On the heels of the NACD Directorship 2020™panel, Virginia Gambale, director, JetBlue and managing partner, Azimuth Partners LLC; Helene D. Gayle, president and CEO, CARE USA; director, The Coca-Cola Co. and Colgate-Palmolive Co.; Michael D. Rochelle, founder and president, MDR Strategies LLC, director, Military Officers Association of America, trustee, U.S. Army War College Foundation; and Clara Shih, CEO, Hearsay Social and director, Starbucks, discussed the perspectives, expertise, and skill sets that will be critical for boardrooms of the future.
Gambale noted that some of the issues that will confront boards in 2020 are obvious today. Globalization, technology and innovation, the drive for transparency coupled with short-termism, and a focus on shareholder returns will require a certain expertise at the board level. To meet these challenges, Gambale suggested one valuable mindset is contextual awareness—the ability to lead and make decisions in the context of what is going on in the environment around you with the information you have.
“Another way of thinking about contextual awareness is as the intersection of situational awareness and the ability to use intuition to take advantage of opportunities,” said Rochelle. “It’s a 360-degree awareness.”
“Part of situational awareness is to ensure that in a globalized world you have the ability to speak each other’s language and talk across the divide,” explained Gayle. “We can be brokers for merging creating wealth with creating social value.”
Reinventing the Future
While some technologies, such as social media and mobile, enhance existing business models, some companies are developing technologies that will completely alter the future. Shih pointed to the examples of 3-D printing and self-driving cars, noting that embracing embrace rapid innovation can redefine the customer experience.
Directors and management will need to prepare to keep pace with evolving technology. “The bylaws in corporate governance were meant to maintain stability. We need to be aware that in that environment we need to try harder to carve out time to brainstorm about how businesses can be transformed by these technologies.”
Onboarding Future Directors
“Ensuring a board is prepared to embrace emerging technologies starts with an effective onboarding process. Boards must do a better job of thinking about diversity as more than numbers,” Gayle explained. “How do we make sure what that person has to offer is brought to light? In onboarding, we need a focus on dialogue—having a discussion about what that member brings to the table.”
In addition, considering younger directors may also prove fruitful, she continued: “We have deliberately looked for younger candidates on my board—they understand some of these worlds better.”
For nearly three years, the boardroom maintained a consistent response to a tumultuous marketplace. Whether it was following the 2008-2009 financial crisis, navigating an economic recovery unlike any other, or facing a debt crisis with global implications, reaction from directors seemed to stay the same. Year over year, NACD’s Annual Governance Surveys did not register significant upheavals in methods or structures used. Areas of high priority continue to be strategic planning and oversight, corporate performance and valuation, and risk oversight.
NACD’s Board Confidence Index (BCI), a measure of the boardroom’s attitude toward the state of the economy, told a similar story. Although the index would fluctuate by a few points from quarter to quarter, confidence remained in the slightly optimistic side of uncertain.
This changed last fall when the nation was forced to address the pending fiscal cliff. At November’s NACD Directorship 100 event, DuPont Chairman and CEO Ellen Kullman remarked that uncertainty over future regulatory activity and the general economy had led her company to reevaluate major investments for 2013. Uncertainty in the future of the economy and consumer demand also significantly impacted Coca-Cola’s decisions to make capital investments, according to presiding director James D. Robinson III.
Just a few weeks later, results from the fourth quarter BCI further demonstrated how the economy affected the boardroom. Although the overall index score remained on the positive side of uncertain (51.8), for the first time responding directors indicated outright pessimism in the state of the economy in the next three months. Directors also echoed the statements made at NACD Directorship 100: In preparation for 2013 nearly half (47%) had reassessed corporate strategy.
The need to focus on strategy was also confirmed at NACD’s recently held Master Class in Naples, Florida. Although sessions were designed to address the new and emerging risks entering the boardroom, discussions often returned to the importance of strategic planning in uncertain times. Both panelists and attendees agreed that directors need to keep a steady eye on the established strategic plans at hand.
This recommendation is not without caveat. With a maintained focus, directors should not relegate a discussion on strategy to an annual event. Instead, the established strategic plans should be woven into every board meeting and discussion. Furthermore, plans should be adjusted to incorporate flexibility from the boardroom. This includes shorter response times that are now necessary to address situations that could be presented by emerging methods of communication and rapidly changing technologies.
The 2012 campaign season was predictably dominated by debate on how to jump-start America’s stalled economy. This topic was the focus of more than the presidential race; it seems nearly every candidate for office—national, state, and local—weighed in on job growth and the best policies to promote it.
Now that the noise has died away, we need to get down to business. To that end, this year’s NACD Directorship 100 Forum will focus on the theme of “Reinvigorating America” as several hundred of the men and women who sit on the boards of America’s leading companies share insights and exchange ideas on practical solutions to the critical problems ahead.
The NACD Directorship 100 Forum, which occurs on November 27 in New York City, congregates a veritable Who’s Who of battle-tested directors. As much as any public official, these are the people who will play a key role in helping the United States move forward. The services they render to investors, employees, and customers affect economic performance at every level in every locale. The entire public is their stakeholder.
Marjorie Bowen, a director for Euramax, Talbots, and Global Aviation, summed it up neatly: “There is no other gathering that allows corporate directors to share ideas, learn from one another and experts, and get updated on the key topics facing directors in today’s volatile market environment.”
The keynote speaker is David Walker, former U.S. Comptroller General, Government Accountability Office. He will present a compelling and practicable “Road Map for the Future.” Other speakers include:
Ann Fudge, director, General Electric
Ellen Kullman, chairman and CEO, E.I. du Pont de Nemours and Company
James Robinson III, director, Coca-Cola
Robert Denham, lead director, Chevron
The NACD Directorship 100 Forum is an opportunity to learn from today’s leading authorities. To join us, register here. For a full program agenda, click here.