8. A Panel Discussion: The Role of Boards in the Current Crisis – and how it’s changing

May 4, 2020

Planning for a crisis is not a luxury and boards must be a very good at crisis management – we’re seeing just how important that is right now.  For this topic, we’ve assembled an incredibly experienced panel – our first panel episode – to delve into the role that boards are playing, and must play, during a crisis. 

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Jay Lorsch Bio

Jay Lorsch is the Louis E. Kirstein Professor of Human Relations at Harvard Business School. For the past 35 years he has specialized on the functioning and operations of corporate boards and is widely recognized as Recognized as a leading expert on the subject. His full bio here: https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6502

Ellen Richstone Bio

Ellen Richstone is a former Fortune 500 CFO and former CEO of a private company. She has been sitting on public company boards for over 15 years- on micro caps up to Fortune 500 in size.  She is currently sitting on the board of three public companies in : Technology; Industrial and Clean Tech. Her prior board experience includes companies in: Consumer Products, Bio Tech, Financial Services and Pharma. She also sits on the Board of NACD New England and is both an NACD Board Leadership Fellow and also received the first Distinguished Director Award from the Association of Corporate Directors.

Rick Williams Bio

Rick Williams is Managing Director of Williams Advisory Partners, LLC. He has a breadth of experience as an executive and board director for technology companies including medical technology, software, and financial services. Rick is a nationally published thought leader. His soon to be published book entitle “Create the Future – for your company and yourself” is a is a “how to field guide” for leaders who want to think creatively about where to take their organization. Williams Advisory Partners provides CEO and board advisory services for middle market technology companies. He was Chairman of the Board of Point Care Technologies and formerly was Chairman of a quasi-public bank/VC firm. Rick is on the board of an ocular drug delivery company and a leading company in gene therapy. Rick is past President of the Harvard Business School Association of Boston. He was a management consultant with the global consulting firm Arthur D. Little, Inc. He is a physics graduate of the University of Pennsylvania.   www.WilliamsAdvisoryPartners.com

Quotes

“Clearly, number one is the focus on employee health and employee safety. The takeaway I would give on this area is the need to balance empathy, safety and yet execute where execution is still critically needed.”

“There is a demand for increased communications with all parties promptly, clearly with increased transparency, and this is all stakeholders – employees, customers, supply chain, and of course shareholders.”

“How does all of this change our long-term strategy – or not? What pivots should we be making within our strategy for the long term?”

“I think it’s very, very important to have board leadership and to recognize that one of the board’s primary duties is to make sure that leadership is in place and functioning effectively, not only with the board but with management.”

“I think  the “trick” of being a lead director or a chairman is to figure out how to build a relationship with management through the CEO and how to maintain cohesion within the board so that the two groups, that is management and the board, can work in a collaborative way for the good of the shareholder, for the good of the company.”

Ideas/Comments

We’re going to rethink the reliance that companies have on their supply chains and critical resources: are they exposed to getting cut off in the kind of crisis that might happen over time?

In today’s world, boards have to be ready to move in and deal with a crisis – whether the crisis is externally generated like this one is or whether it’s a CEO who suddenly has a heart attack or decides he wants to quit, the board has to be very good at crisis management, and that really goes back to the leadership of the board.

Succession planning is being done very differently than the way we traditionally have done it at the board level, given that you need to really dive down into many levels, which the board doesn’t usually do.  The reason we must do that is because, as people get sick, you need to make sure that the critical areas are covered.  We’re learning lot about management at levels below the very top.

Has there ever been a time when honest, authentic communication has been more important for a company?

Messaging must be realism about the challenges facing the company, a message of brutal honesty as to what is going on and what the threats are – and at the same time, a message of hope.

Transcript

[00:00:00]Joe: [00:00:03] Hello and welcome to On Boards: a Deep Look at Driving Business Success. Hi, I’m Joe Ayoub  and I’m here with my co-host Raza Shaikh. How are you doing today Raza?

Raza: [00:00:16] I’m doing well. Good to be with you Joe.

Joe: [00:00:18] Good to be with you Raza. Virtually.

