Boardrooms in Transition Ep. 3/5 | Karen Francis | Investment Under Uncertainty

This is episode 3 of 5 in Boardrooms in Transition, a special series from Inside CVC by U-Path. We recommend starting with Episode 1 and listening in order. This episode opens with a short recap. If you are listening to the full series in one sitting, use the chapter marker to jump straight to the conversation. 

In the third chapter of Boardrooms in Transition, seasoned public company director and Chair Circle co-founder Karen Francis explores what it takes to lead through uncertainty. Drawing on decades of experience across automotive, mobility, technology, and healthcare, Karen examines how boards weigh transformational opportunities, allocate scarce capital, and maintain confidence when the future is anything but clear.

We also discuss:

• The tradeoffs boards face when pursuing major transformations

• Why timing matters as much as conviction when placing strategic bets

• How investor trust influences a company's ability to execute

• The distinction between board oversight and management execution

• Why broad experience around the board table matters in times of uncertainty

• How trust between directors and management enables better decisions

As the series reaches its midpoint, Karen reminds us that transformation is rarely a straight line. Success depends not only on making the right bet, but on having the confidence and discipline to stay the course when the road ahead disappears into the fog.

Boardrooms in Transition: www.boardroomsintransition.u-path.com
Inside CVC: www.u-path.com/podcast
U-Path Venture Advisors: www.u-path.com

Acknowledgments
Special thanks to Grammy Award-winning saxophonist and composer Wayne Escoffery for lending his music to the soundtrack of Boardrooms in Transition. A member of the Yale School of Music faculty and one of the leading voices in contemporary jazz, Wayne's work helps bring this series to life. Learn more about Wayne and his music at www.wayneescoffery.com.

Transcript

Steve Schmith 0:00

Previously, on Boardrooms in Transition, a special series from Inside CVC.

Larry Quinlan 0:05

You know, I've been privileged to be a part of a number of transformations, all the way from X.25 networks to mobile to cloud to messaging, etc. I think what's different here is speed. The adoption of AI is occurring at breakneck speed. The breakneck speed is incredibly uneven. Everybody's just implementing transformative AI in their businesses, and if you don't get it done tomorrow, you're way behind. That is not the case from my point of view. And the massive organization doesn't just turn on the dimes to accelerate adoption. Cyber is still the number one risk on the heat map for a number of organizations. Yes, I believe we need to prepare faster. But it's not a doomsday scenario.

Steve Schmith 1:05

Welcome to Boardrooms in Transition, a special series from Inside CVC, where we are bringing you an inside look at the conversations and the decisions being made inside of boardrooms around the world.

Philipp Willigmann 1:17

We are doing this series because you have asked us to share some insights what really happens in the boardroom. So Steve and I reached out to our network to find the most influential board members who are willing to share their insights, how they are transforming organizations, how they're thinking about the future of ecosystems, and how we can together move to a more positive world.

Steve Schmith 1:38

And that's exactly what you're going to hear in the five episodes. Personal stories around managing AI, leading with courage, managing through geopolitical pressures. We cover it all from voices from inside the boardroom. I'm Philipp Willigmann, and I'm Steve Schmith. Welcome to Boardrooms in Transition. In our third installment, we're joined by Karen Francis, seasoned public company board chair and co-founder of The Chair Circle. In this conversation, we explore what it actually takes to lead a board through transformation, from the discipline of capital allocation under uncertainty to building the trust between the board and management that makes the hardest decisions possible. Here's our conversation with Karen Francis. Welcome to Inside CVC. Super excited to have you on the show today. How are you?

Karen Francis 2:27

I'm awesome. How are you today?

Steve Schmith 2:30

Doing fantastic. We're going to have a great conversation as part of our boardroom in transition series. Certainly you have an amazing career and experience in that way. But why don't we start with what you're doing more recently? You co-founded this chair circle. What were you seeing among boards of directors, communities, that community that made you say this doesn't exist and it needs to?

