Shades of Leadership

CES - Implications for Board Leadership

At a recent Texas TriCities NACD peer-to-peer dinner, hosted by Grant Thornton, a group of directors gathered to hear about and reflect on the impact of the 2019 Consumer Electronics Show. At this year’s event, Grant Thornton organized a curated experience of the massive conference, to help streamline and focus the experience of board directors faced with over 4,500 booths of technological innovations.

We learned about things that were coming: 5G connectivity (potential for instant simultaneous translation), 8K televisions (imagine watching sports), flying cars, armor-protected drones that can stop bullets, and various applications of AI and block chain.

We could have spent all evening speaking about all the fascinating gizmos and technologies that are being developed, but reined the conversation back quickly to the implications for us, as directors, relative to how we guide strategic dialogue in the boardroom. Three primary takeaways: (1) Creation of new business models, (2) How do existing companies recognize disruptive technology, and (3) The importance of being directors who are engaged in digital transformation.

New business models

There is no doubt that with the exponential growth of new technology applications, there will be new business models that emerge. Whether it’s travel/entertainment, retail, healthcare, or financial services, the applications of the likes of AI, 3D printing, and 5G will undoubtedly create opportunities for more companies such as Uber/Lyft, AirBnB, Apple, and Tesla to redefine how we go about our day-to-day lives. To grasp the pace of change, one only has to consider today’s definition of what a “phone” does to what one did a generation ago. Learning today takes place not only in classrooms, but in the circuits of machines that will be accessible through applications such as “Google Mind”. Augmented reality may today be thought of as a helmet worn over our heads for gaming, but as we consider its applications around human exoskeletons, it has implications for workplace health and safety yet undefined. Understanding the possibilities of new business models is crucial if we are to guide companies through this exciting next chapter of innovation.

Challenges for established companies

The fact that most business disruption happens from outside mainstream companies suggests that most large organizations miss many strategic shifts. This is mostly likely due to the past success of organizations that might have been yesterday’s disruptors. Countless case studies are written with the “how did they miss it” narrative, as though long-established, innovative companies (cue Sears, Kodak, Blockbuster) should have seen the advent of disruptors that wiped them out. It’s as though hindsight is a missing leadership skill. The difficulties are numerous; how to deliver of continued performance results in an existing business model whilst giving permission and space for innovation to create a wholesale shift, the ability to attract different sets of investors, and how to build a new skill base in the workforce to move from “old” to “new” economy. The emergence of corporate venture capital groups, creation of internal innovation hubs, and collaboration with start-up incubators are just a few examples of how established organizations are trying to create pockets of innovation that might end up sun-setting the very characteristics that define success today.

The Role of Directors

The role that independent directors play in understanding how technology can impact the business is crucial. As individuals who are not mired in the daily exercise of customer capture, cost control, and personnel matters, directors are uniquely positioned to help the executive team explore options and consider implications on the existing business. They should challenge executives to push the boundaries of “what could happen” that would wreak havoc to the revenue stream, and what skills are needed to answer future strategic imperatives. This requires a constant quest for learning and gathering external input, and participating in events such as CES, forcing us to consider a business horizon that goes far beyond our board tenures. Of the many memorable quotes from the evening, one that stood out was, “You can’t read a label from inside the jar.” Perhaps the greatest enemy of progress is a board that is too comfortable with what it knows and understands.

The most important characteristic of a world-class organization is that it consists of individuals – in both the executive suite and boardroom – energized by learning. The board processes must then allow that information to be integrated into regular, deep strategic dialogue. CES provides an incredible backdrop for a conversation around what “could be” that will undoubtedly, eventually morph into the “what is”.

International Women's Day

On the eve of  International Women's Day, I had the opportunity to speak to the inaugural gathering of HollyFrontier Corporation's WiE event (Women in Energy) at its corporate headquarters in Dallas. A local gathering of over 100 employees, combined with satellite offices connected via technology, resulted in 800+ members of the HFC family who tuned in for a conversation about Diversity and Inclusion.

 

The great thing about this event was that it wasn't just women who attended. Men and women, from all levels of the organization, representing different ethnic and national backgrounds, from across the company's North American footprint (and possibly the Netherlands if recent Sonneborn acquisition members joined) engaged in listening, learning, and participating in a dialogue about Unconscious Bias -- a topic which is critical to understand if we are ever to make progress in the D&I arena.

 

The presence of Unconscious Bias is the result of two primary forces that make us who we are; (1) How we are raised (including our environment and family structure) as well as (2) Our life experiences (education, religion, travel, work environment, interactions). Understanding how these factors contribute to the manner in which our brains store and organize our thoughts is critical to mitigating the personal impact of biases we bring to the workplace every day. We are unable to go back in time and change how we are raised, but we can certainly create life experiences that expose us to different people, places, and perspectives to help us raise our game of inclusivity.

 

Talking through examples of Affirmation Bias, Confirmation Bias, and Attribution Bias gave the audience context for many of the behaviors that we experience every day.  These biases can often explain why some people seem to have greater fortune in their careers than others. Our propensity to identify with those who share demographic makeup, agree with our political viewpoints, or resemble those who we are accustomed to seeing in various roles all play into the absence of true meritocracy in the workplace. Further discussion about Likeability Bias and Maternal Bias brought focus on some disadvantages that women, in particular, have on the job -- the tradeoff between being "competent" and being "nice", and the assumptions that are made regarding women who are mothers or in childbearing years.

 

Holding an event that involves participation of a wide cross-section of an organization broadens the conversation about Diversity and Inclusion, and truly addresses the primary goal of any such endeavor; that of building talent in a company. I am witnessing a new chapter in the D&I journey. It's no longer just about senior management commitment to D&I. The past 30 years and subsequent lack of progress demonstrates that showcasing companies and CEOs who say the right things doesn't move the needle in the corporate world. The new movement is grassroots. It recognizes that change can only occur if the ownership of meritocracy belongs to the entire organization. Identifying examples of Unconscious Bias and holding one another -- all colleagues -- accountable for its presence and impact is key to creating a truly inclusive workforce.