In this episode of On Boards, hosts Joe Ayoub and Raza Shaikh speak with Betsy Atkins, a three-time CEO, serial entrepreneur, and one of the most experienced public company directors in the U.S., having served on more than 38 public boards and through 17 IPOs.

Betsy explains why a board stuck in an oversight mindset can never be a competitive asset, and what it actually takes for directors to lean into growth and innovation: mentoring the CEO, becoming a thought partner, opening doors, and thinking like an owner. She makes the case that the attributes that matter most in a director today are being active, brave, curious, and decisive – and offers practical questions for finding those qualities in a candidate.

The conversation also explores the difference between a high-performing board and a change-adaptive one, drawing on Betsy’s experience as lead director when an activist arrived, and closes with a hard look at AI governance – why boards should treat AI agents as an insider threat, tier their risk, and make sure the guardrails are actually being enforced.

Key Takeaways

• A board becomes a competitive advantage by leaning into growth, not just oversight

  • Reviewing last quarter and the annual plan is the minimum; companies thrive or melt depending on whether they stay relevant

  • Directors should push the CEO and leadership team to be change adaptive – what’s new, where the market is going, who the unexpected interlopers are

  • In practice this means mentoring the CEO, connecting them with other relevant CEOs, becoming a thought partner on partnering ecosystems, and opening doors at the right level when invited

• Showing up four times a year is a transaction, not a relationship

  • Reading the board package and attending meetings is table stakes, not the job

  • Directors need to invest in the relationship with the CEO – meeting early, meeting outside the boardroom – before their help will be welcomed

  • The highest standard is thinking like an owner: if I had to solve this, how would I go about it?

• Hire for resume reality, not resume match

  • Board search can be a loss leader for search firms, which creates an incentive to place candidates who look perfect on paper rather than those who deliver value

  • A functional expert from a large-cap company may not bring the generalist, entrepreneurial perspective a board needs

  • The four attributes to seek: active (100% engaged), brave (courage to have meaningful dialogue), curious (open to new models and tools), and decisive (able to act with incomplete information)

  • To test for courage, ask candidates about the hard things they’ve done, when they took a principled position against the group, and who they admire as courageous

• You’re hiring for the bad times

  • Everybody looks like a genius on a rising tide; equivocating and stalling are decisions too

  • Duty of care means getting objective outside information, but the board is there to exercise business judgment – often with incomplete information

  • Large-company executives are skilled at moving big organizations incrementally, which is the opposite of the personal decisiveness a board crisis demands

• A high-performing board is not the same as a change-adaptive board

  • High-performing boards have excellent processes for the status quo; change-adaptive boards can absorb and act on something new

  • At HD Supply, Betsy replaced a board dinner with a learning session on digital transformation, bringing in three outside firms so the board could build shared understanding together

  • That shared learning “wove the fabric” that let the board process an activist event as a cohered team

  • Change adaptiveness is a muscle that is often dormant in senior leaders and has to be deliberately created – or recruited for

• Engage with activists rather than refuse them

  • Activists are shareholders, and there’s a wide continuum between confrontational and constructive ones

  • The initial “refusenik” reaction rarely works; the board should ask whether the activist might have a valuable idea and what it would cost to listen

  • Who got you here is not who’s going to get you there – the rate of change and the number of macro trends today are different from a decade ago and board composition needs to change accordingly

• AI governance is the next big thing boards are not ready for

  • Use the cybersecurity playbook boards already know: zero trust, with AI viewed as an insider threat vulnerability

  • Every agent needs a unique cryptographic identity and a human owner in the operating line who is accountable for its purpose and permissions

  • Boards should ask management to tier agent risk: low (read-only), medium (reversible, bounded actions), high (irreversible or material actions such as payments, deleting databases, or exposing customer data)

  • A policy on paper is not enough – someone has to verify there are logs and that incidents are tracked, algorithms are monitored for drift, and there is a way to disable an agent

  • Technology expertise on the board is now a must-have, not a nice-to-have – broad and conceptual, not narrowly functional

• Board composition and tenure have to keep pace

  • Boards should review their composition regularly, and duration of service probably has to change

  • Companies are less likely to fail from cooked books than from irrelevance – and the glide path is much shorter than it used to be

Quotes

“It’s very easy for boards to be in an oversight mindset. But companies thrive or they melt if they’re relevant.”

“Coming [attending board meetings] four times a year is a transaction, not really a relationship.”

