How to build a modern and value-creating board
Although diversity and different perspectives are key to building and sustaining a value-creating board, there is one thing all board members must have in common.
– "Today, decisions are made close to the customer, and it turns the whole pyramid upside down. It is no longer the board that holds the greatest power. Therefore, it is no longer primarily a control body, but should be more of a resource body," says Reynir Indahl, founder and Managing Partner at Summa Equity.
Reynir is experiencing a shift from a traditional hierarchical organizational structure to a model that places greater emphasis on self-management. This means that there are slightly different requirements for how the board should contribute to creating value, and presupposes that you work in a slightly different way to before:
Diversity as a goal
Board diversity is a key priority for us across all the companies in which Summa invests:
– We work towards having diversity on our boards, not only in terms of gender balance, but also age, competence, and background, says Reynir.
The motivation behind diversity is to ensure that you get more perspectives when tackling a challenge, solving a problem, or seizing an opportunity, so as to respond more effectively to a rapidly changing world.
– An economist will often reason differently to a historian, women may have a different “mindset” than men, and younger people often choose a different approach to older ones. Also, younger board members are often more “in touch” with certain trends, including technology, and social media, while older ones have more experience. The combination can be very effective and inspiring, Reynir believes.
A creative space for workshops and discussions
Although knowledge about each industry is important, Summa has a desire to break with the traditional in the search for board members with the right competence to create value for our companies.
This is also reflected in the board’s role, the way they work, and, not least, in board meetings.
– We have a fixed agenda at all board meetings, where we report on results and formalities. Also, in each board meeting, we take a deep dive into an important area, such as organizational strategy, or how to integrate sustainability into operational decisions, says Reynir.
– Suddenly the board meeting also becomes a workshop and a discussion forum, and we often bring non-board members in to provide additional insights and encourage a good discussion. The goal is for both the board and management to leave the meeting feeling that the time was well spent and that it gave them more energy. If they feel this way, we have succeeded.
Sustainability at the top of the agenda
Last but not least, Summa values board members with expertise in sustainability, as this ensures that sustainability is integrated into companies’ strategic plans and day-to-day management and decisions. This requirement comes with one caveat, however:
– "Many companies state that they want to hire sustainability experts for the board, but often the competence they bring with them is reporting-focused, and not strategy and management-oriented. In contrast, if the company has management that works actively with sustainability, then you do not necessarily need sustainability expertise at the board level. What you need are value creators who see the big picture, who know the technical and understand what is happening, how things are connected, and what it means for the company as a whole," Reynir explains.
Builds a bridge between Summa, the board, and management
When Summa joins a new company, we, therefore, arrange a kickoff with as many employees as possible, so that we are visible to the whole organization and not just the board. This enables us to get buy-in from all stakeholders, so as to effectively embed sustainability into the whole organization.
Because there is one thing that all board members, management and Summates must have in common: purpose.
– Everyone must be concerned with our “purpose”. Summa invests in companies that work to solve global challenges, so all members of all boards must want to be part of such a journey – and buy into our philosophy.
To ensure that the entire company is united behind the same vision, the same values, and the same “purpose”, it is important to build a solid bridge between the owners, the board, and the administration.