Oct. 19, 1987—aka Black Friday—was noted for an historic 500+-point market plunge. But that day was not all bad. That evening, before a small crowd of staunch supporters impervious to market panic (including yours truly), the Hon. Juanita Kreps, past secretary of commerce, received recognition as the Director of the Year by the National Association of Corporate Directors (NACD)—the first award of its kind.
If the crash that resounded 25 years ago showed the fragility of capitalism, NACD’s recognition of Kreps showed its strength. One was all about alchemy; the other all about chemistry. Let me explain:
In his classic book the Alchemy of Finance, released shortly after the crash of 1987, financier George Soros cites the event as an example of “reflexivity.” Soros told us that in stock markets, as in the universe (per Dr. Werner Heisenberg’s uncertainty principle) perceptions influence reality. Soros calls this “alchemy,” referring to the old pseudoscience of the Dark Ages. He wanted to highlight the element of mystery behind markets. One cannot grasp them through science alone, Soros correctly implies.
By contrast, NACD’s choice of Kreps in 1987, as well as many other honored directors over the following 25 years, could be better compared to chemistry than to alchemy, given the significance of chemistry in the boardroom and governance community.
The award received by Kreps has grown to honor more than one category of director. NACD also recognizes a director each year for the B. Kenneth West Lifetime Achievement Award in honor of our late chair Ken West, who had been the CEO of Harris Bank and who at the time oversaw governance research at TIAA-CREF. In 2012, this highest accolade goes to Jack B. Lowe Jr., chairman, Zale Corp. and TDIndustries. The NACD Director of the Year awards, once given to one director per year, have expanded to recognize additional directors. In 2012, there are two recipients: William S. Ayer, chairman, Alaska Air Group and Puget Sound Energy; and Linda Rabbitt, lead director, Towers Watson and chairman/CEO, Rand Construction.
Additionally, the NACD Directorship 100 annually recognizes and honors both corporate directors and governance professionals. The number 100, unlike the 118 chemicals currently in the periodic table, is arbitrary, but the number is fitting, given the importance of “chemistry” in the boardroom and in the governance world. People rarely accomplish things in and of themselves. They interact with other individuals and institutions to create valuable compounds. Nominees for the NACD Directorship 100 and the NACD Director of the Year are evaluated for integrity, mature confidence, informed judgment, and high performance standards for the work of the board.
As I look back on that night, I remember how surprised I was that Kreps had invited her entire family to the event. At the time, I envisioned the successful woman as an Amelia Earhart flying solo. Not so for Kreps. In fact, she had resigned her commerce post early to attend to a crisis involving her husband, Dr. Clifton Kreps, who was despondent over the fact that their careers were forcing them to live apart. Unless my memory is playing tricks with me, Clifton Kreps and their three children were all at her table for the event. Compound chemistry indeed.
In the modern chemistry of the boardroom, we would have said the fundamental elements Kreps brought to her work, as a woman who rose from Kentucky coal town poverty to national leadership, were grit, integrity, and a sharp mind—as witnessed by her peers in the boardrooms. They too were there that night 25 years ago. I recall seeing representatives of some of her boards, which were no less than the teams overseeing corporations that brought us the enduring brands of AT&T, Citi, Chrysler, Deere, Kodak, Penney, Nabisco, and Zurn—as well as the investments of TIAA-CREF.
It’s a search to look beneath the surface of appearance to see the reality of character. That’s what makes the right chemistry in the boardroom and the right decisions for our long-term economic future. Stay tuned for more NACD Director of the Year and NACD Directorship 100 profiles in future blogs.