“Perfect on paper is not always perfect in reality. Perfect on paper is the difference between resume and reality.”

“You’re hiring for the bad times. Everybody goes up with the rising tide.”

“You have to be decisive because equivocating is a decision. Stalling is a decision. Time is not your friend if there’s something really wrong.”

“Who got you here is not who’s gonna get you there.”

“AI should be viewed as an insider threat vulnerability. Every single agent needs to have a cryptographic, unique identity, and a human owner who’s responsible for what is its purpose.”

“Blockbuster had a decade before Netflix took it out. I don’t think you have two years anymore.”

Links

betsyatkins.com

Be Board Ready: The Secrets to Landing a Board Seat and Being a Great Director

Behind Boardroom Doors: Lessons of a Corporate Director

Guest Bio

Betsy Atkins is a three-time CEO and serial entrepreneur who has co-founded enterprise software companies in the energy, healthcare, and software industries. She has scaled companies through hypergrowth, helped shape the future of digitization, and led companies to successful IPOs and acquisitions. Since 1994 she has been CEO of Baja Corporation, an independent venture capital firm focused on technology, renewable energy, and life sciences.

Betsy has served on more than 38 public company boards and has been through 17 IPOs, with board experience spanning technology, financial services, healthcare, retail, automotive, manufacturing, and logistics. She was a co-founder of Ascend Communications, acquired by Lucent, and CEO of Clear Standards, acquired by SAP. She is a frequent corporate governance commentator and the author of two books, Be Board Ready and Behind Boardroom Doors.

Transcript: 

Joe Ayoub: [00:00:00] Welcome to On Boards. a month, we explore what makes a board a strategic asset for any company or organization. I’m Joe Ayoub, and I’m here with my co-host, Raza Shaikh. Today, we’re joined by Betsy Atkins to talk about how a high-performing board can turn governance into a competitive advantage.

Before we introduce our guest, we’d like to thank our longtime sponsor, the law firm of Nutter, McLennan and Fish, who again is sponsoring both the podcast as well as our On Board summit. With offices in Boston, New York, and San Francisco, Nutter serves as trusted counsel to a wide range of public, private, and nonprofit organizations, as well as investors and boards, helping them build, [00:01:00] grow, and govern through every stage of their development And we’re proud to welcome PwC Private as a sponsor of our podcast, as well as the On Board Summit.

For 25 years, PwC Private has focused exclusively on helping private companies, owners, and boards navigate complexity, make informed decisions, and prepare for what’s next. We’re joined today by Betsy Atkins to talk about how a high-performing board can turn governance into a competitive advantage. Betsy is a digital native, three-time CEO, and serial entrepreneur who has co-founded enterprise software companies in the energy, healthcare, and software industries.

She has scaled companies through hypergrowth, helped give shape to the future of digitization, [00:02:00] and led companies to successful IPOs and acquisitions. She has served on over 38 public company boards, and has been through 17 IPOs. And Betsy has written two books. First one is “Be Ready: The Secrets of Landing a Board Seat and Being a Great Director,” and the second one is “Behind the Boardroom Doors: Lessons of a Corporate Director.”

Betsy, welcome to On Boards, and thanks so much for being with us today.

Betsy Atkins: Wonderful to be with you both and your audience. 

Joe Ayoub: I’m gonna start off with a very small question. How does a board give a company a competitive advantage?

Betsy Atkins: I think the way that you do that is that you inspire the thinking to lean into growth.

Into innovation. I think it’s very easy for boards to be in an oversight mindset, where you’re looking, how’d we [00:03:00] do last quarter? How are we performing against our annual plan? What’s it gonna be next quarter? But companies thrive or they melt if they’re relevant. And so leaning into- … innovation and future at this velocity of change that we’re at, I think is critical.

So Encouraging the CEO and the leadership to be change adaptive, to think about what is new, where is the market going, what are your competitors doing, who could be interlopers that you don’t expect? I, I think where everything is starting to overlap into each other’s area, blurring traditional lines.

an innovative and future and market focus, I think, is what a board can do to help a company be more competitive.

Joe Ayoub: So part of what gives it the advantage is not just sticking to the, the basics, if you will, the oversight, which is obviously important, but [00:04:00] it’s not enough, is what you’re saying.

what’s critical, if it’s gonna really be an advantage, is for the board to be thinking about the future and helping management think about the future in a way that will really make the company successful, not just the next quarter or the next couple of quarters, but down the road. . Is that right?

