Leadership in a Complex and Changing Global Arena

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Dennis T. Whalen, partner in charge and executive director at KPMG, led the final plenary session of the NACD Board Leadership Conference. He began the session by referencing Leo Abruzzese’s remarks during yesterday’s session, noting that it set the stage for this panel. Titled Leadership in a Complex and Changing Global Arena, the panel explored how boards oversee operations in a tightly connected global marketplace.

Dr. Ronald Sugar, director of Chevron and Apple, noted that all corporations are global to one extent or another, whether a company has global competitors, customers, or operations. “What global means for one company isn’t the same for another,” he said. Opportunities for growth are increasingly outside of the United States, and with these opportunities come a new dimension of enterprise risk. To help mitigate this risk, companies should consider having directors who live overseas, run a company overseas, or has some other international expertise.

While the focus on international markets tends to shine the spotlight on China and India, the Hon. Paula Stern, director of Avon Products, said the focus on these markets has overshadowed other exciting opportunities. One such example is Africa, with countries that are rich in resources. “Africa is no longer this continent we can ignore,” she said. Stern cautioned that it’s important for directors to examine the rule of law and political stability of any country a company is considering doing business in. She also added that when looking for a suitable market for your company, one indicator of potential is a rising middle class.

As a company prepares to move overseas, Karen N. Horn, lead director of Eli Lilly, noted the right business strategy, tone at the top, and robust backup systems all need to be in place. She said a company needs someone who listens to the market or knows the market to find good partners or places to find employees. Stern added that talent is another aspect. “Your talent has to reflect that tone [at the top] every day in the marketplace,” she said.

One of the challenges companies face as they expand into overseas markets is ensuring board some board members have international experience. While larger companies have an easier time with recruiting such directors, smaller companies may have to explore other options for getting this experience. Horn suggested one way to get international experience is to also consider offering advisory roles. Stern noted that she had the experience of sitting on the international board of a French company. This company has a separate international advisory board that convenes twice a year, and top managers are available during those meetings. “It helps get past logistical and practical problem of finding international board members,” she explained.

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