2013 AGM Bingo Card v1

Special Thanks to Broc Romanek for including the AGM Bingo Card in his recent post:

Welcome to the 4^th annual Broads on Boards program:  Women on Corporate Boards

Hi, I’m Fay Feeney, my day job is CEO of Risk for Good where we equip CEOs and their boards to govern in this new mobile, transparent, connected world by bring digital intelligence to the competitive uncertainty in the equity markets.

I’m also the President of the Broads on Board program for Broads Circle which is an executive-level networking group with a focus on MONEY and POWER for WOMEN.

The mission for Broads Circle is to connect senior level business women. We believe that successful, impactful, powerful people have strong networks.

They draw on these networks in driving revenue and growing capital for themselves and their ventures.

At Broads Circle we talk exclusively about issues related to Money and Power for women.

So let me begin with some action items for you to think about as we talk about corporate board service.  I’m out seeking a corporate board appointment and am using these guiding principles in my search:

Action Items:

1. The world is changing before our eyes; use your influence where you have it – with clients, in your spending, where you invest and with family & friends.  You never know who in your network has board opportunities. Stay connected – if you are in the flow of learning about board opportunities let me know.

 2. Luck favors the prepared – stay informed on corporate governance.  You can join me on Twitter #Corpgov or consider attending a NACD Director Professionalism course.  We’ll have a session August 15-16, in Newport Beach.  I’m proud to be a NACD Leadership Fellow.

 My corporate governance education builds confidence for the Nomination/Governance committee, is proxy ready and more important shows I’m serious about building company value.

  3.  Narrow your boardroom focus. Think about board service opportunities starting with private companies and public companies on the Wilshire 5000.  The F500 have plenty of people vying for those seats.

For example, let’s look at the 79 S&P 500-listed financial services firms, these provide a window into the governance trends affecting these companies.

Among the 2012 trends:

• Financial services firms welcomed more new directors; 53 new independent directors joined S&P 500 financial services boards in 2012 compared to 45 in 2011.
• The profile of new directors has evolved, with the boards of financial services firms adding more women and financial services executives and fewer private equity professionals and retired CEOs. Of the new directors joining financial services boards in 2012, 30% are women.  Do the math, 30% of 53.

Are my action items for focus on private companies and the Wilshire 5000 starting to make sense?

• These seats are coveted for a number of reasons including the average director compensation increased by 7% from $200,519 in 2011 to $214,852 in 2012.

In Feb 2013 PwC surveyed directors for priorities and challenges facing today’s directors.  Even in the age of social technology what remains true for the boardroom is that Directors continue to look to other board members for candidates.

Nearly 91% of directors rely on other board members’ recommendations for new candidates.

Common sense tells us that boards can broaden the search without compromising on the skills and attributes required by looking to new or different sources when seeking candidates.

My search for a corporate board seat has me spending time with corporate directors, CEOs, CFOs & Corporate Counsel.  The data confirms this is a smart strategy and I’m sticking to it.

But Where Is The Demand?

We can’t pretend we live in an equal society when the centers of power are predominately held by wealthy white men or that the women currently in the boardroom can transform the workplace for all other women.  Trickle down change is not working even here in California where almost half (44.8 percent) of California’s companies have no women directors.

I’m a STEM gal (science, technology, engineering, and mathematics) so I like to have a problem where I can solve for X.  So I accept we need to look at building demand.

I’m not seeing the “old saw” diversity arguments that it improves shareholder performance, helps companies access the widest talent pool, ensures they are more responsive to the market and provides overall stronger corporate governance is not fueling demand.

I call these “the eat your vegetables” argument – we all know it is a good idea but find it easier to do when they are pureed in the recipe.

Let’s find another way to have this conversation – I think of Peter Drucker who said:

Communication is not saying something, communication is being heard.

 In preparation for tonight I watched the PBS series Makers: Women Who Make America  in search of inspiration from how the women in the 1960s were a force to reshape stereotypes and the relationships between men and women in the most fundamental ways.  Those were the days.

I watched it through the lens of advancing women in business only to see how Phyllis Schlafy organized women conservatives to shift the Equal Rights Amendment focus to non business issues like reproductive rights.

Senator Pat Schroeder brought her sense of humor when asked: How she could be a mother and a congresswoman?  She answered “I have a brain and I have a uterus and they both work.”

Fast forward fifty plus years and think about the age we are living in.  It is one of unprecedented opportunity where the more you know about yourself that more you can be successful.  The boardroom is a big modernizing challenge for business and their investors.

In the words of rapper ICE T – “Don’t hate the player, hate the game.”

Here’s is my playbook for getting a board seat:

• Know My Strengths
• Have Clarity on Where I Belong
• Know What I Should Contribute
• Spend time with People in the Game – in real life and virtually

Yes, we have much work to do to see more women on corporate boards. Tonight we’ll look at some of the options so in closing let me share more Peter Drucker wisdom that I think is helpful in looking for opportunities:

“The most important thing in communication is hearing what isn’t said.” 

Lean in – Boardroom Edition and change the music from James Brown’s  ”This is a man’s world” to “Respect” by Aretha Franklin.

Is 2013 the year you are taking social technology seriously enough to engage personally on Twitter?  If so, you may be surprised by the impact on your real life reputation once you go social.