Betsy Atkins: And offering ways to help them expand their thinking. Whether exposure to interesting people, other CEOs, other models, and giving them, the support by making it important to the board. Betsy, so that part we all get, that, a board can be a competitive asset. But what does that actually mean in practice then?

What are the practical ways of a board making themself an asset? By the way, I’m all for practical. Theory is okay, just like hope is not a [00:05:00] strategy. Exactly. I think the practical things that I do, I, try and specifically mentor my CEOs. I try to offer them connections to other relevant CEOs that they would admire, that they could learn from, that they can relate to.

I try to invest the time to become a thought partner specifically and talk about, how could we grow this business? Who are the partnering ecosystem that would make us have more reach or enter new territories or different industry use cases? How can we think about our partnering ecosystem?

And, you have to have relationship capital. Thought partnership is one thing. Practical, relationship door opening is valuable at the right level when you’re invited. and offering to help on challenges. For example, I just had board meetings in the last two weeks, with, one public [00:06:00] and one private manufacturing company, and on the private one, we were having challenges in our, manufacturing flow on the factory floor.

It wasn’t efficient. and, by offering to introduce world-class manufacturing leaders, efficiency factory flow leaders, and, on the other one, offering to think about what are hardware companies who have learned successfully to speed up their new product development cycle? Hardware companies are traditionally much slower than software and hardware cultures are slower to change, and so giving them models of other companies who have tackled this problem compressed the hardware development cycle. And, doing those kinds of where there’s something that comes up in the board dialogue where there, [00:07:00] if you’ve done your active listening, you’ll hear we’re challenged here- and then trying to think about, think like an owner, think like the CEO. If I had to solve this, how would I go about it? And try and come up with some constructive, not time-wasting ideas. So are you talking about having that conversation in a, your role as board chair, or are you suggesting that any board member could engage in this kind of dialogue with the CEO?

I think anyone can, but you have to invest in the relationship, right? coming four times a year is- That’s not enough … a transaction, not really a relationship, right? I go in early, and I try and meet the CEO, ahead of a meeting, or I meet them- in a major city like New York where everybody’s going every quarter.

Joe Ayoub: You’re genuinely trying to find a way to help someone, they’re mostly pretty happy [00:08:00] to get the help- as long as it’s, at an appropriate level- Yeah … after you’ve developed a relationship. It’s a great point because I think, if a board member thinks that just reading the material and showing up four times a year is the whole, thing, that’s all they’re responsible for, they’re missing something.

Yeah. So I think- Would you agree?

Raza Shaikh: I think it almost sounds like there are levels of those effectiveness. Maybe, Joe, what you’re saying, that’s like level zero. you read the materials, you show up, is, almost like the minimum level that you have to be at. that, that’s definitely the minimum level.

If you’re not doing that, then what are you doing? Really goes up from there. I think the highest level, as Betsy is saying, is, think from the owner’s mindset, and be able to, in practical manners, look at the business and be able to h- really help actually move it forward.

And I think that’s kind of the holy grail or the highest standard for, not only an effective [00:09:00] board, but being a competitive asset for the organization.

Joe Ayoub: Yeah, and I’m gonna guess that even a really well-constructed, composed board, not every board member’s gonna be able to do this. I mean- it’s just not gonna happen.

So it’s maybe even an attribute you should look for as you’re recruiting new members on your board. I’m not sure how you find that, but I think if you had enough conversations, you could probably ferret it out.

Betsy Atkins: I think there’s a very programmatic way you can find it. Okay. So I think that boards have historically, made the mistake of going to search firms who are, whose business model is that board search is often, not always, but often a lost leader, so that they can, do a much bigger search in the company.

So let’s say- hypothetically I’m American Express and I want to bring a, a world-class agent board thought [00:10:00] leader. so I might go to, hypothetically, Facebook Meta and get a general manager who looks perfect on paper. Perfect on paper is not always perfect in reality. So perfect on paper is the difference between resume reality.

So here’s the thing. it’s probably a, a decent match to large cap companies, the rate pace of change that they can absorb. but in general, like in any large company, there’s a function and the person is very knowledgeable in their function, finance, marketing, product development. they may not be a generalist, they may not have done general management, they may not be able to really contribute, with a broad enough perspective.

However, search firm markets to the board, they wanna close the transaction, right? A search is, how quick can I get this closed? And … plus they wanna take somebody [00:11:00] Often out of a big platform company like a Meta, ’cause then they can go back in and do the CHRO search or the CMO search for, 750,000, not a board search for 120.

