Vice Chair, Board & CEO Services, Global Leader, CEO Succession Practice
This Week in Leadership (Dec 6 - Dec 12)
Do leaders have a false sense of confidence over the Omicron variant? Plus, the new favorites in the C-Suite horse race.
See the new issue of Briefings magazine, available at newsstands and online.
Jane Stevenson is vice chairman of the Korn Ferry’s Board & CEO Services practice.
It’s a question board directors ask all the time these days: “What should we do about activists?” To some, it’s an overriding concern that activists will be arriving at any moment to tear apart their companies. Directors want to know how they can defend their firms, and, if they’re being honest, their own board seats.
There have been a handful of high-profile campaigns over the past few years at huge firms, including GE and Procter & Gamble. But those mega-battles mask the fact that activism fights just don’t affect that many firms. The stock research group FactSet tracks more than 4,000 companies worldwide, and only about 600 of them, or about 15 percent, were targets of major activism campaigns in 2017. At the same time, activists most often target firms that are undergoing some sort of distress. If the firm is earning competitive returns, activists usually look elsewhere.
But just because activists leave a firm alone doesn’t mean that there aren’t a lot of key issues for its board to contend with. These change over time, and while there are several that may not be in the spotlight at the moment, they are nevertheless critical.
1. Risk Management:
Figure out what’s an opportunity and what’s a threat.
In today’s active global economy, the lines between competitive markets have never been blurrier. Even defining which industry sector is involved can be hard to peg. For example, is Amazon a consumer or a technology company? Is it a retailer? Or, since it owns and operates a large web-services business, is it a digital technology player? This is just one example of many. With all the crossover, it’s very difficult for board members to assess whether market disruptions are accelerators to the organization’s growth, or roadblocks that could endanger their business.
2. Talent Alignment:
Close the gaps between strategy and talent.
This is a huge topic because of the rapid pace of strategic change and the evolving needs of leadership as our society potentially moves from an exchange of goods to a more thought-centric exchange. Boards really need to be able to see around hairpin turns and to fly at a high enough elevation to anticipate these change trajectories appropriately.
That means stepping up in a different way—not just by identifying problems but by anticipating them. Said simply, it’s about awareness and courageous consideration of the impossible. Boards need to ask the right questions (not just regulatory ones) that help elevate leadership’s view of the road ahead.
One way to think about it is through the lens of succession: Do you have the right board to pick the next CEO? Do you have the right CEO in place to develop the right leaders? Are the leaders the ones who will define and cultivate the right workforce for the future?
3. Information Overload:
Everyone has information. Learn how to connect the dots better.
Access to information used to be a huge cost for businesses. That has gone down enormously. Today, the real questions are: What does the information say? What does it mean? And how do we use it? Whole businesses are changing. Today’s boards have to adapt, stepping up to a different kind of leadership: anticipating what will create value, how that impacts the organization, and evaluating whether the right leadership is in place to make those pivotal operating decisions on a day-to-day basis. Boards of the future will need to look forward in a different way and think with a different level of expansiveness, involvement, and opportunity building.
In the end, it all comes back to the link between business strategy, talent and succession, which all need to be tightly aligned. Talent in this equation starts with the board and goes down to the lowest level of employees. It will take different kinds of thinking in the boardroom to effectively anticipate all of these issues. The need for diversity in the boardroom will be paramount to doing that effectively. Having the right mix of views and access will be important to achieving the nimbleness in thinking and diversity of perspectives to make that happen.