At the National Association of Corporate Directors’ (NACD’s) Master Class program in Philadelphia June 3-4, nearly 50 experienced directors engaged with corporate leaders on the key elements that will shape the boardroom in the coming decade.
NACD’s Master Class takes place over two days and comprises eight modules presented as panels, keynote speeches, and intensive breakout sessions. Modules are highly interactive and are led by veteran directors, leading business executives, and corporate governance experts. Each Master Class is organized around a specific theme.
In Philadelphia, discussions centered on ensuring effective boardroom dynamics and strengthening the board’s role in strategic planning, cybersecurity, and mitigating global risks. Below are five takeaways that emerged in Philadelphia.
Search out the enemies of effectiveness. Vague expectations, absence of process, inadequate delegation of authority, and individual sabotage can individually or collectively compromise board effectiveness. Independent chairs and lead directors should be attentive to poor board dynamics, which often have root causes that can easily be addressed. Boards can also help counter dysfunction by establishing a foundation of shared principles that will guide the board’s decision-making, agenda-setting, discussion management, and self-assessment.
Analyze the causes of gradual deterioration in performance. Management often rationalizes small performance drops by pointing to macro-economic trends or solvable business execution problems. Boards should consider adopting a forward-looking posture in order to understand the long-term impact of disruptors on business performance. They can do this by engaging with management in frequent discussions about the assumptions that undergird the company’s strategy and the “what-if” events that could invalidate those assumptions.
Think like an activist shareholder. Activists usually know the industry and sometimes even the company better than the board does. To avoid being ambushed by well-informed activists, boards should learn from the consultants and investment banks that serve their company, industry, customers, and competitors. They must also challenge management’s conventional wisdom about the firm’s current performance and future direction.
Clearly delineate the roles of the board and management in developing and executing strategy. Boards can offer more value by engaging “early and often” in the strategy development process, by pressure-testing management assumptions, and by selecting the appropriate metrics to assess strategy success or failure. When seeking a more active role, boards must collaborate with management on defining the boundary between directing strategy and managing it. Addressing this tension over where the lines should be drawn is a critical challenge that will demand ongoing attention from the CEO and the lead director.
Anticipate the consequences of global disruptors. In a hyper-connected global marketplace, economic and political shifts in distant corners of the world can instantaneously impact company performance through supply-chain disruptions, foreign-exchange volatility, and regulatory activism. Boards can increase their understanding of emerging cross-border interdependencies and evaluate whether management is sufficiently agile to respond when conditions change.
For corporate directors, time is a valuable resource. As such, I’m frequently asked why directors should carve out three days to attend NACD’s annual Board Leadership Conference, which is held every October in the nation’s capital. To me, it is obvious why those in the boardroom should attend this first-rate conference.
Here are the 10 reasons I shared with our NACD chapter leaders at a recent meeting in St. Louis, Missouri:
Save $500 when registering by April 30. The NACD Board Leadership Conference is historically sold out, and this three-day conference represents the most important knowledge exchange for the world’s leading directors, C-suite executives, and governance experts.
For directors by directors. Learn from leading boardroom practitioners, those who have endured many hard lessons you may not want to encounter yourself! Hear firsthand from Laban Jackson, audit committee chair of JPMorgan Chase, about the London Whale controversy and his perspective on the board’s role in risk oversight. Learn more about the shifting landscape of social media from Clara Shih, Starbucks director and CEO of Hearsay. Get the latest on how big data is impacting business with Rich Relevance CEO David Sellinger.
Get more actionable takeaways than from any other conference.Address persistent challenges and gain “next practices” from your peers on the timeliest and most critical boardroom issues, including human capital management, emerging technology, compensation, and global markets.
Make your voice heard.Take part in shaping thought leadership and talk to influential legislators, regulators, and stakeholders.
Sharpen your committee skills. Attend a Sunday Board Committee Forum, including dedicated sessions on audit, compensation, nominating/governance, and risk. Network with peers during breaks following big-name keynote speakers, and share your opinion with peer-led panels and committee chairs who really understand your challenges.
Get hands-on with social media. Visit our first ever social media learning lab, staffed by experts in the latest social media trends, who can show you the ropes and help you understand how social medial is affecting your business.
Spark innovative thinking.Participate in active dialogues around Directorship 2020™—NACD’s new initiative—to explore how and why the boardroom will change over the next several years and what you as a director need to know to keep pace. Gain exclusive insights gleaned from thought leaders and directors around the country in a report from our Directorship 2020 regional events.
Build your network. Exchange ideas with nearly 800 directors from around the world, including those from Akamai Technologies, Ford, JetBlue, JPMorgan Chase, and Union Pacific, to name a few.
Tailor your experience.There’s something for everyone. Join special breakouts for general counsels, private company directors, small-cap directors, and nonprofits organizations. With nearly 50 sessions, choose from unmatched session selection to meet your own boardroom needs and interests.
In my opinion, NACD’s Board Leadership Conference is not only a great value, but an experience every corporate director should take part in.
I look forward to seeing you this October in Washington, D.C. Register here.
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.