Boards Evolve Beyond Compliance to Drive Innovation and Growth
New Delhi - In a significant shift from their traditional roles, corporate boards are now seen as critical drivers of innovation and strategic decision-making, according to a recent survey by global search firm Executive Access, commissioned by The Times of India.
The survey, which included insights from 120 board members, highlights a transformation in boardroom dynamics over the past five years. Previously focused primarily on compliance, boards are now actively engaging in discussions that foster innovative thinking and strategic foresight.
Ronesh Puri, Managing Director of Executive Access (India), commented, "The survey indicates that boards today are more evolved and have moved beyond corporate governance. A well-structured, business-savvy board can significantly drive growth."
This evolution is partly driven by the recognition of the need for meritocracy in selecting board members, especially in today's volatile business environment. Boards are now looking for individuals with substantial intellectual and professional breadth to navigate the complexities of modern business.
Harsh Goenka, Chairman of RPG Enterprises, emphasized the transformation, stating, "In the past, corporate boards were often a mere legal formality, convened to tick the compliance box. Today, they’ve transformed into a powerful strategic necessity, pivotal in defining a company’s trajectory."
The survey also notes a change in how leadership teams interact with boards. "Leadership teams are no longer just seeking approval; they’re actively seeking guidance and insights from the board. Boards are expected to help open new doors, leverage their networks, and provide strategic connections," Goenka added.
In the context of the BANI (Brittle, Anxious, Nonlinear, and Incomprehensible) world, the role of boards has become even more crucial in preparing businesses for future challenges. The advent of AI and the potential for disruptive innovation have increased the stakes, with board members focusing more on business continuity and value creation.
Nikhil Ojha, Partner at Bain & Co and head of the strategy practice for Asia Pacific, noted, "Many board members now recognize their fiduciary responsibility not just in terms of defensive 'do no harm' but also as stewards of shareholder value creation. They are holding management accountable towards driving full potential from the core business and growing new Engine-2 businesses."
Moreover, the current economic climate has shifted priorities towards profitability over mere topline growth, a lesson learned from high-profile cases like Byju’s and Paytm, which faced setbacks for focusing excessively on expansion.
Siraj Chaudhry, who serves on the boards of Jubilant Ingrevia and Carrier Air Conditioning, believes this transformation aligns with broader changes at India Inc. Meanwhile, Daljit Singh, former President of Fortis Healthcare, highlighted the critical role of the Audit and Risk Management Committee in ensuring alignment with key management personnel.
This evolving role of boards signifies a proactive approach towards governance, innovation, and strategic management, adapting to the fast-paced and unpredictable business landscape.