In our final lesson, we're gonna look at three ways having a strong board can give an organization competitive advantage, something that we've been calling governance advantage. Competitive Advantage is typically associated with a distinctive competency that arises inside an organization. As the board of directors operates independent of management, we'll just go with this term governance advantage and see if 10 years from now it catches on, regardless of what we call it. If all your board does is focus on making sure that management is complying, then it's hard to point to any value creation by the board. Governance advantage arises when the board is able to direct management in ways that enhances corporate performance. The first opportunity of governance advantage was discussed extensively in our previous lesson, and that is when the board works with management test strengthen strategic development, the board can contribute to strategy development in three important ways.

First, the board can broad management's awareness and understanding of the external context through its own collective understanding and experience. Secondly, the board can strengthen strategic development by challenging the thinking of management and contributing its own hunches. And finally, the board holds a management accountable for the execution of strategy through all future interactions in monitoring activities. The second potential source of governance advantage is leadership development. The board's single most important decision is picking the right CEO. As we discussed earlier in the course, having picked the right CEO, the board can augment the effectiveness of the CEO using these three ideas.

First, by providing the CEO with regular feedback, which can be gathered during the in camera sessions at the board meeting or by a separate committee of the board. The questions for the directors to consider include, is our CEO confronting the realities of the existing environment appropriately. Is our CEO focusing on the right sorts of things. How is our CEO strengthening the management team? How is our CEO fostering open communication and cooperation around the organization? has our CEO anticipated challenges in the business and responded accordingly?

How well does our CEO lead the board meetings? oversee the information circulated to directors and articulate strategic vision? Is our CEO having the right discussions with us during our board meetings? This is a very interesting set of questions for directors to discuss, and then share points of constructive feedback with the CEO. The second opportunity for adding value is having one or more directors help the CEO by coaching, mentoring or sharing advice. Keep in mind the impeccable qualifications of our directors.

A well constituted board has a broad base of collective action and expertise to offer the CEO the CEO should use various directors as a sounding board as matters of judgment arise. And finally, the CEO is wise to leverage the contacts and connections of the collective members of the board. This can accelerate the progress of the organization and open doors that might otherwise be difficult to do without the right connection. But leadership development extends beyond just the CEO. Leadership Development includes succession planning for the CEO and other key management roles. The board should actively influence and monitor the pool of future leaders.

The board can nurture their development through regular interactions with the board and establish policies and encourage the development of future leaders. Whether these future leaders are attending board meetings or hosting directors to show them the business the board can judge for itself the strength of its future leadership candidates, the board should look for individuals who can think independently Have the CEO but raised their point of view in a way that doesn't undermine the credibility of the CEO. In addition, individuals who can add value through their own insights of the situation and offer solutions, as well as adapting to different situations, different perspectives and different directions as required. One final area of governance advantage comes from a strong alignment between the owners of the organization and the management team. The board is an important conduit of information between the managers and the owners. The greater this alignment is, the stronger the ownership interest will be in the business.

Having strong owners is the key to raising more capital to fund future growth of the business. Whether that source of capital originates from capital markets, private donors or government having the right board and the right connections between the owners and the board can be instrumental in fulfilling mission and vision. A strong board should understand the risk appetite of its ownership group well, which will help align the risk appetite with the strategic direction taken by the managers of the business. This brings us to the end of this course of behind boardroom doors. And in this course, we emphasize three key board leadership roles that support the evolution of governance advantage. The informer role is a particular relevance to the CFO, as it deals with ensuring that all relevant matters are communicated to the board to establish a common understanding of the company and its performance.

The conductor role, which ensures the board spends its time on the most important matters without forgetting the important fiduciary responsibilities mandated by regulations. And then thirdly, the facilitator role, which recognizes that the effectiveness of the board itself and its interactions with management rely heavily on group dynamics with all three of these boards leadership roles well represented during in between board meetings. The board itself has the opportunity to make a valuable contribution to the organization. This is what we call governance advantage. And it's achieved by boards who fulfill their direct and protect mandate to the fullest extent we described in this course. Whether you currently sit on the management side of the boardroom doors or on the director side, appreciating the principles that we have discussed, will hopefully make you more effective in your role.

Thank you for taking the time to participate in this course and until next time, my name is Blair cook.