General Motors and Merck Board Member Patricia Russo On Directorship In An Era Of Disruption

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Corporate Board Member recently had the chance to talk with Pat Russo about her experience dealing with disruptive tech, both as CEO and a director of companies in the throes of transformation.
Pat Russo

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In 2002, Pat Russo took the helm of a company drowning in debt and decimated by the dot-com disaster. One of just six women CEOs leading Fortune 500 companies at the time, Russo deftly steered Lucent Technologies through the monumental challenge of retrenching after seeing its revenues slashed nearly in half, all the while bolstering morale among remaining employees.

Under her steady hand, Lucent survived the crisis, regained profitability and went on to strengthen its market positions in emerging areas like optical and wireless networks. She’s since moved from the CEO office to the boardroom, serving as a director for General Motors, Merck & Co., Hewlett Packard Enterprise and KKR. Corporate Board Member recently had the chance to talk with Russo about her experience dealing with disruptive tech, both as CEO and a director of companies in the throes of transformation. Excerpts of that conversation, edited for length and clarity, follow.

You’ve been a CEO in an industry being redefined by disruptive tech and served on the boards of companies coping with similar upheaval. What needs to be done to manage culture in an environment where agility and disruption and all these things are happening in such an aggressive way?

The cultural work that leaders do has to start with the mission and purpose of the organization. What are the values that I, as the leader, or we as a leadership team, feel are important? What are the values that are critical that we will hold people accountable for in addition to producing the financial results? There needs to be that contextual framework from which you then take whatever actions you take to create that behavior and drive that cultural change.

GM’s mission is zero emissions, zero crashes and zero congestion. That is a very big statement about what the company is committed to with respect to its product portfolio, to the environment, to the objective of participating in transportation as a service, autonomous vehicles. It starts with clarity around what you are trying to accomplish and what behaviors are necessary to get it done. Then you lay out a plan for driving that change within the organization, starting with the leadership team.

The companies on whose boards you currently serve—GM, HPE and Arconic— have all faced a great deal of change. What qualities should boards be looking for in leaders who will be navigating significant changes, both at the company itself and in the industry in which it operates?

The first thing, and probably one of the most important jobs of the board, is to make sure you have the right CEO. So a board’s first job is, do we have the right person at the helm at this time for this company in this industry with this set of things going on? If you have confidence in your CEO, you will rely on your CEO to lay it out: “Here’s the talent that I have, here’s what’s missing that I need to add.” Then, obviously, you support the CEO as he or she builds out the leadership team.

I know from my board experience that a lot of time and energy goes into talent [development]. What skills are necessary? What does our bench look like? Do we have the different perspectives that are necessary given the changes that we’re going through? Is there the right mix of inside and outside perspective, especially when a company is going through a lot of transformation and change and embarking in new areas of business? It’s a very important topic for the board to engage with the CEO around, but it’s clearly the CEO’s responsibility to have a good talent management plan and set of processes in place that they’re executing. Obviously, with the board’s advice, counsel and support as necessary.

When you were CEO of Lucent, the company was dealing with a very, very turbulent environment, something many companies are facing today. How do you compare the competitive environment today with earlier periods in your career? Has technology increased the overall pace of competition?

Digital transformation [has changed] how communication occurs, and the frequency and the breadth with which communications occurs, and that’s created more intensity around how you respond in a time of disruption or crisis. There’s no question about that. When I was running Lucent Technologies and the telecommunications crash occurred, we didn’t have all the tools that exist today. To some extent, that technology is helpful, and in other ways, it makes things more challenging because there’s the opportunity for a greater degree of misinformation. A lot of that results from the communications proliferation that can occur via the social media channels. Everybody’s connected all the time. The ability for things to go viral instantaneously makes a huge difference.

So, yes, definitely the tools have changed, but competitive intensity in and of itself has not. We were slugging it out then and companies are slugging it out today.

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