Like the new years resolution for going to the gym, I’m seeing some new people showing up on Twitter. These are people who have established reputations in real life – CEOs, corporate counsel and entrepreneurs.  We even have a hashtag for CEOs who are leading their organizations to leverage social technology #socialCEO .

You may be in enterprises where your business has been engaging in social media for marketing but not personally.  With the IBM Social CEO Survey data we are seeing 16% of CEOs on social media with expectation for that number to triple in five years.

Like the new faces at the gym, I’m here to welcome you and share what I know about operating the equipment safely. Last thing I want is to see someone risking their personal safety and getting hurt!

I’m happy you are here and interested in following you. Like any place, new people bring fresh perspectives and insights. I speak about making this happen in the boardroom and I live it online.  My big idea for 2013 is “let it begin with me.”  With the amazing transparency I’m seeing the last thing I want to do is expose my reputation by going all command and control.  ”Do what I say, not what I do” falls into a category of lessons I’m unlearning.

My board clients are generally not going on Twitter to engage but to observe the #corpgov conversation, follow their customers, company, executives, competitors, employees, investors and issues of interest.  Together we curate a Twitter feed that filters a bespoke experience and closes their information gap.  Directors don’t need to tweet to govern the digital revolution.  What they need to do is listen and understand the strategic issues.  These insights come from big data analytics and are affectionately referred to as “social media exhaust.”

When I bring clients with big off line reputations online their reputation risk goes way up.  Here is my process to equip them to have an experience that will transform them and accelerate their business in the digital revolution:

Week One:

Tour Twitter and identify how it is being used in your ecosystem by collaborators and competitors.

Goal setting: clarify thinking about why you are using Twitter:

1. Who do you want to connect with on Twitter?
2. Learn how to listen/speak
3. How will people connect with you?
4. Who will you follow back?
5. How to deal with people who you don’t want to follow you?
6. Learn what authentic engagement looks like by following my favorites in #corpgov #law #CSR #diversity #ESG #safety #socialmedia and more.

Week Two:

Begin building out your network.

Leveraging your existing network for business development

• Identify who in your offline network should be with you online: clients, colleagues, professional associations, etc.
• Decide how you will make time before you begin building your network.

At the end of week two you will be asked to begin your outreach, as designed.

Week Three:

We’ll discuss how to be of service on Twitter to share your interests with your followers:

• Use the update status to keep your network informed of your activities.
• Provide unique and relevant resources for them.
• Assess relevant lists to follow.
• Introduce contacts to each other. Be a connector.

Like the gym, there are many tips you’ll hear along with the grunts.  I’ll invite comments to this post to get the wisdom of Twitter to support you in how to bring your offline reputation online and love every minute you spend here.

Welcome to the always on, 24/7, global world of Twitter.  If you are looking to optimize your experience online, let’s talk!

Best, Fay

Hello from Fay

I’ve been on the go, which makes sleeping in my own bed that much sweeter this holiday season.  As I think about 2012, my take-away for directors is “more than ever, your CEOs need your wisdom and provocative questions to support them in adjusting their thinking and strategy to a landscape of turbulence.”

Changes brought on in the past year from the digital revolution alone are accelerating business risks and opportunities.  Mary Meeker speaks to this in her 2012 KPCB Internet Trends Year-End Update.    She calls it “The Re-Imagination- of Nearly Everything.”

The “weapon of choice” in the digital revolution is proving to be the smart phone.  It provides stakeholders a tool to connect with like-minded individuals anywhere, any time.

This year, when speaking on social technology, I’ve been asking directors to think about issues from the constituent’s viewpoint (investors, customers and employees) for a start.  Broadening to stakeholders is the next level request.

I recently heard Mark T. Bertolini, Chairman, CEO & President, Aetna Inc., speak at the NACD Board Leadership Conference.  Yes, he has a Twitter account @mtbert, but that’s not the only reason I like him.  He spoke to the value of having the CEO be an active participant in the social conversation.  Here is a link to his session, which is a blueprint for the #SocialCEO.

We certainly expect our C-suite to align their messaging to demographics, but it is far more complex than it appears.  People are expressing their underlying attitudes and values in a variety of ways that are being expressed in the public domain on Twitter, Facebook, blogs, etc.

An expectation for CEOs is to listen, assess and, if appropriate, adapt to the feedback.  It reminds me of the first two steps in a risk management process: identify and assess.  I encourage directors to stop and consider ways they can help their CEO speak to values that define, strengthen and grow the company.

As a board leader, your agenda needs to allow time for the on-going, dynamic issues that are emerging that may not have been assigned to a committee:

• Company culture and talent
• Company brand and reputation
• Opening communication channels from the outside/in
• Sustainability and safety
• Supply Chain
• IT and social technology including cyber-risk
• Diversity & Inclusion

I heard James Robinson, III speak in New York City at the NACD D100.  His message to business was simple: “To grow and sustain a successful enterprise, recognize that we are all in it together, act accordingly.”

So, how will your CEO use their time wisely in 2013?  I feel this recent article in the Wall Street Journal is a must-read.  If you’d like a copy of the full article, send me an email.

