Businesses cannot afford to be short-sighted if they are to meet the challenges and opportunities of the next decade according to a new report from Grant Thornton.

The warning comes despite research confirming a widespread commitment among today’s business leaders to implementing effective corporate governance practices. The report finds that simply focusing on the issues of today will not be enough, and that actively looking ahead and spotting the challenges and opportunities of tomorrow is vital to ensuring the companies of the future survive, adapt and ultimately thrive.

Grant Thornton’s Boards of the future: steering organisations to thrive report highlights the findings of recent research and finds that businesses are under pressure to manage a complex blend of forces including technological advances, regulation, demographic changes and globalisation, to ensure they are fit for purpose and able to compete. However, it also questions whether boards are moving quickly enough and uncovers two burning priorities for boards and shareholders worldwide which need addressing as a matter of urgency: ensuring diversity of thinking and boosting digital capability.

Richard Ratcliffe, a director at Grant Thornton in the Isle of Man, said: ‘This detailed report has been compiled based on global research and provides a valuable insight into the need for businesses to be looking ahead to identify challenges and opportunities and prepare for both.

‘The findings are very relevant to Isle of Man businesses, especially those which want to compete on an equal footing with companies around the world. Island firms simply cannot afford to be short-sighted and focused on today and tomorrow if they want to compete; they must be looking much further ahead and ready to deal with whatever that brings.

‘The report identifies greater diversity as being key to understanding and preparing for the next 10 years, as well as the need to rapidly improve digital capability to prosper. By taking the report’s recommendations on board, Island businesses can ensure they are looking to the future and prepared to meet the challenges and take advantage of the opportunities the next decade will bring.’

The report identifies boosting diversity as a key challenge for boards over the next 10 years; 88% of respondents to its International Business Report recognise their board needs to do more to encourage greater diversity. However, the report also finds that diversity needs to go beyond gender identifying a need for diversity of experience, which is arguably harder to measure than gender or ethnic diversity but is critical to encourage better decision-making.

The second key challenge identified is boosting digital capability, but evidence suggests there is a way to go until this becomes a reality. Only 25% of business leaders said that digital expertise is an area where their board should increase focus over the next 10 years.

Nick Jeffrey, director for public policy at Grant Thornton, said: ‘The demands on boards and on businesses are rapidly changing, which is why compliance and risk management should always be at the heart of good business management. But rather than simply fighting today’s fires, good governance must also be proactive, spotting and responding to challenges and opportunities ahead.

‘Tackling both digital and diversity means thinking outside traditional spheres and engaging with people who can bring something new to the table. That can be achieved by setting up new cells of activity in hubs of innovation like Palo Alto or London’s “Silicon Roundabout”, but it can and must also involve better signposting – ensuring opportunities for all employees to become board members, rather than just a few. This will mean that boards of the future are made up of the best people for the job. To do this though, the net needs to be cast as widely as possible.’

He added: ‘Those with responsibility for driving today’s companies forward – boards and shareholders alike - need to be focused not just on immediate issues but the future too. They can’t afford to take their eyes off the challenges and opportunities coming into view. Or worse, not see them coming.’

Grant Thornton’s Boards of the future: steering organisations to thrive report makes these key recommendations:

1. Diversity
• Map the challenges you think you will face over the next decade, map the skills you think you will need to address them and identify the gaps you need to fill. But make sure you have a diverse group to do this effectively, to reduce the list of things you don’t know you don’t know.
• Prioritise the forms of diversity which you need to build on your board in order to reflect your organisational culture, your markets and your customers.

2. Digital
• If there is no cyber strategy currently in place, waste no time in developing one. Then, if it isn’t already, make cyber strategy a standing agenda item for every single board meeting. Wave after wave of cyber-crime will become the norm, and staying one step ahead of the criminals will be a necessity.
• Collaborate. Establish cells in hotbeds of activity outside of your day-to-day activities. Don’t be afraid to admit there are things you don’t know, and that there are some challenges and opportunities you won’t see coming. Make the most of your supply chains to garner ideas and nurture the potential stars of the future. Think outside traditional spheres when it comes to digital threats and opportunities.

3. Signposting
• Make it easier for the best and brightest talent from across your organisation to make it to the top. Use a board skills matrix, succession plans, mentoring and shadowing opportunities, and supply chains to boost signposting.
• Policymakers: embrace innovative initiatives. Encourage the cross-fertilisation of ideas across industries and borders.

You can read the report at www.grantthornton.global/en/insights/articles/corporate-governance-2016/ 

Photo - Richard Ratcliffe.