Karen Francis 2:54

Sure. Well, very excited about what we are doing. I'm uh partnered with a dear friend Penny Herscher, who also chairs public company boards. And so uh Penny and I have both been sitting on public as well as private and venture-backed companies for many years, but certainly in the public company space, there is a lot of board education and networking that is designed to make sure board directors are uh knowledgeable and up to date on the most current practices and best governance thinking and you know, new new curveballs that might come in. But what we've also found is that being a leader on a board, whether that's the board chair position or the lead independent director position or a committee chair position, is very different in terms of the types of knowledge you need and also the types of networks that you should be building of people to go to when you have questions. And so we found that that really didn't exist to have very uh high-level, more intimate conversations about very interesting and dynamic topics. And so we created the chair circle, which convenes board chairs and committee chairs on relevant topics. Um I'm lucky to own a winery in Sonoma County in Healdsburg. So we actually convene uh the whole three-day, two-night session at the winery in Healdsburg. And it just creates a very wonderful uh intimate conversation setting. We all meet in the farmhouse. So everyone's sitting in sofas, looking out at the vineyards, and quite frankly, having very, very important conversations about what it takes to lead a board and um the different issues that uniquely the leadership needs to lead, you know, whether that be uh compensation uh practices and trends, or CEO succession or board effectiveness, or MA and activism, certainly. So we're very excited about the lineup we have uh for this year. We have five sessions planned starting in April and going through October. And uh we'll be bringing about 25 participants along with sponsors. So that's about 40 people each session to uh Healdsburg. So we're very excited about it. The lineup of sponsors is uh incredible, and the sponsors present the content and begin the conversations. So very excited about uh that we did it first last August, and the feedback was insane, insanely good. And uh my favorite comment was someone said, This was the best thing I've done in my career.

Steve Schmith 5:42

Wow, that's high praise.

Karen Francis 5:44

I thought, okay, we have something here. So I'm very excited uh to begin that. So uh it's the chair's circle.

Steve Schmith 5:51

Such an interesting time, an important time, right? We talk about some of the challenges uh that you describe, we talk about those on the show all the time. One of the major things we're talking about more recently is how boards help uh their C-suite uh organizations sort of navigate all of this transformation, all of this change, all of this uncertainty. So I'm curious, when management brings these sort of major transformation plans to the board, what what typically are part of those discussions that usually take the most time to sort of figure out and get aligned on?

Karen Francis 6:26

Well, you know, it's interesting when you say when they bring the topic to the board, it generally isn't a surprise. It isn't that we haven't had some prior conversation or um direction or you know, discussion around what we might need to be doing. So um I would imagine if someone walked in with a transformation plan that was a total shock, that would be a different um sort of outcome. But I think the types of things that boards need to um weigh as they consider the company's ability and plan to transform, there are a couple things. Certainly, does the organization itself have the capabilities to execute what is being proposed? You know, you could have the the grandest plan in the world, but if your team and company isn't suited for it and doesn't have the experience or the, let's say, curiosity and and risk-taking capability, um, you're not going to succeed. So I think it's it's important to know what the organization itself can do. Um I think it also is important to know when you're considering a transformation, uh, what is the opportunity cost here? You know, when you start to um think about major changes to the strategy of the company or the operations of the company, clearly uh your current team, assuming they can can execute it, are gonna be distracted from their day-to-day uh ability to run the business. So it's not like you have a you know a secret team of transformers in some room that are gonna pop out and make this all happen. Your existing company and employee base needs to run the business, deliver the results, and then transform the company. And so um, and also the question of whether that's an organic or inorganic transformation, right? Are we gonna be buying something that's gonna make a big transformation, or are we actually gonna try and execute this ourselves? Both paths are require a lot of energy and a lot of attention and a lot of time. So I think the board really has to weigh, along with management, of course, but you know, what will we give up by doing this? What is at risk by starting to focus more on uh bigger transformational moves? And then uh assuming the the uh agreement is to go forward, how do we mitigate um any uh risk to the current business as we begin this new transformation process? I mean, uh your our shareholders and our you know, our shareholders and our investors don't give us a pass to say, okay, well, we get it. We know you're transforming, so we won't worry about your results for the next eight quarters. Um, so I think um I think that leads to my last uh thought here, which is what is our shareholder and investor perception going to be about this transformative plan? You know, do they believe we can execute it? Are they going to go along on the journey with us as we uh proceed to change or modify or enhance the business that they've known and that they've known how to model and they know what to expect? And uh, you know, a big transformation requires some, you know, will result in and require new businesses and new um new set of results. So will our investors uh be willing to go along and can we convince them that this is the right thing for the company?

