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10 Questions Dominating Boardroom Agendas for 2016

Boardrooms are facing great unpredictability and a breakdown of business models in their industries, which changes the role of directors today. We need directors who are synthesizers of information—who can see the smoke over the horizon and bring this insight into their companies.

At WCD’s fall Americas Institute held at Coca-Cola Company headquarters in Atlanta, directors from across the globe discussed top board concerns and how directors are preparing themselves for the challenges of 2016 and beyond. Here are 10 questions uncovered that are dominating boardroom agendas for 2016.

1. Is the board truly thinking globally? “Many of our companies have global footprints and distribute global products, and yet, I dare say, are not what I would call a global company with a global DNA,” said Elaine La Roche, Director of Marsh & McLennan Companies, Inc., China Construction Bank, and Harsco Corporation; and Senior Advisor, China International Capital Corporation. “The population of the world, [which] is 7.3 billion today, will add almost another billion by 2025. Yes, the demographic growth is going to be coming from China, but also from India, Indonesia, and Africa. How many of you have had a conversation about those countries in your boardroom recently?”

“Demographic growth is going to be coming from China, but also from India, Indonesia, and Africa. How many of you have had a conversation about those countries in your boardroom recently?”

2. How can companies leverage “glocalization”? “You can’t reach many local markets around the world if you don’t produce innovation locally,” said Adriana Machado, formerly the Latin America Government Affairs and Policy Vice President at General Electric. “Companies can then employ ‘reverse innovation’ and find opportunities to create a product in a less developed country, and then take it globally afterward.” Companies such as GE are some of the leaders making the models of glocalization and reverse innovation co-exist, bringing products tailored to emerging markets—such as portable medical devices—and selling them in wealthy countries.

3. Who’s accountable for the company’s cybersecurity? “Organizations are still lacking in cybersecurity preparation,” said Olga Botero, Founder and Managing Director of C&S Customers and Strategy, Senior Advisor at Boston Consulting Group, and Director of Evertec, Inc. “True cybersecurity is based on accountability for each person in an organization. It doesn’t matter whether it’s someone in sales or the production area or whether it’s someone in management—security is everyone’s responsibility, and if you don’t have a very strong culture within companies, we have open windows.” Boards are responsible for creating the conditions upon which a culture of preparedness and accountability can be built.

4. Where is the data risk in the organization? “I think the biggest thing to remember is that data risk isn’t just about IT or those involved in the security area,” said Kathy Misunas, Director, Tech Data Corporation. “This is about every employee thinking about security—it’s not just about those handling customer data, Social Security numbers, and credit card numbers. Consider employees in areas such as M&A and investor relations since there may be sensitive data and risk embedded in these parts of the organization. I believe that many companies are looking at security through a narrower lens than is required.”

5. What is included in the company’s innovation “ecosystem”? “The board should be looking at a company and asking itself: are initiatives praised, are they celebrated? Are failures embraced?” said Giannella Alvarez, Chief Executive Officer, Harmless Harvest, and Director, Domtar Corporation. “Is the innovation ecosystem comprised of internal and external stakeholders? Do we involve our employees in innovation? Do we involve our suppliers? Do we involve academia? Do we involve startups?” More and more, innovation is an open system, and boards can help open these doors.

6. What new business model should the company be thinking about? “Innovating isn’t always about new technology; it’s often about business model innovation,” said Teresa Amabile, Professor & Director of Research, Harvard Business School, and Director, Seaman Corporation. “Think about Uber: Uber didn’t invent cars. Uber didn’t invent the idea of a stranger giving a ride to someone else—that’s been around as long as there’ve been liveries and taxis. But Uber invented a new business model for doing that. FedEx didn’t invent package delivery, but it invented this crazy new business model for doing that.” Boards need to be aware that the culture is what will make the company open to new business models. “As Peter Drucker said, ‘culture eats strategy for breakfast,’” said Amabile. “You can have the best strategy around, but if you don’t have the appropriate culture within your company to execute it, it will fail.”

7. How does a board balance innovation and risk? “Boards must look short-, medium-, and long-term: what is our role in thinking about innovation?” said Anne Darche, Owner of Pertinence and Director, Groupe St-Hubert, Groupe Germain Hôtels, and MU. “Boards have to look at a balanced innovation portfolio from a risk perspective. You do need incremental innovations, where you’re basically tweaking products that exist already—maybe it’s a second generation or third generation of products. These are lower risk, lower return, but you need those. Then you also need the more disruptive innovations: those with longer return and higher risks, but will be the ones to bring you to the future. These are the innovations that guarantee that you will be here 15 years, 20 years from now.”

8. Where should the board spend its time? “One of the problems is that we’re spending too much of our time on the past and not enough on the future,” said Donna McManmon, Regional Sales Director at Diligent Corporation, which creates collaborative software for boardrooms. “We spend a whole lot of time on quarterly reports, audit reviews, and budget compliance, and not enough on strategy, risks, trends, disruption, R&D, and innovations. As it’s said, a good board brings oversight and insight, but a great board also brings foresight.”

9. How will we manage shareholders? Shareholders are forcing boards to up their communications game, both ways. “Sound pay practices were one of the issues that started this stronger voice from shareholders, but it was really just a Trojan horse,” said Maria Elena (Mel) Lagomasino, Chief Executive Officer & Managing Partner, WE Family Offices and Director of The Walt Disney Company, The Coca-Cola Company, and Avon Products, Inc. “There is now a whole process where shareholders want more and more communication about everything, and boards are becoming much better listeners. Boards will need antennae to be able to really listen to what’s going on with shareholders.”

10. How can a board bring the right voices to the table? “People who all think alike might not ask questions of each other and may not probe,” said Helene D. Gayle, MD, MPH, Chief Executive Officer, McKinsey Social Initiative; Director, The Coca-Cola Company and Colgate-Palmolive Company. “I think the fact that we’re all taking our responsibility more seriously, and that we’re scrutinized more, opens up the opportunity to also have a greater number of different voices at the table. Not only women’s voices, but diversity across all backgrounds and demographic factors.”

“A great director at the right place, at the appropriate time, can save a company going through disruption,” says Stautberg.

Nancy Calderon – KPMG Global Lead Partner and Director of WCD and KPMG India’s Global Delivery Center, Ltd. – echoes this: “The best directors can navigate all these disruptive forces, and at the same time help their own companies disrupt boardroom thinking enough to ensure their companies have a future.”

For more information about WCD and boardroom trends, please contact Suzanne Oaks Brownstein or Trang Mar of Temin and Company at 212.588.8788 or [email protected]


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