Goldman Sachs CEO David Solomon announced in late January that the investment and financial services giant, itself publicly traded, would no longer take a company public if the firm didn’t have at least one “diverse” board member. There was a similar call to action for board shakeup from BlackRock, the world’s largest asset manager.
While there has been much talk in the past to improve board diversity, it was often from well-meaning public figures and activists organizations with the goal for gender or racial equality. Now, these international asset managers and investment bankers are pushing for board diversity with the objective of improving financial results.
It’s time to break the mold for board of directors.
Be Fast and Not Furious
The pace of business is dramatically faster today than 10 years ago, when many board members assumed their roles. Activist shareholders expect results in weeks and months rather than quarters or years. Customer moods and brand affinity can shift with a tweet or Instagram in minutes rather than be carefully developed over seasons. Boards need to decide quickly, but analytically. In the era of big data and high-powered analytics and artificial intelligence, board members must digest data fast and make the tough calls.
Here’s what a “diverse” board means: faster, more data-driven, more global, and with a fresh, outsider’s perspective. Board directors must bring higher integrity and leave behind their egos.
Bring Disruption Without Being Disruptive
The past 25 years have been incredibly disruptive with every sector, from retail to banking to entertainment, being turned upside down. Small startups quickly upend old, established industries, and in turn large entrenched players pivot to create new models to mitigate disruption and create their own new waves and ripples. Boards need disrupters. To be clear, a collegial collaborative environment is still key for healthy functioning boards.
Board members need to be disruptive in strategies not in style. Boards need strategic thinkers who can think outside the normal paradigms. Having individuals with unusual experiences and training is essential for a high-functioning board. Board members with diverse backgrounds increase the opportunity-set for the company and lead to productive disruption.
See the Global Rubik’s Cube
Recent surveys of executives across industries and locations show their most pressing concerns are global threats. The top issues for boards are U.S.-China tariff conflicts, Brexit, and the war for global talent.
Boards need global citizens. In competing for software developer talent in Silicon Valley, for example, the talent is not just down the street but across the globe. And competition is anywhere a computer is connected to the internet. A board member who has never been outside the United States has little appreciation for negative interest rates.
Boards need directors who have international experience, and the ability to see multidimensional issues.
Stick to Old-Fashioned Integrity
Ironically, with higher expectations from executives and board members, it's even more important for board members to have old fashioned values, a strong moral compass and high integrity. The pressure to perform and deliver results is more intense than ever. The temptation to cut corners is high.
Today, we need board members who have good old-fashioned integrity. Compassion, humility, honesty and empathy are new fashioned characteristics as well.
This post originally appeared on LinkedIn on Jan. 31, 2020.