The business operating context has often been described as volatile since the 2008 global recession. Yet, since the Covid-19 pandemic, business leaders have experienced a level of turbulence unseen in the era of modern business. The recent Strategic Foresight Report published by the EU in September identifies seven dominant trends that coincide to shape this environment, ranging from a changing global order, accelerated climate change impacts, to technological change through AI.

What’s clear is how interconnected these challenges are, and their scale and urgency mean that continuing with ‘business as usual’ is no longer viable — and we are already seeing evidence of this. For example, in many of the countries experiencing increasing extreme weather impacts, home insurance companies are adopting additional measures, from increasing premiums to imposing conditions or exclusions on some forms of weather damage. Yet, an increasing number of insurance companies are filing for bankruptcy; as one industry body observed, “climate risk appears to be increasing solvency risk.”

Compete and retreat

These intertwined challenges require entrepreneurship, innovation and adaptation at an astounding pace and scale. Businesses are naturally good at leveraging all three to create and seize opportunities.

However, research by Forum for the Future on the global trends emerging post-Covid shows how, during turbulent times, it’s natural and understandable for businesses to ‘compete and retreat’. This is characterised by a mindset rooted in protectionism and parochialism, making any kind of change appear even more daunting than it otherwise might be. The imperative for financial success becomes stronger and there is less forgiveness for initiatives that are perceived as failures, increasing pressure on boards and those responsible for implementing change and driving performance.

Breaking down the transformation imperative

While full-scale transformation may seem an impossible task in such an environment, there are still ways to implement changes that can create significant business value. Drawing from Forum for the Future’s work with businesses on their transformational strategies, businesses can make changes that, though smaller, are far from piecemeal and enable the creation of new value streams. The board is key to this, with its ability to enable and unlock what seem like small changes but are ones that significantly enhance the business’s capacity to create value.

1. Fostering a mindset shift: How do we see the world? This informs our actions, decisions, and the way we organise ourselves, including our businesses. A business’s culture, structure and policies, along with the actions of its leaders, combine to create a dominant mindset that often drives behaviour. Employees are likely to be influenced by this dominant mindset, even if, individually, they hold different or conflicting views. In such times, boards should encourage a mindset shift from a narrow focus on cost reduction to a broader view towards potential and identifying solutions.

2. Building the medium and long-term into immediate decisions: A volatile operating environment can often, despite best intentions, result in making decisions that are effective in the immediate term, but create inadvertent impacts or cause challenges in the medium or longer-term. Regardless of the nature of the decision, exploring the potential medium to long-term impacts and inadvertent impacts can support more informed strategic direction. This might mean setting aside time in board meetings to review decisions made so that their implications are considered—and, in some cases, can be reversed early to avoid such consequences. This could also be done through governance practices, such as through a decision-making framework or embedded within assessment criteria for decision-making.

3. Elevate one or two challenges to board level, for example, ‘extreme weather’ or ‘future generations’: Several companies have legally given some of their key challenges or issues a seat at the board table as a move to increase the potential value of their decision-making. For instance, Faith in Nature and House of Hackney, a natural beauty brand and an interiors, fashion and lifestyle brand respectively, have both appointed ‘nature’ to their boards of directors. House of Hackney has also given ‘future generations’ a seat at the table—a move that stands out when considering that only 5% of directors in S&P 500 companies are under 50. Key to this approach is that these companies have chosen issues to be on their boards based on what’s most relevant to their businesses; a key issue that enhances decision-making for one company may not for another.

In practice, this non-partisan and independent individual has a voice—and critically, a vote—that represents the interests of the issue rather than the individual’s own views. When each company makes strategic decisions, they always consider the impact of their approach on that issue. Decision-making is enhanced when a range of voices are included. This approach can also reduce key risks, such as choosing to invest in regenerative agriculture stemming from nature’s interests, avoiding exposure to raw material price volatility.

4. Frequently seek inspiration and capacity building: Invite both specialists and generalists with different perspectives to share insights and create a safe space to share ideas and explore potential possibilities. A mix of internal and external speakers, particularly those who might not normally present at a board meeting, can unlock unexpected insights that better inform strategic planning.

5. Listen to the silence: The loudest voices tend to be dominant in discussions. Stopping to consider where the silence is can surface perspectives and insights that boards were unaware of. Consider what internal and external stakeholder group(s) you aren’t hearing from, why that might be the case, and invite a representative of that group into the conversation.

Small actions count

Boards are in a hugely privileged position. Their actions today could have the potential to make or break the success of business in the year and over the decade. With this privilege and duty comes significant responsibilities and pressures, both of which intensify during periods of volatility.

Not every action that a board takes needs to be grand, and often what is viewed as transformational is automatically assumed to be large in scale. However, this does not necessarily lead to results or success equal to the effort put in; on the other hand, a seemingly small action can have significant impacts.

During turbulent times, changes that can seem smaller, and often more doable, can still contain ambition, build resilience, unlock opportunities and create value in the short, medium and long-term. Such changes, which help businesses navigate and tackle the issues we’re currently experiencing, are needed now more than ever.

Gemma Bridgman is principal sustainability strategist at Forum for the Future.