 What I know for sure is that in 2013, demanding investors will be using up a CEO’s scarcest resource, stealing time from customers, operations and strategy.  They will be increasing pressure to meet with your CEOs and you.

It will be important that investors are provided a quality interaction on the relevant topics at the right time.  Equipping CEOs to manage these demands translates to increased valuations and corporate growth.

The WSJ article quoted “C-level executives in North America topped the list, attending 70% of private investor meetings over the past year, up from 64% a year earlier. On average, CEOs and finance chiefs devoted 14 days and 17 days, respectively, to these meetings.  Most CEOs today cannot afford to decline a meeting request.”

This is where strategy, risk and opportunity intersect.  It is also an area I’m focused on for providing solutions.  My starting point is from the investor’s perspective.  If you’d like a peek into how it could support your CEO in enhancing their investor calls, let me know.

___________________________________________________________

My visit to Washington, DC for the NACD Board Leadership Conference gave me a chance to visit the office of Richard S. Levick, Esq., President & Chief Executive Officer, Levick.

We spoke together on a panel “Everything Directors Need to Know About Social Media.”  He kicked off the discussion with “We are leading businesses in a digital revolution, use your peacetime wisely.”

I am not accustomed to speaking of revolution in business, yet I am witness to one that is changing expectations on leaders.  Here is a recent video I made that speaks to how companies must identify ways to influence the conversations they simply cannot control.

I hope you will continue to be the catalyst in your organization to broaden the discussion on the agenda.  I want to thank my clients for their trust this year.  And to all who have made it this far, I send my sincere appreciation for your support.

Sending my wishes for happy holidays and a wonderful new year.  I’m grateful to be sharing the planet with you and living in such interesting times.

Risk for Good equips business leaders with a framework for interpreting the digital revolution. These emerging risks are being driven by social media, ESG investors and new business technologies. Along with the opportunities from these 21st century disruptions come new risks for the enterprise in the always-on, hyper-connected, diverse thinking world.

We enable client success by delivering big data analytics in a world where enhanced listening, communicating and transparency are critical for governing a sustainable, future-focused company.

Call Fay at 310-372-0591 or email her at fay@riskforgood.com to ensure your boardroom discussions are surfacing the right questions on emerging strategic opportunities (and risks.)

Sincerely,

Fay Feeney

Risk For Good

“Your business is operating in a digital revolution, use your peacetime wisely”

Speaking to a packed audience my curiosity was: who in the audience will leave seeing social media as a strategic business advantage?  Will they take action and get social media on their next boardroom agenda?

As we began our session, I asked Allan Grafman, CEO, All Media Ventures and Chairman, Majesco Entertainment to help us better understand boardroom thinking, “What’s the biggest misconception that many directors have about social media as it relates to their business?”

He said, “They think it is being handled.  Nothing could be further from the truth.  It is an iceberg…and larger than you think” which gave the audience one of the many opportunities to sit up in their chairs.  Allan gave us a couple of takeaways right up front:

1. Don’t let social media get put in a functional silo: it touches and impacts every part of your business.
2. In the boardroom, it is too large for any single committee…this is a topic that needs the entire Board’s attention.
3. Don’t believe social will go away, make a list of questions and begin the conversation with your Board and Management team.

It was time to tap into insights from Neil S. Braun, Dean of Pace University’s Lubin School of Business in New York.  He has previously been President of the NBC Television Network, Chairman and CEO of Viacom Entertainment, Braun serves on the board of directors, audit, compensation and governance committees of IMAX Corporation.

Neil spends many hours now with students who are driving the digital revolution using social and mobile technology.

Asked about how to connect with students, he shared that email is becoming passé.  If you want to get your message to his students it requires texting.  They are using their mobile phones as ways to stay connected in their world.  This is consistent with a global trend on mobile devices.

Social media is part of a larger technology revolution where social connects to mobile, cloud and big data.  It is becoming a foundation for business transformation and innovation.  It is also a new form of radical transparency into your boardrooms where fans, critics and disruptors are questioning the “art of director decision making.”

At the end of 2011 there were six billion cell phone subscriptions globally, which means that 86% of the people on the face of the earth can now connect and talk or text directly with each other.  By comparison there are only 2.3 billion internet users.  More people in India now have mobile phones, than have indoor plumbing.

As directors your role is to support your CEOs in exploring how they can socialize and humanize the company as a place to buy, work and invest.  It is important to remember that these social conversations have just begun with your customers, employees and investors.  With or without you they are talking about your brand with each other.  The challenge for the business is to accept that you do not control the conversation anymore.

This opens your business up to a variety of emerging risks which were defined in a recent study by Stanford University’s Rock Center for Corporate Governance, in conjunction with The Conference Board, where they surveyed CEOs, senior executives, and corporate directors.  The study could be summed up as: Lots of Knowledge, Little Action!

Risks

 • Possible loss of control of product branding.

• Possible loss of control of corporate reputation.

• Possible loss of control of proprietary information.

• Potential for misinformation in the market. Information shared among social media users is not verified.

• Potential for misinformation for corporate decision makers. Users of social media represent only a subsample of stakeholders, and their actions and opinions might not be reflective of stakeholders in general or even core stakeholders.

