Preparing Directors for Corporate Survival and International Operation

Becoming a director requires more than a brief induction programme and learning about directors' duties and responsibilities. While important, a focus on legal requirements and what needs to be done, complied with, or avoided, whether in reporting or other relationships with shareholders, can sometimes result in areas of possibility and opportunities to do things differently being overlooked. Personal risks exist alongside business ones, including damage to a reputation, disqualification as a director, and legal and financial penalties, but options, expectations, various codes, and board and governance practices could also be covered.

There is more to directorship than absorbing shared assumptions and becoming acquainted with the people and personalities around a boardroom table, how the business of the board is conducted, and what is delegated to a CEO and executive team. When joining any social group, the emphasis is often on fitting in and learning what is preferred, expected, and acceptable. A company's vision, values, and purpose, briefly mentioned during an induction, can sometimes seem general, bland, and/or uncontroversial. Subsequently, they may be rarely mentioned during board meetings. In time, a director may become integrated into the group.

What is sometimes either missing or insufficiently stressed during inductions is the freedom directors have to think, explore, rove, and question assumptions, business and operating models, priorities and relationships, and review, question, and redefine areas such as vision, values, and purpose. They can encourage collaboration as well as competition and inspire as well as defend. In areas where more than one activity needs to occur simultaneously and interests conflict, directors may have an important role to play in determining where balances are struck. Their focus also needs to be on the context within which companies operate.

Understanding the international operating context

The induction of new directors is often light on understanding the changing nature of the wider external and international operating context, and the global risks and existential threats companies and their stakeholders face. The nature and number of challenges confronting boards raise questions about the continuing relevance of some of the inherited assumptions, practices and priorities directors may have encountered. So how might aspiring and potential directors, senior managers seeking chief officer positions, and those being considered for a directorial role, be better prepared for corporate survival and international activities?

The international arena poses a range of demanding tests, global risks and existential threats, including those that are geopolitical, philosophical, environmental and technological. Aspects of it are becoming increasingly fragile, fractured and fraught. Realities and underlying drivers and motives of actors are often concealed by misinformation and disinformation. Increased connectivity has led to new vulnerabilities and also dependency, which can be exploited by state and non-state actors for geopolitical purposes, resulting in multiple active and potential conflicts. The latter include disputes over territory, water, and the control of scarce resources, against the background of more overt antagonism and discord between political systems.

Democracies are under assault from authoritarian leaders, either from within as politicians with dictatorial leanings seek more control over domestic media and political systems, or externally from those with de facto totalitarian control for whom democracy is a threat. Targeted democracies are being regularly attacked by various statesponsored and/or other activities supported by authoritarian regimes. On some issues, people and organisations may have to collaborate with assailants and players they dislike or even loathe, while at the same time defending themselves and their beliefs and interests from ideological and other assaults.

What is sometimes either missing or insufficiently stressed during inductions is the freedom directors have to think, explore, rove, and question assumptions, business and operating models, priorities and relationships, and review, question, and redefine areas such as vision, values, and purpose.

Accommodating shifting alliances, groupings and perspectives

Many states belong to multiple groupings that include other parties that may have very different perspectives on certain issues. Such groupings can embrace states with conflicting views of the contemporary international system and their stakes in it. The current order embraces relatively new states that were formerly elements of empires that held sway for centuries over many other peoples. Successor states such as China and Russia are ruled by those who would like to reclaim past glories, if need be, by force as and when opportunity allows. They draw upon centuries of history to present alternative narratives and priorities.

Leaders of revisionist states may think their people are different and special. Their narratives may extend back centuries or millennia, before the current international order emerged, and draw upon civilisational, philosophical, and/or religious roots to portray the current system as an aberration or exception rather than as inevitable or a given. This may appeal to rulers of developing countries with less of a stake in the status quo and a preference for order and control rather than the uncertainty and challenge of democracy. They may consider keeping their options open and trying to keep in with everyone to be in their best interests.

While some appeal to past glories, religious fervour or democratic principles or values to hold their followers and supporters together, others are more pragmatic and flexible. They may be prepared to work with whoever they feel best serves their current interests. While good governance practice may stress the importance of integrity, principles, and values and the importance of compliance and assurance mechanisms to ensure adherence to laws, regulations, and codes, opinion polling suggests many people cooperate across ideological divisions on an issue-by-issue basis, according to situation, circumstances, and context.

Retaining a healthy scepticism Directors are regularly subjected to messages designed to promote, persuade, sell, or at minimum portray their sender, originator, or instigator in a favourable light. Other messages may be designed to conceal or confirm an existing opinion, perhaps driven by an algorithm, instinct, or prior knowledge to identify and reinforce an existing set of beliefs. Board members are also open to misinformation and disinformation designed to confuse, distract, sow doubt and division, undermine their self confidence, and encourage conformity. What can and should directors do to better understand the realities of what is happening internationally?

