The future boardroom requires a move from a “tick box rules based situation” to one that is “outcomes based” and driven by “original intellectual thinking”. This means boards should focus on what is in the best long-term interest and health of the company, rather than simply adhering to a rigid set of rules. The company should be viewed as an “incapacitated person,” and directors act as its “guardian,” making decisions in the best interest of its assets and business affairs, much like a guardian would for a child.

The role of a director is best understood as a “guardian” rather than simply a “steward”. While a steward performs administrative functions, a guardian not only administers but also makes critical decisions for the entity they oversee. Applying this to a company, which is seen as an “incapacitated person,” the directors become the company’s “heart, mind, and conscience,” actively making decisions for its long-term well-being. This guardianship role includes the duties of “good faith, loyalty,” and “care, skill, and diligence”.

A “company-centric” approach is crucial because it is an “inclusive concept” that ultimately benefits all stakeholders. By focusing on the “best long-term interest of the health of the company,” directors inherently consider the well-being of stakeholders. This contrasts with the historical focus on “the primacy of the shareholder,” which led to negative consequences such as the degradation of the environment and adverse impacts on society. Prioritising the company’s health ensures a more sustainable and balanced outcome for everyone connected to the business.

Technology, especially AI, is seen as a “major enabler” for the future boardroom, facilitating better decision-making and integrated reporting. However, it also presents significant risks due to the lack of regulation and potential biases in the data AI is trained on. Directors have a duty to the company to “interrogate” the information provided by AI and not “blindly follow” it. Relying solely on AI without original intellectual thinking could be detrimental to the company’s long-term health and potentially expose directors to liability if decisions made based on flawed AI input cause harm.

The “business judgment rule” is a legal principle that protects honest directors from liability for business decisions that, with hindsight, turn out to be harmful, provided certain criteria are met. These criteria include acting without conflict of interest, having all relevant facts at the time of the decision, and making a decision that was “a rational business decision at that time.” In the future, having “all the facts” will likely include leveraging technology like AI for research. Therefore, to rely on the business judgment rule, directors will need to demonstrate they used available technology, such as consulting AI for information, and properly interrogated the results before making their decision.

Navigating the current turbulent environment requires boards to embrace “integrated thinking” and an “inclusive mindset”. This means moving beyond siloed thinking and understanding how various factors like economy, society, and environment are interconnected and impact enterprise value. While there is a “compliance panic” around sustainability reporting, boards need to focus on embedding sustainable value creation into their core strategy. Regarding global issues like DEI, boards of multinational companies must respect local contexts while upholding the overarching values and culture of the group. The key is to foster a culture where directors serve the company’s long-term sustainability, considering diverse perspectives and global concerns.

The purpose of the board is to function as a “unified, collective mind” that serves the company’s long-term health and sustainability. This involves defining the “purpose of the business,” identifying “value drivers,” and understanding “key risk indicators” and “key performance indicators.” The purpose of individual board members is to actively “serve” the company by contributing their insights, asking critical questions, and ensuring they understand the subject matter. Boards should move away from simply fulfilling a compliance role and instead focus on strategic thinking and ensuring all directors are engaged and contributing to informed decision-making.

Recruiting effective board members for the future requires moving beyond traditional networks and focusing on individuals who are curious, possess critical thinking skills, and are committed to continuous learning. The era of the “Gin and Tonic brigade,” where board appointments were sinecures based on connections, is over. Future directors must be willing to actively participate, ask “all the right questions,” and collaborate as a collective. Essential qualities include “conscience, compassion, and courage,” as directors must be willing to take informed risks and make difficult decisions in the company’s best interest, even in uncertain times. Fostering a culture of open questioning and ensuring no questions go unanswered are crucial practices for effective board governance.