“The majority of those we surveyed don’t have social media guidelines in place at their companies, haven’t had a social media expert consult with their company, and don’t have systems in place for gathering key information. They are putting themselves at serious risk by not taking action,” Professor Larcker concludes.

As you are putting your thoughts together about how to tackle social media as a strategic agenda item for your boardroom, take the next step by asking a specific question that Richard Levick shared to kick start your crisis communication planning which needs to include social channels:

Get confirmation from your CEO that your company knows and owns all of the risk terms and URLs that stakeholders will be keying into Google to access information on your next crisis?

The last thing you want in crisis is for a Google search for “Your Company” and “Problem X” to rank messages belonging to plaintiffs’ firms, activists, or regulators ahead of your own. Once you have identified your risk keywords (i.e. “FCPA investigation,” “shareholder suit,” etc.), buy those terms and related URLs so that no one else can use them directly.

In today’s fast moving news cycle remember by the time you’ve sat down to read the WSJ it will be a history lesson from yesterday’s news.  You’ve made it this far so take the next step and get social media on your next boardroom agenda.  Your future will continue to be shaped by social media and is ignored at your business peril.

So in an hour we were able to touch on some things directors need to know about social media.  Happy we were able to get the conversation started on how directors can ask good questions on social media’s business risks and opportunities in 2012 and beyond.

At Risk for Good we’re here to equip your board to ask smart, strategic questions on social media engagement.  Put social media on your next board agenda.  Time is now to get connected to customers, employees and investors in the digital revolution.

Here is the advance reading for corporate directors who will be attending:

Directors in the Digital Age – Social Media

No surprise that directors would have reservations when it comes to social media.

Let me share a few of my favorite comments I hear from Corporate Directors:

1. Show me the ROI on what people had for breakfast.

2. I don’t have enough time.

3. I am concerned about my privacy.

4. We are B2B / We are industrial.  Our customers are NOT using social media.

5. There is too much change to keep up with.

 If you’ve had these thoughts, now is time to put them behind you.  In today’s connected world your company has a unique platform to listen and communicate with their customers, employees, investors, fans and critics.

Social media is simply another media platform to help you achieve your company’s objectives.  It is growing in importance to your company and your industry.  Social media encompasses many platforms with one thing in common….it provides a two-way conversation.

The pivot for business is to understand and adapt their communications to participate in a conversation they no longer control.  The 21^st century boardroom needs you to use your creativity to support your CEO and the strategy that optimizes digital opportunities.

You need to encourage your CEO to play offense and get your company aligned with social media.  To empower CEO success, you need to step up and play defense for your CEO.  The role you play is to support your CEO in this exploration.

Directors Don’t Tweet, They Listen

So take your hands off the keyboard.  Focus your thinking on how social media is impacting your business and how it has opened up a new media channel.  The question to ask is: are we listening?

Social media is now being used by customers, employees, investors, stakeholders, and critics to discuss your company:  Social media listening can happen across the enterprise: sales and marketing, investor relations, human resources, risk and business development.  Each area has unique conversations happening on social media.

How is your CEO exploring methods to listen and summarize these conversations for you?  Your CEO should ensure that the procedures for crisis identification and escalation are defined and understood by employees and your board.

Here are some questions to ask:

 For Your Business:

• How would you describe your social media policy?
• What are your vulnerabilities compared with your competitors?
• What insights are coming out of social media listening from the operating units?
• How are you monitoring for customer service and crisis conversations?
• What is your plan for speaking and listening during a crisis?
• What training are you doing for employees?
• What have you done to ensure your outside advisors can be a resource?

For the Boardroom:

• What social media information is essential for the board?
• How is the information formatted for the entire board and/or by committee?
• How often does the board want to review their social media dashboard?
• What competitive information can be culled from social sites (big data) that provide unique insights into investors, customers, industry, competitors and management?
• What is being said by our investors, analyst, shareowners and stakeholders around our annual meetings, quarterly calls and presentations?

You do not have to tweet to understand the social media landscape and how it is changing your business opportunities and risks.  We drive cars yet many of us don’t know how combustion engines work.  However, decide what you will do to accelerate your learning curve to become engaged in the broader topic of social media and how it impacts your business.

Digital Crisis Identification and Response Plan

In the Risk Map below, social media is at location 4, in the yellow zone.  In times of crisis, social media will accelerate your reputation risk by moving in the direction of the red arrow.  This is why it is critical for you to have a prepared plan for managing social media as part of your crisis management strategy.  Your oversight of the social media strategy is essential and requires management to be proactive in their thinking and planning.

Social media is challenging our thinking about who talks and who listens.  In all cases, the key is to ensure you have a plan that can see across the enterprise.

Resources for the Corporate Director

SOCIAL MEDIA What Boards Need to Know

May 2012 | practicallaw.com

Holly J. Gregory

Partner

WEIL, GOTSHAL & MANGES LLP

Holly specializes in advising companies and boards on corporate governance matters.

 http://www.weil.com/files/upload/May2012_Opinion.pdf

 Top Five Questions Directors Need To Ask About Social And Digital Media

 June 2011 | Fast Company

Richard S. Levick

President

LEVICK Strategic Communications

Richard Levick, Esq. President & CEO of LEVICK Strategic Communications, represents countries and companies in the highest-stakes global crises and litigation.

http://www.fastcompany.com/1756966/top-five-questions-directors-need-ask-about-social-and-digital-media

During the report out, Stephen Davis asked that audience the question:

“In your estimation, what percentage of corporate boards now exercise constructive oversight of social media risks and opportunities?”

