and build confidence means you are armed with knowledge before the event arises.
- Create contingency plans to address potential risks and challenges that are fuelling your fears. Concrete plans of action provide control and preparedness.
- Reach out to mentors, colleagues, or industry experts for perspective and advice. An external viewpoint can offer clarity and reassurance.
- What can you control? Fear often arises from a sense of powerlessness. Focus on the aspects of the situation that are within your control, such as decision-making processes, risk management strategies and fostering a positive work environment.
- Adopt a growth mindset that sees challenge as opportunity for learning and improvement. By reframing fear-inducing scenarios as growth opportunities, you can shift your perspective.
- Clear your mind using whatever means works for you, to enable a reset. Put some space between yourself and the issue. Sometimes you need to hit pause to move forward.
- Break it down. If your fear is linked to a large, overwhelming issue, break it down into smaller steps. This makes the situation less daunting and enables proactive action.
- Stay informed about industry developments, market trends, and regulatory changes. Being adaptive and open to change helps.
- Surround yourself with a supportive network. A trusted colleague or peer, who you can discuss hypothetical scenarios with are invaluable during a time like this. This also plays to the dance floor to balcony analogy.
- Managing fear can mean taking calculated risks. Evaluate any potential outcome and make informed decisions that align with your risk tolerance. Ask yourself “what’s the worst that can happen”.
- Recognising and acknowledging progress can boost confidence and counter fear. When you pause, take the time to reflect on what is behind you. What did you do well. What could have been better? How will you take those learnings into future scenarios?
- Invest in professional development and training to enhance your skills and knowledge. Regular investment in your development takes confidence but it’s the only way you can protect your most valuable asset – you – and continue to be an asset to the companies you serve.
Sitting in uncertainty
Addressing fear requires a proactive and strategic approach, at times collaboratively too.
In approaching fear in uncertain times, it’s important to approach the Board’s role with a balance of pragmatism and compassion. By fostering an environment of trust, resilience and strategic alignment, the board can navigate uncertainty with confidence and lead the organisation toward sustainable success.
In the end, sitting in uncertainty is a strategic move. It allows for a space of contemplation, where the Board can collectively access their knowledge, expertise and skills, integrate this with patience, active listening and drive a pause on ‘reacting’ or not ‘doing’.
Our job is to visualise what success will look like, create measures for knowing when we have achieved it and, most importantly, articulate the benefits of going forward to all stakeholders and staff.
As the world becomes more complex and uncertain, the ability to sit in uncertainty will be a critical skill for board directors and executive leaders.