The use of data and a data-driven approach in the board’s work can be beneficial to the whole organization from top to bottom. Yet, I have rarely seen the company using top to bottom digital tools to evaluate the company’s direction. But for modern board work, transparency and the use of digital tools can become a competitive advantage to understanding how the whole organization operates.
A great board is passionate about the company. They are able to create a common vision to guide the company to sustainable success. The board can dig the best potential out of the entire company when doing things right. In a successful board work there are three major factors:
- Strategy - See how the strategic goals are achieved
- Profitability and value - Ensure that the company generates profit and increases its value with responsible ownership
- Risk management - Identify and manage risks that might endanger the operations.
In all of these, there are threads, but also possibilities to increase the success of the company. First, let’s dig into the risks of not going for a data-driven approach.
Strategy
How do you reach strategic goals, if you don't see what’s behind the figures? If you see only results, how could you point out where you are going as a company, and how strategy has to be evaluated?
How could you evaluate the effectiveness of the strategy, when you are tied only to notable results – not the causes behind them?
How to evaluate the company's performance, if all that you see are the operative metrics or financials?
How could you ensure that the direction taken is sustainable in a long run?
Profitability and value
How to ensure the ability to generate profit and increase the value of the company without knowing its true condition? How to ensure responsible ownership and board work if you can't see how’s everyday life in the company?
Risk management
How to manage risks, if they are not identified on a strategic and operational level? How to spar with the CEO or the management team, if you can’t recognize the pain points? Any company is its people, how well does the board know, what people think about their employer?
These topics aren’t easy to address. In many cases, the CEO is able to pull the strings and present the situation in such a way that the board gets distracted from bringing full value to the company. Or as usual, the CEO or board might not even be aware of the capabilities, efficiency, leadership, and culture of the company. Let alone being able to measure them.
We aren’t saying that every CEO is like this, but if there was a crystal ball that everybody could scan the real condition of the company, wouldn’t it be smart to use it? What if everyone could concentrate on sustainable success, strategy evaluation, and risk management? This is where the data-driven approach to board work comes in.
What could a data-driven approach bring to the board work? Let’s have a look.
Strategy
What if there was a way to see deeper, understand what’s behind the financials, and pinpoint where you are going as a company? To see clearly what should be done for sustainable success?
You could evaluate the effectiveness of the strategy by having a look at the causes – not the results. You could evaluate the company's performance beyond operative metrics or financials, and could ensure that the direction taken is sustainable.
Profitability and value
You could know the company’s true condition. You could ensure responsible ownership and board work by having a look into the everyday life of the company.
Risk management
You could identify risks in advance. You could mentor the CEO and the management team because you know the pain points of the company. You know exactly what people think of the company, from the bottom up.
This all sounds great, right? To have that crystal ball to see through the company and to understand all of the root causes of its performance. Then you could use your expertise to guide the right matters in the company.
We have seen too little of this in the board work, but as the tools and ways to operate progress, we can expect the use of data to become a norm in the SME boards as well.
You have to have a holistic view of the company’s condition for successful board work.
You need to have metrics on its capabilities, efficiency, level of leadership, and level of productive culture.
Wouldn’t you love to work on a board where all business-critical data was always correct and available? You could concentrate on building future success - and that’s what you were called to do on the board wasn’t it?
