Tag Archive: NACD D100

NACD Directorship 100 and the Directors of the Year: Legacy of Hon. Juanita Kreps and the Power of Chemistry

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Oct. 19, 1987—aka Black Friday—was noted for an historic 500+-point market plunge. But that day was not all bad. That evening, before a small crowd of staunch supporters impervious to market panic (including yours truly), the Hon. Juanita Kreps, past secretary of commerce, received recognition as the Director of the Year by the National Association of Corporate Directors (NACD)—the first award of its kind.

If the crash that resounded 25 years ago showed the fragility of capitalism, NACD’s recognition of Kreps showed its strength. One was all about alchemy; the other all about chemistry. Let me explain:

In his classic book the Alchemy of Finance, released shortly after the crash of 1987, financier George Soros cites the event as an example of “reflexivity.” Soros told us that in stock markets, as in the universe (per Dr. Werner Heisenberg’s uncertainty principle) perceptions influence reality. Soros calls this “alchemy,” referring to the old pseudoscience of the Dark Ages. He wanted to highlight the element of mystery behind markets. One cannot grasp them through science alone, Soros correctly implies.

By contrast, NACD’s choice of Kreps in 1987, as well as many other honored directors over the following 25 years, could be better compared to chemistry than to alchemy, given the significance of chemistry in the boardroom and governance community.

The award received by Kreps has grown to honor more than one category of director. NACD also recognizes a director each year for the B. Kenneth West Lifetime Achievement Award in honor of our late chair Ken West, who had been the CEO of Harris Bank and who at the time oversaw governance research at TIAA-CREF. In 2012, this highest accolade goes to Jack B. Lowe Jr., chairman, Zale Corp. and TDIndustries. The NACD Director of the Year awards, once given to one director per year, have expanded to recognize additional directors. In 2012, there are two recipients: William S. Ayer, chairman, Alaska Air Group and Puget Sound Energy; and Linda Rabbitt, lead director, Towers Watson and chairman/CEO, Rand Construction.

Additionally, the NACD Directorship 100 annually recognizes and honors both corporate directors and governance professionals. The number 100, unlike the 118 chemicals currently in the periodic table, is arbitrary, but the number is fitting, given the importance of “chemistry” in the boardroom and in the governance world. People rarely accomplish things in and of themselves. They interact with other individuals and institutions to create valuable compounds. Nominees for the NACD Directorship 100 and the NACD Director of the Year are evaluated for integrity, mature confidence, informed judgment, and high performance standards for the work of the board.

As I look back on that night, I remember how surprised I was that Kreps had invited her entire family to the event. At the time, I envisioned the successful woman as an Amelia Earhart flying solo. Not so for Kreps. In fact, she had resigned her commerce post early to attend to a crisis involving her husband, Dr. Clifton Kreps, who was despondent over the fact that their careers were forcing them to live apart. Unless my memory is playing tricks with me, Clifton Kreps and their three children were all at her table for the event. Compound chemistry indeed.

In the modern chemistry of the boardroom, we would have said the fundamental elements Kreps brought to her work, as a woman who rose from Kentucky coal town poverty to national leadership, were grit, integrity, and a sharp mind—as witnessed by her peers in the boardrooms. They too were there that night 25 years ago. I recall seeing representatives of some of her boards, which were no less than the teams overseeing corporations that brought us the enduring brands of AT&T, Citi, Chrysler, Deere, Kodak, Penney, Nabisco, and Zurn—as well as the investments of TIAA-CREF.

It’s a search to look beneath the surface of appearance to see the reality of character. That’s what makes the right chemistry in the boardroom and the right decisions for our long-term economic future. Stay tuned for more NACD Director of the Year and NACD Directorship 100 profiles in future blogs.

Problem-Finding: A Vital Board Skill

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Solange Charas is the president of Charas Consulting, Inc. and a senior-level human capital professional with 20-plus years of experience as corporate CHRO and consulting firm practice director. She is currently pursuing her doctor of management at Case Western Reserve. She has served as the chair of the remuneration committee for a NASDAQ-traded company.

Michael Roberto, author of Know What You Don’t Know: How Great Leaders Prevent Problems Before They Happen, shared his insights with the 200 directors who attended last week’s NACD Directorship Forum in NYC. He explained why it makes more sense to concentrate on “problem- finding” than “problem-solving.” Practicing problem-finding helps leaders spot and address emerging concerns while they are still manageable and before they turn into disasters. It is a vital board skill.

Roberto opened his talk with examples from the Cuban Missile Crisis and recounted his conversations with Robert McNamara about that perilous time. He also gave examples from the 2003 NASA shuttle failure from his interviews with then Space Shuttle program manager, Linda Ham. Using these two examples he illustrated the fundamental value of actively seeking out problems before they find you.

I think his presentation had the attention of the audience—there was something seductively compelling about the idea of using proactive techniques to anticipate and avoid dangerous problems. Yet, despite our intellectual agreement that being proactive is always more effective than being inactive or reactive, what’s the trick? How do we set about successful problem-finding?

Roberto offered these seven steps to becoming a proactive problem-finder instead of a reactive problem-solver:

  1. Circumvent the gatekeepers – get unfiltered information.
  2. Become an ethnographer – watch what your constituents are doing and stay alert to what’s happening in the periphery. Watch for “Hirschman’s exit” or “voice” phenomena;
  3. Hunt for patterns – try to draw on past experiences but don’t get caught in the trap of misusing analogies.
  4. Use intuition to “connect the dots;” lessons learned from small problems can contribute to understanding the path of large problems.
  5. Encourage innovative thinking and risk-taking on a small scale – piloting programs and experimenting may be the key to learning. “Fail often, succeed sooner.”
  6. “Watch the film” – what is your team and the competition doing? “Adopt the military’s “After Action Review” (AAR) process to learn and improve;
  7. Create a climate of information-sharing – encourage people to speak up and have a mindset of “openness.”

In my opinion, our shareholders and stakeholders expect us board members to do our best to steward the organization. To do that, we need to listen to our inner dialogue to understand what can inhibit our participation in important activities. What can cause us to abdicate our leadership role? Is it fear that we may be viewed as pariahs and shunned if we voice a dissenting opinion?  Do we feel safer if we ignore an issue? Like the Ravenous Bugblatter Beast of Traal in Douglas Adams’s Hitchhiker’s Guide to the Galaxy, do we believe that if we can’t see the problem, then it can’t see us? Or do we assume that someone else will tell us about the problem when it get big enough? All perilous pitfalls—which might be avoided by practicing problem-finding.

Read more about the NACD Directorship Forum here and here.

To reserve your seat for the NACD D100 Forum, November 8-9 at the Waldorf Astoria, NYC. Sign up to learn from Jet Blue director General (rtd) Stanley McChrystal, Polymer Group CEO Ronee Hagen and HealthSouth CEO Jay Grinney among others, and be our guest at the gala dinner celebrating the NACD D100 and Director of the Year honorees.