Posts Tagged ‘board education’

The Environmental and Competitive Disruptors That Lie Ahead

July 23rd, 2014 | By

More than 100 directors gathered at The Ritz-Carlton, Denver on July 15 to hear expert speakers put a boardroom lens on the competitive and environmental forces that are having a far-reaching impact on companies across industries.

The half-day symposium was the second of three NACD Directorship 2020®events this year. The forums are addressing seven disruptive forces (competition, demographics, economics, environment, geopolitics, innovation, and technology)—the major trends and transitions expected to drive significant change for companies and industries in the near future—and the implications for directors.

Environmental Disruptors

Linda J. Fisher, vice president of safety, health, and environment and chief sustainability officer at DuPont, called attention to five key sustainability trends—population growth, water supply, climate change, resource scarcity, and “circular economies”—that will have significant influence on markets, regulators, and investors.

Population growth. The earth’s population already has surpassed seven billion and is expected to reach nine billion by 2050. Population growth will lead to increased demand for food and other goods, while supply may be limited. This could lead to price hikes, increased regulation, and shortages.

Water supply. Water will become limited somewhere within businesses’ value chains, potentially affecting—among other things—transportation of goods and power production. Data from General Electric Co. show that 66 percent of the U.S.’ water-reliant power production in 2012 resided in areas experiencing water stress. In December 2012 and January 2013, low levels in Mississippi waterways resulted in more than $6 billion in commodity losses when barges carrying goods were unable to pass through the river, according to waterways groups.

Climate change. The Intergovernmental Panel on Climate Change reported last year that they are 95 percent sure that human activity is primarily responsible for global warming. Carbon dioxide is at an unprecedented level not seen for the last 800,000 years, and ice sheets and glaciers have been melting over the past 20 years.

Resource scarcity. Focus also should be placed on resource efficiency, concentrating mostly on improving building performance and food waste reduction.

Circular economies. Also gaining traction is the trend of circular economies in which products are designed so they can be used, deconstructed, and have the remaining materials captured for reuse or recycle.

And while companies are accustomed to the government regulating environmental issues, concerned consumers now are playing a regulatory role. These consumers increasingly are business savvy, understanding the degree to which companies rely on their reputations and brands. Activist consumers can call negative attention to a company’s brand until they see the change for which they have advocated.

These increased demands mean that companies should stay abreast of environmental and sustainability issues. Directors can ask management the following questions to ensure the company is forward-thinking about sustainability:

  1. Climate change. What is the company doing to mitigate greenhouse gas emissions and consider adaptation to climate changes within its operations, its supply chain, and consumers’ use of their products?
  2. Resource efficiency. How is the consideration of the efficient use of resources being embedded into the company’s innovation and operational strategy?
  3. Supply chain resiliency. How is the company managing its supply chain to reduce risk and assure resiliency? What is the process for assessing, prioritizing, and managing for potential risks that could threaten their ability to deliver products/services?
  4. Circular economy. How is the company planning for products’ end of life? Or, if the company does not directly sell to consumers, how are the materials that the company provides aiding in the eventual disassemble/recycling/take back of the final product?
  5. Transparency. How prepared is the company for increased sustainability expectations around transparency from investors, customers, retailers, NGOs, and others?

Competitive Disruptors

Adam Hartung, managing partner at strategy consultancy Spark Partners, CEO of Soparfilm Energy Corp., board member of 6 Dimensions, and an NACD Fellow, shared his thoughts and concerns about the impact of competitive disruptors and how boards should help set the competitive edge at their companies.

People often think about bankruptcy filings as being the sign of business failure, but Hartung proposed that business failure begins when a company loses its relevancy.

Hartung said the biggest risk to companies’ competitiveness is getting stuck maintaining the status quo. The secret of being successful in today’s marketplace is to overcome the “lock-in” to past successes.

Boards can encourage company management to take four steps to stay competitive:

  1. Focus on trends and potential future competitors, rather than on companies that have been competitors in the past.
  2. Shift direction away from current solutions and customers’ desires and instead steer more toward marketplace needs and competitors.
  3. Ask how your company can disrupt the marketplace—not just how it can do things better, cheaper, and faster.
  4. Allow for white space innovation, in which creative thinkers can develop business or product ideas that are outside the status quo. White space innovation can lead to ideas that will set the competitive curve in your industry.

Following each speaker’s presentation, attendee directors developed key takeaways for boards. Those responses may be found in follow-up blog post Through the Boardroom Lens.

Hu, Valukas, and Markopolos on Corporate Governance

November 10th, 2010 | By

As the country emerges from the worst financial downturn since the Great Depression, directors, executives and other corporate governance experts gathered to honor the 100 most influential players in the boardroom and analyze recent mistakes and how they can be avoided at the NACD Directorship 100 Forum held Monday and Tuesday in New York City. The 100 honorees were commended at a dinner Monday night in a keynote address by Henry Hu, director of the SEC’s Division of Risk, Strategy and Financial Innovation.

Hu presented his “decoupling” concept, and explained how it relates to boards’ current challenges, especially as directors face the new Dodd-Frank Act. He pointed to the Act as the “most comprehensive change in generations… representing a new era for corporations and boards that introduces new challenges and new opportunities. It is important to get the balance between corporate governance and financial innovation right.”

The Forum’s second day featured Anton Valukas, court-appointed examiner in the Lehman Brothers’ bankruptcy, explaining the actions that the Lehman board could have taken to better prepare for the company’s failure. While Valukas does not believe that failure was preventable, he did explain that, had the board asked more important questions, the fall would have had less severe of an impact on the U.S. economy. 
“In this case,” said Valukas, “one word would have made the difference: transparency.” (read Valukas’ full report here)

Also featured was Harry Markopolos, author of No One Would Listen, which details his ten-year-long investigation of Bernie Madoff’s Ponzi scheme, the largest in history.  Markopolos took a firm tone with the directors of the room, imploring them to “use your experts and don’t take numbers from management, for the sake of your shareholders and stakeholders. That’s your job.”

Time to Tone Up—Do You Need a Personal Trainer for the Social Media Age?

November 3rd, 2010 | By

“Technology leaves companies naked and it’s time to buff up,” says Phil Cowcill, facilitating a session at an e-learning conference I am attending this week in San Francisco.

WeightlifterHe believes all boards and companies should embark on a workout schedule and, if necessary, hire a personal trainer so they look good under the scrutiny of stakeholders using social media. “You can’t keep technology out of the room,” Cowcill says, “so use it to learn what your stakeholders really think, feel and see.”

Your skin, in addition to being toned and oiled, needs to be thick, says Cowcill, for sometimes your stakeholders will say and do things that you feel threaten the company, but if you learn to think of them as partners rather than threats— NACD Webinar people with whom you have collaborative dialogue—then you will gain more value than you will by playing defensively.

We discuss the recent decision by Gap, Inc. to withdraw their new logo in response to customer feedback on Twitter and Facebook.

  • Was Gap really committed to the logo or did they just float it on Facebook to test the response?
  • What have they gained in column inches and from appearing to be responsive to their customers?
  • What have they learned that will inform new product launches and strategic initiatives?

However you address the questions above, your answers will demonstrate the need for new thinking around stakeholder—including shareowner—engagement. How good does your board’s body look in the social media age? Leave your comments below.