Why Communication and Risk-Taking are a Boardroom’s Strongest Tools — In conversation with Alexandra M. Hughes
Corporate boards maintain the mission and values of a company, balancing interests between various stakeholders and making sure that the company grows and profits. Risks are often viewed by boards as potential drains of money, time, and effort, but how can a company grow without risk?
We’re in conversation with Alex Hughes, a strategic executive navigator who brings 20 years of regulatory and communication experience in government. A highly courageous, inclusive, and dynamic motivator that gives everyone a voice, Alex has the sharp capability to align various stakeholders and motivate people toward a certain goal.
You’ve emphasized the importance of having a strategic, pragmatic risk-taker on a board of directors. From your experience, how has your strategic risk-taking approach caused growth in a company’s decision-making and overall performance?
A successful board is one that effectively drives company growth and weaves together the mission and values of the company in order to form a cohesive strategy that everyone can understand. In order to do so effectively, it is crucial for everyone on the board to remain on the same page.
I emphasize clear communication on any board. Everyone who sits on the board needs to understand what the focus of, say, the finance committee is — what they do, why they do it, and the principles and lens they use to make decisions. By understanding how each part of the board functions and what its current concerns are, board members can better see how they and their committee(s) can contribute to the success of the board as a whole. Decisions can be made more efficiently because we don’t have to spend precious time getting everyone caught up to speed, and everyone can have full context when the board decides to take a risk.
Boards are, more often than not, risk-averse. Still, it’s important to have a strategic risk-taker on the board because growth for individual organizations in the private sector requires a huge amount of risk. The question isn’t ‘Do we want to take risks?’; it’s ‘What’s the right risk? Does the risk make sense in the context of the broader vision and strategy for the company?’
If companies are completely risk-averse, they’re going to fail. There are many examples of companies that have done the same thing for 50 years, but now they’re not evolving and taking risks to continue to be competitive in a changing national and global market. If you’re not open to thinking differently about the company’s vision and trajectory, you will fail. You have to be willing to be methodical about taking risks. You have to be willing to think about cross-pollinating, driving more efficiency, and adding to the portfolio something that you historically haven’t had.
On one board I was on, we were considering launching a completely new product line. It was outside of our core business, but it was a market that we were interested in expanding into. There was a lot of risk involved in launching the new product line, but I believed that it was the right move for the company and argued that the new product line would allow us to reach a new customer base and generate new revenue streams. The board ultimately agreed to launch the new product line, and it was a huge success, quickly becoming one of our most profitable businesses. Of course, not every risk a board takes will be a huge success; however, each risk will teach the board more about the intricacies of your customer base and business as a whole.
Thanks for sharing, Alex.
Connect with Alex on LinkedIn.
