Fix Boards, Fix Capitalism

NewCo Shift Forum 2018

Sukhinder Singh Cassidy argues that boards are utterly broken. Fixing them isn’t as hard as it might seem. And it’s urgently needed.

Sukhinder Singh Cassidy has nearly two decades of executive leadership experience at consumer and internet companies, including Google, Amazon, Yodlee, Polyvore and Joyus. She’s also an accomplished board member — serving on both public and private boards in a range of industries. In the past two years, Cassidy has focused her energy on theBoardlist, a platform that connects accomplished women to board opportunities. But Cassidy didn’t focus her time at Shift Forum on the issue of diversity in boards. Instead, she exhorted the audience to think about the power and the responsibility of boards, and the role a truly high functioning board can have in changing the culture of business. Below is an edited transcript and the video of Cassidy’s inspiring talk.

(For more on the role of boards, see It All Starts with the Board)

Sukhinder Singh Cassidy: Hey everyone, how are you? Thank you again for having me, John. I am super excited to be here. The first couple of days are very hard act to follow.

I do think the conversation has been tee’d up for me in many ways, because I understand corporate governance and boards has been the subject of a lot of conversation of the last couple of days, which is no surprise.

Just before, I get started, by show of hands, how many of you’ve sit on any kind of board? Do any kind of board-work? At least 50 percent of the audience. I presume for the remain of the audience, are boards of interest, something you would like to serve on, or do you feel like boards are places you interact as an executive? I presume the answer is yes.

What I want to do in the next effectively 12 to 15 minutes is really talk to you about how to be a better board. You’ll understand I didn’t say, “Build a better board.” I started with, “Be a better board.”

You can’t talk about board building without also talking about governance. It doesn’t matter if you build the world’s most diverse board, if you don’t do the job that you’re there for.

As I have played out my career on both public, private, and non-profit boards, I think it’s been amazing to me, and particularly of the last two years since I founded theBoardlist, just how much we need to go back to basics of thinking about what the boardroom is all about.

Let’s get started.

First of all, I am going to spend this morning on three themes — boards 101, the big idea, and a thought to leave you with. Hopefully, all three will invoke some thinking, and maybe a different perspective, or maybe back to the fundamentals of board building.

Why does this matter? We all know boardrooms need to change. No surprise, this has been the topic of conversation over the last couple of days. By the way, it’s not just diversity and the need for diverse skills. It’s the fact that we have activists looking at board tenure and the lack of board governance.

We have digital disruption. We’ve a whole new class of consumers called millennials. We have scandal. Unfortunately, all of these things, or fortunately, all of these things together are creating an impetus for the first time in a long time for boardrooms to change.

What does that mean? How do we begin that conversation? Well, I want to begin it actually not with the topic of diversity, but with something more fundamental.

My first key message for you is the boards are failing today because they fail to do the fundamentals well. Topic number one, what does it mean to run a great boardroom?

When I reflect on being an operator inside the boardroom, and for all of you who’ve been operators inside a boardroom, what are we told when we enter boardroom? Well, you don’t enter a boardroom as an operator, with your operator hat on.

You’re supposed to come and influence, because you know your job isn’t to be the person running the show. You’re not part of the management team. You are there to help guide the company.

In one fundamental respect, boards really need to get their act together in a way that operators uniquely will know. Boards need to start running far more disciplined, far more like operators do in a couple of key ways that could entirely change the way boards operate today.

I was an operator. The reason I find myself frustrated sometimes sitting in the boardroom is not because I want to be on the management team, but because I want the boardroom to run with the same discipline and thoughtfulness with which we build our management teams and run our management teams in order to create the most effective companies.

I would argue, in the first place, we’re failing in the boardroom is failing at the fundamentals. At the most basic level, we spend a lot of time talking about diversity, a lot of time. If you just reverse that question, why are we talking about diversity, because how can you run any company or group effectively if you don’t have the needed skills and perspectives present?

When we look at most private boardrooms, they lack an independent. When we look at most public boardrooms, they lack diversity of multiple types. When we look at the average tenure of boards, we have two complete extremes. We have public boards who fail to turn over their boardrooms rapidly enough to really change out the skills that are needed for the company’s next three to five years.

When we look at private boardrooms, they have no idea of what tenure should look like at all. In fact, many people are afraid to put something in the boardroom as an independent because they are worried whether that person will be relevant in three to five years.

You have extremes, yet neither do the fundamentals well of putting together a group of people whose skills and perspectives are relevant to the next one to three to five years of the company.

How many of you in the room feel like you sit on a board where the boardroom has inside of it the skills and diversity of skills needed for the companies next one, two, three years? Put up your hand.

Lesson number one, if you’re sitting in a boardroom and it is lacking the skills and perspectives needed, as a board member, what is your job? Speak up. Speak up.

If you have a founder on the one end who is afraid to put an independent in the boardroom, speak up. Talk about what a board term should look like. Is it one year, two years, three years, five years? It doesn’t matter. That skill needs to be there.