Steve Schmith 10:07

A quick interruption regarding the investor why. Well, Karen is pointing out is that boards must keep the street aligned with the strategy. If your stock is your currency for MA, you cannot afford to surprise the market with a pivot they haven't been briefed on for 18 months. Now let's get back to the conversation.

Philipp Willigmann 10:28

We have uh been sitting in boardrooms together um over the last uh uh decade. And um I I recall um many conversations, but also in discussions uh we had with other um guests on our board series, that there are these moments um in board meetings or in the time of a transformation where a single board objection can really force a deeper conversation. But then once the vision is clear, what trade-offs tend to matter most in whether a board is willing to advocate for a transformation?

Karen Francis 11:04

Um well, I think there are a lot of trade-offs, right? You know, what are we doing with our capital? And that might be cash, that might be debt capacity. Um, I could also define that as people. Um, but what is what we're about to embark on an appropriate um return on the investment of the capital um involved? I think that's a very important conversation. And then if you flip the coin, you can also say, what's the cost of not doing this? Right? How if we don't do this, what what costs do we have? And so I think the board, that's the level of board conversation that I think is the most vibrant and most important to help a company and a management team and a CEO consider um what they should be doing. And, you know, capital is limited. Um maybe for some companies it's unlimited, but for most companies it's limited in terms of their um ability to get it or secure it, and making sure that you're making the right trade-offs with the allocation of your capital and time and energy.

Steve Schmith 12:24

Karen, it's so interesting to hear you talk specifically around capital, given the industries in which you've held board positions, automotive, mobility, massive investments, trillions upon trillions of dollars. And the future is still sort of uncertain as to when the tipping point is, when we're going to see all of that ROI. We've seen the bottom drop out of EVs. We're seeing a lot more just interest and autonomy now. So when you think about that in these sectors that you've operated in, how do you think boards think about committing serious capital when success is so far out? And and frankly, in these industries, often relies on other sectors that are adjacent, energy, infrastructure, et cetera. How do you weigh those things?

Karen Francis 13:14

Well, uh, you know, it's uh not for the faint of heart. Let's just do that. Over the last uh what, eight years, let's call it. That's just a snippet of time in the automotive industry. And I I ran Oldsmobile and I was there when we celebrated our hundredth anniversary. So let's just say in the last eight years, my oh my, what a roller coaster. Right? We've gone from um autonomy is it. It's just around the corner. It's going to take over cars and trucks and freight to wow, we're, you know, we have some Waymo's in San Francisco doing some drives. Like it's it's been fascinating. Um I think the, and and then EV, let's do that. Um, we used to want to save our planet, and so uh electric vehicles were part of that. Um in the middle of that, wow, the automotive industry was able to produce electric vehicles that, in my opinion, are uh superior in some uh drive capabilities and a lot of other characteristics, but now all of a sudden it's you know it's a bad word, um, even though the vehicle itself is phenomenal. So I think it's been very challenging. I'm sure there, I'm sure just about every industry feels that their own industry has been challenged equally. But I think um for boards and companies right now, trying to weigh um the benefit of being first, right? For new technologies, you if you are first and you can succeed in executing, you win. You can win. In some of these sectors, being first was sort of a sacrificial lamb. You know, you you put in a lot of money and then somebody came behind you with something um even better, and you invested a lot of capital, maybe without the best return. So um I think the the challenge of technology specifically, which I think is what you're talking about here, and knowing when is the right time, it has to be a very deep, comprehensive conversation with the board, with management, with outside advisors. I think you have to be very holistic in terms of making sure you have as much information on the technology, the adoption, your competitors, the risks. Um, and then we'll again I go back to will your investors understand what you're doing and why? Because if you, even if you, if you're a public company and you make a big bet and your investors don't understand why you're doing it, you're not gonna have the ability to use your stock or your, you know, other types of uh currency to execute the plan because they're not gonna trust it. So I think um making sure you really understand why you're doing it, what the risks are, and how you're gonna mitigate the risks, the risks are really important. Um, that being said, I think the last four to eight years of you know regulatory change is just really hard to wrap your head around. I mean, uh, you know, we just recently saw the end of fuel emission, uh fuel emission mattering. I I I can't, I don't even know what to say there. I mean, um how how think about every dollar that's gone into making cars more fuel efficient. Now, I personally think that's the right thing for a planet and our the population of our planet, but um, when regulatory uh moves come in and throw a curveball in, that's a great example of a curveball. Um, were you right or were you wrong to invest? You know, and and you might uh you might have used capital that you would have done, you would have used differently, but on the other hand, maybe all your employees and all your customers appreciate the investment that you made because they do believe that fuel emissions um matter for the the atmosphere and the ozone and the planet, right? So there are a lot of different ways to think about what success, what defines success in terms of investment in these new technologies.

