Governance in the Digital Age

CHAPTER 2 Building a Resilient Board

Your most important duty to shareholders is to make sure that the enterprise thrives. To do that, the board has to be resilient — not only keep up with the rate of change but help management “look around the corners” to anticipate risks and competitive marketplace dynamics.¹

— Betsy Atkins

In today’s world, it’s difficult to ensure that nothing ever goes wrong – because change will happen, and quickly, so adaptability is crucial. Consider the digital, market, and regulatory disruptions seen in just the twenty-first century so far:

• Business-to-consumer models shifting from bricks-and-mortar to e-commerce
• The emergence of social media networks, with implications for consumer marketing, sales models, and reputation management
• The impact of big data
• Increased pressure on companies to consider environmental and social impact
• New generations of consumers with different values, preferences, and buying habits

Change, and the resulting corporate churn, are not new phenomena, according to corporate director Margaret Whelan. “If you look back at the 1960s, companies in the S&P 500 had an average tenure of 33 years on the list. These days, nearly half the current S&P 500 is forecast to be replaced within the next 10 years. Either they go bankrupt, get acquired, or struggle and shrink, mostly because of a failure to embrace technological disruption. Unfortunately, Sears is another good example of this phenomenon.”²

Yet today more than ever, disruption ...