For decades, the mantra of corporate governance has been “independence.” In protest, an article titled “How Independent are Independent Directors?” was written. We have rightly focused on populating boards with a majority of non-executive directors, believing that structural independence is the primary safeguard for shareholder interests, but as we reflect on the principles in the book, Outcomes-Based Governance, which I had the privilege to help advance with Professor Mervyn King, SC, a critical question emerges: Are we mistaking a well-composed board for a competent one?
A board can appear perfectly independent on paper, yet it may be dangerously ill-equipped for the realities of the 21st century. The true measure of a board’s effectiveness is not its composition alone, but its collective competence in steering the company toward sustainable value creation in a complex and volatile world. This demands a frank conversation about three critical areas: board refreshment, digital literacy, and the insularity of director appointments.
1. The Mirage of Tenure: The Imperative of Strategic Refreshment
Many of our boards are led by directors with decades of experience. While this longevity brings valuable wisdom, it can also cement strategic myopia. The world in which a director joined the board ten or fifteen years ago has fundamentally transformed.
Rigid tenure limits can be blunt instruments, but the absence of a formal refreshment strategy is a greater risk. Outcomes-Based Governance compels us to ask: Does the board’s current mix of skills, experience, and perspectives directly serve the company’s future strategy? We must move beyond the ceremonial re-election of long-serving members and implement rigorous, annual skills matrix evaluations. This is not about discarding experience; it is about complementing it with the fresh, relevant competence needed to navigate the future.
2. The Digital Literacy Deficit: A Strategic Blind Spot
Can a board effectively oversee a company it does not understand? In today’s economy, understanding a company increasingly means understanding its relationship with technology. This goes far beyond having a “digital committee” or a lone “tech expert” in the boardroom.
Digital literacy is now a baseline requirement for every director. It is not about coding, but about possessing a foundational understanding of cybersecurity threats, data analytics as a strategic asset, the disruptive potential of AI, and the digital transformation of the company’s business model. A board that cannot effectively interrogate management on these issues is failing in its statutory duty of care. It is operating with a strategic blind spot that exposes the company to immense risk and missed opportunities. This is not a niche skill; it is core to modern directorship.
3. Moving Beyond the “Usual Suspects”: The Tyranny of Traditional Networks
Perhaps the most entrenched barrier to future fitness is how we find our directors. Too often, board appointments are the product of closed networks – the same circles of senior executives and professionals recommending from a familiar, and often homogenous, pool.
This “tyranny of the usual suspects” is a recipe for groupthink. It systematically excludes the diverse talent – including younger leaders, international experts, and specialists from non-traditional industries – that could provide the disruptive thinking a board needs.
As a Fellow of the Society for Corporate Governance Nigeria (SCGN), I advocate for a more transparent, skills-based nomination process. We must mandate our Nomination Committees to look beyond their immediate networks, to utilise professional search firms with a mandate for diversity, and to prioritise demonstrable competence over mere familiarity.
The Way Forward: From a Board of Guardians to a Strategic Asset
The transition from a well-composed board to a truly competent one requires courage and intentionality.
o Conduct a Future-Back Skills Audit. Do not just assess the board against today’s challenges. Project the company’s strategic needs 5-10 years into the future and identify the gaps.
o Embrace Continuous Education. Make director education on emerging trends, such as from climate risk to generative AI, a non-negotiable, budgeted priority.
o Broaden the Talent Pipeline. Actively seek out candidates who challenge the board’s conventional wisdom and bring cognitively diverse perspectives.
Ultimately, this is about a shift in mindset. A board that is merely independent is a guardian of the past. A board that is genuinely competent and diverse is a strategic asset for the future. The question for every Chairman, every Nomination Committee, and every shareholder is clear: Which one do you have?
Professor Fabian Ajogwu, OFR, SAN
Professor of Corporate Governance, Lagos Business School
Co-Author, ‘Outcomes-Based Governance’