First to our listeners, for those of you listening during the COVID-19 crisis, and many of us in the United States are restricted in what we can do and where we can go, and we’re all trying to understand how to best conduct ourselves, we hope you’re all taking precautions to stay safe.

On Boards podcast is about boards of directors of advisors and all aspects of board governance. Twice a month this is the place to learn about one of the most critically important aspects of any company or organization. Its board of directors or [00:01:00] advisors.

Raza: [00:01:00] Joe and I speak with guests about a wide range of topics relating to boards. What makes them successful or unsuccessful, and how to make your board one of the most valuable assets of your company.

Joe: [00:01:14] Today’s episode is focused on the role that boards are playing during the coronavirus crisis and how that role is changing, and we have a slightly different format today.

We’ve invited three guests, instead of one, to help give a broad perspective on the changing role of boards during this crisis.

On our panel today, are Jay Lorsch, a distinguished professor at Harvard Business School.  For the past 25 years he has specialized on the functioning and operations of corporate boards and is widely recognized as a leading expert on the subject.  Jay, it’s good to have you with us. how are you?

[00:02:00] Jay: [00:02:00] Thank you very much.

Raza: [00:02:01] We have Rick Williams as our guest today, who is the Managing Director of  Williams Advisory Partners.  He has a breadth of experience as an executive and board director for technology companies, including medical technology, software, and financial services. Rick’s soon to be published book entitled “Create the Future for Your Company and Yourself” is a how-to field guide for leaders who want to think creatively about where to take their organization. Welcome Rick.

Rick: [00:02:37] Thanks, Raza. Glad to be here.

Joe: [00:02:41] And, Ellen Richstone. She is a former Fortune 500 CFO and a former private company’s CEO. She has sat on public company boards for over 15 years and is currently sitting on the boards of three public companies. One in the technology [00:03:00] sector, industrial sector and clean tech.  She also sits on the board of the NACD of New England, is an NACD Board Leadership Fellow and  received the first Distinguished Director Award from the Association of Corporate Directors. Ellen, welcome to On Boards.

Ellen: [00:03:21] Oh, it’s great to be here. Thank you for having me.

 Joe: [00:03:24] So Ellen, let me start with you. You’re sitting on the boards of three public companies. Each in very different sectors. What conversations are you currently having at the board level?

Ellen: [00:03:37] Thank you, Joe. The conversations really fall into three buckets: the immediate, the medium term and the long term, but they really divide into four different areas.

The first is employees, the second communication, the third financial and the fourth business. Let me go [00:04:00] back to each one of them.

The first – employees and people.  Clearly, number one is the focus on employee health and employee safety. The takeaway I would give on this area is the need to balance empathy, safety and yet execute where execution is still critically needed. The third item within people and employees is succession planning. It’s being done very differently than the way we traditionally have done it at the board level. Given that you need to really dive down into many levels, which the board doesn’t usually do and the reason we have to do that is because, as people get sick, you need to make sure that the critical areas are covered.

The second area [00:05:00] is communications. There is a demand for increased communications with all parties promptly, clearly with increased transparency, and this is all stakeholders – employees, customers, supply chain, and of course shareholders.

The third area we focus on is financial. Number one is “Cash is King.” So the focus on liquidity is absolutely paramount. The second is a scenario planning, which also was part of the business, but in the scenario planning, within financial, it’s the, I’ll call it pare and protect or to ride out the storm.

The third is don’t forget about your internal controls because as we all come out of this, we don’t want to create a different set of problems as we come out.

The [00:06:00] four, is the business area. And this I divide into four different areas. One, which is of course, supply chain. Are there any broken links? What can be done today and how is this impacted as we go forward?

Two: customers. All of my companies are having increased, communication, interface, actions, with the customers.

Three: are there short or long term opportunities? My three companies are in very different areas. One is in an area that’s being decimated, one which is in an area which is having opportunities because of this crisis. And the third is one which has been declared a national, they’re not allowed to shut down because of their, their status supplying the military.

