In March 2023, Silicon Valley Bank failed, and the media coverage highlighted that one of the reasons for this failure was the lack of experience among the board of directors. The board was diverse, but only one member had investment banking experience, which is a crucial area of expertise for a bank.
The importance of diversity and inclusion in the boardroom cannot be overstated, but it is essential to remember that it is just one piece of the puzzle. In addition to having diverse points of view, board members also need to have the right experience and know-how in the company’s industry.
For example, if a company operates in the healthcare industry, having a board member with a background in finance may not be as valuable as having someone with experience in the medical field. Similarly, a board member with experience in marketing may not be as effective in a company that primarily deals with technology.
The mission, vision, and values of the company and the board members should also be aligned to ensure that everyone is working towards the same goal. A board member who does not share the same vision or values as the company may not be as effective in making strategic decisions or representing the company’s interests.
For instance, if a company has a mission to be environmentally friendly and sustainable, a board member who prioritizes profits over sustainability may not be in line with the company’s values and could ultimately harm the company’s reputation.
Also, board members should have experience and skills that are relevant to the business so that they can make useful contributions and give good advice. If a board member hasn’t worked in the company’s industry before, they might not be able to make good decisions or give helpful advice.
For example, if a company wants to expand into a new market, having a board member with experience in that market could help the company make better decisions and avoid problems.
Diversity and inclusion are critical in the boardroom, but they should not come at the expense of experience and expertise. The mission, vision, and values of the company and the board members should align, and their experience and expertise should be in line with the business. Board members should be evaluated regularly, and new members added or replaced as needed to ensure that the board is effective and can protect the company from failure.
An effective board is one that brings together people with diverse experiences, skills, and ways of thinking to provide strategic direction, oversight, and guidance to the company. A board that lacks the diversity of thought and expertise may miss important opportunities or fail to identify critical risks and threats to the company. The board must always look at the company’s strengths and weaknesses, figure out what risks and threats it might face, and come up with plans to deal with them.
For example, the board of a company in the retail industry must keep up with changing consumer preferences, emerging technologies, and evolving regulatory environments. A board that is proactive and forward-thinking can help the company adapt to these changes and stay ahead of the competition.
An effective board is made up of people with different experiences, skills, and ways of thinking. To keep the board fresh and effective and the company strong and resilient, it’s important to do regular evaluations, add or replace board members as needed, and build a board that thinks ahead.
Boardsi is a powerful digital executive network that has been building its global membership for over six years. Our executive members possess a wide range of experience and expertise that companies need, both private and public. The human capital that Boardsi offers can help any company build, expand, or rebuild its board to prevent potential failures like the one experienced by Silicon Valley Bank.
Enron is an example of a company that failed due in part to the board’s lack of expertise and experience. Enron’s board was mostly made up of insiders, lacking the broader lens provided by independent directors.
Diversity and inclusion are important in the boardroom, but they shouldn’t come at the expense of experience and expertise. To make sure the board is effective and can keep the company from failing, it needs to take a balanced approach. Regular evaluations of the board and the addition of new board members with the necessary skills and experience are crucial to building a strong and resilient company. Boardsi can help connect companies with the right executive talent to build an effective board that can protect the company and ensure its success.