Preparing for a More Demanding and Transformative Future

From addressing technological disruption to navigating the fallout of major geopolitical conflicts and domestic political shifts, visionary keynote speakers on the second day of the NACD Directors Summit 2024 shared insights on how businesses can prepare for the future.

How are external factors, such as geopolitical conflicts and domestic political forces, compelling companies to rethink their stakeholder engagement and strategic decision-making? How are transformations—driven by technological disruption and the evolving nature of work—prompting companies to reevaluate their approaches to value creation? How and why should boards make the shift from engaging only in technology oversight to engaging in foresight? These were just some of the issues that were discussed during the second day of NACD Directors Summit™ 2024, the premier annual conference which brings the governance elite together to shape the future of boardrooms. The event is being held at the Gaylord National Resort & Convention Center, in the Washington, DC, area through Oct. 9, 2024. Learn more.

Keynote speakers included Vilas Dhar, a member of the United Nations High-Level Advisory Board on Artificial Intelligence; Nora Denzel and David Kenny, cochairs of the NACD 2024 Blue Ribbon Commission and highly experienced technology leaders; Wayne Peacock, USAA CEO; and Ian Bremmer, president and founder of the Eurasia Group and GZERO Media. 

NACD also released its 2024 Report of the NACD Blue Ribbon Commission on Technology Leadership in the Boardroom: Driving Trust and Value.

Attendees had the opportunity to participate in tailored learning tracks on critical governance issues and join different networking events.

Here are some highlights from sessions held on Oct. 7.

There’s a need for long-term artificial intelligence (AI) strategy. As artificial intelligence (and not just generative AI) is rapidly evolving, Dhar urged boards to take ownership of the long-term strategy by asking: Where do we need to be in five to ten years? What resources are required to support the CEO and management in this journey?

Additionally, identify which leaders in your organization share responsibility for driving AI initiatives. The critical shift is from asking, “How do we do things better?” to “How do we deliver greater value as a company?” Furthermore, “What are the broader implications for society in the long term?"

Up Your Technology Governance: More Clarity and Fluency. As technology is becoming a critical driver of a company’s long-term success, including its reputation, Kenny emphasized the importance of gaining clarity on what technology governance means. Establishing a common vocabulary for discussions on AI, along with clear communication between management and the board regarding spending levels and governance principles, which will vary depending on organization and industry, will support sound decision-making.

“In the age of the unknown, there is almost always something new on the horizon. It works better when there is trust between management and the board to wallow in the unknown together. Giving management permission to test and try [AI in the business], plus applauding them when they succeed and fail, can help advance thinking and not slow progress,” said Kenny.

Denzel encouraged directors to “up their technology game by one to two levels,” regardless of their current expertise. Directors should not rely solely on education provided by management. External perspectives should be coupled with management’s insights to support well-rounded learning on technology in the boardroom.

The right risks may not always look good on paper. USAA was born out of a decision to insure military members who were unable to obtain auto insurance from traditional firms. Now, USAA is ranked 103 on the Fortune 500, demonstrating that taking this risk was a good business decision. Peacock, USAA CEO, noted that good risks are often rooted in ethics and values. Veterans and military personnel are a good risk for an insurance company to take on because the military instills discipline, ethics, and responsibility in ways that FICO scores don’t reflect. To this day, policyholders are the owners of USAA, reflecting a strong and continued alignment between its members, management, and the board.

Staying out of politics is becoming harder. Companies are finding it increasingly difficult to avoid involvement in politics, while the risks of getting involved are on the rise. The biggest geopolitical challenge for boards in the coming years will be the increasing difficulty of staying neutral on political matters. Bremmer suggested that there is safety in numbers, and boards should consider going public with a united voice when asked to speak up on complex issues such as environmental, social, and governance concerns, fossil fuel usage, and more. Before making public statements, boards should carefully consider the stakeholders they might antagonize. Ultimately, they must ensure that companies are not too quick to cater to the loudest voices.

Technologists increasingly have the power to influence geopolitics. According to Bremmer, technologists are becoming fundamentally indispensable to national security—and sometimes technologists are not aligned with the positions of their home countries. For example, Starlink has the ability to influence whether countries such as Taiwan can access its satellites should the country’s own Internet connection be cut off. Given Tesla’s business ties in China, that decision could conflict with the United States government’s stance. Companies, especially technology companies, and their boards will increasingly have to weigh how their business decisions may affect geopolitical issues in the coming years.

Recognize “what” you want in a CEO, not the “who.” Before identifying internal and external candidates, clearly define what the organization needs from its next CEO. What specific skills are required given the company’s strategic direction and external factors? What qualities such as self-awareness, and empathy are most important for cultural fit? Additionally, go beyond competency scores and explore the candidate’s background in meaningful ways. By considering a candidate’s experiences and influences in the context of the company, boards can better assess how a candidate will navigate uncertainty and unpredictability, reducing the risk of a failed CEO succession.

Venture capital (VC)-backed company boards should seek missionaries, not mercenaries. Many directors are perfectly qualified to serve on a private company board; the key is to discern the right company that aligns with your interests and values. While “mercenaries,” or independent directors who seek to help a company go public often for a personal payout, serve on many VC-backed boards, these companies should instead seek out “missionaries,” who would join the board even if they are not paid. Given the inherent risks of serving on a VC-backed board, boards should look for conviction in directors and be sure that they understand the motivations of other board members.