So, very different scenarios, [00:07:00] and in some cases there are  opportunities that are coming out of this, new paradigm shifting business situation, which takes us into the last category, which we can’t forget, which is strategy. How does all of this change our longterm strategy or not? What pivots should we be making within our strategy for the long term?

And with that, I would turn it back to you, Joe.

Joe: [00:07:28] Thank you, Ellen. Rick, would you like to a follow up on that?

Rick: [00:07:34] Well, first of all, Ellen has just kind of a really superb overview of what the boards need to be doing at this point. And I actually, we just got to add and build on a little bit what Ellen said.  Ellen emphasized communication as an important element.

One of the things I think the board can contribute to in these situations is a very important conversation about what should the [00:08:00] board and the company be communicating?  So, Ellen mentioned that she is on the board of companies in three different sectors. One that’s been severely impacted, one that’s  a critical industry and another that’s has may have opportunities coming out of this.

So what is the message that the company should be communicating to its employees, to, its customers and to shareholders. And it’s not the same in each.  And I think part of that messaging has to be realism about what’s the challenge facing the company, a message of brutal honesty in a real crisis as to what actually is going on and what the threats are. And also a message of hope. And I would say bounded hope about within the bounds of reality. So what, what is the vision for how we’re going to get through this is part of the message, I think has to come out of this.

Joe: [00:08:54] Raza, has there ever been a time when honest, authentic [00:09:00] communication has been more important for a company?

Raza: [00:09:02] I can’t imagine Joe and our recent guest, Joe Bearlein, also emphasized and provided playbooks on how what really matters is the authenticity and trust of the messages and messaging in this world.

Joe: [00:09:20] I’d like to bring Jay into the conversation if I can  with this question:   wouldn’t it be good practice for private company boards to follow the same structure as public company boards? That is that every board, public or private should have either an independent chair or an outside lead director?

Jay: [00:09:42] Yeah, I think that’s right. I would agree with you. And, I think the problem, however, is that, in private company boards, the term, really defines the difficulty, which is in a private company board, the people who are the shareholders are actually on the board and therefore [00:10:00] you get into this complicated situation about who’s really leading the company.

At the end of the day, in my experience, when you’ve got private shareholders, whether they’d be a set of venture capital firms or a family, they have immense, influence because in a sense it is their company. And that’s different from a public company where the shareholders are represented by the board and the board’s responsibility is to speak for the shareholders and to oversee management on behalf of the shareholders as well as any other constituents that you’ve got involved.

So I think it’s very, very important to have leadership and to recognize that one of the board’s primary duties is to make sure that leadership is in place and then its functioning effectively, not only with the board but as well, with management, I mean, I think that’s the trick of being a lead director or a chairman is to figure out how to build a relationship with management through the CEO and how to [00:11:00] maintain cohesion within the board so that the two groups, that is management and the board, can work in a collaborative way whether for the good of the shareholder, for the good of the company.

Joe: [00:11:11] Thanks Jay.

Rick, I wanted to go to you with a question that you raise actually for Ellen, which is: how does the relationship between the board and management change in a crisis and what’s different in this crisis?

Rick: [00:11:28] Okay Joe, boy, this is an interesting conversation, already, so I think it’s great and I’m learning myself.

 First of all, let’s just drop back to kind of what is the role of the board versus the role of management? I think it’s just worth restating that every so often because I think we lose track of that sometimes. So the management of the company is in charge of running the company, not the board of directors.

And as Jay just mentioned, that’s a difficult separation to keep often with private [00:12:00] companies, but that is the distinction that should be in place the boards role is as, as an advisor, a coach, a resource, a representative over overall management in terms of the supervision of the company, that’s the board’s role –  its not to run the company. So, if you look at what’s happening in a crisis like this, the management is the one who has to deal with the immediate crisis and the board has to provide its supervision, but stay out of the way of management as it’s running the company.

And, I think there are a number of differences between the normal  relationship between the board and the management, and the board’s role in a crisis. And among them being that frankly, a lot of leaders today of companies may never have been through a crisis of this magnitude.

