Jack London NACD Keynote Speech
Bringing Your Leadership to America’s Boardrooms
National Association of Corporate Directors Keynote, February 28, 2012
Dr. J.P. (Jack) London, CACI Executive Chairman and Chairman of the Board
Thank you, Ken, for the kind introduction. I am delighted and pleased to be with you this evening!
My thanks also to General Jim Conway and the NACD board for the opportunity to offer some thoughts here tonight. Your theme – “From the Battlefield to the Boardroom” – is really important. You have a lot to bring to the table.
When I thought about giving this talk, I wanted to give you a realistic picture. Board duty is not just social hours and golf outings. There can be real stress and you folks are good at it. Also, you can hit only the highlights in a keynote talk.
Then, too, these views are all my own and not a statement, per se, from the CACI Board.
So let’s do it!
As I look across the group, I am honored to be with you tonight … and I want to recognize all the distinguished attendees of this fine program.
In this room tonight … we have a total of some 1,750 years of service to our great nation.
You have given over half your lives to the American people, and I greatly respect and appreciate your many talents and achievements.
So I say … “Thank you for your service.”
I also want to mention, up front, that over the years CACI has had the honor of having a number of distinguished flag officers on our boards. Among these are:
· ADM Thomas H. Moorer, U.S. Navy, former Chair of the Joint Chiefs and former CNO
· GEN Hugh Shelton, U.S. Army, also former Chair of the Joint Chiefs, and Chief of Staff of the U.S. Army
· GEN Larry Welch, U.S. Air Force, former Chief of Staff of the Air Force
· ADM Gregory “Grog” Johnson, U.S. Navy, former Commander of U.S. Naval Forces Europe and Allied Forces, Southern Europe
· GEN Scott Wallace, U.S. Army, former Commander of Vth Corps
Now let’s talk about corporate boards and some of my thoughts about them.
First off, I think it’s fair to say that I have been at this board business for a long time:
· 31 years CACI Board
· 21 years Chairman
· Over 50 years total on boards, foundations and trusts, non-profits and small privates
· Corporate trees of subsidiaries
· International corporations
· Acquired/bought 55 companies since 1991
In my experience, we need to start any discussion of board membership with “Leadership.”
Leadership needs are the same at the senior military levels as they are in the corporate world. And there is a big and continuing need in the corporate world!
Integrity, ethics, values, respect, and dignity all describe the character and strength of the person. These are all at the top of the list in the military and in the boardroom. They also pertain to boards as a whole!
The intellectual qualities of strategic thinking, critical thinking, and having a keen sense for risk assessment are also essential.
Also important are understanding long-distance leadership and organizational dynamics; and knowing how to manage and get the most out of large/complex organizations.
In the military, your customers were the American people. You were driven by the mission focus of national security. It’s very much the same in industry, with a mission focus on the shareholders – doing what is right for the shareholders. But also for your clients and employees.
So “Leadership” is why you are here tonight!
I also want to say that the language of industry is frequently the language of financial metrics.
Military organizations have operating budgets (not P&Ls).
Accountability is laser-focused on mission accomplishment.
However, industry has a very different mission. It’s motivated by growth, shareholder value, and providing value to customers or clients.
While the military is accountable to the American people – its “stakeholders” – board directors are accountable to the shareholders of their company. (And, of course, similar accountabilities exist on non-profit or private boards of directors.)
Here’s an example. As for CACI’s board: Today we have nine directors, with seven outside-independent directors and two inside directors. CACI’s two Inside Directors are myself, Executive Chairman and Chairman of the Board – Executive since I am part of the management team and an employee of CACI.
At CACI, the CEO reports directly to the Executive Chair and concurrently to the Board. As CEO, Paul Cofoni is our second Inside Director.
We are also fortunate in having two very capable flag officers serving as directors:
• ADM Grog Johnson, U.S. Navy, retired
• GEN Scott Wallace, U.S. Army, retired
They make a major contribution and add an important dimension to our board – leadership and strategic positioning.
At CACI, we have 6 committees in addition to our standing Executive Committee of the Board:
• Audit Committee
• Compensation Committee
• Corporate Governance and Nominating Committee
• Security and Risk Assessment Committee – established in 2008
• Strategic Advisory Committee
• Investor Relations Committee
Our board schedule is published on an annual basis and we meet quarterly. Of course, we hold special meetings as needed (for example, for our M&A program buying a company).
We talked with Grog Johnson and Scott Wallace on our board and they offered their thoughts.
They said that retired flags are a natural fit for understanding board and corporate needs for: ethics, strategy, leadership, communications, and getting the most out of the organization.
Other points of advice included:
· Learn the new business language – it’s not the military. And NACD can help here, too.
· Do your homework – know your organization, its business, and its market space, including the competition.
· Start with one of the two technical committees (Audit or Comp) if you can, because there is a lot to learn, and they are a good place to start. Take the courses; do the homework (Audit, Compensation, Income Statements, Balance Sheets, Accounting, Financial Analysis).
· Invest in relationships with other board members, the Chair, and the CEO. (The Chair and CEO can help you understand what’s important and what’s not!)
· Understand the difference between the role of the board and that of management. There is a line between the two, and it varies with companies – large or small – but stay on the board side of the line. The board has an oversight role – the board’s job does NOT include managing the company!
