At Corporate Board Member‘s recent Boardroom Summit, Diligent Institute Executive Director Dottie Schindlinger asked three veteran directors—Amalgamated Bank’s Maryann Bruce, Ralph de la Vega with American Express, Amdocs and New York Life Insurance, and Dorlisa Flur of Sally Beauty Holdings and Hibbett Sports—how boards can do a better job overseeing strategy while holding the line between management and the board. Key takeaways from the discussion.
How can boards do a better job of approaching strategy, especially during chronic uncertainty?
Dorlisa Flur: In times of uncertainty it’s very easy for people to get lost in tactics, not strategy. On my boards, we look back at purpose as the North Star of our strategy. Then, with some of the changes that are going on, we consider, does that require us to shift that core purpose, either to reaffirm it or to say there are new threats or new opportunities? There are a lot of other businesses being displaced. As a board, you need to be flexible on how you engage with the management team. Gone are the days when strategy was just about an annual strategy day once a year.
Ralph de la Vega: The biggest challenge is how to deal with disruption. In my view, that’s a discussion every board should be having. If you’re in finance today, fintech companies are looking to disrupt you. If you’re in insurance, insurance companies are trying to disrupt you. And even if you’re in tech, there’s new tech dying to disrupt you. So it’s really important that you look at each side of an equation… because with the advances that we’re seeing in technology today, take, for example, 5G, edge computing and AI, when disruptors can use those or similar forces to come in and disrupt you, sometimes you can’t recover. So make sure you play offense and defense on all the key items, and do what is right for your company.
How can the chair hold the line between management and boards on strategy?
Maryann Bruce: Effective chairs must have a sound knowledge of the company’s vision, mission and core values and strategy, as well as a clear understanding of where their contributions to those elements start and end. So, the chair should encourage the board to participate in activities related to strategy without micromanaging the CEO or overstepping their role. That’s been particularly challenging during the pandemic, but it is important that the chair reinforce that the role is oversight, insight and foresight. And one of the ways you can do that, and that many boards are doing, is the strategic offsite where the CEO and the leadership team review and analyze data related to the industry, the environment, the nature of the competition, various business models. They can also collectively identify strategic priorities, establish goals and objectives, discuss resource allocations, support the decisions that need to be made around the strategic planning process. So, the chair’s primary role is to draw out everybody’s opinions in these discussions, because the goal is to have the whole be greater than the sum of the parts; the collective wisdom needs to transcend the individual contributions.
De la Vega: The role of the chair is to look at the capabilities a company will need in the future as a result of the strategy and make sure that the board composition reflects those capabilities. And if not, you need to have a rotation to get the right people on the board. I’ve seen that happen when we bring in people who have a different background. We’ve seen that when young tech entrepreneurs come onto the board, the discussions change, and it’s almost as if you’re having a strategy session every time you go to a board meeting, because they give you ideas about things happening in the marketplace today that help you make sure that your company is able to be successful now and into the future.
How should boards approach gathering what they need to inform strategic decisions?
Bruce: One of the boards that I serve on hasn’t always done the best job of gathering data. So we’ve done two things to address that: First, we recently hired a consultant to work with us to help build that muscle, to determine what data we need to help us make informed and insightful decisions and to make sure that we can get that data. Second, when we were looking for our new CEO, who joined in June of 2021, we looked to make sure that we found somebody who at their core and part of their DNA was data focused and really took an approach that was different from what we had done in the past. Those are the two ways we addressed it.