If you’re in a public boardroom and somebody is looking to you for an answer, and everyone looks at each other, and no one has the answer. Your job as a board member should pose the question about what skills are missing in the boardroom.

The average tenure of the person in the boardroom is nine years. Your job is to say, “You know, we’re missing people from this conversation.” By the way, this is the basics. This is Management 101. Do you have the skills and the leadership necessary in the room to do the job?

Number two, are you having the right discussion? Interestingly, when we think about the right discussions, today there is a plethora of things that boards aren’t really clear on whether or not they have responsibility towards those things.

Number one, besides the metrics of success and growth, is culture, an area of oversight that the board should have any thesis on. What do you think? How many people here believe that culture is an area that the board should have oversight on?

How many people today believe your boards have the mandate to have that conversation? How many people feel like you have that mandate, and the infrastructure, and the metrics to have it consistently?

Exactly. Culture is just one example of the question of whether or not boardrooms are having the right discussions. The others are actually far more fundamental. You need access to information. You need access to the metrics of the business. You need the ability to have a clear and constructive debate. Seems obvious.

Let’s continue. Clear decision-making. How does decision-making get made in your boardrooms? How many people exist in boardrooms today whereas there is plenty of debate and a lack of conclusion?

Any of you have that problem? Have you sit in boardrooms where you talk about the same thing again, board meeting after board meeting, yet nobody is really clear what the conclusion is?

Think about this inside of a management team. If you were running a team of any kind and you didn’t know how decisions were getting made, implicitly, explicitly, who’s responsible for making them? Would we consider that a well-run organization?

Yet in the boardroom, we spend all of this time amassing great talent, not clear if we’re having the right discussions, not clear for giving right access to right information, and even discussing explicitly the mandate of the board. Up from that, not clear how decisions get made.

At the last in the top, of course, is performance management and accountability, bi-directionally. This means, and once again, if we went from the extreme of public boards to private boards, I’ll juxtapose them both.

Is the CEO being held accountable for the performance of the company? Is the boardroom being held responsible for its job in providing stewardship and guidance? In how many of your boardrooms does the CEO get a formal and consistent review?

Four hands went up. Four hands went up. How many of your boardrooms do you as board members get 360 feedback consistently? One hand. One hand. Let’s just think about that. Doing the fundamentals well, boardroom management 101. How many of you now believe that your boardrooms are running at their most effective? How many of you believe you sit inside boardrooms that are as well run as you look to the CEO to run the company?

When we talk about boards, we can talk about the most advanced ideas. We can talk about cyber security, and blockchain, and risk management, and digital disruption. If you don’t do the fundamentals well, we can’t expect a great result. Of course, this comes to one obvious question — who’s leading the boardroom? Who is leading the boardroom?

How many of you sit on private company boards? How many of those private company boards have a lead independent? OK, two.

How many of them have a chairman who is distinct from the CEO? Two. How many cases are your boardrooms led by the CEO? By the way, I’ve been a founder-CEO. I am a founder-CEO. I put myself in that class, having been a chairman of my own boards. I’m the chairman of the board at theBoardlist.

In any event, in the public companies in the US, what you would find is the vast majority of the time, the CEO was also the chairman. In Europe, by the way, this is almost never the case. I sit on the board of Ericsson where, in fact, the CEO is not allowed to be the chairman of the board. He is distinctly not allowed. That role has been mandated to be separated.

In any event, I would come back to the most startling observation I’ve had on boards over the last 10 years that I’ve served, is that you can put together the most brilliant group of people, but unless they are led effectively, you will not have an effective boardroom. When we talk about the things I showed you on the previous slide, how do those get solved if you’re an operator? Somebody leads.

I presume most of the people in the room lead a team of some kind. Is that fair to say? You work really hard to amass the right talent. Let’s presume you’re the leader of that group or the leader of that team.

How many of you ever left the room and given your team a task, and been frustrated when you get back, the collected brainstorming session or whatever task you’ve given them comes back of poor quality than you’d expect for the team you just put in the room?

Why? Because when you leave a really talented group of people together, no matter how talented, if there is not someone leading or facilitating, you do not get the best out of that team.

What’s the challenge when you have the CEO and the chairman role in one role together? What’s the obvious issue with that? It pains me as a founder to say it, by the way. It pains me as a founder. [laughs] The obvious issue which is the only lens in the boardroom is the lens of the CEO. If the CEO is the chair, all information comes through that lens.

That’s great in peace time. Is it good in war time? Is it good in times of challenge and disruption? Is it right to have only one lens into the boardroom? Is the board’s job to provide, again, diverse perspectives, gathered together into a whole that helps guide the company?

As you sit here today, before we move off this topic, one of the things I want you all as board members or aspiring board members or people who work in the boardroom to do is to go back and challenge yourself and your boardrooms to figure out who is leading that boardroom dynamic, and how do you make it more effective?

I’d argue today leaving this to an implicit play-out of whatever the CEO’s agenda is, hoping that one of the venture capitalists in the room steps up because they have a bigger ownership perspective and will take a perspective beyond their own position for all shareholders.

