Transforming A Moment Into A Movement (Part 5 Of The Time Capsule Project Series)

If nothing is broken, do we need to fix it? It’s an age-old question that triggers concern in people because it feels like the answer is not intuitive. Most people should say, “no.” Often, they would be right. However, there are two specific circumstances that we should say, “yes.” First, when we grow complacent, we must disrupt ourselves before someone else disrupts us. Consider Kodak. It dominated the film industry for over a century. What took Kodak down? The rise of digital camera technology. Ironically, the digital camera was invented in 1976 by Steve Sassoon, a Kodak engineer. Yes, Kodak had the technology about 20 years before anyone else did. However, they chose not to pursue it because it would be a huge capital investment and cannibalize their film business. (Whoops!)

The second circumstance when we should answer “yes” is when can’t see a problem, but others do. This is one of the biggest challenges we face when we talk about bringing diversity and inclusion to corporate boards. Most people think it is a numbers game. It is not. It is about adding much-needed perspective into the Directors’ thinking.

Diversity Requires a Change in the Way We Think

Unconscious bias and historical experience have shaped how we think. Think about some of the things we do, such as, use a fork with our right hand and the knife with our left in the United States? Most people would state that’s the way they were taught. However, that does not explain why this is the “best” way to do it. Consider that the fork is the most involved tool being used (especially since we’re aiming it at our face while eating.) It would seem logical that that person’s dominate hand should control the fork, right? However, that’s not the way we are taught… and we don’t even really question it. While this seems like an innocuous example, it’s a pattern of thinking that holds true in much of our lives, including corporate board diversity.

Simiso Nzima, the Chief Investment Officer for CALPERS, has experienced this modality of thinking firsthand. Nzima summarizes, “We have four main obstacles to tackle: process, criteria, pipeline, and board turnover.” Let’s start with the process. A core piece in Director recruitment is relationships, i.e. who you know (as we have seen in the earlier articles in this series.) “If it is a homogenous group looking at candidates, it will impede diversity,” shares Nzima. He makes a powerful point. As human beings, we often find ourselves as part of different cliques. Because we are with similar people, we forget the bubble we create for ourselves and may not seek growth opportunities. Next, we have criteria. Most corporate boards look for CEOs (or former CEOs.) “Currently, there’s only four Black CEOs in the Fortune 500, so if you are looking for CEOs or former CEOs for the Board seats, it limits diversity,” shares Nzima. Then, pipeline is a self-inflicted problem. At the entry levels, companies have done a solid job in improving diversity and inclusion. However, looking up the corporate ladder, it is a different story. The visibility, network, and opportunity are still lacking which is why mentorship and growth opportunities are so critical. Lastly, the average board turnover is more than ten years, greatly limiting available opportunities. So, what’s the solution?

CALPERS has a very interesting board model to tackle these challenges. Nizma shares that CALPERS “refreshes the board if one-third has more than twelve years of service and works to ensure that one third of the board has less than six years.” CALPERS has also adopted other steps to reach beyond the traditional pool to find diverse candidates and has implemented programs to create a pipeline of future Directors. One key trigger for CALPERS commitment, they embraced changing the way they thought about their Board of Directors. This a major factor for organizations that have achieved success in building more diverse boards.

Go From a Moment to a Movement: Change the Structure

“When you have power, it is very difficult to cede it to anyone else,” points out Ursula Burnes. Burnes is the former CEO of Xerox and has served as a Board of Director for Uber, Chevron, and American Express. Her direct experiences have shown consistent structure of powers that are based in favoring white men. Even when others break through into the boardroom, Burns has seen many of them become protective of their power and reluctant to embrace too much change.

“There is hope,” exclaims Burns, “through jolts that drive diversity and civil rights.” The Me Too movement and the tragic death of George Floyd are jolts that shed light on the challenges and help drive a meaningful discourse and action towards change. “We have to take advantage of opportunity change from these crisis moments,” shares Burns, “to build a momentum so that it is becomes impossible to go backwards.”

There is no one solution that will change the structural problems of improving diversity on corporate boards, but there is a combination of effort and initiative that will. The Board Action Alliance and other groups have successful created sustained change with the NASDAQ rule. Through visibility and lobbying, groups have influenced the state of California to adopt diversity requirements for the Board of Directors within large companies that are headquartered in the state. As Lin-Manuel Miranda eloquently wrote in Hamilton: “we have to go from a moment to a movement.”

Getting There

Thanks champions like Burns, Nizma, Barry Lawson of the Time Capsule project, and numerous others, we are turning these moments into a movement. The combined effort is going beyond solving the four major obstacles of process, criteria, pipeline, and board turnover. It’s breaking the inherent bias in our systems to unlock business value from diversity and inclusion. Moreover, technology is becoming a powerful ally in this movement. Emerging technology like artificial intelligence (AI) is shining light on our flawed process and helping to improve them. Consider, the Financial Services Innovation Coalition has co-published a white paper called Artificial Intelligence and Algorithmic Lending Have the Potential to Reduce Discrimination in Mortgage Lending. In a concerted effort to reduce racial bias in mortgage lending practice, they found that AI not only helped detect the implicit bias within the system but also the reduced bias algorithms applied by AI helped improve accessibility and affordability for underserved communities. Then, we have the combination of social media and blockchain solutions to help board candidates get connected, build relationships, verify skills, and be prominently visible in the pipeline. Through virtual reality, aspiring board members now get hands-on experience and training without having to wait for a real-world, accessible opportunity to present itself.

Incredibly, this is just the tip of the iceberg when it comes to solutions to improve Board of Directors diversity.

This article is part 5 in this series on diversity and inclusion in corporate Board of Directors and concludes the series.