Uncertainty, Courage, and Hope: Key Lessons From NACD Summit 2022

“Uncertainty” is a term used in almost every boardroom conversation nowadays. For example, the future of the workforce is uncertain as workers call for continued flexibility post-pandemic in where and how they work, and the balance of power seems tipped in favor of employees. How inflation, supply chain issues, geopolitical tensions, and the US Federal Reserve’s actions will impact the economy, not to mention corporations, in the coming months is uncertain. But to say that we are living through a “period of uncertainty” would be inaccurate.

“We are not living through a period of uncertainty; that would imply that it’s going to end,” Abhi Shah, a director of AML RightSource, Class Valuation, and Ulteig, and chair of Yuva Unstoppable, said during a session at NACD Summit 2022. “I think uncertainty is now the new norm of our changing world order. Uncertainty is the only certainty looking forward.”

With uncertainty and constant change now expected, Shah suggested that companies and their boards learn from the past few years of disruption and act on these lessons to reimagine and rebuild for the future. Pulling from four days of in-person NACD Summit 2022 programming, below are actionable lessons boards can take back to their own boardrooms.

Digital transformation should be central to the processes of reimagining and rebuilding. Boards should remember that digitally transforming for competitive advantage is not about what the heads of technology or information security seem to be implementing in their own silos. “The good news in demystifying it is that it’s not about what technology you decide to use, regardless of whether it’s artificial intelligence, blockchain, quantum computing, or the Metaverse,” Shah added.

Digital transformation should involve leveraging emerging technologies to reimagine the strategy and the company’s business model to be resilient and competitive going forward. To have dialogue with board peers on how to do this effectively, Shah suggested asking the following six questions:

1. How do we envision our core strategy and business model changing and how can we evolve our digital strategy to support that?
2. How are we going to drive this change and who will lead the effort?
3. Do we have the right people in the boardroom and among the executive team, and do we have the right culture to be successful?
4. Are we going to build or buy digital capabilities?
5. How are we going to pay for this?
6. How are we going to measure success? What are the key metrics that the board will receive reporting on?

Board deliberations should be focused through a purpose, strategy, and risk lens. Whether the board discusses director engagement, talent, competitors, digital transformation, or mergers and acquisitions, it is imperative to have these discussions through a strategic lens—with the company’s purpose in mind. Purpose, or why the company exists, and strategy, or how the company achieves goals in line with its purpose, influence one another.

“The second piece when you think about strategy inevitably is risk,” Angela Brock-Kyle, a director of Bowhead Insurance, Hunt Companies, and Mutual Fund Directors Forum, said on stage during the session “Summit Reflections: Closing Panel” on Oct. 11. “What risks do you take? When do you take them? How do you take them… or do you not do anything? Those are decisions you have to make in balance.”

Applying this lens to discussions about continuing inflation and a potential recession in 2023, Brock-Kyle suggested a few questions boards can ask themselves: “How high will [inflation] go? How deep will [a recession] be? How long will they last? How do they work together to balance the path forward when that happens, and what are some of the other factors that influence both of those?”

Domestic companies are not immune to geopolitical tensions, which will continue to stand front and center in the months and even years ahead. Though we cannot predict how the focal point of geopolitical tensions will shift in the coming months, we can predict that such tensions will continue to pervade both boardroom agendas and the thoughts of all corporate directors and workers.

“There’s no organization, be [it] domestic or global, that is not touched by the geopolitical changes that are going on in the world,” Catalano said. “Even if you’re a domestic company, you were impacted by supply chain issues throughout the pandemic. One of the things that directors have always needed to be aware of, and now even more so, is the impact on your organizations from everything that’s going on around the globe, not only because it affects the business, but [also because] it affects the mentality of the people who work in your organization and they care about things that they may not have cared that much about 20 years ago.”

Talent oversight isn’t only about the workforce of the future; talent in the boardroom is equally as important. What once were board-level conversations about pay and benefits have developed into conversations about how to attract, retain, and develop talent. This is now taking place against the backdrop of a shifting working environment, in part accelerated by the COVID-19 pandemic. Anna Catalano, chair of the NACD Texas TriCities Chapter and a director of Frontdoor, HollyFrontier, Ecovyst, Hexion, and the NACD Corporate Directors Institute, emphasized that these conversations have become so important and complex because without the right talent, no company can deliver on its strategy.

The same concept applies to directors. Every seat in the boardroom should be filled by someone who has the right competencies to support the strategy and a willingness to engage and learn. If there are members of the board whose skill sets no longer align with the company’s strategy, or if individuals simply are no longer effective, then boards must have the courage to put in place a system of offboarding—and directors should have the courage to recognize for themselves when it is their time to leave.

But courage should not only be limited to acts of offboarding. Boards must have the courage in the coming months to face complexity in their roles and the unknown, to make difficult decisions, but perhaps most of all, to have hope.