C-Suite / Stay Current, Remain Relevant: A Director’s Guide

In the past two decades, corporate boardrooms have undergone a rapid pace of change heretofore unseen in the history of American business. The structure of the boardroom itself has changed following legislation and regulation from Sarbanes-Oxley and Dodd-Frank, and advancements brought upon by the technological revolution seemingly alter strategic oversight at a moment’s notice. And those are just several large-scale examples, as every individual company has its own challenges and opportunities in today’s dynamic business landscape. Maintaining a high level of sophisticated understanding amidst all this change requires time, energy and attention. It’s with that perspective that C-Suite Editor-in-Chief Dan Marcec sat down with Betsy Atkins, who has sat on 27 public company boards and more than twice that number of boards in total, to discuss what it takes for a professional director to fulfill their fiduciary duties in the current climate. In short, if you’re looking at board service as something to do between golfing and yachting, this may no longer be the right “retirement business.” Atkins provided her perspective on what it means to stay current and remain relevant in the boardroom.

C-Suite: Over the course of your career, what has inspired you to become a board member at so many different companies? What do you look for when you’re evaluating opportunities for director service?

Betsy Atkins: I’ve served on 27 public company boards, probably 55 or 60 in total if you include private equity, venture capital and advisory boards. For me, it always starts with the CEO. A CEO must have a vision that can really disrupt the industry. If the CEO is an inspirational leader with a real plan to grow the company, and if there is some element of transformation in the business, then it’s intriguing to me. If it’s a small company, a niche player, or tied down with restructuring or cost-cutting—more of a value than growth player—I’m not the optimal fit.
In addition to an inspiring leader with growth potential, there needs to be a macro trend that’s interesting. It could be any business. I’ve been in financial services, CPG, healthcare, manufacturing and tech, pretty much every sector. Uber or Airbnb are examples of leadership in the gig economy and the sharing economy, respectively. Etsy and eBay are on the edge of the macro trend in the online marketplace model. Let’s talk about insurance, a less obvious example. You could say “an insurance company, why would that be interesting?” Insurance has an old model with brokers, and new millennial customers just don’t want to deal with that. An insurer who embraces the macro trends of AI and machine learning as ways to take costs out and deliver services to the consumer, and is willing to embrace change? Now that is a lot more intriguing from a board perspective.

What is your executive background, and how did that prepare you for board service? In what ways do those skill sets and your perspective of serving on multiple boards factor into
seeking—and landing—new board positions?

Atkins: I’m an operator by background—writing business plans, building companies and thinking about how to accelerate the company. Whether it’s B2B or B2C, I take a multi-tiered and hybrid approach. You have to know your own background to know what type of perspective you might bring to a board, and how you can make a difference.

How have board discussions and policies around evaluation, refreshment and diversity evolved, and in what ways do they look different now than when you first became a director?

Atkins: I think that boards are more open than they were in the past to renewing and evolving themselves. Boards are now more forward-looking, as opposed to a forensic oversight group. Before
you’d say, “How did we do last quarter against the plan?” Now, with the velocity of change in the marketplace, we’re asking whether we need a digital director or more diverse viewpoints. I don’t think that we’ve seen a great tsunami of change yet, but we have seen much more open discussion about board refreshment. That’s good—it helps “future proof” both the board and the company. If you go back in time to the horrible Enron and WorldCom governance failures, those triggered the creation of an executive session for the board to talk as a group. That transitioned into a phase where boards were thinking more strategically and having more in-depth annual strategy reviews. Today, that’s evolved into multi-day, offsite board strategy retreats so they can focus even more. Boards also realized they had to understand technology more as digitization took hold. And over the last few years, you’ve seen the rise of activism. That’s an important factor, and most boards haven’t really prepared for it.

That’s a great outline of what has been happening at the board level. In that time frame, how have these changes reflected on the time commitments, time restraints and educational requirements for directors on an individual basis, and what have you seen in your own experience?

Atkins: Time commitments have gone up significantly if a director’s really going to be engaged and add value. That doesn’t mean everybody puts all the time in, and I’m sure some board members don’t do the pre-read and aren’t coming as fully informed as they should. But I think that’s changing. The time and engagement demands are higher, and directors recognize what they have to do to fulfill their role. They have to take responsibility to “self-educate,” and with so much information available on the web today, there’s just no excuse.

That’s the core of what I wanted to speak about. Having served on multiple company boards at a time, what are some of the different issues you’ve had to balance? What are some strategies you’ve employed to do so?

