Guides
What is a shadow board?
The main concept behind a shadow board is that it provides an alternative, often younger perspective to that of the official board of directors.
However, the specific roles, responsibilities, and authority of a shadow board can vary widely depending on the organisation and its goals.
For example, when Gucci created a shadow board of younger employees, its profits soared.
Another fashion giant, Prada, didn’t pay attention to the creative input of its younger employees, failed to recognise the growing power of digital influencers, and its profits fell.
The tale of these two fashion giants is a valuable lesson for all companies about the potential creative energy of a shadow board.
Many businesses struggle with two seemingly unrelated issues: disengaged younger employees and a lack of response by senior executives to market changes.
A few companies have successfully tackled these problems by creating “shadow boards” – a group of non-executive employees who work with senior executives on strategic initiatives.
Why?
To gain insights from the younger generations and to broaden the view of senior executives.
What is a shadow board?
A shadow board typically consists of 9 to 13 people from a cross-section of the business, and all are younger – either millennials or GenZers.
The CEO usually sponsors the shadow board, and its primary purpose is to provide insight, feedback, and ideas to senior decision-makers in the company, representing their generation’s perspective.
Shadow board members also learn about the company’s strategy and decisions so that they can share with their peers and network.
Examples of shadow boards at work
HBR published a fascinating piece of research that examined the success of shadow boards at various firms.
Let’s look at what happened at two big fashion firms – Gucci and Prada.
Gucci and Prada are two fashion giants with a good track record of keeping up with and shaping consumer tastes.
In the past, Prada had high margins, a legendarily creative director, and good growth prospects.
Since 2014, however, sales have declined. In 2017, the company admitted that it had “been slow in realising the importance of digital channels and online influencers disrupting the industry.”
Co-CEO Patrizio Bertelli said, “We made a mistake.”
Meanwhile, over at Gucci, over the same period, and under the direction of CEO Mario Bizzarri, the fashion house created a shadow board.
Gucci’s shadow board is made up of millennials, and since 2015 they have met regularly with senior management.
As Bizzarri describes it, the shadow board consists of people from different departments; many are young and talented.
Their insights have “served as a wake-up call for the executives”, and Gucci’s sales grew by 136%. This growth was primarily driven by the success of both its internet and digital strategies.
In the same period, Prada’s sales dropped by 11.5%.
There are three different types of shadow boards
As a developmental tool
Shadow boards are used by certain businesses to cultivate and promote younger or less-experienced staff for future leadership positions.
A shadow board, in this context, is made up of people who do not have formal authority inside the organisation but participate in board-like conversations to provide new perspectives, develop novel ideas, or gain experience in board-level decision-making procedures.
It’s a learning experience for these people, as well as a method for the organisation to gain diverse perspectives.
Checking and balancing the official board
In other situations, a shadow board might act as a separate, unofficial group that reviews and critiques the decisions of the official board of directors. They can offer alternative perspectives or point out potential flaws in the board’s decisions. This structure is less common and can sometimes arise in activist or oversight situations.
Alternative perspective
Especially in larger or more complex organisations, a shadow board can be formed to offer a viewpoint from different parts of the company or from different stakeholder groups. For instance, a non-profit might have a shadow board made up of the people they serve.
Are shadow boards a good idea?
Shadow boards provide younger workers with the visibility and access they desire.
This visibility can often lead to significant career advancement.
Notably, the impact and insights of the shadow board can drive valuable offshoots that more senior executives would usually miss.
You could also ask yourselves, what do we (the board) have to lose?