The world is moving at breakneck speed, and a new study by Corporate Board Member and the EY Americas Center for Board Matters reveals just how dramatically this pace of change is reshaping corporate governance.
In new research conducted earlier this year among nearly 200 public company board members, nearly three-quarters of directors say their corporate strategy is in constant flux, with six out of 10 saying they expect their carefully crafted plans to need complete overhaul within just 12 to 18 months.
This finding signals a fundamental shift in how boards must approach strategic oversight, with continuous strategic vigilance and adaptive governance. A closer look at what’s changing.
THE NEW STRATEGIC REALITY
The research reveals a changing dynamic in boardroom decision-making. While boards and management teams report strong alignment on current risks—with 87 percent of directors believing they see eye-to-eye with management on risk assessment—this consensus may be masking a more troubling issue: the potential for groupthink in an era when diverse perspectives are more critical than ever.
“In today’s dynamic global market, boards cannot afford to be complacent about organizational strategy,” says Jamie Smith, director with the EY Center for Board Matters and a partner in this research. “This environment demands that boards use their experience and long-term perspective to elevate management’s view and help identify opportunities for action.”
The implications are profound: When strategy must constantly evolve, boards can’t afford to wait for formal strategy sessions that occur once or twice a year. Instead, strategic thinking must be embedded in every board conversation, woven into the fabric of ongoing oversight rather than compartmentalized into dedicated planning retreats.
THE ACTION GAP
Another revealing finding from this research centers on risk appetite and execution. While 91 percent of directors believe they clearly communicate risk appetite to management and 80 percent report that management understands it, a third say they would actually like management to take more risks, to act more aggressively in alignment with the board’s stated risk appetite.
The research suggests that this cautious approach from management stems from several barriers. Beyond external disruptions in their industry (cited by 50 percent of directors) and broader economic disruption (45 percent), management’s focus on short-term financial performance creates substantial challenges to building long-term resilience, a concern raised by a third of the directors polled.
So, how do leading boards bridge this action gap? The research points to several critical factors, with director skills and background expertise topping the list at 72 percent.
But experience alone isn’t enough. The most effective boards create what the research identifies as a “boardroom culture of constructive disagreement”, cited by 55 percent of directors as crucial to their effectiveness. This culture manifests in four key conversations that leading boards engage in throughout the year, rather than waiting for formal strategy sessions:
- Building genuine consensus on strategic resilience by ensuring all directors share a common understanding of the company’s current state and readiness. This isn’t about achieving agreement but about achieving clarity on what resilience means for their specific organization.
- Evaluating strategy discussions regularly rather than annually, with boards helping management identify the right opportunities for action and evaluate the costs of inaction.
- Identifying single points of failure and clearly articulating risk tolerance for each, helping management prioritize where to allocate resources for both resilience and growth.
- Understanding the critical assumptions underlying strategy and preparing for those assumptions to change, creating early warning systems and response strategies.
To learn more about the research findings and how boards are faming these conversations, as well as practical frameworks for improving strategic oversight, download the report.
