What makes a great board great in emerging markets
In the dynamic and often unpredictable environment of emerging markets, the difference between a good company and a great one often hinges on its Board of Directors.
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But what exactly makes a board in these markets stand out? Let’s unpack this in plain, everyday English.
Understanding the unique challenges of emerging markets
First, it’s crucial to recognise the special challenges emerging markets pose. These can include political instability, regulatory uncertainties, economic volatility, and fast-changing consumer behaviors.
Boards in these markets need to be adept at navigating these complexities.
1. Deep market insight and local knowledge
A great board in an emerging market isn't just a group of top executives from other parts of the world. They need members who have deep insights into local market dynamics.
This means understanding not just the economics, but also the culture, the politics, the legal environment, and the social norms of the region. It’s like having a local guide in a foreign city – they know the best routes and the areas to avoid.
2. Agility and flexibility
Markets that are emerging or developing can change rapidly. A great board in these environments needs to be agile – able to respond quickly to market changes, regulatory shifts, and new competitive challenges.
This agility is like being a skilled surfer, able to ride the waves no matter how unpredictable they get.
3. Strong risk management
With higher potential rewards in emerging markets often come higher risks. Great boards in these areas excel in risk management.
They can identify potential risks, from financial instability to political upheaval, and have strategies in place to mitigate them. Think of this as having a great weather app – it helps you prepare for storms before they hit.
4. Ethical leadership and transparency
In many emerging markets, issues like corruption and lack of transparency can be major hurdles. A great board champions ethical leadership and transparent practices, setting a tone of integrity for the entire organization.
This approach builds trust with investors, regulators, and the public. It’s like being the one clean player in a muddy game – it sets you apart and earns respect.
5. Embracing technology and innovation
Emerging markets are often at the forefront of technological and digital innovation, partly because there’s less legacy infrastructure. Great boards in these markets are not just open to new technologies; they actively embrace them.
They’re constantly looking for ways tech can improve their business, be it through better customer service, more efficient operations, or new product offerings.
This is akin to always having the latest smartphone – it gives you an edge in efficiency and connectivity.
6. Strong stakeholder relationships
In emerging markets, building and maintaining strong relationships with a range of stakeholders – from government officials to local communities – is crucial.
Great boards understand the value of these relationships and work actively to foster them. It’s like being a good neighbor – knowing the people around you and maintaining good relationships can be invaluable.
7. Commitment to sustainability and social responsibility
Emerging markets are often more directly impacted by issues like environmental change and social inequality. Great boards recognize their role in addressing these challenges.
They integrate sustainability and social responsibility into their business strategies, recognizing that what’s good for society can also be good for business. This is like planting a garden in your backyard – it beautifies the space, but also supports the local ecosystem.
8. Building a diverse and inclusive board
Diversity in the boardroom – in terms of gender, ethnicity, age, and professional background – brings different perspectives and can lead to better decision-making. In the context of emerging markets, this diversity is even more critical.
It’s like having a multi-cuisine kitchen – the variety adds richness and flavor.
9. Focused yet flexible strategy development
While it’s important to have a focused strategy, great boards in emerging markets also maintain flexibility. They set clear goals but are ready to pivot or adjust their strategies as the market evolves.
This is like being a good chess player – having a strategy but being ready to adapt as the game unfolds.
10. Continuous learning and adaptation
Finally, the best boards in these markets are always learning. They stay updated on global trends and best practices and are willing to adapt these to their local context. It’s like being a student of life – always curious, always learning, and always growing.
Conclusion
In the rapidly shifting landscape of emerging markets, a great board is characterized by a deep understanding of the local environment, agility, strong risk management, ethical leadership, technological savvy, solid stakeholder relationships, commitment to sustainability, diversity, strategic focus with flexibility, and a culture of continuous learning.
These boards are the navigators in the exciting yet challenging journey of emerging markets.
They don’t just steer their companies through the here and now; they set a course for long-term success and sustainability.
In essence, these boards don’t just adapt to change; they anticipate and shape it, creating a ripple effect that extends far beyond the boardroom.
The writer is a member of the Institute of Directors, Ghana and serves on a number of boards. He is an independent Internal Audit Advisor, Enterprise Risk Management Consultant, Board Consultant, and professional trainer.
He is the founder and Chief Operating Officer of Redric Consulting, your trusted partner for comprehensive training and consulting services in the fields of Governance, Risk, and Compliance (GRC).
With a proven track record in Board Consulting, Internal Audit, Internal Control, Compliance, Fraud Risk Management, and Cybersecurity, Redric Consulting empowers your organization and ensures its success.
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