Philipp Willigmann 17:45

Let's hit the pause button for a second. Karen is introducing a great concept, the Pioneer's Tex. For CVC innovation and MA leaders, this is a call for discipline, patience. Sometimes the highest return of investment comes from being the fast follower who acquires the pioneer's assets for cents on the dollars after they have done the heavy lifting. And now back to the show.

Steve Schmith 18:12

Well, it's so interesting. I mean, even the customer incentive piece that dropped out of the electric vehicles market right here as a with literally the swipe of a pen, the demand was so negatively impacted. And it's just an interesting sort of view from what happens on the public sector, the government, the regulatory side, and how corporations, public or private, and their leadership and their management boards have to navigate all that. It seems, it seems pretty different, and or at least something is changing now. And I do, and I've seen some recent conversations on boards just getting back to focusing on shareholder value, um, you know, whether it's near-term or short-term. And um I'm wondering if you're seeing any trends in that and sort of changes in that regard.

Karen Francis 19:02

Well, I don't think we ever lost sight of shareholder value. I think every public company board and executive and management team is quite focused on creating um maximum shareholder value. But at the same time, I do think there are other constituencies that you can define as shareholders. I do believe that employees are shareholders. I believe that customers are shareholders. You know, there are a lot of other constituents that need to understand, uh, buy in and admire what you're doing. So um I think, and and I I actually believe that many, many, and if not most companies understand this and are very focused on trying to do the best they can for all those audiences. That being said, wow, is it tricky? It's gotten very tricky, you know. Um uh we're we're um interestingly, maybe more divided or more apparently more divided as a country, if I just focus on that. And can you is something that you say going to please everybody? Yeah, that would be challenging at this point in time. And so I um I have a lot of uh compassion for the challenge that CEOs face, that leadership teams face in terms of you know doing the right financial thing for the company and for the financial investors, but at the same time making sure they are understanding and committing uh appropriately to their other constituencies, their employees and their customers and the you know, the broader reputation of their company. Very, very challenging right now. And I think um I think we all need to um step back and understand everybody thinks, you know, being a CEO is a really great, fun, awesome. Look at them, don't they have a great job? They do. They have a lot of responsibility and they've achieved a lot through their career to get to where they are. But man, imagine being that person, right? With all the the um the stressors that go with that position today. Um, I think they're all they've always been there from a financial standpoint, and can you deliver the results? But um, the position of running companies today has gotten very intricate in terms of um taking stands or not taking stands, and how do you um how can you uh deliver appropriately to all these different uh constituencies? So it's a it's a tough job, and I have a lot of respect for all the CEOs out there.

