The corporate landscape is undergoing a period of dynamic transformation. As the nation strives for economic diversification and global competitiveness, the role of effective corporate governance becomes paramount. At the heart of this transformation lies a dedicated group of individuals – the directors. Their decisions, their willingness to take calculated risks, and their ability to navigate change will ultimately define the success of businesses. In this context, we explore the three Cs that shape a director's effectiveness – Choices, Chances, and Change.
Directors are constantly faced with a multitude of choices. From selecting the right CEO to approving major investments, each decision can have significant consequences for the company and its stakeholders. Effective directors prioritize making informed choices. This necessitates a commitment to continuous learning, and staying abreast of industry trends, regulatory developments, and best practices in corporate governance. Directors who actively seek out knowledge, participate in professional development opportunities, and leverage external expertise are better equipped to navigate complex situations and make sound decisions.
In 2018, Diamond Bank, a leading Nigerian financial institution, faced a critical decision. The bank had been under regulatory scrutiny for alleged non-compliance with Know Your Customer (KYC) regulations. The directors chose transparency, opting for a proactive approach. They publicly disclosed the situation, engaged with regulators, and undertook significant reforms to strengthen their KYC processes. This choice, while initially challenging, ultimately restored public trust in the bank and paved the way for a successful merger with Access Bank.
Effective directors understand that progress often requires taking calculated risks. While prioritizing stability is essential, an unwillingness to venture outside one's comfort zone can impede growth. Directors who embrace well-considered chances demonstrate a commitment to innovation and seize new opportunities. This involves carefully weighing potential risks and rewards, conducting thorough due diligence, and developing robust risk management strategies.
In 2012, Jumia, an e-commerce platform, entered the largely unexplored Nigerian market. This was a significant change, as the concept of online shopping was relatively new in the country. The directors, however, recognized the immense potential for e-commerce growth. By taking this calculated risk, Jumia became a pioneer in the Nigerian e-commerce industry, paving the way for a thriving digital marketplace that benefits both consumers and businesses.
Change is a constant in the business world, and directors must be adaptable to remain relevant. Whether it's technological advancements, regulatory shifts, or evolving consumer preferences, directors must embrace change and lead their organizations through transformation.
An illustrative example is the adoption of digital transformation in response to the COVID-19 pandemic. Directors who recognized the need to pivot quickly to remote work and digital solutions ensured business continuity during challenging times. This ability to adapt to change is a hallmark of effective governance.
Directors in Nigeria must also contend with regulatory changes. The Companies and Allied Matters Act (CAMA) and other legal frameworks are subject to amendments, requiring directors to stay informed and compliant. By fostering a culture of continuous learning and innovation, directors can proactively respond to regulatory changes while driving business growth.
The three C's of life—choices, chances, and changes—are foundational principles for directors seeking to promote sound corporate governance. They have a unique opportunity to shape the corporate landscape, and their actions reverberate throughout the business community and society at large.
Directors and corporate leaders, therefore, must see the need to invest in acquiring knowledge and skills for the present challenges. They should engage in continuous learning to stay abreast of industry trends, regulatory changes, and best practices in corporate governance. In addition, they must foster a culture of innovation to encourage adaptability and creativity within the organization to navigate changes and seize opportunities. This will create a corporate culture that values diversity, superior argument, and ideas leading to enhanced innovation and performance.
Our institute has a decades-long record of supporting directors in their journey of excellence. We offer a multitude of resources; including Director development programs to enhance knowledge and skills in key areas like corporate governance and risk management. We also offer networking opportunities for members to connect with fellow directors and industry experts to share experiences and stay informed on emerging trends.
By embracing these principles, directors can contribute to a brighter future for their organizations and the broader corporate community. The choices, chances, and changes they navigate today will define the success of their organizations and set the standard for corporate governance in the years to come.
Research & Advocacy Department,
Chartered Institute of Directors (CIoD), Nigeria
28, Cameron Road, Ikoyi, Lagos.