The European Business Review

THE SIMPLEXITY GAP   Why Boards are Always a Step Behind their Management Teams – and What To Do About It

How impactful can simplexity gap be in corporate boards? In this article, the authors show how such gap undermines the role, function and integrity of the board by making it impossible for boards to ratify decisions on the basis of all of the information that is valid, reliable and relevant to the case at hand, as well as how the design and execution of the right board communication process can help boards bridge the gap and restore agency and accountability to the board.

The simplexity gap is the yawning space between the simple expectations of board members and the complex predicaments, problems and rationales of management.

A Widening Chasm. A growing chasm separates corporate boards from the competent exercise of their duties of care and diligence. It threatens to make boards everywhere into no more than ineffectual rubber-stampers that do not fully understand what their management teams do and why they do it and end up sanctioning the wrong actions for the wrong reason at the wrong time. It is a gap in knowledge rather than information; in expertise rather than evidence; and in understanding and comprehension rather than judgment.

On one side, you have top management teams leading organisations whose technological, operational and social complexity has grown momentously during the past decade – the ability to deal with complexity is cited by most CEO’s as the greatest challenge to their businesses. Their recommendations to the board are based on detailed analyses of dense, changing, uncertain information. They are informed by expert analyses - and scarcely intelligible to those who have the obligation to audit and understand them.

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