Technology, Democracy and the End of Top-Down Leadership?

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A recent conversation with one of our members via the NACD LinkedIn Group has prompted me to think about how social media might affect the work of companies, the behavior of shareowners, and thus the leadership of boards of directors.

The conversation started like this: I attended an elearning conference and, inspired by some of the sessions, decided to solicit the views of NACD membership on how the emergence of social media might require new skills and mind-sets from those charged with company oversight: the board of directors.

I had only one response. “Neil” wrote: “Other than the notion that social media plays out quickly, are the oversight issues any different from what they were in the past? In the pre-social media world, companies I served had policies (and less formally, unwritten “understandings”) in place with respect to media/public communications and crisis management. Other than establishing a proper framework that includes setting policy and ensuring there’s a system of assuring (or at least optimizing) compliance and reviewing the policy/program from time to time as appropriate, I see actual oversight (i.e., implementing, monitoring and executing) as the realm of management.”

Hmmm. I had meant the general role of overseer, not just the oversight of social media initiatives. It’s also interesting that my correspondent immediately equated social media with crisis whereas my colleagues at the conference instead saw it as a valuable tool for collaboration. People talking to each other, sharing ideas and swapping stories can be, of course, both a boon and a threat. Perhaps what it threatens most is the long-established idea of control and command leadership, as practiced by so many boards and C-suites. Thus, if implementing, monitoring and executing business activities remain the responsibility of management, oversight of these activities today could, for good or ill, be provided directly by stakeholders, moving at a speed and with a force that is completely out of kilter with the careful deliberations of the best boards.

At the conference, presenter Phil Cowcill (follow him on Twitter here) shared the idea that “technology makes companies naked,” forcing a new transparency that private meetings and closely held notes could once have hidden. “Invite technology into the room,” he advised, “for you cannot keep it out. The value of collaboration is more valuable than the threat of the loss of control. Learn to treat your stakeholders as partners and you will benefit from knowing what they think and feel.” The baseline extrapolation for a board would be to make intelligent use of the social media environment to solicit relevant third-party views on business issues, winnowing worldwide views to supplement the information provided in the board book.

Bob Reisner, former vice president of strategic planning for the U.S. Postal Service, agrees that the speed and ease of information sharing and communications poses leadership challenges for boards and management teams. “Shareowners, customers, employees, suppliers and communities can now insist that they be included in guiding the shape of the future,” he said, “and that will either be frustrating and bewildering for those who seek to maintain control, or enriching and transformational for those who anticipate the wave and act.” Bob is writing a book—provisionally entitled Democratizing Transformation—and shared some of his thoughts when we talked recently in Washington, DC. “Constituents have access to their own collaborative tools, official or not,” he said. “When they engage the official media and have the same collaborative tools, boards will have to work out how and when to engage them in governing and shaping the future. The democratic impulse can’t be stopped or contained (without new costs), and so it will require leaders to define new rules and embrace a new, collaborative, open, transformational style. Increasing risk and uncertainty has raised constituent activism, and many traditional constituents (and some new ones) will view the future as too important to trust to management [and boards] alone”

You may still receive the information that informs your board decisions via the board book, the newspaper delivered daily to the front door, and your deep experience of the industry and company you serve. You may still cherish your leather seat at the beautiful board table, and the tenor of the high-level discussions that take place behind closed doors. And you may be right that your board has the people, commitment and brain power to continue to act as a strategic asset to the company, and as an effective monitor of management. But keep an eye on the social media tsunami, and follow this drill to ride the giant wave:

Bring stakeowners and shareowners into decision making—solicit information, listen, learn and act, and encourage company managers to do the same. Support company initiatives that encourage collaborative problem-solving at all levels of the organization.

And above all, don’t leave it too late.

4 Comments

  • “Neil’s” comments reflect one of the biggest challenges we face with social media today: an (almost complete) lack of understanding of what social media is and what it means for organizations. Although this lack of understanding impacts people at all ranks in organizations, it is particularly problematic among the leadership ranks. Both BoD members and executives in publicly-held enterprises have a fiduciary responsibility to their shareholders to be aware of significant trends that can potentially impact them. Not only is social media one of these trends, it also offers a set of enabling technologies for monitoring and responding to trends in other areas. We need to better educate leaders so they can make social media a strategic priority and provide the necessary resources to their organizations and employees. And even if they’re not intimately involved in the details of those efforts, Directors should understand the technologies and their implications sufficiently to provide oversight and accountability of the executive team.

    I’ve included this item in a Social Media in Organizations (SMinOrgs) S.M.A.R.T. News Digest focused on “social leadership.” Here’s a link to it: http://www.sminorgs.net/2010/12/smart-news-social-leadership-i.html.

    Thanks!

    Courtney Hunt
    Founder, SMinOrgs Community

  • Fay Feeney says:

    Liz thanks for this post. You did a great job explaining what happens when technology meets human nature.

    Jeff Weiner, CEO of LinkedIn calls Technology, Democracy and the End of Top-Down Leadership the “talent economy”:

    “Where it’s not just about the information you know, but about who you know and the information they possess.

    Knowledge is now evolving so quickly, I think it’s equally, if not more important, to have access and be connected to the people who have the knowledge you most need to get your job done.

    Talent is going to be driving where value gets created.”

    We’re all early in watching how this movement is transforming our lives. Directors you’ll be glad you joined in. It’s easy: it starts with listening to stakeowners and shareowners.

    Fay Feeney, CEO Risk for Good
    On Twitter @fayfeeney

  • Each day there is new evidence that the Internet era is leading our traditional organizations, the pillars of our economy, into new, uncharted territory. A recent book provides a marker showing how far we have traveled in a little more than a decade. In their book Macrowikinomics: Rebooting Business and the World, Don Tapscott & co-author Anthony D. Williams note that Internet technologies have dramatically lowered the cost of mass collaboration. A combination of technology and public policy (Sarbannes Oxley & Dodd Frank, for example) have created an energized, empowered set of constituencies with interests in transparent enterprises. Compare this with the traditional stories of the visionary leader and the small band of followers who dream up transformation and push it through the organization.