I had the privilege of joining over 30 public company directors this week to discuss lead directors—what they do and how to pick them. Wow, what a lively discussion it was.
We were fortunate to have our partners from Heidrick & Struggles there—Ted Dysart and Stephen Miles, who are both vice chairmen for this leading executive recruitment firm. Through a very candid dialogue, we were really able to dig into this topic. At the session, and in many praiseworthy emails following this gathering of esteemed directors, I heard many common suggestions that all boards can put into action.
The key takeaways? Everything is subtle; just work through the details, expectations and preferences that fit for your situation.
Beyond the subtleties, three key themes did emerge for me:
Role: Define expectations first. How will the CEO and management team work with the chairman or lead director? What do we expect him/her to do?
Criteria: What skill sets and experiences are required, preferred and desired? Surprisingly, this aspect of the process is really no different from other director hire decisions, but many boards overlook this critical step.
Process: Have a process and make it transparent. No need to keep your selection process a secret from your fellow board members. They can help you identify key criteria and you want them invested in the success of whomever you select as your next board leader.
While many other items were discussed, here are a few that rose to the top for me:
Term limits/rotation: No consensus…all over the board: Yes, no, perhaps.
Time commitment: Ensure this person is willing to make the commitment and has the time available after making that commitment.
Crisis and succession: Ensure this person is willing to take on a key role in times of crisis. You never know what can happen, and the lead director needs to be ready to step up, whether as interim CEO or chair of a search committee.
Experience: This leader should be seasoned and savvy (some felt, ideally, from the company’s industry), and can act as a sounding board for the CEO, management and others on the board.
Trust: This is a “no kidding” area, but many emphasized the need to ensure the lead director check his/her ego at the door and not have a personal agenda.
Collaboration: Near the top of requirements, the lead director needs to be a strong team builder with exceptional listening skills. Is he/she a facilitator?
Raising the bar. One passionate participant even suggested that all boards separate the chair and CEO roles. Perhaps this director was thinking about asymmetric information risk. No matter; we assured the participants that NACD does not advocate for specific board structure, rather, it’s situation-dependent—
i.e., it’s subtle! Combined chair/CEO roles make sense for some companies, and separating the roles is appropriate for other companies.
Another year, another Consumer Electronics Show (CES). I have been attending these for over 30 years. Everyone wants to know—was there one big thing? Unlike other years, when there were gigantic flat-panel screens or 3D last year, there was no one big thing this year. Yes, 80 iPad contenders, but that is not revolutionary.
However, the forces leading to major, massive changes that will affect every consumer and company worldwide are being unleashed:
Convergence: We have gone from convergence of digital content to give us “edutainmentgaming,” to multi-delivery channels leading to what many of the tech leaders are calling content anywhere, anytime and anyway you want it on up to N-screens. More screens—many smaller, all synchronized—that will let you read, text, watch TV or a movie—seamlessly, instantly, and sometimes simultaneously.
But where will be the points of leverage? Will the network be the computer as we hear Verizon tout its impressive offerings? In the devices, as Samsung and others show their integrated, products from Smart TV to cameras to appliances? Or in the content, as the Hollywood crowd and the ad agencies return in force to CES? Is content still king? Does Comcast have something with content and delivery in its NBC acquisition? Or in the apps on devices and in the “cloud”?
Back to the Future: All, including Ford and Audi (hardly your typical consumer-electronics company), talk about the “cloud,” the ability to do computing in servers connected by networks, or what we used to call timesharing. There is the slight problem of bandwidth, but with technology and the FCC looking again at spectrum, can that too be resolved?
Ford's display at the 2011 Consumer Electronics Show
What does this mean to companies?
The future of all industries will be profoundly affected by the new technologies. Just think of the black rotary phone vs. the smartphones and iDevices. The future portends even more profound changes.
The customers of the future, the Y generation and Millennials will be more demanding in how they are sold and serviced. And, don’t forget the boomers who will growingly seek solutions to health, aging, security, preserving their minds, mobility and relationships through technology.
Competition is global and those who can best utilize the new technologies to better provide solutions vs. just products to the world will win.
The U.S. as a country is not producing the citizens we need to compete. We are failing at K-12, education-wise, and with the dearth of scientists and engineers we are producing, cannot compete in the future. Our policies since 9/11 have hurt us in terms of attracting and retaining the best and brightest and there should be a “call to arms.”
The Coca-Cola Company (also not a typical consumer-electronics company), which is top branded, really gets this. Coke sends 40 folks to the CES to understand what the new technologies mean in terms of marketing, branding and customer relationships.
Board members should really consider attending and strongly urge their marketing, product and technology folks to attend. Remember the transistor and silicon chip? We are moving towards a new world when the consumer technologies will drive much of what industry will need to produce, promote, sell and service the offerings of the future.
Can any company which must use or deal with technology afford not to understand what is happening in the future?
Join us next year.