Philipp Willigmann 21:46

Karen, in in um our recent summits uh we have been uh hosting in in Europe uh and in the United States, we bring together innovation, corporate venture capital leaders, chief strategy officers. Uh and there's always this question, um, how much does the board actually get into the organization, right? What is really the difference between you know the role of the board versus the CEO? How much do you get into the management? And uh specifically when it comes to long-term transformation, right? And you know, the innovation function or strategy function trying to make the bet for three, five, ten years. Can you share with our listeners kind of like really where do you where shouldn't you cross the line uh when it comes to board versus management?

Karen Francis 22:32

Sure. Well, great, great question, Philipp. Um, and as a um prior CEO, I'm quite um alert to that uh line. Um and I actually think having had that experience myself helps me understand that line, right? I know what I wanted my board to how I wanted my board to weigh in or not, or help me or not. Um, and I um am very um respectful of that line, and I personally um see it, and I make sure that the boards that I lead also see it. That being said, the board does need to understand um the business, the transformation, the risk in a way that is helpful and at the same time provides proper governance. I do think that it puts the burden on the board, the board leadership, I go back to that as well, to make sure that the board itself, the individual members, and the collective group are educated and informed about the business, the topic, the competitors, um, making sure we create the type of experiences that um experiences, speakers, reading, in-depth um exposure to the business in a way that when we are presented with a business plan, we're smart enough to know what is being asked and what is being um presented as the path for the future. I think it takes more time than ever to be a board member now, especially because uh, you know, many, much of this is uh laid upon a foundation of technology transformation. And not everybody had a tech career or you know, went up through the ranks in that way. So it takes more commitment and investment of time to learn and to be informed. And I think that that's incumbent upon the board members themselves, but also the board leadership to make sure that the board is fully informed to know how to provide the insight, provide the the suggestions, provide the challenging questions. That's a really important role of the board to challenge. You need to challenge management. You need to know that they know what they're doing and that they know what the risks are.

Philipp Willigmann 25:06

Thank you very much, Karen. And and you we spoke a lot about you know trends. Um, you mentioned autonomy, you know, 10 years ago, we all thought it's happening. Uncertainty is a big topic, and we don't have all the information um uh available anymore. Uh, and also, as you said, uh within a year, policies change and uh yeah, the whole ecosystems um are different. How you know how can a board without having the right information still make moves ahead? And and and what are some you know lessons you've made or learned to make yeah, decisions, even though you don't have perfect information and ensure you can, you know, you can create the future?

Karen Francis 25:50

Well, um let's see, I I would say importantly, you have to feel confident that your um long career, you know, it's very most people on boards have had long careers in some way, um, that your long career and your set of experiences that you've had have enabled you to be wiser, um, smarter, understand fact, uh, understand fact patterns, recognize patterns, and feel that you're confident in your own ability to contribute. Um so I I think you had you have to feel that you know what you're doing in a lot of ways, because if not, you're gonna feel nervous about a lot of things. And we've all in our careers had situations where we've had to make risky decisions and they've some have worked out well and some haven't. And for the ones that haven't, did you learn about it? Did you learn go back and learn what went wrong and acknowledge that you what you missed and made a mistake? So I think that takes a sense of confidence. I also think it it requires a lot of experience. When we um recruit new board directors, we look for people who've had a very broad array of experiences. They and that doesn't mean you have to work for 20 different companies, but did you experience good times, bad times, acquisitions, not acquisitions, starting new businesses, firing people, like as much experience as you can to have around the board table, I think is um incredibly valuable for these risky situations because invariably someone will say, wait a minute, I've been through this. I this is what happened, and and I saw these things and I and I missed these three things when I went through it last time. Let's not miss these three things now. And it's that aggregation of experience that is incredibly valuable. And I think why boards exist. Um, and I think to have uh a board that's only one flavor, one uh set of uh career uh description is narrow and not as helpful to a company. I also think that um, you know, there's this word called trust. And I think that we have to trust that our management team is doing the right thing. You know, everyone says the number one role of the board is to hire the CEO and make sure you have the right CEO. You have to trust that that person knows what they're doing, that they lead a great team, that they're open to hearing uh bad news. God, I don't want a CEO who doesn't want to hear bad news. They have to hear bad news because otherwise, you know, it's happening. You've got to know, right? So you have to trust that the people you have in place are good, that they're doing, that they're what they're proposing to execute and that they're executing has all the best intentions and that they um are willing to admit when something's not going well and and uh revert or you know, pivot. Um, and then I think you also have to trust the people around the table. I have to trust my fellow board members. I have to trust their motives, I have to trust their knowledge, I have to trust their commitment, I have to trust that they read all the materials and that um they come to every conversation or every meeting informed and willing uh and focused. So I think those are some things that I, some words I think about when I um think about your question, Philip.