One half of me is shaking my head while the other half is working on products and services to fast track boards, CEOs and investors into 21st century communications.

Here are the notes from our session and would welcome you adding to the ideas.

Social Media

Panel

Provocateurs: Santiago J.D. Chaher, Managing Director, Cefeidas Group, Argentina and Fay Feeney, CEO, Risk For Good, USA

Moderator: Stephen Davis, Executive Director, Millstein Center for Corporate Governance and Performance Yale School of Management, USA

Investors and corporate boardrooms alike increasingly see social media as a channel for advancing goals as well as a risk to manage. One illustration of the power of social media:  during the ICGN’s first Rio day some 14 tweeters messaged on the conference from Brazil, the US, Canada, Portugal, Switzerland, Japan and Jordan. Totaling their followers, the number of people around the world who received at least one tweet from the conference was 93,781.

Provocateurs Fay Feeney and Santiago Chaher made the following main points:

• Companies facing viral crisis set up a “war room”

• Ongoing defenses include:

• Monitoring how firm and competitors are positioned in social media

• Maintaining an up-to-date inventory of relevant social media channels

• Embedding social media in corporate strategy

• Understanding ‘Big Data’ metrics and tools

• Establishing protocols for using social media within legal boundaries

• Boards should have someone with ‘digital literacy’, and other directors should have mentoring to bring them up to speed

• In the long term Big Data offer windows on real-time embryonic thinking rather than today’s historical data–deeper insights on consumer behavior and how it changes

Delegates were asked to discuss two questions:

1. What would you recommend boards do to prepare for social media risks and opportunities next season?

2. What can you imagine social media and technology allowing companies to do in 2020?

Points raised by delegates included the following:

Recommendations for boards

• Most boards should have skills and training to understand the firm’s net presence and make sure that management is considering social media, both in the strategic plan and as a tool in crisis response

• The most critical challenge for management in an age of information overload is filtering important information from noise

• Companies should devise social media strategy with aid of the Investor Relations officer, IT officer and company secretary. Only designated executives–not outside directors–should speak for the company via social media

• Boards should ensure that management produces a profile of how social media may affect products

• Social media tools may be important at many levels of a company

• Social media should be a regular item on a board’s agenda

• Companies can hire outside digital advisors for proactive social media outreach (corporate governance, investor relations, marketing) or defensive tactics

In 2020 social media is likely to:

• Enhance shareowner democracy, e.g. through virtual AGMs and electronic voting

• Amplify influence of stakeholders

• Reduce fraud by making it easier to detect–or at least it will change the nature of fraud

• Raise prospects of insider information abuse since more will have access to info

• Make companies adapt to transparency at all times

• Overhaul assumptions of what information is personal and confidential

Final tips:

• A reality check and educational tip: go Google yourself and your email address

• Talk to your kids about what to do.

When you get those two final tips completed email me at fay@riskforgood.com   Time to get serious and get this conversation started for you, your boardroom and your investors.

 My Remarks:

Ola, Stephen, Santiago and the ICGN conference committee for including me in this amazing event.  For the past 15 years I’ve been active in engaging the internet and social media for my business & personal development.  As a result, my colleagues in corporate governance have labeled me the “Digital Whisperer”.  Today I’d like to share some of my experiences and “lessons learned” with you.

We are early in the internet age.  This 2^nd generation of the internet (web 2.0) is where individuals, investors, activists and companies can use the web as a media platform to shape the perception of their company and their board.  You control your own site, or blog, or tweet; and are able to control your own data.  The importance of the company’s web site is well understood by most of us.

Less understood is the importance of interactivity, another key feature of web 2.0.  Being “social” in the digital age means creating the opportunity for user-generated content on line, and using this interactive feature to exchange information.  We know these applications such as: Facebook, Linked In, Blogs and Twitter.

In the first wave of the digital economy, the focus was on one-way conversations corporations were having with their customers.  The marketing department was in charge of overseeing that information was carefully controlled and distributed.  Marketers are known for talking, not listening.

We are now in the second wave of the digital economy.  Two way connections will dominate with less hierarchy, not more hierarchy.  Information about your company, its products, and its policies can no longer be carefully controlled and distributed.  As you and your board become digital citizens, you will be leading socially enabled enterprises with your stakeholders, your board members, and your key investors.

Take a moment to think where you were 8 years ago in 2004 when Facebook was being launched.  I was sitting with CEOs in their boardrooms briefing them on what I was seeing in their operations from a risk, safety, health, and environmental perspective.

I had limited time with them so my job was to inspire them to improve their profits by enhancing the safety and sustainability of their workplaces and products.  This included focusing on the people, products, use of resources and supply chains that made them money.  The way to focus on these audiences is to listen to them.

Investors, stakeholders, and the employees on the loading dock all have ideas for improvement and an opinion about the job management is doing.  This has always been the case.  What has changed is that now several platforms exist for these individuals to communicate their ideas and attitudes.  They now find, nearly instantly, that these ideas and attitudes are shared by their peers.  When their opinion captures the sentiment of others, then “word of mouth” becomes magnified at large scales with customers, employees, investors and activists.  These events become opportunities or risks, and can quickly shape a company’s future.

