Clearhouse
It's Never Been a Better Time to Open Up the Boardroom: Here's Why
Publication Date: July 24, 2018

Coco Brown is founder and CEO of The Athena Alliance, a non-profit organization dedicated to building the modern boardroom and advancing women in the top ranks of leadership. Alison Davis is co-founder of Fifth Era and an Investor, Board Director and Author.

Time to Open Up The Boardroom

Companies today are surrounded by an unprecedented level of transformation. They're operating in the age of disruptive innovation that we call the Fifth Era - Cloud Computing, IoT, Artificial Intelligence, Robotics, Genetic Editing, Blockchain and much more. Furthermore, they're doing it all in a connected digital global marketplace, where customers expect more, share more and talk more—where public opinion spreads like wildfire. This is the hard reality of doing business in the twenty-first century: it's fast-moving, inherently high-tech, and operates in an unforgiving, digital world.

To overcome these modern challenges, businesses must rely on their boards, the highest level of leadership within an organization, to help the CEO steward long-term competitive advantage and relevance. However, despite these technological advances and radically new ways of doing business, most boards today look like they did decades ago, mostly CEOs and CFOs near or having reached retirement.

As a result, much of the board agenda today is focused on topics that were the same focus of the last few decades - operations, compliance, and risk management as well as too often narrowly defined economic value creation goals established within the context of yesterday's products and businesses - rather than the topics that will drive tomorrow's success. Many boards spend little of their time focused on new and emerging external competitive threats, longer term strategy and building innovation capabilities to succeed in this new era. Irrespective of gender, these backgrounds and areas of focus are too narrow to address the key challenges and opportunities that can quickly undermine or boost a business, including innovation and strategy as it relates to technology, employees, customers and community.

It's time to re-think and open up the boardroom. That means widening the aperture to include career experiences beyond CEO and CFO, and widening the age range to incorporate greater exposure to modern business models and innovation. A board with diverse capabilities and more relevant committees is essential to the strategy and innovation discussions that must be had around the board table in the twenty-first century.

Diverse boards are good for business.

By now we know that diverse boards are a competitive advantage. Harnessing the capabilities, experience and perspectives from across a broad range of leaders solidifies a company's place in the world. Yet, many conversations about boardroom diversity tend to overly focus on women, fixating on a supposed pipeline challenge. The hypothesis is simple: there just aren't enough women CEOs and women financial experts out there to fill board seats.

If the board is to be focused on today's operations, financials, compliance and risks, then perhaps this narrower criteria for participation at the board level might be appropriate. Appointing people that have proven themselves is the board model of the past. But we are not just talking about making smart decisions about today's business models and products and services. Companies must also consider this rapidly changing world of new innovations and possibilities and the new and emerging needs and expectations of the customer, the community, and the environment.

Companies need to define their purpose for existing in the first place, and how they offer meaning to human lives—beyond making a profit. They need a diverse board to achieve this broader view.

In his annual letter to CEOs, Larry Fink, chairman and CEO of BlackRock, called on leaders to define their purpose, and to engage their boards in doing so. He stated: "We also will continue to emphasize the importance of a diverse board. Boards with a diverse mix of genders, ethnicities, career experiences, and ways of thinking have, as a result, a more diverse and aware mindset. They are less likely to succumb to groupthink or miss new threats to a company's business model. And they are better able to identify opportunities that promote long-term growth."

CEOs don't last. Boards do.

While the median tenure for a CEO is just five years, board tenures can far exceed that. Board directors may serve for five years, or as long as 10 or 20 years. Indeed, a company's board leadership is more likely to withstand the highs and lows of a company's trajectory, while CEOs will come and go at a much more rapid pace.

At the same time, boards often state that their "responsibility is to the shareholder," yet boards often support CEOs focused on driving or maximizing short term returns, often to a degree that is unsustainable and can hurt the business longer term. Because many shareholders come and go at a rapid pace (a shareholder holds a stock for an average of just four months in the U.S.), the conversation with the long-term shareholder becomes lost. These shareholders, for example pension funds investing for their ultimate clients' retirement accounts, or parents investing for children's college education, are seeking solid long-term returns. They don't want returns that come with a heavy social and societal cost that will hurt them and future generations. Such shareholders are relying on the board of directors, even more than the CEO, to oversee the long term success and sustainability of the returns.

And so, boards, not just CEOs, must be thinking about a company's future and purpose and meaning for the community.

It's time to widen the aperture.

What if companies today approached board diversity with the aim of crafting a board that is capable of confronting complex threats and embracing (and creating) new and innovative opportunities? Getting more women into board seats is a start. But boards should also evaluate younger board candidates. By looking to roles beyond the CEO and CFO, boards will ensure they are thinking about capabilities and skill sets, not just titles. This may include adding board directors with experience in such areas as talent management, culture transformation, customer experience, digital marketing and more.

When one does open the aperture to these other roles, the gender diversity issue we are trying so hard to address becomes less challenging: women hold 55% of chief human resource officer roles, 35% of chief customer officer roles, and 32% of chief marketing officer roles. Even in the technology realm, women are better represented than they are in CEO or CFO roles (19% of CIOs are women, versus 6% of CEOs and 11% of CFOs).

Finally, consider this: many of the most valuable companies in the world didn't exist 20 years ago. And some businesses that have managed to survive are under scrutiny for reasons one would not have expected ten or 20 years ago. They struggle with issues related to employees, customers, culture, and ethics -- issues not focused on nearly enough in today's boardrooms. If these companies want to be around in another 20 years, they must re-evaluate their board competencies and committees.

It's never been a better time to open up the boardroom.

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Coco Brown is the founder and CEO of The Athena Alliance. She leads a network of more than 1500 C-Level women, VCs, and CEOs from over 200 companies including Microsoft, Autodesk, Intuit, OpenView Venture Partners, Accenture, Deloitte, and PwC. In just two years, Athena has secured almost 200 board interviews for women, with over fifty boards working with Athena today. Coco has extensive experience in serving as an advisor to c-suite executives and their teams, guiding strategy and execution. Prior to The Athena Alliance, Coco served as President, COO and Board Director of Taos, a prominent in IT Services business serving hundreds of F1000 companies such as Apple, Cisco, eBay, Facebook, and Silicon Valley Bank.


Alison Davis is co-founder of Fifth Era. She is an experienced corporate executive, public company board director, an active investor in growth companies and a best-selling author (Her most recent book "Corporate Innovation in the Fifth Era" profiles the innovation approaches of Amazon.com, Alphabet/Google, Apple, Facebook and Microsoft). She was CFO and Head of Strategy at BGI (Blackrock), Managing Partner at Belvedere Capital, and a strategy consultant at McKinsey and A.T. Kearney. Alison has degrees from Cambridge (MA/BA) and Stanford (MBA). She was born in Sheffield, UK and now lives in the San Francisco Bay Area with her husband, Matthew C. Le Merle, and their five children.


The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.