Ultimately a company’s success is determined by a sound strategy that is well executed by strong leadership and a passionate, highly capable team.
But don’t underestimate the role of the Board of Directors in distinguishing winners and losers.
If your business is established but struggling, you need a remarkable Board to help guide craft a re-imagined and remarkable turnaround strategy. If you are a rapidly growing brand, you need a Board that can challenge your growth assumptions and navigate make or break scaling issues.
Every Board should have outside members who are well versed on the critical strategic issues that face that company. Every Board should have several members who are willing to aggressively challenge the status quo and are willing to walk if they feel they are not heard.
The unfortunate reality for many companies is that the outside members of their Board of Directors fall short on both dimensions.
When I made my first strategy presentation to the Sears Board in 2002 I was certainly impressed by the distinguished careers of the outside directors sitting around the conference table.
But how many had any relevant experience with a retail brand turnaround or repositioning? How many had a solid understanding of the emerging impact of e-commerce? How many understood the fashion sensibilities of the mid-market female shopper? How many knew how to leverage customer data to fine tune a marketing strategy? How many had experience crafting a value proposition that could fight and win against increasingly strong price competition? How many grasped the intricacies of delineating and executing an assortment strategy that would differentiate us from both on and off-the-mall competition? How many had experience developing relevancy with the younger customer that we so coveted?
That answer was precisely zero.
Look at Sears’ Board today. Different players, same result.
Sears, of course, is just one depressing example, but you don’t have to look far to find many more. Just for fun, go check out J.C. Penney’s current Board.
We will never know how different things might have been if Jeff Bezos or Kevin Ryan or Tony Hsieh or any other similar forward thinking executive had been on Sears’ Board at any time during the last 10 years. And adding a Board member from a sexy, innovative company certainly does not guarantee success.
But if a Board is supposed to guide the future strategic direction of the company, you might want to have a few people who know what they are talking about when it comes to issues that truly matter. And they also need to be willing to get in the CEO’s face when necessary.
As an employee, you should expect it. As an investor, you should demand it.