Do retail boards need to be overhauled?

Discussion
Oct 30, 2014

According to a survey from Women’s Wear Daily and the executive research firm, Berglass+Associates, only 22 percent of retail execs believe their board of directors today are very effective. In fact, 60 percent believe the makeup of the board (including experience and skillsets) will change by 2020, with 72 percent expecting the board to add leaders with technology backgrounds and 64 percent expecting to add leaders with global expertise.

The survey likewise found that digital/technology and global expertise — along with the old standby, merchandise acumen — were the top three most important skillsets that will be required of successful CEOs in 2020.

"There are changes happening so fast in our industry that the present feels like the future," said Les Berglass, founder and CEO of Berglass+Associates, in a statement. "The need for leadership talent that aligns with an increasingly savvy consumer will drive a virtual redefinition of both the C-suite and boardroom."

Other findings in the study:

Chief Customer Officer (CCO) enters C-suite: While only five percent of the companies surveyed have a CCO today, nearly 25 percent expect to fill this role by 2020.

Outside leadership: Nearly 70 percent of respondents believe that C-suite leadership coming from outside of the retail industry will increase by 2020, specifically from technology (57 percent), pure-play e-retailers (51 percent), and consumer packaged goods (43 percent).

Product innovation, consumer engagement and talent acquisition remain paramount: Retail’s core performance areas are expected to remain the same. Product innovation (98 percent), consumer engagement (98 percent), talent acquisition/retention (98 percent), and providing consistent consumer experiences across touchpoints (98 percent) were the top four areas of focus in both 2014 and 2020.

Berglass+Associates and Women’s Wear Daily conducted an online survey in July and August 2014 of 127 U.S. business leaders involved in the retail industry (including blended wholesaler/retailers, physical store operators, pure-play e-commerce, and investment community professionals) primarily focused on the apparel, accessories, footwear, beauty and consumer goods sectors.

Do many board members lack the skillsets relevant to the pressing needs of today’s retailers? How should boards be overhauled skillset-wise by 2020?

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9 Comments on "Do retail boards need to be overhauled?"


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Ryan Mathews
Guest
7 years 6 months ago

Since I don’t have a good grasp on the makeup of all retail boards, I’ll pass on the first question. If, however, it is asked on a more general level I’d say most companies could benefit from leadership (board and management) which possesses new skill sets—not all of them technological.

Technology is the corporate default used to escape the need to think through a holistic model of the future. Technology enables the future of companies but it doesn’t define them.

So, in addition to technologists I’d vote for a cultural anthropologist or social psychologist, some media theorists, a futurist or two and somebody with a deep knowledge of design.

And by the way, I also take exception to the second question. The issue isn’t what should we do by 2020. It is what do we need to do today to position companies for the future. Many retailers don’t have the luxury of those six fleeting years even if they don’t know it yet.

Cathy Hotka
Guest
7 years 6 months ago

Retail boards of directors need three things these days:

  1. Technical acumen. Board members who can’t spell “IT” can’t make meaningful contributions to guide future actions.
  2. Women. Eighty percent of purchase decisions are made by women. That all-male BOD won’t have a clue, and
  3. Intellectual curiosity. Retailers are taking inspiration from all kinds of businesses, not just other retailers.
Ian Percy
Guest
7 years 6 months ago
Is it as high as 22 percent? Having engaged with all kinds of boards over my consulting career I’ve always been appalled by the often pathetic level of explorative dialog and insight. Board members, who often have built amazing companies themselves, somehow have their collective brilliance drop to the level of a hockey puck once they enter the board room. First, board rooms are simply not designed for any intelligent conversation. No one has ever had a good idea during a board meeting. Any time you sit around an immovable table your thinking will be immovable too. Groups act like they look. Second, what do we mean by “leader?” The original meaning of the word was a title for “the head of an authoritarian state.” That may tell you something right there. Many “leaders” are very poor collaborators, thus their ineffectiveness in a collaborative environment. Third, about 80 percent of what a retail operation needs to learn has nothing to do with retail. When you stack your board with those who have cut their teeth… Read more »
Mark Price
Guest
Mark Price
7 years 6 months ago

Many board members lack the skill sets to address the needs of retail companies. One example is the willingness of the J.C. Penney board to permit Ron Johnson to linger as CEO long past the point where the company should have shifted gears. A lack of understanding of fundamental business drivers is the only reason the company could have reached the cash-flow crisis that followed Johnson’s departure.

To succeed on the board of a retailer, members must have a deep understanding of the drivers and metrics around business success. They also need to be on top of trends in store associate management, training, store location analysis and the rapidly growing field of customer-driven marketing.

It is a tough job that needs well-skilled people to help keep these ever-changing retailers afloat and growing.

Camille P. Schuster, Ph.D.
Guest
7 years 6 months ago

Many board members and top executives lack the skill set to plan for the future because the pace of change is faster and more extensive than ever before. To overhaul the board, screening for mindset is even more important than skill set. The specific set of skills for running a retail business will change as the environment changes. Board members need a Renaissance mindset. Functional experts who excel at one thing and do not have the ability to quickly incorporate new information, or the ability to collaborate with other areas, will not be successful board members. The required mindset is the ability to seek out trends, changes and new information balanced with the ability to step back to see the big picture and how consumers are interacting with the changes.

Ralph Jacobson
Guest
7 years 6 months ago

Not all retail boards are dysfunctional. Some thrive with innovative interaction at the board level. The key is not only a diverse board composition in terms of industry expertise, but also a very active board. If there are members who rarely contribute then those people should be filtered out, regardless of their stature in the industry. I’d rather see an active, creative board capable of guiding and supporting management decisions and helping drive real innovation throughout the enterprise.

Chris Petersen, PhD
Guest
7 years 6 months ago
Most retail board members lack the skill sets, experience and context to be relevant in today’s omni-channel marketplace. Period. Even in the area of merchandising acumen, it is a very different competitive environment when consumers expect to buy online and pick up in-store, or vice versa. Previous retail store experience can be a liability, not an asset. Top five questions a retail board member should be able to address: How likely is it that our customers would recommend our company to a friend or colleague? Would they do that in person, or via social media? In today’s omni-channel market, what one word do we want to own in the minds of our customers, employees and partners? Do we understand the customer’s journey? Do we know what it looks like for our retail brand today? Five years from now? What was the last experiment we ran? Was it online or in stores, and what were the measurable results? What successful things are we doing in stores today that may be blinding us to new growth opportunities?… Read more »
Gene Hoffman
Guest
Gene Hoffman
7 years 6 months ago

Seven to eight out of every 10 board members lack the future and technical insights and skill sets relevant to the pressing needs of both today’s and tomorrow’s retailers. The other two or three probably have skills, but they are in how to make brownies, investment banking and how to preserve the high fees and rewards for while serving ineffectively.

Boards should be overhauled by 1.) eliminating CEOs’ right to solely choose new personally-indebted members, 2.) permitting other key management to, at least, submit names of potential relevant candidates, and 3.) adding a top futurist.

David Livingston
Guest
7 years 6 months ago

Getting people with the right skill sets is very important. Finding people with the proper skill sets who have time to serve on boards is a problem. Seems most boards are more about the visual picture of the board rather than a vision for the future. The only way to get the right people on the board is to put Charles Darwin in charge.

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