And hopefully there are people on the board who have and can provide some guidance as to, okay, how do you make decisions? What are the issues you have to think about? [00:13:00] All the sorts of things that, Ellen mentioned before. So the board also the leadership, often is thinking about what are the issues I have to deal with today?

What do I have to do today? And I don’t have time to think about six months from now, a year from now, five years from now and usually those are domains are off to the board has more of a role in. But even in the cases where the management has to be thinking about the immediate, the future can be, what’s going to happen a month from now? What’s going to happen two months from now? And the board often will have the time to think about that a month from now and two months from now questions that the management may not have time to, in the same way.  We’re not thinking about five years from now, but are you really thinking about what’s going to happen two months from now?

Who are the suppliers going to be? Are you going to have cash? Are we going to be able to stay in operation? Or if, or this [00:14:00] immediate surge in demand that we have, is that going to be here two months from now or six months from now?

 I also think, that one of the things that the board needs to be think very carefully about is,  the relationship that they have between each other. and Jay talked about this a little bit. What happens if you don’t have a good relationship?

Well, whether you have a good relationship between management and the board is or not in a moment of crisis, both management and the board have to think consciously about maintaining that relationship, maintaining trust and maintaining open communications and its communication with, management and the board so the board knows what’s going on and also has enough information so we can get its work done and also that the board is not putting demands on management for communication that management doesn’t [00:15:00] really have time to provide. And it’s really not as central for the board at this moment.

Joe: [00:15:04] Let me ask you, Rick, a follow up question: as much as boards may want to help, don’t they have to be especially careful now not to grab the wheel, so to speak and veer into management?

Rick: [00:15:17] Oh, absolutely. There are certainly instances in which the board has to be in effect imposing or making a decision, but really the more, valuable usually, role of the board, is to help the management think about process. What is the process you have set up to deal with this crisis? How are you going to make decisions through this crisis?

Joe: [00:15:42] Ellen, did you want to follow up on that?

Ellen: [00:15:45] Yeah. I would just wanted to talk for a moment about how the board and the management communicate, because I think every board, led by the chair or the independent lead director and [00:16:00] management need to figure out, the frequency and the amount of communication that’s needed between them.

I did some thought processing and it came down to three points. with my boards right now, my public boards, it comes down to the CEOs give email updates about every other week. It includes information on company specific and it may touch on something that is just happened in the industry. So that’s bullet one. Obviously if there is a crisis or some huge change, it’s more frequent, but what the pattern is every other week, communication by email.

Second, that boards do calls regularly. Normally you don’t meet that often on a phone call virtually or in person, in between [00:17:00] standard board meetings but each of my boards have set up regular calls, one which is biweekly and two of my boards are on a monthly cycle, so that there can be live communication. Again, it increases if something immediate has happened, but otherwise we have a standard routine and  each board has to figure out what its routine is with email communications coming out from the CEO so that the board can maintain an appropriate distance.

Oversight. Yes. Appropriate noses in, fingers out. And make sure that they’re doing the right things, but not interfering or preventing or taking time away from what management needs to be spending their time doing.

Joe: [00:17:52] That’s great, Ellen. Thank you.

So, Jay, let me follow up something that Rick said [00:18:00] and ask you about situations, actually, you and I have talked about this previously, that in situations where the relationship between the board and the CEO, senior management has not been strong. For example, there’s been a lack of transparency or a lack of trust. What can a board do now in order to handle that challenge or manage that challenge?

Jay: [00:18:28] Well, it’s always a challenge when the board and the CEO don’t trust each other, or particularly the board as well as company is losing confidence in its leader and the leadership of the company. I think in a situation like we’re now in, most boards obviously would prefer to avoid that kind of a problem.

Yet, I think. If there’s a lack of trust between the manager at the senior manager, the CEO, and the board, and the board’s leadership. I think you’ve got to fix it. And I think even though you’re in the middle of a crisis,  it’s [00:19:00] probably even more urgent not to let it fester.