So they’re gonna pick people based on… It’d be foolish not to. These are smart people. Their business model is better served, finding resume match as opposed to value delivery.

Joe Ayoub: Yeah. I’m gonna say that sounds like a bad search. That sounds like, honestly, and it could be anyone doing I…

this isn’t directed anywhere in particular. But if the basis of a search is a resume match and not what’s the best fit for this board, for this company, then you’re al- you’re already on the wrong track. 

Raza Shaikh: But I think what Betsy’s saying, like incentives, align everything, and-

Joe Ayoub: No 

Raza Shaikh: … You figure out, like that’s what they are trying to do.

I think the [00:12:00] broader thing though is that, specialists and specialized skills on the board had been the, proverbial, match your candidates to the matrix, for the board search. and now I think in this new world, we need, I don’t wanna s- call it broad or horizontal candidates, but more like T-shaped candidates that are broad and have general knowledge, but also specialized knowledge.

Joe Ayoub: I’m gonna, I’m gonna say I disagree. I’ve been doing board searches for 14 years, and I’ve never, if it’s a small private company forming their first board or a public company 

Betsy Atkins: Joe, you’re an outlier. 

Joe Ayoub: Apparently 

Betsy Atkins: Do you think everyone, do you think everyone in your industry performs with that level of

I, I hope they do, but I think if we go, forget my knock on search firm. Let go of that. Let’s move on. The bigger point is really, change adaptive entrepreneurial thinking. Because if you look [00:13:00] at the attributes that are, that you could, that you should, in my opinion, be qualitatively seeking.

certainly a resume with credentials is a foundational thing, just like- Sure … reading your board packet- Yeah, it’s a start … is a foundational thing. But you want somebody, first of all, who’s really active, 100% engaged. They’re not doing this as, “I’m retired, and I’m on two boards- Oh, my gosh

and I’m in a pit hole. I have something to talk about.” 

Joe Ayoub: Exactly. 

Betsy Atkins: If you’re not 100% engaged in, at, at this level of change in the world, you’re atrophying geometrically. Yeah. Second, the second attribute after active is brave. You have to have courage to have meaningful dialogue, and you can’t have courageous conversations without credibility and trust having been forward built and invested with your CEO, your leadership team, your board team, your board chair, [00:14:00] your committee chairs.

that you have to be aligned to have those conversations effectively. 

Joe Ayoub: So wait, before you go on, I want to just say you’ve mentioned this, this attribute of courage when we last talked, and I agree with you. So what do you look for? What does one look for, to understand if a candidate has courage?

Betsy Atkins: Courage? Yeah. Okay. Tell me the hard things that you’ve had to do. What were the times- … when you had to take a principled, position- against the group? How did you successfully navigate that? How did you stand up for somebody, in, in a group or in an organization? How did you overcome a tough obstacle?

What were the hardest things you’ve done in your life? Who do you admire as courageous? What does courage look like? When things went bad, who goes into the burning building? Who runs away? Things always get [00:15:00] added somewhere. Fantastic.

Raza Shaikh: Betsy, I know for key employee hiring, people ask this question, but I think you’ve highlighted very aptly that, And Joe and I often talk saying, 

getting hired on a board is also a, a job. And I think, it, it is incumbent on when you’re interviewing to filter or ask or at least look at signs for grit, resilience, and courage as well, as an important attribute.

Betsy Atkins: You’re hiring for the bad times. Everybody goes up with the rising tide. “Oh, look at me, I’m a genius. I’ve been sitting on the board of, Databricks,” or whomever. Yeah. no. Databricks’ leadership team is a genius, and you’ve been there. so I think that, after active and brave, I would say curious. If you’re not curious, you’re not gonna be innovative, change adaptive.

people who have a mindset that, “Wow, I have been so successful, and my playbook has been so effective for three decades. I understand this. This is awesome pattern recognition from Pepsi. Let me bring this very, very cherished [00:16:00] and valuable playbook.” If you’re not curious about what’s changing, new business models, new tools, new competitors, you’re not gonna be relevant I don’t think.

It won’t take long before you’re not relevant. And then the other thing is decisive. I think that boards, when something challenging occurs, mostly in my observation of my experience, they tend to be, “Ooh, we need more info. We need more data. Let’s ask-” 

Joe Ayoub: Let’s get an, let’s get an expert.

Betsy Atkins: Let’s get a, let’s get a consultant. No, you need… Your duty of care is get objective outside information but you are there to give a business judgment, and you have to be decisive because equivocating is a decision. Stalling is a decision. Time is not your friend if there’s something really wrong.

