Knowledge and Governance from Generation Z
Originally published on August 30, 2020.
These past ten months, I’ve led a project called “LBS Board Fellows Programme”, which places London Business School students on the governance boards of charities in London. When the VP and I overtook the programme as a turnaround project, we recruited a new Executive Committee from different nationalities and seniorities. Despite the pandemic, we managed to execute the pilot programme this spring successfully. Currently, we are building a new leadership team since I am graduating from the class of 2020 and transitioning to the Advisory Board. During my time at Board Fellows, I have been working more than ever with the concepts of corporate governance and leadership; and coming from a finance/investment background, I am well aware that governance is more important now than ever. I wanted to share my learnings over the past months, plus some insights still relevant to the business world from a course I took ten years ago that helped me during the process.
Leadership was a skill that was necessary to learn since I was a child. When I started to work in private equity, leadership became even more crucial. During this time, I had my first interactions with governance boards, advisory committees and investment committees (formally speaking). And now, after ten months as President of the LBS Board Fellows Programme, the role of Board of Directors/Trustees and Advisory Boards is more critical than ever. For instance, Exxon in 2020 was delisted from the Dow Jones Industrials after being the most valuable company in 2011. Lack of leadership and vision contribute to this.
When designing a company’s strategy, we need to plan for the challenges and risks relevant to the business and the industry. This is common knowledge from Business 101, but still, many people don’t apply it in real life.
Having a personal purpose is more important as you grow wiser, and having a successful, purposeful Board will be essential in developing your organisation. Nonetheless, be aware that boards and management are not equal in functions. Boards guarantee the company’s sustainability, develop the next generation of talent, oversee management and provide the strategical directions of companies, charities and projects.
How do we guarantee that we have the best people on the Board? Some consultants will suggest you build your skill matrix (which is highly important) but that it’s not enough. Recruiting, in general, is not an easy step. How do you recruit people who will be in charge of developing the next generation of talent? It is quite a challenging task. Naturally, we want people with motivation, skills, and experience, but above all, we want them to thrive as a team of directors.
Best to look out for:
What makes you tick? I’ve seen many people only driven by money over my short finance career in Peru and the UK. But at the end of the day, when you have money (hope that day comes sooner than later), you will still want someone with the stamina to build the next Global Wonder. Your purpose is the most relevant individual skill you will need (besides business acumen and execution capacity) to make your team envision, care and drive strong results.
Team decision. Many business articles recommend not having a team of A-players, and we have some adverse history. Working as a team is the foremost crucial skill you will need apart from successfully managing conflict. There will always be a player whose ego is larger than the rest of the room, but when he is challenged, you want someone who can step back from the discussion and find common ground. There will always be times when you have to decide with fewer risks (after all, we live in an uncertain world) but can everyone in the room keep peace of mind moving forward with this option? In other words, the conflict is smoother, and it’s not a deal-breaker for the project or strategy. In that case, you are on the route to building a great team.
Strategic drivers. According to the Theory of Knowledge course, we learn from different sources (e.g. emotion, perception, reason, language). If we take those insights into the business world, setting up the strategy and vision for the company based on different ways of learning will allow us to be more creative. A report from McKinsey of high performing boards suggested that what distinguishes high performers from low performers is that board members understand their companies’ industry and business drivers. By thoroughly knowing the drivers, you will have a more creative vision of changing your strategy. Even if you are not an industry expert, you will look up to learn more. Money and prestige will be external drivers, but they will not be sustainable.
Board members need to develop and strengthen their creative skills. When we are children, curiosity drives our decisions; as we grow older, risks and analysis drive our choices. As board members, we need to challenge our curiosity and empower management to propose bold ideas; it starts from helping shape the company culture of promoting tolerance for failure whilst exploring new business ideas to challenge the Board self-assessment report on allowing sustainable drivers of value. The more curious we are, the more we will allow a robust value creation process.
Is age a requirement?
We have prioritised that years of experience is the necessary skill to have on a board during the past years. If we are looking to challenge the company’s management strategy and vision, we must stay relevant to the consumers. We have read so many articles about Generation Z, Millennials and how different they are from Baby Boomers. Yet, Baby Boomers are the average age of a Board Director. When looking to envision the future, or challenge the strategy of your management, include a Gen Z or Millennial in the discussion, make them question the plan or even create a Plan B strategy. We are looking to guarantee the sustainability of the company/charity, and we need young eyes relevant to the consumers as a differentiated force to drive large sustainable results and value.
LBS Board Fellows Programme is here to challenge the status quo and drive value by placing LBS students in the Boards of Trustees of leading Charities in London (Next step: expansion beyond London and to the corporate sector). If you are a charity, start-up, or a company that needs to drive sustainable growth, don’t hesitate to reach out to us at boardfellows@london.edu.
A. Sebastian