The impact of social media on corporate governance is a new concept.  It is not yet embraced by most boards.  We are literally building the plane as we fly.  My training and expertise is in risk management.  For the last 8 years I have been applying fundamental principles of enterprise risk management to social media.  Today I will share some of these findings.

Many corporate executives are ignoring social media due to their personal time constraints.  If you feel like you’re running as fast as you can doing your job now, then the thought of spending time tweeting, reading blogs and going on facebook, etc. sounds like an unimaginable idea.  Please remember that ignoring new trends has not been shown to be effective for you or your company.  So take a breath, strap yourself in, and get help if you need it.  Being left out of this revolution is not an option.  It will happen with or without you.  You don’t want to be disconnected from this.

The average age of independent directors in the S&P 500 in 2008 was 61.2 years:

• Independent directors under 65 yr:  34% are using social media;
• Over 65 yrs:   23% are using social media (8% growth from last year)

By comparison, 80% of 18-24 year olds are on social networks.

Getting boards and their CEOs to understand the concepts and power of social media is made more challenging when they have not begun the journey to learn about it.

An IBM survey said “16% of CEO are using social media now; 57% will be using it in the next 3-5 years.  Many CEOs now understand that they need to listen and communicate both narrowly and broadly to build trust.

With our without your CEO using social media, people will be on line talking about hot issues like: CSR, Executive Compensation, no votes on directors, ESG investing, conflict minerals, constrained resources especially water, political contributions and diversity (especially gender representation of the board and officers).  Without any contribution from the board or the CEO, these conversations will be a disruptive to investor relations.  Those not listening will be taken out.

I recently tweeted to my followers in our #corpgov community: “Do you know someone who brags that they don’t text, tweet or care about social media?”  I like to diplomatically tell these folks that their digital zipper is down; and it is not helping them look relevant.

Two way communications is about human behavior and the on-line platforms have made it essential to modern accountability.

CEOs are under the microscope and being talked about in all social media platforms: 14.2% of the world’s largest 2,500 public companies replaced their CEO in 2011 due to #sayonpay, stock performance, poor judgment, or unacceptable ethics (Booz & Co).

Using risk analysis, we can see that the focus of the corporate board is transforming from “inside out” (what we’re doing) to an enlightened “outside in” (what others are saying).  It is critical to the board’s success that this shift in focus be factored into strategic decisions.

I work with clients using a 3-part Risk Framework:

1.   Internal (Compliance): Controls and audits to avoid and eliminate risk.  This includes employee/director policies on use of social media, resources for social media listening, war room for crisis response, etc.

• Internal Fraud – misappropriation of assets, tax evasion, intentional mismarking of positions, bribery
• External Fraud- cyber-risks, theft of information, hacking damage, third-party theft and forgery
• Employment Practices and Workplace Safety – discrimination, workers compensation, employee health and safety
• Clients, Products, & Business Practice- market manipulation, antitrust, improper trade, product defects, fiduciary breaches, account churning
• Damage to Physical Assets – natural disasters, terrorism, vandalism
• Business Disruption & Systems Failures – utility disruptions, software failures, hardware failures
• Execution, Delivery, & Process Management – data entry errors, accounting errors, failed mandatory reporting, negligent loss of client assets.

2.   Strategic (Operational):  Risk maps, indices and event scenarios enable interactive discussions to achieve strategic objectives.  Directors would love to have more time for these discussions.

3.    External (Reputation):  Progressive CEOs & corporate boards are beginning to utilize social media war rooms to listen to the conversation and analyze risks.  Scenario planning, identifying black swan events, etc.

Understanding this framework can help you develop the playbook for your organization:

• Offensive plays identify compliance and strategic risk, and
• Defensive plays improve your listening from an “outside-in” perspective.

Key Tip:  Don’t be intimidated by “big data”.  Well developed tools exist for this.

One of the biggest opportunities for business today is access to real time data from social media.  It is called “big-data”…you can actively aggregate, mine, analyze and understand what is happening “in the now”.  This is in contrast to our looking backwards on historical data.  This is what progressive companies are using now in their risk analysis.

All of the new information generated in the world in the year 2000 amounted to about 2 million terabytes. The digital universe now generates more than twice that much in a single day.

Here’s how social media is being used in 2012 for proxy and annual meetings:

Social media war rooms to combat viral threats to reputation

• http://socialmediatoday.com/davidarmano/560757/five-considerations-social-command-centers
  • @armano discusses the growing importance for businesses to act in real-time @EdelmanDigital Link here http://bit.ly/M6SeOM

Business has shifted to a real-time environment, and social media tools are evolving to keep up. They are building (SICC) Social Intelligence Command Centers

1. Start With a Purpose

Organizations can have various goals when looking to set up a “SICC” including event management (such as the Super Bowl), real-time reactive engagement and content creation (such as the American Red Cross), etc.  Once you’ve defined your purpose, you can begin envisioning the space.