Here are some pointers on having your company do well:
Great Leadership. (Easy to say, not so easy to achieve.)
· Watch the trend lines and develop a vision of the future. Where are the company and the market going?
· Recruit great people that align with your culture – people that have the right attitude, integrity, commitment, and domain expertise. (And attitude is always the first criterion … it’s the trump card … without good attitudes, good teams can’t form.)
· Create distinction everywhere. (Being the best, quality first … and a reputation for doing it right, and being an industry role model!)
Solid Culture. (Again, easy to talk about, not so easy to create.)
· ALWAYS do the right thing! Integrity and ethics are fundamental!
· Common bond – teamwork. Any organization of consequence and success has to have a great team that works together with synergy and leverage.
· Empower your team to solve the client’s greatest challenges. When you have great people and a great team – and you really empower them – you are going to really “make hay” and get big things done.
Effective Communication. It’s like giving a speech to a passing parade – you have to keep saying things over and over to get the message across. And boards need to understand this.
· Be persistent, consistent, and clear. And don’t be complicated about it.
· Communicate goals and convey expectations clearly and unambiguously.
· Ensure people can hear – and be heard. So listening is important, too!
And as you know … paying attention to the details can make the difference.
The devil is in the details!
There can also be great payoffs from getting the communications
right and working the details.
Back in 2004, CACI was accused of crimes at Abu Ghraib prison as part of our interrogator support contract.
Well, the truth was we had not been part of the abuses … and no charges were ever brought against CACI or any of our people. The story was just wrong. So we developed a communications plan to set the record straight. I pushed back against the media, the talking head accusations, and the lynch mob mentality.
Our board supported me all the way, and our comms plan worked great! Investigations (nine in total) cleared CACI of any crimes, fraud, or serious wrongdoing. We prevailed!
We also wrote a book about this fiasco … it’s called Our Good Name and in it, we tell how we defended ourselves and our people against the media lynch mob.
So to succeed, what management needs from the board is:
• Enthusiasm for the business itself.
• Engagement on the corporate business strategy.
• Encouragement and support of the management team.
• A trusting relationship among board members and between board and management.
• Critical thinking, paying attention, looking at risk vs. reward, and NEVER betting the company on any management decision. Be prudent and responsible!
• One voice. And this simply means clear direction. This is the challenge the chairman always faces – getting consensus – a unified position, clear and unambiguous.
The job is always serving the shareholders, but it’s hard to serve the shareholders unless you serve the customers and clients. It’s hard to serve the customers and clients unless you serve the employees, your people. If you don’t have a competent, capable, and loyal team of people – your employees – you aren’t going anywhere!
If you don’t “get it” – you won’t “get it”!
So let’s flip it over … What management doesn’t need from the board is:
A bunch of part-time CEOs:
• Who live off a diet of second guessing.
• Who don’t understand that the board’s role is: “Eyes in” and “fingers out.” (Look at, but don’t touch, the management apparatus.)
• Who think their job is to play “gotcha” with the management team, the CEO, COO, or CFO.
I have seen the boardroom bullies in action. Talking over everyone else, endlessly interrupting their colleagues, and even pounding tables in an effort to intimidate. They are easy to spot after a meeting or two – but the real trick is to carefully screen and interview board candidates, ahead of time, to determine their fit! You don’t want a bunch of naysayers – but you also don’t want a bunch of yes men either.
As I hope you’re picking up, there is a line here, between board duty and management activity – so make sure you don’t cross it and get everyone confused as to just who’s in charge of what.
And then as a last thing, it is important for a board to maintain its dignity, mutual respect, decorum, and civil behavior. Why do I say this? It’s simple: I have seen, years ago, where it has broken down … into board fights; lawsuits, class action and otherwise; and proxy fights.
So there is a boardroom etiquette and level of responsible behavior that can make a difference.
Again, it all boils down to people’s attitudes. Are they team players and mission people, or are they self-serving politicians? Mission people are there to get the job done. Political people are there to make the most out of it for themselves. So you know the kind you are looking for – and that’s mission people.
Finally, what’s my personal advice to you?
Work to build your network in the business world … your network will be an important key to learning about potential board positions.
Initially, be open to all board situations – start, perhaps, with a non-profit or a small privately held company. Many of the governance principles and duties are the same. Learn, contribute, and enjoy it. Be careful, however, not to load up with too many non-profit boards – these folks are, understandably, always looking for help, and for money, and the list can get very long. And here are some real tips:
· Be sure to complete your own due diligence about the outfit.
· Check into their directors and officers liability insurance coverage.
· And it’s a good idea to look at their Constitution & By-Laws and governance policies.
Many organizations will have this information up on their websites, but ask if they don’t.
Then make board education part of your ongoing regimen. Like this week, continue your education because we never stop learning and there are some wonderful sources … starting right here with NACD.
Plus, there is no substitute for getting engaged!
There is also a lot I didn’t cover, and here are a few items. All are important … evaluating CEO performance … insider trading … governance …. SEC compliance, etc.
Well, there are some thoughts from me, so what’s on your mind? We are ready to take your questions.
Again, my thanks for your service, and I know you will find these following years interesting and rewarding … You can make a difference!!
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