Atkins: The old model of being a director in the 1990s is gone. The business models and the competitive landscape didn’t change that fast then, and neither did the composition of the Fortune 500. Now, you’ve had 50 % turnover on the Fortune 500 in just in a decade. That would have been unheard of 35 years ago. I don’t think you can be as effective a board member if you’re pretty much retired. You can’t expect to just play golf and show up to boar d meetings now. In the ’80s and ’90s, when things didn’t change so fast, your past frame of reference may have been more valuable. Now you have to be in the business flow more than ever, whether it’s private equity, a hedge fund or financial advisory firm. Directors have to keep up on major macro trends for whatever industry they’re in. To be a good board member, you have to be contemporary and current. If you’re not in the daily business flow, it’s hard to appreciate the dynamics and the velocity of change that’s required to be a good steward for your shareholders, your management and your customers. I think you have to actively make a forward investment in having a team to know what’s going on in the marketplace. You have to pay attention beyond just the financial analysts for the banks and the investment analysts for the companies. You have to hear from the industry analysts, go to conferences, stay up-to-date on articles and trends, and listen to the earnings calls. And not just for your own company, but your competitors. You have to invest the time if you’re going to add value.

And there’s an investment to have a global perspective, too. Even if you’re not on the golf course and are at conferences and are doing a lot individually, it’s not tenable to keep up with everything. If you’re fully engaged in a board meeting or fully engaged in something else that is a valuable use of your time, you still could be missing something if you aren’t cognizant of what’s happening on a global scale.

Atkins: I think so. I make a point of serving on both domestic and international boards because I think the marketplace for almost all categories, maybe with the exception of retail, is global. And even if you’re in retail, your supply chain comes from overseas. So you have to understand the regulatory environments, duty taxes and other financial considerations, even if your retail business is domestic. It’s very important to think globally, meet with and learn about competitive peers, and enable technology and innovative business models. I don’t think you can do it alone. I think you have to invest in resources to support you and succeed.

Stepping back from issues specific to any given company, what is something that all boards will have to consider unilaterally in 2018?

Atkins: One of the biggest factors is going to be the velocity of change in the life cycle of a company. In the ’90s, when Jim Collins wrote Good to Great, he said that almost 40% of all companies don’t exist 20 years later. Now, it’s well over 50%, and they don’t even last a decade. So you have to ask where your company is in its life expectancy, and what are you doing to keep it contemporary. If you think that the way you’ve been doing business is how you’ll do business in the future, you’re probably missing out on some risks. Even young companies can be old. You have to engage in some healthy paranoia with respect to new competitors, digital competitors, new business models and macro trends. For example, the gig economy and sharing economy affects one of my boards, Volvo, because they affect how people will buy cars in the future. The second thing everyone will be thinking about in 2018 is digital transformation. Everyone speaks about it, but they don’t all know what it means. Look at mobile as an example. In the year 2000, Nokia had a dominant 74% share. Today, hardly anyone’s even heard of them anymore. Motorola dominated the rest of the decade and now they’re dismembered. Palm—remember the hot Palm Pilot you wanted to have? Gone! Dead! And then by 2007 you had the iPhone.

Digital will transform your business. You may use it to acquire customers using mobile enablement and omni-channel marketing, or create unique curated content using marketing automation, or take costs out of your supply chain. But somehow, it will affect your business. Boards have to understand digital transformation whether you’re a consumer company or not, whether you’re B2B or B2C. How will you use technology to be more efficient or competitive and use new business cycles and new business models? These are the macro themes that are going to shake businesses in 2018.

Betsy Atkins is a three-time CEO, serial entrepreneur and Founder of Baja Corporation. She has co-founded enterprise software companies in multiple industries including energy, healthcare and networking. She currently serves on public company boards Cognizant, Home Depot Supply, SL Green Realty and Schneider Electric. She is also a member on the board of Volvo Cars (private) and the SAP Advisory Board. She is an expert at scaling companies through hyper growth and leading them to successful IPO and acquisitions. At Baja Corporation, Betsy has built three early stage funds and has made early investments in companies such as Yahoo, eBay and Selectica. Betsy is a corporate governance expert with an eye for making boards a competitive asset. Her corporate board experience is vast and covers multiple industries including: technology, financial services, healthcare, retail, automotive, manufacturing and logistics. Previously, Betsy was the CEO of NCI, a food manufacturer creating Nutraceutical and Functional Food products. NCI created the PowerBar and healthy snacks for Kraft, Nabisco, etc. Betsy was also the CEO of Clear Standards, which developed enterprise level software for energy management.

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