You have to be courageous to make a decision with incomplete info. But in [00:17:00] a kerfuffle, there is not complete info.

Joe Ayoub: Yeah. In the real world, you don’t have all the time in the world to gather every bit of information that could be relevant. Sometimes you just have to make the call based on what you gathered, in a timely fashion.

Raza Shaikh: Yeah. So the real meaning of, decisiveness is decisiveness under uncertainty, under the conditions of uncertainty-

Betsy Atkins: Yeah, you’re right 

Raza Shaikh: … and boards are often

Betsy Atkins: Decisiveness in the ambiguity-… is not something comfortable for, in my experience, very large cap executives because they, their skill set is, work with a team, energize the team, move a team, activate a multinational organization.

But that’s not personal decisiveness. That’s not you’re accountable, you’re on the line, and you have to make it quickly. It’s the antithetical skill set To what they have been, building as their core expertise, which is why I was saying [00:18:00] resume reality. A board situation is different than, I’m, Coca-Cola’s general manager.

Joe Ayoub: Yeah. Absolutely. 

Raza Shaikh: Executives are executing, and they’re often not deciding, and that’s how it reflects-

They’re incrementally improving. Incrementally moving a large entity forward because large entities can only move incrementally. And I think that notion also reflects well in, what we see in startup boards, that these boards and these executives, the startup founders, are, moving decisively and are making, headways under uncertainty.

They don’t know what is next, but they’re making the best judgment.

Joe Ayoub: Yeah, they have to. They have to. And I guess that you’re right. if it applies to a startup board, it almost applies more as you go on because the consequences of each decision is gonna be significant. You have to make those decisions as you go.

Raza Shaikh: Yeah. But there must be some law that says the larger the organization, the larger the cap is, [00:19:00] the less these characteristics, or qualities become-

Betsy Atkins: Exactly, because you actually cause a problem. So for example, I was asked to go on the board of Volvo, and I declined. And they asked me again, and I declined.

I’m not a fit for you. My cycle time is too fast for you. I’ll give you indigestion. I’ll work on at a pace that you won’t wanna go at.” Boy, I’ve never heard that before.

Joe Ayoub: That’s great. I love it. 

Betsy Atkins: But you have to know yourself, right? It’s not that I can’t modulate, and I do modulate, but a hardware culture of an automotive company seemed in a, Scandinavian socialist environment where decisions are collective, collaborative, takes a while to get everyone aligned because everybody has to fall in line, and those kind of consensus mindsets tend to not be quick enough.

And the remit was come and help us digitally transform and do autonomous drive [00:20:00] and do infotainment systems and electrification. These were big remits, and I’m thinking, I’ll be Sisyphus. I will not be able to add value and plus I’ll probably

Joe Ayoub: Kill yourself.

Betsy Atkins: I’ll probably, not be as helpful as I’d like to be.

But they assured me, and they were right by the way, they were nimble, fast, innovative, entrepreneurial, shockingly all kudos to the CEO who’s there now. and, I’m glad this had a happy ending. but in general, large organizations by their nature, you know- 

Joe Ayoub: Are not nimble

Betsy Atkins: Are not nimble, which is why they go acquire innovative things because they can’t innovate quickly anymore.

Raza Shaikh: Absolutely. Betsy, earlier you alluded to this phrase, change adaptive, and I think this is where it’s all headed. contrast this with high-performing. What is the difference between high-performing board and a change adaptive board?[00:21:00] 

Betsy Atkins: So a high-performing board would tend to have a great set of skills in the status quo. A really wonderful set of processes, procedures, methodologies in how they review the company’s performance, they look at the annual strategy. they are high-performing. They are collaborative, collegial, integrated. But they may not be change-adaptable. I’ll give you an example. I was the lead director at a company named Home Depot Supply. It was about 8 billion. It was the professional arm of Home Depot for contractors, large turnkey EPC projects, things of that nature. And I went to the board meeting, I don’t know, we’re a year in, and I mentioned, we need to look at how might [00:22:00] we, address digital transformation.

And I looked around the room and I said, You could see on the face of everybody that they were like, their reaction was like, “Oh, buzzword.” It’s like jargon, corporate-speak. and I said, okay. we are not comfortable, we’re not on the same level of understanding of what this means.”