Surrounded by prevailing positive groupthink and colleagues eager to talk up prospects to keep others on side and retain their confidence and trust, busy individual directors sometimes lack the time to look at smaller print details below the headlines. An Indian board member whose colleagues are buoyed up by forecasts of their national economy overtaking those of Germany and Japan to become the third biggest in the world by 2027 may be reluctant to raise questions about the sustainability and inclusiveness of the growth projections. How feasible are they? Have certain constraints and vulnerabilities been considered?

Should more directors probe and seek clarity about the sustainability and inclusiveness of current growth models and projections for the world's most populous country? Global natural capital is not unlimited, and ecosystems are fragile. From the perspective of GDP per capita, that of India is a twentieth of that of Germany. Despite the growth of cities and large infrastructure developments, most people in India still live in rural areas, and many of those employed are in the agricultural sector. Against a background of multiple global risks and existential threats, when and how might they benefit more from the value being created?

Implications for director and board development

Much-sought-after postgraduate MBA programmes composed mainly of courses introducing individual functional disciplines such as marketing, finance, and HR that coincide with the departmental structure still found in many companies and the business strategy for pulling them together may still have a cache with certain employers. New recruits are likely to have some familiarity with the terminology used by the teams they join and may be able to add value at the early stages of a career. An MBA from a leading business school offering a programme that is regularly updated to reflect the evolving requirements of employers might still be welcomed.

However, many of the issues confronting contemporary boards cannot be easily delegated to a particular function. They may impact many, if not all, of them and require a multi-disciplinary approach and collaboration with other players to develop a collective as well as a corporate response. This may need to be done in an international context, as approaches, business and operating models, and technologies being adopted make it easier and quicker for companies to go global. The leading risks and existential threats faced by individuals, organisations, communities, and societies are also increasingly international.

The global geopolitical context in which many companies operate is characterised by conflicts of ambitions, ideologies, political systems, and values; unprovoked invasions; armed conflicts; trade wars; abuse of minorities; and active attempts to hack, steal IP, and undermine with misinformation and disinformation on an industrial scale. With population increases and growth ambitions exceeding the planet's resources, conflicts over borders, land, food, water, rare minerals, and other raw materials are set to increase as available natural capital is used up. Given incompatible ambitions, demands, and perspectives, the future looks bleak.

Preparing for international operations and survival

Many boards are ill-equipped to cope with contemporary realities. Some do not even acknowledge their limitations and requirements for members with an understanding of how to operate and survive in the international arena. Yet just as there are business schools, there are also schools and departments of international relations. Their courses and programmes are designed to equip people with an understanding of the major actors on the international stage, the rivalries, disputes, conflicts, and active and possible wars they are involved with or planning for, their alliances, and what holds these together or could undermine them.

For directors of companies that operate internationally, it may also be helpful to understand differing approaches to foreign policy making and/or ways of understanding what drives observed patterns of international behaviour, whether from a power politics or systems perspective. While a business studies degree or MBA can be helpful for a succession of functional and general management roles, an international relations degree and/or mid-career programme can be a useful precursor to joining the board of a company with international activities and aspirations to survive on the global stage and exert responsible leadership.

Sometimes there are complex issues and existential threats that cannot be resolved within a national context. Nor can they be delegated to management, as existing approaches, tools, processes, positions, and policies may be incapable of addressing them. Executives may also lack the authority to determine trade-offs if tackling some problems creates others and/or objectives conflict and interests diverge. In some situations, and with certain existential threats, all choices might incur costs. Only a board may be able to decide the level at which they are bearable and initiate frank conversations with stakeholders on the way ahead.

Confronting intractable global issues

Many complex and intractable issues are interrelated. They can only be addressed holistically at the board or equivalent level by asking questions, reframing problems, involving others, and through international cooperation and thinking longer-term. Knowledge of international relations can increase awareness of the fragility of existing arrangements, the drawbacks and dangers of different approaches to leadership, the disastrous consequences of making the wrong calls, the limits to what can often be accomplished, and the trade-offs and sacrifices that might have to be made to achieve better or worse outcomes.

Exposure to international affairs can also increase awareness of national and/or corporate objectives that may not be achievable without significant costs. It can lead to a greater appreciation of what might have to be moderated, scaled back, negotiated away, or given up. Courage may be needed to decide what and whose interests and priorities to abandon or override. Responsible boards engage with stakeholders to build a better understanding of the realities of situations and threats, align aspirations, and agree on common goals and corporate, collective, and sustainable trade-offs and actions to pursue a shared interest in survival.