Hoping that someone is going to play a leadership role, in fact, doesn’t make it happen. If you want to be a better board, find leadership in the boardroom, identify who it is, and commit yourself to the fundamentals of building a great team together.

I’m going to go on to two bigger ideas, having talked about boardroom fundamentals. Of course, we can talk about the boardroom and the things that need to shift in the boardroom and in companies if we want to see change. Most people would fundamentally agree that boardrooms are about power. Any disagreement with that? Boardrooms are about power, fundamentally.

What is the bigger idea with regard to power in the boardrooms? This comes not just to being a better board but building a better board. The fundamental issue with boardrooms today is that people see power as a finite resource.

Managing a boardroom historically has been a power play. It’s about who is in control. Who is in control? That is the way boardrooms run.

Let’s step back to a bigger idea. Is power a finite resource? Should boardrooms run on a dynamic that if one person has power, everybody else is powerless? No, because the key inside, and the way boardrooms will advance, the way diversity will advance, the way it all advances is by starting to think about power and how to use power not as a finite resource but as an infinite resource.

What do I mean by that? Many of you know that I’m here because I’m the founder of theBoardlist, which is a platform that allows leaders with board experience to nominate diverse talent for boards. Those people, in turn, are discovered as companies are looking for new and emerging talent to once again re-energize and help shift the boardroom.

What’s our key inside at theBoardlist? At the end of the day, it works on a fundamental principle that people who have power, i.e., they’re sitting in boardrooms. They are in whatever club you consider to hold board members. They refer talent who then gets discovered for boards. Why do they do it?

They do it because, in turn, once that person gets their first board seat, they feel great. They feel an emotional and social response and reward to helping put somebody else into power. It turns out that the most powerful people in the world enjoy one thing that the rest of us all need to appreciate. It’s not that they enjoy holding power. It’s that they, in fact, get energy from sharing power.

Boardrooms will change if we stop thinking about it as a place where things need to be controlled and power needs to be controlled, and start thinking about boardrooms, about ourselves, about ourselves as board members or aspiring board members, or people in any position of leadership as people who have the ability not only to become powerful, but in fact, to share power.

If you think about a big idea for today, the basic idea is get the board fundamentals right. Doing the fundamentals well will actually build a great boardroom. Above that, if you want to become someone who helps change the nature of how boards work and how companies work, you need to shift from a perspective of thinking that it’s all about harnessing power for yourself.

It’s about starting to share power with others. In fact, the more power you share, the more power you get. It’s the fundamental lesson at theBoardlist — the more power you share, the more power you get, because power multiplies. It turns out it’s not a finite resource. It’s an infinite resource.

I want you to think about it as a bigger idea, whether you’re in the boardroom today or not. If you’re in the boardroom, how do you move from feeling powerful to letting power flow?

To whom are you going to let power flow? How do you start to share power in a way that it will come back to you and to everybody else in the boardroom or in your management team or in any leadership circle that you run multiplied?

The last two ideas I want to leave you with are these. When we think about sharing power, with whom do we naturally think about sharing power? Those in our network, right?

I love theBoardlist. I was the founder. I love it because I think about smart and amazing women I know, and I refer them to theBoardlist all the time. When they get a board, I do feel in fact the reward and the excitement of seeing somebody else who’s great rise to a position of power and influence.

I do it very naturally within my network. That’s a great thing, right? It is, but there’s only one thing that is better than sharing power naturally within your network. Any ideas what it is?

What happens when you share power within your network? Today, I benefit from the fact that I am putting together amazing women on theBoardlist, who in turn by the way are my power endorsers and who bring other women.

On the one hand, that’s great. I can pat myself on the back. On the other hand, what I’ve also realized, as I’ve been on this journey over the past two years, is that if my network looks like this, there’s also a problem with it.

This is the last idea I’ll leave you with, as we come off the topic of boards, and being better board members, and building and sharing power.

It’s this. In fact, it’s true that for all of us, myself included, the work doesn’t stop when you share power with people in your network because if you’re like many of the people in the room and you are a one presenter, power doesn’t flow very far.

What is the true opportunity for power? What is the true opportunity for power flow and power sharing? It’s to create a true opportunity for access.

That means for every one of us, we are going to have to be far more deliberate about thinking, about how we share power and let power flow with people who are not the obvious people in our network, but to reach to the farthest points of our network.

Maybe beyond our network, to find opportunities, to let others who really have the opportunity inclusion really access power as well.

Three big ideas. Do the fundamentals well. Boardrooms win when boardrooms are led and managed well. Number two, if you are in any kind of position where you think all day about amassing power or being powerful, shift your thinking. Start to think about how you share and let power flow to others, and you will create change in any organization you lead, inside the boardroom or out.

Lastly, when you think about those you share power with, look beyond your obvious networks and think about creating a true opportunity for power flow and inclusion five generations out from where you are today. Thanks so much.

[applause]


Fix Boards, Fix Capitalism was originally published in NewCo Shift on Medium, where people are continuing the conversation by highlighting and responding to this story.