Beyond Oversight: How Board Capital Drives Strategic Value

By Ahmed Alhakbani and Art Uprety

Boards have long been viewed as bodies focused on governance, compliance, and oversight. But in today’s fast-paced and high-stakes business environment, organizations need boards that go beyond monitoring. They need boards that actively contribute to strategic value creation. This shift—from protecting value to helping generate it—is one of the most important evolutions in modern corporate governance.

This is where the concept of Board Capital becomes vital. Board Capital refers to the collective capabilities, expertise, and relationships that directors bring. When approached strategically, this capital becomes a meaningful asset. The board shifts from being a formal governance requirement to a resource that actively supports the organization’s success. The concept was first introduced by Hillman and Dalziel (2003), and it remains highly relevant today. In a complex, competitive world, Board Capital helps organizations build and maintain an edge.

The Three Dimensions of Strategic Board Capital

To truly contribute to value creation, a board needs strength across three distinct dimensions. These go well beyond traditional oversight and support the board’s ability to act as a partner in driving the organization’s success.

• Oversight Competencies: This is the foundation. Boards must still deliver on their fiduciary duties, including governance, compliance, audit, and risk management.
• Human Capital: This dimension is about what directors know. It includes deep knowledge in relevant industries or functions, combined with leadership skills and the ability to constructively challenge and support management.
• Social Capital: This is about who directors know and what they are known for. It includes access to key stakeholders, reputation, and the ability to influence and connect. Social capital can accelerate progress with regulators, investors, and strategic partners—often making the difference between momentum and delay.

This perspective is especially relevant in the GCC region, where many boards have historically placed greater emphasis on oversight. As a result, organizations may be underutilizing the full strategic potential of their boards.

Why Traditional Board Competency Matrices Fall Short

Many organizations now recognize the need for their boards to do more than just provide oversight. They’re starting to use skills or competency matrices to guide board appointments, considering factors like industry, geography, and functional experience. That’s a positive step, but these tools often don’t go far enough.

In our experience, three critical limitations hold them back:

1. They focus too narrowly on technical skills Traditional matrices often highlight check-the-box expertise but miss the intangible factors that drive boardroom impact. For instance, they rarely capture the value of a director’s social capital or their ability to lead, communicate, and collaborate effectively. These soft attributes are often the difference between someone who merely knows a topic and someone who can influence strategy.
2. They oversimplify measurement Most matrices record a binary answer—yes or no—to whether someone has a particular skill. This tells you very little about the depth or relevance of their experience. A more useful approach is to grade capital on a scale, say from 0 to 5, and determine how many board members need to be at what level for each capability. For example, a healthcare firm might need two directors with deep regulatory expertise and another two with moderate familiarity to support well-rounded discussions.
3. They have weak alignment to strategy : Too often, these matrices are generic or compliance-driven. A Board Capital Matrix, in contrast, starts with strategy. It is built by asking, “What kind of board do we need to help us achieve our future goals?” and then backfills the oversight, human, and social capital needed to support those priorities.

A Practical Five-Step Approach

Creating a high-impact board is not a linear process. It involves judgment, trade-offs, and often a level of compromise. The ideal board may not be available in the market, and different stakeholders may bring different priorities to the table. What matters is approaching the task with clear strategic intent—shaping a board that not only fulfills its governance responsibilities but also supports the organization’s long-term goals. Based on our work with organizations across sectors and geographies, we propose a five-step approach to help build such a board.

1. Define the Ideal Board Begin with a clean sheet and ask: If we had no constraints, what kind of people would we want on our board to help us drive our strategy? The answer forms your Board Capital Matrix—clearly outlining the types of capital your board should hold.
2. Identify the Gaps Compare your ideal state with your current board. Where are the gaps? You may find, for example, that you lack experience in key markets or are missing voices with credibility among regulators. It’s important to consider not just what’s missing, but how new capabilities will complement what you already have.
3. Search with Precision Communicate your needs clearly to search partners. Don’t just say, “We need someone with ESG experience.” Say, “We’re looking for a director who has led ESG strategy in a regulated industry in Africa and is well regarded by international investors.” That level of clarity ensures the search yields candidates who match your needs—not just generic profiles.
4. Assess Individuals Thoughtfully Go beyond resumes. Evaluate candidates for oversight, human, and social capital, but also assess their behavioral traits. Will they challenge without alienating others? Can they coach and collaborate? These qualities are often what make expertise useful in a boardroom setting.
5. Evaluate Collective Fit The board’s strength lies in how its members work together. Diversity of thought is critical to avoiding groupthink, and boardroom chemistry matters. One expert can be a game changer or a silent observer, depending on how they mesh with others. The Chairman’s role is particularly crucial here, as they orchestrate the group dynamic and ensure each member’s capital is activated.

Final Thought Board composition should not be reduced to a compliance exercise. It is a high-leverage decision that shapes how organizations think, act, and perform at the highest level. A well-constructed board can be a strategic asset—but only if it’s intentionally designed to be one.

About the Authors

His Excellency Ahmed Alhakbani is the CEO and cofounder of SiFi, a fintech company providing simplified financial solutions. He has extensive experience as a board member and NRC Chair of leading organizations in the GCC with a global footprint. He previously served as the governor of Saudi Customs. He holds an MBA from INSEAD and a degree in computer science from King Saud University. LinkedIn: https://www.linkedin.com/in/hakbani/

Dr. Art Uprety is a coach and advisor to boards and senior management teams and a Professor (Adj) of Strategy and Change Leadership at IE Business School. With over 35 years of experience, he was formerly a Partner and Managing Director at Boston Consulting Group (BCG). He holds a Ph.D. from IE University, MBA from IMD , and a master's in electrical engineering from Moscow Power Engineering Institute. LinkedIn: https://www.linkedin.com/in/art-uprety/

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the opinion or position of the Center for Governance.