Thinking outside the governance box to the board of the future: Exploring “fit-for-future-purpose” governance operating models

Abstract

The research aim was to explore whether the dominant style of board model used in Australia was reaching its use-by-date and if so, what more future-ready model/s or features could be considered. This paper represents original thinking and research to generate a new set of “working hypotheses”. We have followed a “grounded research” (an inductive methodology) to produce an emergent theory. We have used semi-structured and qualitative interviewing techniques. The research has generated an initial “theory” and point of view that is directional (not empirical). The focus of the study was on board operating models of the future — taking a much longer-term perspective, more specifically to identify and postulate what “fit-for-purpose” board operating models could look like in 2030 and beyond. By examining possible solutions through an operating model lens, the study has taken a system’s view of boards, going well beyond the constraints of current siloed, domain-specific research. The findings clearly point to a model that for larger and/or more complicated enterprises is under considerable strain. It is fast approaching its use-by-date, especially in the light of 1) a shift toward stakeholder capitalism and 2) the need to operate effectively in faster-moving, less predictable, and significantly more complicated environments than the existing board models were designed for. Having set the context for future governance, the recommendations focus on six elements of board operating models, board structures, key governance processes, management systems, and frameworks, e.g., board charters, technology/systems, participants and skills, and ways of working. The relevance of the paper is that at a time when directors are doubling down on what needs to be done, there is a general absence of consideration of 1) what “fit-for-purpose” governance should be and 2) whether the governance system as we know it in Australia is approaching a breaking point for some major enterprises (not all companies).