Boardroom diversity just like ESG is the flavour of the month in corporate circles.
There are many noble initiatives and much-needed progress is being made.
However, just like ESG is increasingly prone to greenwashing syndrome, diversity has to be more than just a box-ticking exercise. It must go deeper than crude ratios of gender and ethnicity.
Crucial to Board effectiveness, is a diversity of skillsets to reduce groupthink.
After all, how much more diverse would a Board become if the women and ethnic minorities they add have gone through the same upbringing, education, and work experiences as their white male counterparts.
Diversity of mindset would have stopped own goal of European Super League
Probably a little but not enough. Looking at a broader set of skillsets significantly increases the talent pool of potential ethnic minority and women candidates given how few have been in CEO and CFO positions of large companies.
There is no better example of groupthink in the Boardroom than the Directors at GE in the US.
A country club-style approach failed to engender long-term thinking, innovation, and holding management accountable.
The GE Board was too large but also highly qualified by traditional metrics. It was crammed with distinguished CEOs, CFOs and academics. It also included some diversity in terms of gender and ethnicity.
Rapidly changing and converging industries necessities Boards evolve their skillsets from general management and finance to incorporate a wider set of skills.
The shift from shareholder focus to looking after all stakeholders also necessitates a different set of skills.
Individual companies are keen to promote the changing skill sets of their boards to be able to address ESG related themes.
However, dig a little deeper and we find this has been focused on climate change and net zero commitments.
Progress in other parts of the ESG equation has been more patchy as illustrated by the concerns around working conditions in the supply chain of firms.
And what about the mighty JP Morgan backing the short-lived European Super League. Surely diversity of mindset would have stopped such an obvious own goal!
The pace of technology change is making business model questions more existential than ever before. Former CEO, CFO’s and finance leaders that sit on Boards provide valuable insights.
But are they too far from the coalface to ask all the appropriate questions around technology-enabled platforms, new product development, data, artificial intelligence, or disruption?
Having more successful entrepreneurs and those with relevant experience around building technology products and platforms is increasingly important.
Great founders from Steve Jobs to Jeff Bezos to Elon Musk lead customers and shareholders rather than wait for the market structure to change. Most boards will not be blessed with such visionary CEOs so there must be a more active role for Board Directors to take accountability for innovation.
Entrepreneurs are not naturally attracted to the idea of sitting through long Board meetings but there must be ways to attract them.
A good example is how Jack Dorsey recently took his friendship with Jay-Z into the Boardroom. Time will tell how involved Jay-Z gets but it illustrates the need to think creatively about who you add to Boards and why.
Rupak Ghose is a fintech board advisor, and former head of corporate strategy ICAP/NEX