The board is really fundamentally got to worry about more than anything else, is the quality of the leadership of the company. If they’re loosing confidence  in that person , the CEO, I think, they’ve got to figure out how to fix it. There’s two ways to fix it. One is to have the kinds of conversations with the CEO, which might rebuild their mutual confidence to each other or to make the decision that as bad as that is and as dangerous, it’s difficult as it is at this moment if you don’t have the kind of leadership you want, you better fix the problem by buying elite. Either from within the organization or by looking outside and, I’m not suggesting that’s an easy thing to do, but I think trying to run a company where the board doesn’t have confidence in the management, particularly the top manager, the CEO.

In the kinds of crisis we have, right? It’s really fundamentally impossible. and it’s gonna. It’s gonna come down at some point soon trying to change the leadership. [00:20:00] And I think the sooner you get you address that problem is the safer the company is going to be.

Joe: [00:20:06] Jay, what about the idea of boards having board only executive sessions to at least talk among themselves and think about how they can address problems that they may be having with the CEO and how they can at least deal with that in the short term. The longer term may be a change in management, but that is, this is a, as you suggested, a not a good time for that.

How does the board get itself on the same page?

Jay: [00:20:40] Well, let me say, first of all, you know the analogy I would use is this like trying to change leadership when you’re leading the army through a street? You don’t want to try to do that, but the other point I want to make is that I guess I was assuming that the board regularly has these kinds of, what we call for [00:21:00] some strange reason, executive sessions meaning where there’s sessions with no executives in it.

I’ve never understood how we came to that, that terminology. But the point is, I think every board needs to have a, at least at the time of regular board meetings, a session with just the independent directors alone without the CEO and, trying to figure out where they are as a group. you know,

The reality is there are some things directors need to talk to each other about and they don’t want the CEO there. And you’ve got to have those sessions. And I’ve always believed that, you know. For the last decade. Most boards have had those sessions regularly at the time of each, you know, before or after, or maybe even before and after each of the regular board meetings. A board can’t be effective if the directors themselves don’t know how to talk to each other and can’t be honest with each other.

And I think that’s important to emphasize. There’s a lot of people who keep talking about the relationship [00:22:00] between the CEO and the board and the relationship between the board and other managers in the company. That’s certainly is important, but I think equally important is the relationship among the directors.

I didn’t mention this in the introduction, but I’ve been on about six public company boards, myself and a number of her private boards. And I would say. But if the boards that I was on were really in tune with each other, they didn’t understand each other. They didn’t trust each other. didn’t have common goals and work they couldn’t do a very good job. I mean, the only way you’d get that kind of commonality and shared objectives. Is by having these kinds of quote “executive sessions” so the directors know where they’re headed.

Joe: [00:22:41] Thank you. Ellen, would you like to follow that up?

Ellen: [00:22:45] Well, all I will say is, Jay, I agree with you 100%.  Executive sessions, even before this time were standard practice, with at least public company boards. And [00:23:00] all of mine have always done executive sessions, but I think this situation we’re all going through now just underscored the fact that if you hadn’t been doing executive sessions, and if your board had not been talking to each other on a regular basis without anyone else in the room, if you aren’t able to communicate between yourselves as, as board members, then frankly, it’s a lot more difficult in situations like this, a lot more difficult.

So I would just emphasize, if you aren’t already doing them, please do them. If you are doing them, leave plenty of time. And what the best practice that that that one of my boards usess  and the others have started is at the end of a session and when the board is all together and it could be virtually [00:24:00] altogether, the board chair or lead independent director, whosever running the board, will go around to each director, nobody’s left off the hook and ask them to question one: how did they feel about the conversations we had and to what are their biggest concerns? And he gets all of that input from each of the directors and then we have a discussion and it is over time, it builds the kind of rapport and discussion that you need to have between directors.

Joe: [00:24:41] Ellen and Jay. Great comments. Rick, would you like to follow up on that too?

