A recent meeting with NACD Chair Reatha Clark King has revealed some compelling thoughts on why good corporate governance matters and why we at NACD do what we do.
Over the last 37 years, NACD has researched, documented, and published leading boardroom practices including Blue Ribbon Commission reports, handbooks, white papers, and surveys. Our intent is to advance exemplary board leadership.
As I dug into the question of why we do what we do with directors who serve on NACD’s board, I used a classic marketing approach to define higher order, emotional benefits. A benefit-oriented discussion enables one to organize responses into a pyramid-shaped format. Product attributes serve as the foundation and subsequent perspectives provide product and end benefits, ultimately leading to emotional benefits. Capturing the emotional essence enables one to develop a sustainable, differentiated position.
When I asked the “why we do” question, I received responses such as:
To help directors make better decisions
To ensure that the perspectives of all stakeholders are heard
To do the best job I can
To represent the shareholder
To increase the value of the enterprise
While these responses are appropriate, there was an obvious follow-up question: “Well, why does that matter?” It reminded me of conducting in-home ethnography research and one-on-one interviews when I was in marketing at Kraft Foods–sessions that were typically enjoyable for me, but a bit painful for the participant.
The culmination of responses to “why we do what we do” can be summarized in two remarkably simple bullet points:
To me, this perspective is both impactful and relevant. First, the answers are brief and to the point. Second, each bullet point contains what I would describe as a lightning rod word–sustainability and stakeholder–and each of these words can have a variety of meanings depending on the audience.
Enterprise sustainability means, quite simply, that the company is around for a long time. An enduring enterprise provides long-term benefits to its employees and their families, to suppliers and vendors, to the community in which it operates, and to those who provide financing–bankers, investors, and donors. Further, enterprise sustainability means that the leaders of companies, both in the boardroom and the C-suite, remain aware of current and emerging issues that may impact these companies, and are engaged in robust dialogue about strategic implications. I call this strategic agility.
As a result, stakeholder confidence is established, reinforced, and bolstered. Regardless of how a company is structured–public, private, nonprofit, mutual, or family owned–all enterprises have stakeholders, and the long-term viability of the enterprise is overseen by a board of directors.
Therefore, everything that NACD does–from our NACD Directorship 2020® initiative to our expanding range of events, resources, and services–provides unique value to NACD members to advance exemplary board leadership. The intended outcome of all of our activity is NACD members who demonstrate a commitment to not only continuously learning, but also demonstrating the courage to question the unknown and working to sharpen their strategic agility. Once this is achieved, NACD members are poised to help create sustainable enterprises and bolster stakeholder confidence.
I welcome your feedback on this topic. Please join me in sharing your views of why we do what we do.
As NACD works with corporate directors of public, private, and nonprofit boards to oversee and ensure the long-term sustainability of the enterprise and bolster investor confidence, I am frequently asked: “What companies have the most significant challenges?” While unique challenges certainly exist across boards of all company types, many view the roles of small-cap public company boards to be quite challenging.
These unique challenges span time and effort (workload) requirements, compensation, talent, financing, regulation, risk, strategy, competition, and internal resources, just to name a few. Small-cap directors and governance professionals may identify and prioritize the unique challenges of these companies differently, however, but one thing remains constant and that is that small-cap companies represent the majority of companies listed on U.S. exchanges, and the long-term prosperity of these small-cap companies is essential to a growing, thriving economy.
So where can small-cap company directors turn to reinforce their strategic agility?
Second, I highly recommend that all directors read NACD’s Board Building white paper, another high-impact, quick read. Most important in this resource is the skill set matrix enclosed in the appendix. Many companies are now using the skill set matrix to both determine and articulate the experiences and talents required for their future strategies.
Lastly, I suggest that current and aspiring small-cap directors attend NACD’s Small-Cap Forum on April 10 in San Antonio or on July 17 in San Francisco. Both sessions will focus on current and emerging issues facing small-cap boards, and these interactive events will include a range of interactive, peer-to-peer networking opportunities for robust dialogue.
Contact me at hstoever@NACDonline.org if you have specific questions or suggestions on how NACD can assist you, your board, and other small-cap directors advance exemplary board leadership.
While legislation—such as the Jumpstart Our Business Startups Act (JOBS Act) and Sarbanes-Oxley (SOX)—has eased some of the burdens small companies face when looking to go public, many of these companies now face the challenge of establishing effective governance structures. Limited resources and smaller staffs can lead to blurred lines between operations and oversight. Additionally, recruiting the right talent can also be difficult since small-cap companies may compete against their larger peers for talent.
Recognizing that small-cap directors have a need for specific corporate governance resources, the National Association of Corporate Directors (NACD) developed the NACD Small-Cap Forums exclusive for small- and micro-cap company directors. The forums—held on April 10 in San Antonio and on July 17 in San Francisco—feature seasoned directors from small-cap companies and subject-matter experts on financing and capital markets and board building.
The keynote speaker is Adam Epstein, founding principal of Third Creek Advisors, lead director of OCZ Technology Group Inc., and author of “The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small-Cap Companies.”
Topics to be addressed include strategy and risk, board-shareholder communications, and shareholder activism. To view the full agenda or to register, visit http://bit.ly/1i5NcBu.