How can NEDs help businesses move from ‘Transact’ to ‘Transform?
At our recent strategic considerations for NEDs during a crisis webinar, one of the participants asked how can NEDs help businesses move from ‘Transact’ to ‘Transform? Many people talk Transformation but they don’t really transform - should we take this more seriously and what can NEDs really do to influence that?
Tim Foster, Partner – Many organisations are not very good at transforming and tend to tweak around the edges of ‘Transact’, either making it a little smarter, or a little bit different. What organisations really need to understand is that for some, this is going to be a wholesale change. To do that, they need to understand the different scenarios to take into account, then step back and get strategic about it by looking at their underlying models.
So how to do businesses move from Transact to Transform? For many clients, we’re really seeing a root and branch change. Businesses need to ask what do we do as an organisation, what is our purpose? This means thinking about culture, strategy, and to some degree values. Organisations are going to have to start shaping what their business will need to be in the next 12-18 months. Those that are being more successful are the ones that have started that process of thinking around it. Do some scenario planning, really get challenging, and experiment with what the different scenarios might be for your organisation. Look at all the different areas, look at your supply chain, your operations, and look at your people profile. Start framing your approach to risk and using that for the bedrock to determine where the key areas of focus will need to be.
In terms of the role of NEDs, boards and board members should be driving that change, along with review and scenario planning for engaging with third parties. If you need to help start thinking about what that might be - whether it is regulators, whether it is your membership and industry groups, start talking amongst peers. In the last 3-4 months we have seen greater openness between organisations in understanding sector issues. Previously, it was still quite rare for organisations to talk to other similar organisations about what some of their challenges might be; we are now seeing those barriers being knocked down because whole sectors are being affected.
The takeaway for NEDs is to really challenge the business, stretch them in terms of their thinking, or their ‘ReThinking’ with regards to what that new reality will look like for them. It is about making sure there is absolute clarity in what that roadmap for that change will be, and making sure that there are regular touchpoints throughout the delivery of that roadmap so that we absolutely know we are going to be on track. It also needs to remain flexible if the scenarios that you’ve used as part of your transformation planning don’t stay true.
This high-level strategic discussion used ‘Rethink’, BDO’s global framework, which has been designed around the following ‘stages’ to encourage a broader review of original business models and commercial assumptions that can be used to manage business priorities, address issues and leverage thinking:
- React - ensure that measures are taken to secure business survival in the short term
- Resilience - safeguarding vital elements of a company where necessary throughout the prevailing business environment
- Realise - future benefits of sensible business decisions taken calmly and pragmatically
These three stages can be considered separately to help you as a Non-Executive Director to guide management through COVID-19 over the medium to long-term.
If you would like to discuss any of the issues raised in this article or if BDO can support your business please get in touch. If you would like to contact our speakers please find their details below.
- Matthew White - Matthew is BDO’s Senior Partner and Chair of BDO LLP’s Partnership Council
- Zoe Bailey - Zoe is BDO’s Chief Strategic Officer, a Board Advisor and Strategic Development Specialist
- Tim Foster - Tim is a Risk Advisory Services Partner, with over 20 years’ track record