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.
Few companies have disrupted so-called business-as-usual as much as the Wikimedia Foundation. The nonprofit foundation is behind the website Wikipedia, an online, crowd-sourced encyclopedia that has become the fifth most visited website in the world.
At the 2014 NACD Board Leadership Conference, Sue Gardner, the former executive director and current special advisor for Wikimedia, shared her insights on the open nature of Wikipedia and the risks involved in that business model. Her thoughts resonate not only for the technology or publishing companies, but also for corporate boardrooms across a variety of other sectors.
Wikimedia aims to encourage the growth, development, and distribution of free educational content available in multiple languages.
Nobody, however, oversees the contributors.
“I will never read all the articles on Wikipedia, right? Unlike most organizations, there’s no central point of control. It’s very much about trusting the process.”
“For the most part, Wikipedia works great,” Gardner said. The articles contributed to the website are generally cited and thoroughly researched. Contributors to the site actually are very knowledgeable about intellectual property law and copyright law, Gardner said.
“We aspire to contain the sum total of human knowledge.” “But,” Gardner said, “the Achilles’ heel of Wikipedia is that the number of people contributing to the site is small and limited in its diversity.”
“It’s a systemic bias,” she said. “In order to edit Wikipedia, you tend to be living in a wealthy country with a good Internet connection. You have to have the leisure time to edit Wikipedia. What that adds up to is that the typical content contributor is a 25-year-old male grad student in Germany. People from poor parts of the world and women are underrepresented.”
Gardner said she believes that the contributions of women are missing. Several different studies conducted by researchers have found that somewhere between 12 percent and 15 percent of content contributors are women, she said. This dynamic might be a result of what can be a process that is not very collaborative, but more of a rough, confrontational back-and-forth between content generators.
Gardner also discussed the lack of diversity among the technology industry, specifically in Silicon Valley. When she moved to the San Francisco Bay area, she began a three-month tour to seek funding for Wikimedia. In that period, the only women she met were those who held positions such as administrative assistants. None were company leaders or business investors.
“I think the lack of gender equality of the Silicon Valley area is a symptom of an immature industry,” Gardner said.
In addition to a lack of diversity, Gardner said she has another concern: data privacy. While many people are concerned about government surveillance, she is weary of vast amounts of data being collected by for-profit companies.
“I worry not just about what the advertisers know and how the information is traded, I also worry increasingly about companies that are going to be bought and sold for parts,” Gardner said. “The whole game in Silicon Valley is that a lot of companies are just going to go under. What is going to happen to the information that they have? I don’t think we’re worried enough about that.”
Jet Blue Director Virginia Gambale heard the news about the airline’s fed-up flight attendant—the one who exited the plane via the emergency slide, cursing passengers as he touched down on the tarmac—well before some of the company’s senior executives. Social media savvy Virginia uses a web tool to track all mention of companies on whose boards she sits, and as soon as someone tweeted news of the incident, she was on it.
Virginia, a former CIO with Merrill Lynch and Bankers Trust, shared the story at NACD’s Director Professionalism®—The Master Class, held this week in Clearwater, FL. She was one of a number of dedicated NACD members honing her board leadership skills and using peer expertise to identify and explore innovative solutions to persistent and emerging challenges.
Virginia urged her peers with non-IT backgrounds to become more involved in oversight of the company’s technology strategy. “Ask questions,” she said. “If people tell you that deadlines are being missed, that delivery of services isn’t possible, or that it’s just too complicated to get something done, then you don’t have the right strategy and you may need to change your CIO. Ask the CIO to talk about allocation of resources and find out how the dollars are spent between maintenance and innovation. You can make the same judgments as you would on any other area of the business.”
“Ask ‘What is our model for technology leadership?’” advises Virginia, and ask to be walked through the governance model and strategy for partners and communications with customers. “Read the company culture: Is IT a partner or service provider? How closely integrated is it with your lines of business? What, why and where are you outsourcing, and what effect is that having on your risk? Virtual roads and highways need to be maintained, but you can outsource a lot of this and pay only for what you use,” she said.
Virginia urges boards to make sure they have at least one person charged with asking these and other questions. “It can be helpful to have a technology and operations
sub-committee sitting under audit or risk,” she recommends, especially if the company needs to find a new CIO. Failing this, the board should consider hiring an outside consultant.
“Security breaches, brand tarnish, information leaks or, at worst, a death can do your company real harm,” said the director who joined the Jet Blue board around the time of the Valentine’s Day “Ice Incident.” And, she added, “You can’t risk disintermediation—the business boneyard is filled with companies where the strategists at board and C-suite level failed to ask the right questions and fooled themselves for too long.”
“Today, every man, woman and child has access to instant information,” she reminded the group. “Use social media intelligently—it can supply you with useful information about what your customers think. And remember, if a mind created it, a mind can break it. Be mindful of the need for ongoing vigilance and sound practice in information security.”
Other directors sharing their expertise with peers attending NACD’s Master Class included Office Depot Compensation Rear Admiral (Retired) Chairman Marty Evans, Winn Dixie Director Charlie Garcia, who discussed the implications of America’s growing Hispanic population for board composition, and Major General (Retired) Hawthorne “Peet” Proctor, who spoke about the characteristics of exemplary board leadership.
To learn more about NACD’s Director Professionalism-The Master Class in 2011, click here. Already attended the Master Class? Contact fellowships@NACDonline.org to find out how you can become a 2011 NACD Board Leadership Fellow.