Carolyn Chin is president of NACD’s Florida chapter. She is chairman of the board and CEO of Health Wellness Solutions, a developer and marketer of new pain and brain/memory enhancement products. She also serves on the State Farm Bank board, and is a member of the audit, governance, and ALCO (as chair) committees. Her other board experience includes serving as chairman of Commtouch, and chairman of Kindmark. Ms. Chin founded and managed the global e-commerce services business for IBM.
A couple of NACD’s members recently attended the Consumer Electronics Show in Las Vegas and have blogged their reports from the future for the information of the director community. First: Fay Feeney from NACD’s Southern California chapter.
I just got back from my first visit to the Consumer Electronics Show (CES) in Las Vegas. As much as I enjoyed the first look at the gadgets, my attention was on the CEOs who spoke about this $186 billion U.S. consumer electronics industry. When I listen to a CEO, my focus goes to the support, guidance and contributions coming from the board chair and directors.
It was a great experience, with a very special invite from Walt Mossberg and Kara Swisher ofAllThingsD to attend the Wall Street Journal Digital @ CES session. As a Twitter user, hearing about their business strategy from the CEO, Dick Costolo, was a treat.
I also attended a CEO/chairman session with Jeffrey Immelt, CEO and chairman, GE; John Chambers, chairman and CEO, Cisco; and Ursula Burns, chairman and CEO, Xerox. They gave me a new appreciation for the challenges of leading a global company headquartered in the U.S. The overall mood was optimistic, yet with concern about the need for infrastructure investments to support the future. They are selling to global markets and made it clear that the U.S. opportunities are 300 million people vs. the projected 7 billion worldwide.
The CES highlighted some key trends in the developing electronics industry:
1. Disruption and invading rivals’ turf. Tearing down walls between industries and platforms was the focus. Steve Ballmer, CEO at Microsoft, started his CES keynote with an example about creating a future version of Windows that runs on both Intel-compatible x86 chips as well as ARM-based processors being developed by Qualcomm, Texas Instruments and NVIDIA.
Then Samsung announced a deal with Comcast and Time Warner Cable to put their programs on Samsung’s TVs and other gadgets. This web-based content allows Samsung to provide the cable companies a way to break out of their geographic territories. This kind of deal liberates content, breaking down artificial barriers.
2. 4G and Smartphones arrive. Fast connections are here which make mobile devices work anywhere. Verizon 4G service will cover 100 markets with more than 175 million people by the end of 2011. Lowell McAdam, Verizon CEO, said that faster broadband will spur innovation and create jobs for those who exploit the networks.
3. Tablets and mobile are here to stay. The Motorola Xoom was one of the most impressive among the 80-plus models of tablets that were at the show. Motorola is reportedly aiming to sell one million Xoom tablets in the first quarter of 2011.
4. Glasses free 3D. These still have a way to go to get past the hype. Lots of 3D TVs and content filled the halls.
5. Motion controls move to the PC and beyond. Microsoft Kinect shipped more than 8 million units in 60 days, proving that Xbox 360 gamers want motion control. That quite possibly makes Kinect the most popular consumer electronics gadget in history.
So what can a boardroom do to keep up with these trends?
I believe the time is now to embrace these trends for your business. The time is right for chairmen to explore how the connected, social movement of customers is impacting their boardroom and business. It is becoming a 2011 imperative for business strategy.
Social networks are changing the world, with a mission to empower people by giving them a broadcast platform. They are constructed to make people more powerful, have more control and be more aware. Social networks have given individuals the ability to express their views to friends and the world.
During the session, Kara Swisher asked Twitter CEO Dick Costolo to give us the company’s vision and goal, in light of their recent growth and investments. Twitter Inc. gained more than 100 million registered members this year and approaches the new year with a fresh investment of $200 million. Now it must prove it can live up to its newly elevated valuation of $3.7 billion.
Costolo said that “40% of all tweets come from mobile devices. This is another way of demonstrating mobile’s increasing importance to the social media company. This is up from around 20% to 25% a year ago.”
When I speak with directors about using Twitter as a source of board information, I still get a nervous laugh. Now that I know Twitter’s business strategy I hope we can have a conversation on how it can be used as an independent listening channel for a brand.
“We want to instantly connect people everywhere to what’s most important to them,” he said. He expanded on that by saying Twitter is about connecting for a purpose, not just connecting. Some people use Twitter just to keep up with their friends or interests; others use it as their daily source of news.
The new vision falls in line with Twitter’s re-branding as an information network. It isn’t focused on just social connections but rather on connections between “tweeters” and relevant information, whether that information is from a company, a celebrity or a close friend.
My time at CES strengthened my belief that chairmen who are interested in seeing their boardrooms adapt to this new transparent, engaged business environment will be rewarded. I leave you with a question for 2011: How will your board confront this world changing movement?
Fay Feeney, CEO at Risk for Good (www.riskforgood.com), helps corporate board chairmen monitor, leverage and govern the fast moving landscape of social media and the internet. The impact of this movement is changing business strategy. We apply our expertise in risk management to help corporate boards and CEOs survive and thrive in this digital landscape.