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Dear Betsy,
I sit on the board of a $500 million financial outsourcing firm.  We often have discussions about the risk of disruptive innovations and what they will mean to the growth of our company.  In your view, how often should we be talking about topics like this?  Once a year?  More often?  How can we address disruption risk in an organized manner?

I believe it is time for boards to consider either adding a strategy/technology committee or augmenting the scope of one of the current standing committees to include a specific mandate to regularly review the company’s strategy through the lens of innovative business models like the “marketplace model” of eBay, VRBO, and Uber. The committee could review the use of software enablement, cyber, mobile, social, artificial intelligence, analytics, and other major themes and look at how the company is using technology to either take costs out or engage more deeply with its customers, since these technologies are definitely disrupting businesses. Additionally, the committee could better understand the company’s future development road map for products
and services, with an eye to the external competitive landscape. I would suggest that this strategy/tech oversight be performed regularly, i.e., as part of a quarterly committee review. -B

Question posted on

Dear Betsy,
Our board is having a hard time with the whole concept of board refreshment. About half our board is made up of members who have been on the board for more than 10 years. Some of us think that collective experience is a valuable asset and are against instituting a board tenure policy. Others (the younger directors) believe boards today should definitely have a tenure policy that limits time served. What are your thoughts?

Board refreshment is an emotionally charged subject and one that is taking hold among boardrooms globally. A growing number of countries in Europe, for example, are embracing guidelines that recommend tenures between nine and 12 years as a best practice, and many European boards have defined term limits. While there is value in the institutional memory around the board table, it is important to augment the board with new perspectives, especially since the rate of change corporations face in the competitive marketplace has increased geometrically. I think the best way to thread the needle is to put in a term limit but allow the governance committee to make an exception where needed, just as the governance committee has the same authority to grant an exception on retirement age policies and auto resignations triggered by a role change. –B

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