Rick: [00:24:47] Well, am hesitant to follow up after Jay and Ellen, but, most of my experience has been with private boards. in fact, I would say all my experience been with private boards and I, I’ve been in so many [00:25:00] situations in which the board meeting really didn’t happen until the executive session started and it’s really so very important. And what Ellen said about allowing time as opposed to, Oh, let’s have a quick, you know, five minute, does anybody have anything to say? You’ve got to schedule the time. I was also gonna raise one other element to this building on Jay’s comment about, the directors getting to know each other and what their agendas are. That, let me just put on the table the case where you have members of the family are part of a board of directors. Or you might have a private equity representative on the board of venture capital representatives on the board.

You know board members are not homogeneous, just sort of everybody gets together and works. The reason they’re on the board will be quite different in most cases. And the interests they represent and their own motivations for their being on the board will be [00:26:00] quite different. And as a result of that, it’s often difficult to get the board members who may not personally know each other that well. It’s difficult to get them to work together as a cohesive group, advising management, reviewing management practices, all that sort of thing. So , what Jay said about, having the board members spend time getting to know each other, getting on the same page with each other, is extremely important to have the board be more than a just a functionary that’s sort of doing a role but not really making a contribution. And sometimes it doesn’t work perfectly. In fact, I would say it seldom works perfectly, but the importance of getting to know each other and finding common ground of the board can work with collaboratively is absolutely essential to board being an important contributor.

Joe: [00:26:55] I will say one thing, I thought all the comments are great. I too [00:27:00] have always wondered why a session with only board members is called the “executive session.” I’m glad you said that, Jay. I have no idea where that comes from.

Jay: [00:27:12] This may sound strange, but I think in many respects public company boards are easier to build and make effective than venture capital board or a family company.

The reason being that there are very strong emotional interests in those two situations. And, you know, I’ve been on both and I’ll tell you that it’s much easier to build an understanding and common purpose among public company directors than it is in a family where uncle Joe doesn’t agree with his brother , and in particularly in these venture capital boards, I think the boards that are dominated by venture capital representatives often are the most dysfunctional boards you can find because the idea for a board isto, represent the shareholders.

The problem is when the shareholders are on the board,  they get into [00:28:00] arguments with each other and it’s very, very hard for them to put the interests of the company ahead of their own, parochial interests. And so I think, in a crisis situation like this I’d rather be on a public company board than I would be on some of these family boards and particularly on a venture capital board.

Raza: [00:28:18] For the venture capital board I completely agree, Jay, when the preference stack and the capital waterfall, is so stark, even though as a board member, everybody’s beholden to the shareholders , it’s seldom  is. It does create a lot of tension between the series A board versus the series B board member.

Joe: [00:28:42] So Raza, let me follow up with you and then I’m going to ask everyone maybe to comment on this last question, which is: how has the role of boards changed in this crisis and what is it likely to mean for the future. To the extent we can really see that.

[00:29:00] Raza: [00:29:01] Joe, the first thing I’m observing, as everybody has pointed out that boards are changing towards more frequent communication in all ways.

The second thing I observe, is, it almost for every single board, it is an “all hands on deck” situation. The third thing I know that, there, there always was aligned between, you know, management and board guidance. But that, that line is certainly shifting more towards hands-on. They’re not touching the wheel, but they’re almost, or maybe in some cases they are,

There is a tremendous amount of realization also at board levels that this is not really a short term crisis. This is here, for the long term, and they got to adopt for that.

The one very important thing that I see that all boards are [00:30:00] now in a problem solving mode. Whether it’s how do we get cash in the bank or how to apply for the PPP, and if I need to change my charter documents to be able to do that. But basically, in all respects, boards are squarely in a problem solving mode. And I would say the last thing, probably the tactical, that a lot of boards have gotten now familiar or used to what is Zoom and what is WebEx and how to conduct, board meetings virtually.

Joe: [00:30:32] Ellen. Do you want to, follow up and, and if you would a few words on what it might mean for the future too.

Ellen: [00:30:41] Joe, thank you very much. That’s exactly where I was going to go. What is it likely to mean for the future and the role of the boards? And I think I do it in four bullets.

One:   boards need to understand the world has really changed.

Two: [00:31:00] planning for a crisis is not a luxury. And when I say planning for a crisis, I’m talking about everything from boards would always talk about doing enterprise risk management. Well, enterprise risk management, this just underscores the criticality of that whole effort and the need to be able to understand that that crises happen.