2. Envision the Space

The term “space” is used broadly here because a SICC can be in a room, a pod of desks, a mobile technology configuration, etc.  Components of the process include roles (analyst, community manager, content producer, traffic director, editor), workflow (approvals, escalation protocols, crisis plans), KPIs (what does success look like, how do we show it?), schedules (did you know social media doesn’t sleep? Will the SICC sleep?) and a handful of other components.

When envisioning the space, the components listed above will dictate the design of the space and how it functions. This isn’t just about a room with big screens and a nice logo – it is about planning, coordinating, training, designating and executing in a room designed with a purpose.

3. Build Your Team

The team involved in a SICC is scalable in number, but must function as a unit cohesively. The team should have a firm grasp on the communication goals, tools, social technologies, the brand and the community.  Without community, the SICC is like an airport – mission control, pilots, planes, security protocol, everything – but without passengers.

4. Know Your Technology

SICCs are flexible and inclusive of many platforms at any given time.  From a physical technology perspective, we’ve found SICCs should have television for real-time events and news, large screens so teams can work together and as many white boards as possible. Dual-screens help team members use the numerous tech tools together and conference lines should be setup to facilitate communication with people in the room and others around the world.

 5. Go Beyond Listening

Effective crisis strategy isn’t just for stormy weather.

• Frequency and intensity of conversations
• Sentiment or tone of posts and patterns
• Key fans or critics present, and frequency of their posts
• Incorrect information, misquotations, or slander
• A pattern of comments that uncovers an organizational blind spot, or a “ball that has been dropped”
• Legitimate requests for information in a crisis
• Breaking news concerning the brand, especially from influential non-traditional media sources

All of these elements help implement a responsible triage strategy and protect your reputation.

So far, these centers have not been built for corporate governance or investor usages.   But their basic structure can be adapted for these purposes.  Organizations and brands using this for marketing are:  Dell, American Red Cross, Gatorade, and more…Coca-Cola seems to recognize a simple fact: social media is a complex channel, and asks their marketing and advertising agencies to help it listen better.

• Skills and structure needed in boardrooms to oversee social media; lessons from investor successes in ESG using social media
  • Nestle – palm oil – public apology & restructure supply chain
  • Eric Jackson was able to engage a call to action for investors to unseat directors on Yahoo’s board in 2008.  This was a concept ahead of its time!  With the rapid development of social media, this example of “Investor Spring” will be repeated.
  • Sequoia Fund organized a social media campaign to remove James Johnson, Director at Goldman.
  • How to perform a social media audit– here’s what I tell Risk for Good clients:
    • 1.  The time is NOW to get your board “on board.”  Start with a briefing to baseline your board on the fundamentals of social media risks and opportunities:
      • Baseline your business, your competitors, and mentions of your key executives in the social media.  Identify where your business is positioned in the conversation: Google, Yahoo ,Bing, Facebook, Twitter, LinkedIn.
      • Understand the sources where you can get independent information and business intelligence.
      •  Expand your sources of information on the business beyond management reporting.  Asymmetrical information risk analysis.

• 2.  As you start asking digitally literate questions of your CEO, have a baseline “Social Media for the Boardroom” assessment of your company from an enterprise perspective:
  • Know the risks on how your company is using social media.
  • Map out your company’s current social media engagement.
  • Identify what Marketing is doing for outbound conversations, along with other departments (human resources, customer service, etc.).
  • Summarize what is being said by whom on major social media sites (Google, Facebook, Twitter, LinkedIn).
  • Analyze your website from the perspective of an investor concerned about corporate governance.
  • Identify current policies for employees, contractors, etc.;
  • Begin the discussion on your business readiness to manage crisis communication on social media;
  • Identify how your board is being portrayed in social media. Think executive and board compensation, say on pay, etc.
  • Use this briefing/assessment to introduce your board to the fast-changing communications happening on line.

What should be in a company’s and an investor’s social media toolkit?

Doug Chia, Corporate Secretary at Johnson & Johnson speaks about how J&J used their blog to get results out in real-time from their annual shareholders meeting.  This is an example of using tools set up for marketing for investor relations.  Doug is leading the way using social media tools for investors.  Additionally J&J is using Moxy Vote for retail investors.

The investor relations community is working to use on-line tools in their practice.  They recently had a major milestone for StockTwits, Investor Relations and Social Media

“During our question-and-answer session, callers will be limited to one question in order to allow us to accommodate all those who would like to participate. If you are listening to the call through our live webcast, feel free to submit your questions via email or as a message on StockTwits.com.   Preference will be given to inquiries of a long-term strategic nature.”

Let me close by quoting Machiavelli and Mother Nature:

Machiavelli: “All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but in calculating risk and acting decisively.”

Mother Nature:  “Our brain that routinely tricks us into making three mistakes:

• Overestimating threats;
• Underestimating opportunities; and
• Underestimating resources to handle threats and fulfill opportunities.”

Social media is simultaneously the biggest threat and the biggest opportunity for our business to prosper in the connected world.  What action will you take to help frame this opportunity and threat for your team?  If not you, then who? If not now, then when?

#ICGN12 Social Media

Social media, the investment community and corporate boardrooms alike increasingly see social media as a channel for advancing goals as well as a risk to manage. This breakout will cover: how companies use social media war rooms to combat viral threats to reputation; skills and structure needed in boardrooms to oversee social media; lessons from investor successes in ESG using social media; how to perform a social media audit; and what should be in a company’s and an investor’s social media toolkit?