So I suggested we go to the training center at the next board meeting, not go out to dinner, bring in the exec leadership team and the CEO. Of course, we discussed this all and agreed it in advance. And we brought in three outside, speakers, one from Boston Consulting Group- one from McKinsey, and one from Accenture- to explain the concept of digital transformation in our context as a stocking distributor for large-scale programs. And the first description, each one was given a half an hour, and then we would chat after for 20 minutes. and then we’d have a little break for 15 and chat among ourselves, and then go to the [00:23:00] next one.

And the first explanation, you could see them like, okay, I’m getting, understand the terms.” The second we’re like, I get it.” “Okay.” The third one, I’ve got swagger. They’re all talking. and they understood it- … and they enjoyed the learning process so that then we would bring back somebody to speak on cyber, and then we brought somebody to talk about call center and e-com, and we peeled the onion together on our learnings.

And then when we finally had an activist event, we had cohered as a team, we could process as a new team. We were more… we had woven the fabric of being able to be change-adaptive. But that was a new thing, and you have to create it if you can with the people. or recognize if you don’t have it.

 most, senior leaders Are not always encouraged to be change adaptive. That is for sure. They’re not [00:24:00] rewarded for that. So it’s a muscle that is often dormant and has to be created, or should index towards bringing that into your boardroom. 

Joe Ayoub: I’m gonna say, I wonder why an activist would wanna join a board that you are the chair of, because I would think that, once they got on the board, they would realize there’s not much for them left to do. Because you’re doing the things that a board should do, or leading a board to do what it should do. and really addressing issues that typically activists are trying to address. Because the complacency that you talked about of the, “Oh my God, this is a buzzword, what are we gonna do?” You didn’t just sit there and talk about it, you had a plan, which you apparently had talked to senior management in advance about, and implemented the plan in a way that really brought the board along, and that is absolutely…

good, absolutely fantastic on your part. But why would a [00:25:00] activist ever… Has an activist ever joined a board that you were the, you were chairing?

Betsy Atkins: Yes. Yeah. 

Joe Ayoub: And how did it go for them? 

Betsy Atkins: It was actually pretty constructive. First of all, activists are shareholders.

Yeah. Some of them are very short term, others less So- there’s a big continuum and a big difference between-

Joe Ayoub: Sure 

Betsy Atkins: … a Carl Icahn who’s, purportedly of a hot temper and demeanor, and s- spicy behavior, and then, a more gentlemanly approach, of, ValueAct or, Jana.

our particular activist had 12%, which is a big stake. Big stake. Yep. And by bringing them on the board, it locked up the 11%. If you bring on the representative, they can trade. If you bring on the owner, they cannot. So first of all, you’ve got that. The, the journey was a little more interesting because when it’s, when we first got the knock, my board colleagues, had a reaction of, “No.”

“No. We don’t wanna talk. Stop. We’re gonna refuse.” [00:26:00] And so we had to get over the, refusenik mindset and address, is that gonna work? What’s the history of that working? Do we listen to shareholders or not? Could they have an idea that’s valuable? What would it hurt if we were collegial and polite and listened to what they had to say?

Joe Ayoub: Are we gonna be, tarnished with a n- a new idea? Oh. Oh, no. A new idea. 

Betsy Atkins: So actually, we brought on this firm Spotlight that is, unlike banks that have a- activist defense practices, the, which are all very good, mind you. This is, only what they do is activist defense, and then they do activist offsets. They’re on both sides. And the guy running it has been an activist. So there’s probably not much that he doesn’t know, and he’s, highly credentialed out of Goldman Sachs and Harvard and, Cravath. So it’d be hard to have more credentials, but very smart man.

And so he led the board through the [00:27:00] discussion of pros and cons of engaging, how do you engage, who engages, who does not engage, even more importantly, who does not speak, how you control the dialogue, how handle this with your external investors. there’s a process and a methodology to doing it right.

what is a standstill agreement? How do you negotiate it? so that you don’t just bring someone on, and then they can go do something else again because you forgot to negotiate an appropriate standstill agreement. So there’s, a lot of complexity, and learning about it was great.

And once we got over the, “No, I don’t wanna think about this- Yeah … let me just call Goldman Sachs to defend me,” … and Wachtell, both of whom lose all the time historically, like 90% they lose. So why would you do this? This is a losing strategy. at any rate, We learned, we approached- … we brought them on, and we actually did over time implement some of their ideas.

And, it, this is change [00:28:00] adaptiveness. Now, that doesn’t mean we would’ve listened if it was a crummy idea, but it was a good idea.

