Board directors with a portfolio of positions may find themselves caught among organizations which are now in direct competition as industries converge.
In the race to adapt and stay relevant, industry lines are being increasingly blurred. Social media companies are becoming live entertainment broadcasters, traditional car manufacturers are transforming into on-demand service companies and telecom companies are leveraging huge consumer bases, capital and data, to disrupt the banking sector.
In that context, board directors, who often have a portfolio of board positions, may increasingly find themselves caught among organizations previously in different traditional industries that are now in direct competition.1
Pre-dating the rise of the internet, industry shifts have long been a feature of economic evolution, but today, change is happening at a more dynamic pace and in increasingly unexpected ways. Board directors, therefore, need to keep a watching brief to the possible implications.
Implications of conflicting interests
With recent cases in the news of newly competitive companies’ board members stepping down citing possible conflicts of interest, what discussions should be taking place in the boardroom to make sure that such conflicts are identified early and dealt with as effectively as possible?
Most organizations have a set of policies and tools for monitoring the competitive landscape and disclosing director conflicts of interest, to ensure that all directors are properly aligned with the interests of the organization. In today’s superfluid market, boards should monitor and enforce these processes more frequently than ever before. Cross-holdings, partnerships, acquisitions and dispersed ownership, all complicate a dynamic ecosystem. Directors must therefore ensure they keep an up-to-date list of their affiliations and declare any conflicts of interest, immediately.
When having discussions about competitive trends and developments in the market, board members should make sure that, on an ongoing basis, they are considering:
- Any potential conflicts that may be emerging, whether due to industry convergence, M&A transactions, or otherwise
- What the implications are, if any, for their own status as a director