Board Chair: January Edition

Dear Colleagues,

Welcome to the first 2025 edition of Board Chair.

As we begin the new year, I encourage each of you to reflect on how you can make a meaningful impact on the boards you serve. Driving change as an individual director is challenging due to the unique dynamics of each organization, and offering guidance as a board educator from a distance can be even more complex.

To help, I’ve outlined some general principles in the posts below that I’ve found to be effective. If you have any questions or concerns, my door is always open. I’ll continue sharing my experiences in the hope that they inspire you to embrace 2025 as an impactful director.

Driving Cultural Change at the Board Level: Insights for Directors

First and foremost, timing is crucial. As a director, it's important to establish credibility and understand the board's dynamics before attempting to drive significant changes. Typically, this means being on the board for at least a year or two.

When you identify an issue that needs addressing - be it risk management, C-suite development, or any other critical area - your first step should be to engage with the board chair. This conversation serves two purposes: it helps you gauge if your concerns align with the chair's perspective, and it establishes a foundation of trust for potential action.

If you find alignment with the chair, you're off to a good start. However, if there's a disconnect, you may face a more challenging path forward.

In my experience, building a coalition is often the most effective way to drive change. This involves engaging with others one-on-one, fostering open and transparent discussions about the issue at hand. By doing so, you can identify allies and build a critical mass of support for your position.

I recall a situation where we were selecting a new board chair. Despite a strong front runner, I had reservations about whether this candidate was the best fit for our company's needs. I initiated individual conversations with other directors, asking open-ended questions about their thoughts on the candidates' strengths and weaknesses. This approach allowed me to build a coalition of shared concerns.

The key to success in this scenario was framing the discussion around objective criteria - the strengths, experiences, and potential weaknesses of each candidate in relation to the demands of chairing our board. By focusing on these factors rather than personal preferences, we were able to have a productive dialogue that ultimately led to a selection that was best suited because it was better vetted.

This approach can be applied to various scenarios where cultural change might be needed.

Remember, change is often a gradual process. It requires patience, strategic thinking, and the ability to build consensus. By approaching these challenges thoughtfully and collaboratively, we can drive meaningful improvements in overall effectiveness and corporate governance.

Creating Impact: Focus, Execute, Transform

As directors, we often focus on being part of a good team or lament being stuck in a bad one.?

But the real value lies in being an individual contributor who can humbly effect change within an organization's culture.?

The key is to find one initiative and execute it exceptionally well. This approach establishes your reputation as someone who can make positive things happen, creating a flywheel effect that benefits the entire organization.

Here's how to put this into practice:

1. Build coalitions: Start by discussing your concerns with the chair or other sympathetic board members. Align on the issues before approaching the CEO.

2. Get out of the boardroom: Don't just rely on what you're fed at meetings. Visit company sites, observe operations, and make your own assessments.

3. Seek corroboration: If something doesn't feel right, ask a fellow director to take a look. Different perspectives can validate or challenge your instincts.

4. Be proactive: You're the CEO of your own directorial contribution. If you see a problem, act.?

Remember, effecting change as a director is contextually dependent and requires a nuanced approach. By focusing on one key initiative and executing it well, you can create a lasting impact and drive positive cultural change within an organization.

AI Tsunami Retrospective: Lessons for 2025

The 2024 AI Tsunami series brought together leading voices to examine the transformative impact of artificial intelligence on corporate governance. These sessions underscored the necessity for boards to adapt and respond to AI’s challenges and opportunities.

As we move into 2025, three themes stand out as essential priorities for directors:

1. Establish AI Governance Protocols: Boards must develop robust mechanisms to oversee AI’s deployment and associated risks, ensuring compliance with ethical and regulatory standards.

2. Prioritize Director Education: Continuous professional development is imperative to equip board members with the knowledge to navigate AI’s implications effectively.

3. Embed AI into Long-Term Strategy: Boards must leverage AI to drive sustainable growth while maintaining a focus on innovation and resilience. Have a clear delineation separating two strategic imperatives at your organization. Optimize your core business functions as they stand today and make the critical investment to create and nurture experimental research and development that seek to disrupt those core functions. Make them two different organizations within your overall business that ultimately compliment each other.

For those who missed the series, a comprehensive archive of sessions and resources is available on our AI Tsunami website.

Thank you for your continued engagement with the Board Chair community. As we face the challenges and opportunities of 2025, our shared commitment to excellence in governance will remain a guiding principle. I look forward to a great year of meaningful dialogue and impactful action.

Warm regards, ?

David Beatty?