Harnessing Change in Private Company Markets - NACD BoardVision
In this edition of NACD BoardVision, Christopher Y. Clark, Publisher of NACD Directorship Magazine discusses how private company boards can stay aware of disruptors, harness change and stay proactive. Sal Melilli, Leader of KPMG Private Markets Group in New York leads the discussion with Dr. Solange Charas, President of Charas Consulting and Grace Schalkwyk, CEO of Gramercy Digital Strategy Advisors.
>> Christopher Clark: Hi, I'm Christopher Clark, Publisher of NACD Directorship Magazine and this is BoardVision. Under the private company umbrella, we're going to talk about harnessing change and identifying disruptive forces. I'm joined today by some wonderful people, flanking me to my left is Dr. Solange Charas, CEO of Charas Consulting. Grace Shalkwyk who is one of my favorite tech-savvy board directors, and Sal Mellili who is a key partner at KPMG Private Markets Group. Welcome all!
>> Sal Mellili: Thank you.
>> Dr. Solange Charas: Thank you.
>> Grace Shalkwyk: Thank you.
>> Christopher Clark: Sal, let me start with you. You work with a lot of private company boards, all different types, family, large private, everywhere in between. I want to get to the awareness levels of those private company board which have special responsibilities either about harnessing change, and albeit, sales model, technology strategy, and what are those awareness factors?
>> Sal Mellili: What I'm seeing recently is that boards are actually adding those individuals with the right skill sets and expertise to join them on the board. Recognizing the fact that innovation is moving at such a rapid pace is, is half the battle. Having the right individuals on the, on the board to be forward looking and not only looking at the historical performance of a company is proving to be an asset to, to those companies, and those companies that, A, recognize that to be the case and reacting upon it are often finding themselves on the front end of the curve of innovation.
>> Grace Shalkwyk: The pace of change that Sal is mentioning, we all need to be technologists now, and particularly on the board to have an awareness of what other companies are doing that are out, outside of the experience set of that particular private company, and bringing these practices forward. So, the Cloud, for instance, we see the evolution of corporations being fearful of it to some adopting to everyone adopting, where are, where is this company particular company that you are stewarding in that cycle and are they gaining the best practices from other companies, other industries? That's what a board member can bring.
>> Dr. Solange Charas: One of the really interesting things that I'm seeing is a deeper attention or greater attention, not just to the professional qualifications and to the social depth and breadth of the, of their network, but also their behavioral characteristics, in terms of bringing on a board member who's actually going to increase the dynamic quality of the board and not just recruit board members based on what they know and who they know, but how they fit into the board itself. And that's becoming increasingly important, because the better the dynamic quality of the board, the better the quality of the governance.
>> Christopher Clark: Sal, as an advisor, trusted advisor, are there other hows on how they can achieve this?
>> Sal Mellili: Boards are most effective in really taking a hard look at themselves regularly, looking at themselves in the mirror, and assessing whether or not they have the right skill sets on that board. When I observe boards operating at the startup level, at the mid-market level, and those ready to go public, those that are succeeding most are the ones that make it a regular, healthy practice to look at themselves and look at what's happening, happening in the marketplace, looking at what management's capabilities are and whether they ought to be a compliment to that, whether they ought to be taking the lead on certain things like innovation. You know, they, at times, have the bandwidth to be six months ahead of the company, twelve months ahead of the company, and when it comes to looking at what's on the horizon, so, to answer your question, I think those that are most effective are the ones that are able to make those hard calls and, and upgrade the talent as needed.
>> Grace Shalkwyk: Certainly a diversity of expertise is important on a board, and being aware of, of the larger environment and bringing that into the company, is something that is a critical contribution of boards, and having points of view from, not just technology, but other disciplines that look at these issues, you know, holistically, is really what the board is bringing.
>> Dr. Solange Charas: Recent studies have shown that having women on boards is actually associated with higher corporate performance. Boards should take a very serious look at diversity, not just from the skill set, but also from gender and race. That type of diversity does engender much more creativity, much more innovation, and if we're talking about a changing business environment, we need those skills to be fluid and also to, to help us respond and react to the changes in the marketplace.
>> Christopher Clark: Take us to a deep dish on kind of the, the state of the union in terms of private company controls and processes, so we've touched on elements of them.
>> Sal Mellili: Well the one thing that I need to start off with is that every company board needs to be nimble, needs to be dynamic, needs to grow with the company, and it just, its responsibilities, expertise, and tasks as the company goes through various stages of its life cycle. Years ago I didn't see the diligence of, of private company boards as I see them today, and I serve, like I said earlier, private companies, startups, mid-market, and public companies, and the gap between private company boards and public company markets is, has been the closest I've ever seen it be, before. Which, for me, as, as, as being in the field of public accounting, that's very encouraging, looking at the checks and balances that they're putting in place that emulate those of a public company are very comforting from that perspective as well, so, in summary, it's, it's more than encouraging to see how far the private company boards have come, the openness and the nimbleness that they're embracing is, is also a testament to them wanting to be as reactionary as possible, and, quite frankly, in the private company board setting, they're able to act a lot quicker than, than the public company boards because of the environment, the culture, and this setting that they created
>> Christopher Clark: I'd just like to thank the three of you. Today's comments were insightful, positive, and refreshing. On behalf of NACD and KPMG's Private Markets Group, thank you for viewing today. I'm Christopher [inaudible] Clark and this is BoardVision.
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