Provocateur Investor: Santiago J.D. Chaher, Managing Director, Cefeidas Group, Argentina

Provocateur Corporate: Fay Feeney, CEO, Risk For Good, USA

Moderator: Stephen Davis, Executive Director, Millstein Center for Corporate Governance and Performance Yale School of Management, USA

For an excellent resource on social media:

The initial premise of “social media” is simple: Being “social” in the digital age means creating and exchanging user generated content on line.

Read what CEOs, chairmen, and lead directors need to know about social media to empower them, and in turn their boards, to be more effective in leading their corporations and exceeding shareholder expectations.

To read the entire blog post please hit this link to Boardmember.com

Add to this the recent investigation at Walmart on a Mexican bribery scandal that dates back to 2005.  The NY Times WalMart expose has my attention. BusinessWeek reporter Diane Brady wrote a recent piece titled: Walmart, Avon Execs Should Stop Hiding Behind Boards. “When a company resorts to issuing statements through a spokesperson, it’s essentially telling shareholders the chief executive isn’t up to facing the public. Maybe that’s a wise course of action as far as the board or corporate counsel is concerned, but it reneges on a basic pledge to the company’s shareholders.”

Let me share my perspective: “Boardrooms today have windows and the public is looking in.” The world is watching and listening. We now expect leaders to keep us informed on their activities related to our shareowner’s interests. The days of hiding are over, as one billion people are talking among themselves about you.

So I urge you to speak with your CEO and board about building trust by facing the public. It starts by broadening your vision of who matters to your business success. It is critical that you start listening to the conversation happening outside the boardroom.

The Boardroom in the Digital Age

“The time is ripe for executive-suite discussions on how to lead and to learn from people within      your company, marketers outside it and, most of all, your customers.” ~McKinsey

Creating a Data-Driven Culture

But what does a CEO or informed director need to do to oversee the social media conversation? First, they need to decide that the time is now to learn about social media and how the pieces fit together. If you’ve been too busy, the time to learn is now. This is a customer, an investor, an employee issue and more.

It begins with monitoring and listening to what is being said about your company. There is data that is waiting to be analyzed, but you need to be ready to bring digital intelligence to your business thinking. Let’s keep this in perspective–I’m not suggesting a CEO or director should communicate using social media (Facebook, Twitter, LinkedIn, to name a few), however, they should ensure that they get briefed on the conversation happening around their business.

How else can you ask good questions about what is being said that could impact your revenue, reputation and more? Here is a recent Stanford Graduate School of Business article that does a great job of looking at the risks associated with social media and the boardroom.

I’m pleased to be quoted and want to help you think about how this affects you, your CEO, boardroom and business: “Directors are responsible for oversight of the corporation,” says the Stanford GSB paper.

“This includes monitoring and advising the senior executive team as it develops and implements the corporate strategy. Information gleaned through social media might provide unique and relevant insights into the success of these efforts and supplement the traditional key performance indicators (KPIs) that directors use to evaluate management and award bonuses.”

The authors – Stanford Professor David F. Larker, Sarah M. Larcker and Brian Tayan – argue that social media might alert the board to risks facing an organization in a way that is not currently available. These risks might include:

Operational risk (how exposed the company is to disruptions in its operations);

Reputational risk (how protected are the company’s brands and corporate reputation);

Compliance risk (how effectively the company complies with laws and regulations)

“Why haven’t more boards of directors made certain that management has a process in place for collecting, analyzing, and responding to this information?” the authors ask. “Do boards actually know what questions to ask? Can boards distinguish between a good system for monitoring social media and a bad one?”

To begin getting your arms around this important area, here are 3 questions to ask:

1. What is the plan for monitoring social media to identify negative comments?

2. Who is responsible for responding on the social media platforms when crisis hits?

3. When is the CEO and/or board notified of a pre-determined spike in negative sentiment?

You may ask, what data can you get from real time conversations that are happening by your customers, employees and stakeholders? This is a great question, and one I’ve been doing a deep dive on. The feed of information is like a firehouse, so to make it relevant, you need to set up a point of view.

The one I’ve selected to share with CEOs, the c-suite and directors is related to the conversation-influencing investors. I’m seeing many strategic insights coming out of this investor perspective. Think Money Ball for the boardroom, and I’m feeling like the Jonah Hill character.

If you’re interested in learning more, email me at fay@riskforgood.com or call me at 310-372-0591.

Click on the image to read: Monitoring Risks Before They Go Viral: Is It Time for the Board to Embrace Social Media?

Professor David F. Larcker, Sarah M. Larcker, and Brian Tayan prepared this material as the basis for discussion.  Professor Larcker and Tayan are co-authors of the book Corporate Governance Matters. Sarah M. Larcker is Director of Account Planning at Digitas Health.

The authors would like to thank Michelle E. Gutman for research assistance in the preparation of these materials. The Corporate Governance Research Program is a research center within the Stanford Graduate School of Business.

For more information, visit: http://www.gsb.stanford.edu/cgrp/ or contact Associate Director Michelle E. Gutman at mgutman@stanford.edu.
Copyright © 2012 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved.