Our mission at the National Association of Corporate Directors (NACD) includes continuous learning for directors. In pursuit of that mission our staff also seek out the most exciting events across the country to learn more about the disruptions that will impact members’ boards. I caught up with Erin Essenmacher, NACD’s chief programming officer, after her appearance at SXSW to discuss takeaways from the conference and how corporate directors can continue the conversation on technology disruption.
Erin moderated a panel, in partnership with KITE, titled “Innovation: the Board Director’s Cut,” featuring leadership representatives from Spredfast, OurOffice, and Capital Expert Services. The panel discussed the strategies directors should take in order to best manage technology disruptions at their companies. Highlights from our conversation follow. Katie Swafford: What led your panel to discuss technology disruption? What do you see at NACD—or among NACD’s members—that surfaced this particular topic for the panel?
Erin Essenmacher: Across the spectrum of industries, companies are being disrupted because they are not focused on how new technologies, paired with shifting trends, are completely changing business models. My first major takeaway from the panel was the need to focus on disruption. I don’t even like to say technology disruption, because I think that makes the issue sound too small and prescribed, which it is not. While technology is a big driver of disruption, so are issues like social and demographic shifts and other market-shaping forces as they intersect with technology. Disruption is a huge challenge to navigate for boards at companies of all sizes. We are reaching the point where the swift changes are blurring the lines between industries, and directors should be raising questions with managers about what is on the horizon for their companies, and if their companies are thinking sufficiently about the big picture and the nature and impact of those changes.
In terms of the discussion here at SXSW, the panel was really focused a lot more on flipping the script. A lot of the folks in the audience were on the boards of early-stage companies, and the panel really looked at how boards can add value to companies of all sizes. The panelists brought many perspectives—some are involved on the inside of early-stage companies, some are making investments in start-ups, and they all serve as directors at companies of various sizes, so it was a really interesting discussion.
Swafford:Are there specific skills gaps that NACD has seen when it comes to handling technology disruption or innovation?
Essenmacher: I would say the biggest skill gap is very low tech, but critically important: a sense of curiosity and a willingness to be a continuous learner. When you get to the top of your career and you’re on a board, you’re extremely seasoned and experienced. You’re an expert in many things that relate to the company business model or to the industry you serve, and it’s easy for that expertise to make you complacent. When you have a business environment like ours where things are changing so quickly, I think the most successful boards are the ones that acknowledge that disruption is happening. Most importantly, they acknowledge that because the environment is new, they will not have all of the answers. They are willing to get serious about what’s happening, they are willing to get curious about the gaps in their own knowledge, and they are willing to challenge the management team to evaluate the existing assumptions and expectations of the company culture and business model.
Swafford: Is there an ideal board composition that’s best able to navigate disruption? Is there a leading practice when it comes to board composition?
Essenmacher: I wouldn’t say that there’s an ideal board composition, because every company is different. Composition is going to vary widely depending on industry, company size, and many other factors. An overarching leading practice is to continually consider the board’s composition compared to your long-term strategy as a company. It’s not just about bringing in people that have the latest and greatest technology expertise. There is a critical role on any board for business judgment and experience. We need all of that in our boards. Once you start to dig into how you can think differently about your business model in the face of disruption, you can start to think differently about your board composition. It’s also not just about defaulting to a former CEO or CFO. Boards need to think critically about how diversity of experience, perspective, and expertise can help elevate their strategic discussions to map to where consumers and the market are headed.
Swafford: Where do you foresee some of the topics that came up in the panel flowing over into the Global Board Leaders’ Summit? I would think diversity, board composition, and growth, among other topics, will really flow into the conversations you will be having at Summit.
Essenmacher: We need to challenge ourselves to learn about new trends from the ground-level up. Our panel here at SXSW discussed topics that are important for board members to engage in, so how can we extend this conversation? At the NACD 2018 Global Board Leaders’ Summit we will be hosting the third annual “Dancing with the Start-ups” pitch competition. This event allows us, as board members, to hear what the leaders of start-ups are creating from the ground level—how they are using technology, how they are leveraging or setting trends, and how their ingenuity is disrupting the industry of the company on whose board you might serve. Yes, it’s a fun format and very exciting, but there is also a lot of great content. I think of it as a “meet the disruptors” session. It’s really an opportunity for directors to see the earliest stages of the next iteration of products, services, and trends that are disrupting their industry.
Our Summit theme this year is transformation. The theme provides a wonderful opportunity to keep engaging in this conversation on disruption, but to also look at disruption through a proactive lens. How can we take what we know about the shifting business landscape and leverage it for strategic advantage? On the risk side, we will learn from people who are experts on the important issues of technology and privacy, enabling us to delve into what those issues mean for public trust. We will discuss how new regulations are shifting what disruption means, including the European Union’s General Data Protection Regulation (GDPR). I believe this shift in how companies market their products and how business models are changing is creating an opportunity for large and small companies to learn from each other.
There will be a lot of opportunity to discuss disruption at the 2018 Global Board Leaders’ Summit happening September 29 through October 2 in Washington, DC. Don’t miss out on our early bird pricing through March 31 to save on registration.
One of my favorite comments from an attendee at last year’s Global Board Leaders’ Summit went something like this: “I was expecting to be informed; I wasn’t expecting to be inspired.” For a team that works year-round scouring the globe to discover and deliver to you voices that are shaping the future, that’s about as good as it gets.
This year’s Global Board Leaders’ Summit is on track to be our biggest ever, and one big feature of the Summit remains the same: a diverse array of thought leaders will share paradigm-shifting insights that will challenge the way you think about leadership, give you new tools to approach your directorship practice, and perhaps inspire you in surprising ways.
Here’s a sampling of some of the most exciting sessions at Summit this year:
Michelle Crosby’s start-up Wevorce is not only shaking up Silicon Valley, it’s turning the historic, antagonistic model of divorce on its head. The company’s mission is to “help couples ensure their divorce is less damaging to themselves, their finances, and the people they love.” Crosby was named one of the American Bar Association’s Legal Rebels in 2014, a distinction reserved for “lawyers who are breaking new ground using technology.” “Every institution is subject to change, and the more entrepreneurs who learn to work in the system to create that change, the further we’re going to get,” Crosby said in an interview with USA Today. In an intimate fireside chat, Crosby will discuss innovation, entrepreneurship, disruption, and how the company applies the Wevorce model to talent management inside the company.
Howard Ross, one of the most highly rated thought leaders at last year’s Summit, is back again to share insights from his groundbreaking work on unconscious bias, diversity, leadership, and organizational change. The question directors should ask themselves, says Ross, is not “Is there bias?” Rather, directors should ask one another, “What biases do we have that keep us from making choices counter to the values that we say we believe in?” Ross will open the Diversity Symposium on Saturday and will lead an in-depth workshop on Monday focusing on board dynamics.
The United Nations estimates that by 2025, two-thirds of the world’s population may face fresh water shortages, a critical concern for business and society. Whitewater rafting guide turned CEO Pat Crowley is betting that the solution to that crisis might literally be in our backyards. Crowley’s passion for the outdoors led him to work as a water resource planner, which drew his curiosity to crickets, of all things. “I heard about insects as a more environmentally friendly form of nutrition. From a water perspective, it was clearly a game-changer,” he said. Crowley founded Chapul, a company that makes cricket-based energy bars, in 2012, “to leap over this psychological hurdle of eating insects in the United States.” With explosive growth— 500 percent annually for the past two years alone—Crowley is on track to break through those barriers. On the summit mainstage on Monday, Crowley will discuss what it means to be part of building a new industry that is challenging societal norms, reshaping the competitive landscape, and may just help save the planet.
Phil Gilbert has been working with start-ups for the past 30 years, the most recent of which was acquired by IBM in 2010. Now Gilbert leads IBM’s design team with a focus on an empathy-centered workforce. Bringing a start-up mentality to 100-year-old company can be a challenge and almost immediately Gilbert was forced to confront a disconcerting question: “Is the entire way we’re working an anachronism?” Embracing that hard truth has been nothing short of transformational. Gilbert comes to the Summit mainstage to discuss lessons learned in this transformation. “We’re at an interesting crossroads in business. I think the way business is done and businesses work inside themselves has got to fundamentally change in the twenty-first century,” he said.
As managing director of famed Silicon Valley venture capital firm Andreessen Horowitz, Scott Kupor has been part of building brands like Airbnb, Buzzfeed, Facebook, Foursquare, Lyft, Pinterest, and Skype—companies that have become synonymous with disruption. “Things that are fringe today might become mainstream over time,” Kupor explained on Fox News back in June, describing the philosophy that underpins Andreessen Horowitz’s approach to finding the next disruptive trend. In a mainstage fireside chat Tuesday, Kupor will discuss this philosophy in context with everything from M&A activity and shareholder activism, to IPO trends and the next big innovations he sees poised to disrupt the business landscape.
When Chelsea Grayson took on the role of general counsel at American Apparel, she faced a daunting task: to help turn around a company that was operating in an increasingly competitive industry and was coming off of a tumultuous series of events, including high-profile sexual harassment allegations, layoffs, bankruptcy, and protests. In February, Grayson told the legal blog Above the Law, “I have been in-house for over a year now, and I have encountered just about every legal issue a general counsel might experience in an entire career.” Next month, Grayson will share her insights on governing complexity, a subject she has become adept at navigating during her tenure at American Apparel.