Joe Ayoub: Yeah. I would say that, you’ve just demonstrated the attributes of a, of an excellent board leader because you’ve taken something that the initial reaction to was no, and really forced a conversation to, to discuss it in a way that would make everyone think about what it really meant.

Betsy Atkins: Or maybe it would’ve been, we’re still at no, but we should have the conversation.

Joe Ayoub: At least have a real conversation … and we should be informed. Yep. 

Betsy Atkins: Because, I was the only one who dealt with activists before. No one else had. So they were-

Joe Ayoub: People are afraid of what they don’t know sometimes.

Raza Shaikh: We’re all afraid of what we don’t know. I am. Doesn’t mean I don’t, push myself, but, I’m vibe coding. I’m terrified. Who knows what I’ll do? But see, the thing that, struck me the most is that, boards do sometimes become complacent, and I think the activist thesis is that it brings it full circle, and [00:29:00] that’s actually the accountability or, upping the game of a board itself is the forcing function, by an activist. And I think they play a very important role in that. 

Betsy Atkins: I do too. I also think, oh, pardon me, Joe, that who got you here is not who’s gonna get you there. 

Joe Ayoub: That is for sure. 

Betsy Atkins: The board members who were phenomenal and fabulous through 2010s and, 2010 to 2020, the rate of change was different, the number of macro, trends that are happening was different.

We have about six major macro trends right now, right? We have agentic AI, energy transformation- small modular reactors, space tech, robotics, quantum, the reindustrialization of America, defense tech. I don’t know. There’s a lot of macro trends. 

Raza Shaikh: And we have, like, all the previous ones also still on the [00:30:00] table, whatever the, if whether it was ESG or DE&I, as in, the, good parts of it.

And, the waterfront, of what boards have to deal with is incredibly more vast than before. 

Betsy Atkins: And AI governance is the next big one, and the biggest one that boards are not ready for. 

Joe Ayoub: Let’s talk about that.what should boards be thinking and doing now to prepare for the future of AI’s impact, which is now and in the future. What should the boards be doing now to prepare for that?

Betsy Atkins: So first of all, we have to get our board colleagues to some foundational level- … of knowledge to be comfortable. So everybody has finally pretty much arrived at some base level understanding of cybersecurity, and that took a few years.

Joe Ayoub: That it did.

Betsy Atkins: But most boards sorta kinda get it. They now, [00:31:00] understand, the vulnerabilities. We’ve all got the NIST framework. We’ve all been exposed to it, whether it’s annually or quarterly. We’ve all done tabletop cyber, breach response exercise. So we get it. So I think the easiest way for boards to understand this is to exactly take the mindset of a cyber framework of zero trust, and AI should be viewed as an insider threat , vulnerability. And it’s got to be correctly permissioned, credentialed, identified, real-time monitoring, incident response, and most importantly, you’ve got to understand, how do you de-install or stop a problem. So if we break it up and we go backwards, every single [00:32:00] agent needs to have an identity, a cryptographic unique identity.

Joe Ayoub: Every single agent needs to have a human owner who’s responsible for what is its purpose, what is it doing, how broad are its permissions, its access, Is the owner someone from management or on the board? 

Betsy Atkins: No, neither. It’s the, operational line leader in payments who’s got a payments agent. Oh, okay.

Joe Ayoub: Okay. Yep. 

Betsy Atkins: It’s, the benefits manager who’s got a benefits agent. 

Joe Ayoub: Okay. Okay. 

Betsy Atkins: It’s the procurement guy who’s got a procurement agent helping him. so you’ve got to have those basic things. You have to … The board has to have asked management, “Hey, what are the tiers of risk we’re comfortable with?

What’s a low-risk thing?”A low-risk thing that you might allow an agent to do would be, a read-only. From my manuals, my chatbot can do a read-only diagnosis [00:33:00] of my Ford 150 truck problem. It can read-only. That’s a read-only. … a medium risk is, a, a reversible action that you’ve automated, but it has limits.

So I might grant you a discount I should have gone to the human in the loop, but I didn’t in the call center. But it’s reversible, and I… anyways, I can only go give you a 30% maximum discount. I can’t give you 100% discount. high risk would be things that are irreversible or a material action like, payments, like wiring a million dollars, deleting corporate database. 

Raza Shaikh: Dispensing a drug. 

Betsy Atkins: Exfiltrating and exposing all your customer records. your company’s IP. So you’d have to limit access, put those things in a vault, and everything… you… So you’ve tiered your risks. Where is the human in the loop? who’s the business owner?

