Research Dynamic Board Capabilities
Boards of directors play a crucial role in guiding companies towards long-term success, ensuring they remain adaptable and competitive in rapidly changing markets influenced by geopolitics, sustainability concerns including climate change, and the swift advancement of AI. This requires balancing new opportunities with optimizing current operations, supported by robust dynamic capabilities.
The peer-reviewed academic paper, “Board Dynamic Capabilities: Developing Board Practices that Impact Corporate Renewal and Performance,” is based on previous research OSIRIS and SISU Boards and is published in a special issue of the Journal of Risk Management focused on Corporate Governance and the Board.
The research highlights the essential dynamic capabilities that boards must develop and implement, showing for the first time their direct correlation with improved corporate outcomes. The paper emphasizes the critical role of boards in driving corporate renewal and superior performance.
The research reveals that boards must engage in Sensing, Pivoting, and Aligning to govern effectively and support sustainable value creation amid market uncertainties.
– Sensing: Involves the board’s proactive role in identifying potential opportunities and threats, both internally and externally.
– Pivoting: Entails strategic guidance by the board to navigate through these insights, exploring avenues for innovation and strategic shifts.
– Aligning: Critical for the practical application of these insights, requiring adjustments in the organization, its resources, and strategies.
Empirical evidence from interviews, workshops, and surveys among board members validates the importance of these dynamic capabilities in fostering innovation and economic performance. While Sensing and Pivoting enhance innovation, their immediate impact on economic performance may be negative without the integrative process of Aligning, which is essential for effective execution and positive economic returns.
Our findings advocate for boards to adeptly harness these capabilities to meet their governance responsibilities more efficiently, contributing to enduring corporate governance, innovation, and positive firm results.
This research was conducted over multiple years in OSIRIS and SISU Boards in collaboration with Professor Ludo van Der Heyden of INSEAD, Professor Mats Magnusson and Doctoral Student Henrik Forzelius from the Royal Institute of Technology, Affiliated Researcher Fernanda Torre (CEO of Next Agent, Partner at Digoshen, and Operations Director at Boards Impact Forum), and Liselotte Engstam (Affiliated Researcher, Chair at Digoshen, and Chair at Boards Impact Forum).
We extend our deep gratitude to David R. Koenig, President and CEO of DCRO Institute, and Julie Kerry, Publisher at Henry Stewart Publications, for inviting us to contribute.
Link to the paper HERE