These are just a few snapshots of the incredible line-up of thought leaders who will join us in September. Want to learn more? View the full list of speakers and sessions at www.NACDonline.org/summit.
Speaking at NACD was a highlight of my year, as the audience was forward-thinking, eager to learn, and willing to grapple with tough questions in order to reach good answers. The discussions after my talk were almost as much fun as the talk itself, and there was significant appetite for a reference sheet to some of the bigger ideas I’d outlined. I hope that the summary pulled together here will prove helpful, and I welcome remarks, insights, or questions about any of it!
Disruptive trends in technology, culture, and business are converging. That convergence is an opportunity for businesses that recognize how to proceed.
Code: Technology is cheaper, faster, and better than ever before.
From software toolkits to education outlets, cloud computing to open-source big-data structures, there have never been so many ways for a motivated player to exert so much leverage so rapidly. Competitive advantages and resources that once belonged exclusively to large companies are increasingly not just accessible but freely available. In many cases, these platforms even invert such advantages—meaning that individuals who are part of porous, open groups are able to deploy better solutions faster than corporate counterparts by leveraging their communities. And all at low to no cost.
President Obama’s first campaign for the White House is a prime example of this phenomenon: he hired data specialists who used a simple method to computationally test different versions of his website in order to see which ones were generating more donations. Using this approach, he exceeded his projections by an additional 4 million e-mail addresses, a click-through rate of 140 percent, and $75 million more than was expected.
Culture: Transparency, meritocracy, and a willingness to disrupt anything characterize the new technology (and business) marketplace.
The age of playing by the rules—any rules—has largely gone by the wayside. When it’s possible to conduct corporate inversion online in under 20 minutes using a digital toolkit provided by a foreign nation state, it’s clear the playing field has changed. This is exactly what Estonia’s new “E-Estonia” initiative—which grants corporations a type of citizenship supported by cryptographically backed authentication—has been accused of enabling.
The people developing new solutions and creating new technologies take for granted an entirely different set of social (and moral) norms, which have no respect for the way your business is currently structured.
Competition: An exploding black market and a global tipping point that will occur when the remaining two-thirds of the planet come online over the next five years herald an incipient tidal wave of strange new competitors.
If you think the Internet has been disruptive during the past 20 years, you haven’t seen anything yet. The motivations and expectations of people completely new to technology differ from those of people who have already internalized it. Much like the toddler who doesn’t know what to do with a computer mouse and thinks a computer screen is broken when he can’t swipe it, new users of innovative technologies will have different expectations for what your company should provide. When you mix in a booming black market and a surging cascade of disruptive technologies—everything from drones to 3-D printing to dial-your-own genomics—you have a strange new world indeed…and one coming at you very, very quickly.
ACTION ITEMS: There’s good news in all this. You can compete just as well—if not better—by recognizing that the game has changed and adapting to the new rules.
1) Experiment, experiment, experiment.
It’s faster, cheaper, and easier than ever before to invent, test, and iterate. It’s what your competitors (and they are legion) are doing—especially the outlier startups that you so fear will flip your market as Uber did the medallion cab industry’s. The good news? You can do exactly the same thing. Even better, once you do, you already have a supply chain, established market, and deep resources to drive these new industries ahead of smaller first-time players.
What to ask your senior management: How are you implementing more agile and iterative development methodologies, and why?
2) Systematize culture change.
Empower your employees to act on your behalf. Legitimize risk. Reward insight. While this strategy looks good on paper, it is nearly impossible to execute, especially in highly efficient, competitive, and well-established organizations. Do it anyway, and you will find yourself at the helm of one of the most powerful entities in today’s market: A company that effectively innovates as a matter of course and knows how to build businesses and deploy products accordingly.
What to ask your senior management: How are we empowering our employees, at every level, to change the way our company operates? What evidence are we measuring that indicates this strategy is working?
3) Risk everything.
All business is about risk. But many companies have lost sight of the fact that this means not just mitigating risk but also embracing it. The emergence of new technology is confronting every industry with massive shifts that entail plenty of risk in the most negative sense. But the opposite is equally true, and it’s only by seizing the opportunities this time of change represents that you’ll emerge victorious. And who knows…you might even make the world a better place while you’re doing it.
What to ask your senior management: If you had to increase revenue by 25 percent this quarter, what would you try? Why aren’t we trying that?
I live every day in the future, metabolizing the new technologies that are slipping over our event horizon and into daily life. It’s a scary place to be, but it’s also one that offers boundless hope. Times of change are enormous opportunities for advancement. Those of us who experiment voraciously, learn quickly, and adapt effectively will chart the course for how human commerce unfolds over the next two decades. Our way will become the “new normal” and possibly set standards that will shape lives for generations to come. It’s not a time without risk, but it’s also a chance to change the world. What more could you want?
Josh Klein advises, writes, and hacks systems. He wants to know what you think.