Three: crises will continue. I don’t care whether we talk about a climate change issue or tornado. I hate to think about  9/11 but it, it’s happened once, the pandemic forest fires look at California. Think about the cybersecurity issues that some companies, particularly in financial services and in retail, have gone through.

So crises will continue to come and they’re coming at a faster pace and,

Four: [00:32:00] build resiliency. Think it’s a core need, on a go forward basis at all levels of the corporation.  It starts with the board: how does a company build resiliency as they come and go through these variety of crises that will attach itself to many different industries on a go forward basis?

Joe: [00:32:27] Great stuff to think about, Ellen. Really, really thank you. Rick, do you want to add something to that as well, please?

Rick: [00:32:34] Yeah, just a  couple of comments. I mean, first of all, I think human nature is not going to change and we are not going to be able to predict what the next crisis is going to be.

So the next time there is a major crisis, we’re going to go through the same process of not really understanding what the nature of the crisis is, not understanding what we should really do and [00:33:00] having to go through a process of, make decisions, try, make mistakes, learn, adjust, and move on.

 In addition to what Ellen said, which I thought is very on target, I think that, we’re also going to rethink the, reliance that we have all, all companies have on our supply chains and critical resources, and are they exposed to getting cut off in the kind of crisis that might happen over time?

I think this whole notion of our economies are set up to find absolutely the lowest cost source of production, is being challenged. I mean, that is sort of  the international, business system that we’ve set up, which I think all of us would agree ideally is what we should be doing. But in recognizing the implications of that in a moment like this, where certain supplies are going to be [00:34:00] unreliable for whatever reason, I think that’s going to be a question that we’re all gonna face as we go forward in whatever business we’re in.

Joe: [00:34:08] Thanks, Rick. Jay, do you have some final comments?

Jay: [00:34:13] Well, I know what it will tell us about the future, but I assume the future will, continue to have crises. Hopefully not a, not as serious as the one we now currently faced.

But I think the point I would make here is that the boards  were never created to deal with crises that, that wasn’t the the idea, but the fact of the matter is, in today’s world, boards have to be ready to move in and deal with a crisis – whether a crisis is externally generated like this one is or whether it’s a CEO who suddenly has a heart attack or decides he wants to quit. you know, there’s all kinds of crises out there, and I think the board has to be  a part of your organization, which is really very, very good at crisis management. and I think that really goes back to the leadership of the board.

[00:35:00] The  boards that I’ve had experience with dealing with big crises, I’ve always had, first of all,  a small number of perhaps the leaders of the board, not a leader, but people who are high status members of the board who’ve been around a while who take the resolution of the crisis very, very seriously. That’s one thing you need.

The second thing you need is a leader, not the CEO. CEO has got plenty of problems to deal with. But you need  a leader of the board, whatever title you use for him, chairman or lead director who takes the resolution of the crisis  and the management of the board seriously, there’s no time in my experience where that kind of leadership becomes more important because of avoiding a crisis without that kind of leadership. And that kind of guidance can go off in too many different directions. And I, so I think that the importance of a leader of a board. Whatever title you give him or her, becomes fundamentally important in these crises.

And, we need to keep our eye, , [00:36:00] recognize the kind of effort these people have to put in to make the company successful and making the company successful obviously means the board is successful.

Joe: [00:36:11] Thank you.

Ellen, Jay and Rick, it’s been great speaking with you all. Thanks so much for joining us today. I hope you and your families will continue to be well and, of course, stay safe. I look forward to when we can be meeting in person again and to our listeners.

Thank you all for listening to Onboards with our special guests, Ellen Richstone, Jay Lorsch and Rick Williams. Please stay safe, take care of yourselves, your families, and your communities as best you can.

Raza, please take care. I hope you and your family continue to stay safe.

Raza: [00:36:51] Yes, Joe, we’re all staying safe and thank you and I hope you and your family stay safe as well.

Joe: [00:36:58] Thanks. [00:37:00]

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