How are you monitoring it? And then you can’t just have a policy on [00:34:00] paper. You’ve actually gotta go and do the work of somebody who is your, just like you have your cyber expert on the board and your financial expert on the board. Someone’s gotta actually see, are there logs? Are there incidents? Let me see.

Is it really being done?

Joe Ayoub: So you’d advocate having- 

Betsy Atkins: How do you know that the guardrails are being enforced? You’ve gotta know that.

Raza Shaikh: You need a governance mechanism for governing AI. You’ve gotta build those structures either at the management level- 

Joe Ayoub: And you need at least one person on the board who’s really at a very high level in understanding AI in order to really- 

Betsy Atkins: You don’t have to understand it more than what I just gave you.

You don’t think so? You don’t have to write code. but you have to understand how do you disable- 

Joe Ayoub: No, , I’m not talking about code, but I think-

Raza Shaikh: But Joe, I, I would say, I think almost every board member should understand it at the foundational level. Sure, foundational level is what I- The basic concept of what is an agent or what can it do

Joe Ayoub: But that’s not what I’m talking about. Yeah. I think you need more than that. I think you need a lot more than that, [00:35:00] actually. 

Betsy Atkins: I do think you need to understand the basics of, what is our incident response plan? Who gets alerted? How do we disable the agent? How do we monitor it? Because we all know algorithms drift.

Joe Ayoub: They do. It’s the nature of a machine learning algorithm. That’s why it knows Joe likes these kind of movies, opens the aperture. He reads these books. How did they find out? Raza always buys chocolate ice cream. He never buys vanilla, so they give him the coupon for chocolate and say, “Come on, Raza, you want that Häagen-Dazs,” 

Raza Shaikh: I do want it. 

Joe Ayoub: Yeah, I would argue, and it’s not a big difference, but there needs to be someone who’s, more than just basically has a basic foundational understanding. 

Betsy Atkins: You now need to have, in my opinion, just like you need financial expertise, you do need technology expertise on a board.

Joe Ayoub: Yeah, absolutely. 

Betsy Atkins: You no longer can just say, “Hey, it’s nice to have.” I feel like- It’s a must-have … I feel like it is a domain expertise you, you really need, but not at a [00:36:00] nerd level. Not at a, “I’m only a CISO,” not at, “I’m only a social media person,” not at, “I’m only, 

Joe Ayoub: Yeah, no, I understand. It has to be…

Betsy Atkins: Or econ. You need to have a, a conceptual holistic understanding of technology to be useful because- … companies, whether they’re dir- direct to consumer, they’re B2B, how they innovate, how they develop, the tools they’re using. Are… Is the workforce, being upskilled? You have to… it’s a broad topic that requires a broad understanding.

Joe Ayoub: Yep. I agree. 

Raza Shaikh: Betsy, there’s already so much that we talked about, and the expectations from the boards are increasing. Where does it evolve from here? What’s the future? 

Betsy Atkins: I think the future for us, if we’re doing good board governance in boardrooms- … is gonna be to review our board composition [00:37:00] And, 

Joe Ayoub: Regularly 

Betsy Atkins: And, duration of service I think probably has to change. I’m not saying everyone who’s there didn’t stay active, engaged, and current, that’s not universally but, I think we need to be more tech-savvy, more innovation, more change adaptive. Because I don’t think companies are gonna go out of business like they did in the era of WorldCom in 2000 because they cooked the books ’cause there’s no internal controls.

I think they’re gonna go out of business because they’re not relevant, and their glide plane is so much shorter. You know- … what was it? Blockbuster had a decade before Netflix took ’em out. I don’t think you have- Yeah … two years anymore. I agree with that. 

Joe Ayoub: Yeah. I think that’s I think that’s right on the money.

I really do. So Betsy, thank you so much for joining us today. What a fascinating conversation. 

Raza Shaikh: I think this is good, yeah. 

Betsy Atkins: I’m delighted to be with you. I’m delighted to learn from you. Fabulous, provocative [00:38:00] questions. I continue to serve on private boards and public boards, and it never gets dull.

It only gets more interesting. 

Joe Ayoub: Any board that has you as a member is very fortunate, and I really mean that. That’s fantastic. And thank you all for listening to On Boards with our wonderful guest, Betsy Atkins. If you enjoyed the show, follow it, leave a review, and hopefully we’ll see you for the next episode of On Boards.

Thanks.