Global Governance Advisors

Why Can't Boards Innovate?

Posted by Brad Kelly on Feb 11, 2019, 9:00:00 AM
Brad Kelly
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Innovation is fast. For instance, Moore’s Law claims that computer processing capabilities will double approximately every two years and surprisingly, this has held true for over 50 years since it was first predicted. Innovations change societies, industries and lives. My mother’s parents both passed away at the age of 97 and I was always amazed at the fact that throughout their lives they witnessed the adoption of things such as trains, cars and airplanes that transformed travel; radio and telephone technologies that transformed communication; and at the end of their lives computers and the internet that continue to transform everything (i.e. the internet of everything). Similarly, my wife and I have installed several Google homes throughout our house and as a result, our two very young children will most likely never know a world without access to a virtual assistant and as a result, I often wonder what the lives of today’s children will be like and how new technologies will influence and change their lives.

On the contrary, Boards of Directors/Trustees tend to be slow in their evolution and as a result, the external rate of innovation has exponentially increased the risk that these boards are faced with. Board proceedings tend to follow parliamentary procedure first formalized in Henry M. Robert’s Rules of Order in 1876 and with only 11 revised editions over a period of 143 years, one can argue that a rate of innovation like Moore’s law does not apply to this area. However, in a world of abundant computing technologies, ubiquitous access to internet-enabled information and services and an ever-increasing threat of cyber security, most boards are either still caught in the 1870’s or have advanced to the 1990’s.

Boards caught in the 1870’s are still sending out paper materials to all of its Board members. These are the Boards that have their administrators print, assemble and ship out the infamous “binder packages” one to two weeks in advance of upcoming meetings. Boards members are expected to review the material, lug the package with them (securely) to the meeting, and then either heave the package home (securely) or have the board administrator collect and destroy all of the packages left behind.

More evolved Boards caught in the 1990’s have embraced the internet, most notably email, and have chosen to send all of their board materials one to two weeks in advance via email accounts which are often unsecure and susceptible to interception/theft/hacks.

Often, Boards fall victim to member complacency and comfort. When we conduct governance effectiveness assessments, we will often ask Board members why they do the things they do and the response we most frequently hear is “because that is the way we have always done it.” This mindset implies that the concept of innovation or improved change is never a topic for discussion or consideration. This makes sense when you consider the fact that most Board members are fulfilling their role in a part-time capacity and often have other things or “day jobs” that they are responsible for. However, not evolving or striving to improve would imply that they are not fulfilling their fiduciary duty of loyalty to the stakeholders, which could also make them liable if there was ever a crisis.

The tools for governance security and facilitated board meeting administration have evolved. Cloud-based platforms ensure secure administration, storage and dissemination of materials, and powerful communication channels. They help to protect the work of the Board and the interests of its stakeholders. But this is often seen as new, different, and NOT the way Boards historically did things. Besides, it may require something new like a secure “login” and a “password”; or enable people to fully participate in meetings from faraway places; or simply just make their lives easier.

People were still comfortable using horses and wagons when my grandparents were first born, however, it never stopped them from traveling by train, airplane, or purchasing cars throughout their lifetime.

Boards don’t need to innovate as fast as Moore’s Law, they just need to understand that comfortably relying on their printed binder packages or unsecure email distribution of material is outdated, inefficient, and risky. But that is okay, this is the way they have always done things – and no one will judge them when they arrive at their meetings in their horse and buggies.

If technology tools for governance exist, for the ease of the board and the interests of its stakeholders, maybe it’s time they innovate.

Feel free to browse through the rest of our blog (how about checking out How to Chair a Board Meeting) for more.

Topics: board of directors, GGA, Innovation