Steve Schmith 29:32

And all I think immensely harder in the pressure that comes with some of these large-scale transformations. I'm curious, in the midst of all of that, and in the midst of these, there's the pressure and the ongoing transformation in your experience, what tends to maybe fail first? The strategy, leadership capacity, constituent buy-in as you've described it, right? Employees, customers, shareholders, the board itself, somewhere else? Where do you tend to see the strain first in some of these transformational journeys?

Karen Francis 30:06

Um probably time frame, right? We all want instant results. We all want to know that the decision we made last quarter is working. And sometimes transformation takes years, right? So can can everyone stay with the plan uh and see through the the hills and uh you know the ups and downs of any transformation and not lose confidence and lose faith in a valley. I think um, you know, making sure that we understand that there will be uh it's not going to be a straight line. No trans no transformation is a straight line from here to there. So there's going to be a lot of um feeling, a lot of uh quarters of great, we're awesome, it's fantastic, and then oh my God, what just happened? And I think um making sure that I'll say the collective team, and in that I do mean management and board together, um understand that there are going to be um ups and downs, and knowing when a down is really a problem as just versus just part of the process, right? And I and making sure that we don't um retract when we really shouldn't, you know, you you have to get through um, you know, you're you're in the Midwest, Steve. I'm gonna go, you're getting through a lot of snowstorms to see to the other side. And you know, the road is still there and it's still going, but it's it might you might lose some visibility from time to time. And I think having the um confidence, I go back to that, have confidence to know that we have all the data, we know what's happening, and we um are not going to be dismayed by some you know shorter term um fog. I think that that's important.

Steve Schmith 32:11

Yeah, all driven by the trust that you described as well, I'm sure.

Karen Francis 32:14

Yes. Yes.

Philipp Willigmann 32:17

Um, what issues are board chairs spending the most time on and averring about? So that that myself and other uh chairs can better prepare for the role?

Karen Francis 32:28

Um I think, you know, prior to being a board chair, I was board director, board member. And um I watched how agendas were set and um you know the the meeting itself would be led by the board chair, the board chair would have the best, closest um uh relationship with the CEO. All very apparent, visible things. Um, once I became a board chair myself, I realized there's so much more behind the scenes. There's so much more. Um, and it takes uh a fair amount of time and commitment and heart, I think, to be a very good board chair. Um, part of that, there are a lot of different angles. I probably spend hours on it, but I'll just give I'll just uh say a few. The first is uh the relationship, your relationship with the CEO. And do you have an open relationship where you can both share things that you think are going well and not going well in a way that each other knows in their heart you want only the best thing for the other person? And I think without an open collaborative relationship, it's very hard for the board chair and then the board to really build that sense of trust with the CEO. And so I think the board chair has a big role in that. I mean, on my board, where I'm uh the chair, I speak to our CEO every week. You know, I I joked at our five-year uh party that I might talk to him more than I talk to my husband. Um, and I think building that sense of shared purpose is very, very important. Um, so that's that. Secondly, I think um building the board itself, making sure you have the right people at the table is a big um uh part of this job. Um, I had a pure gift of being able to have a lot of say in the uh composition of my current board because we were a spin-out of another company and I was brought on before the spin, so I was able to do all the recruiting myself. That doesn't happen often. But the board chair and certainly the nomgov chair have a lot of uh say in who is in the room. And I think spending a lot of time and making sure that the fit is right and that um the skill set is right is very important. Um, and then I think the board chair also sets the tone of the meetings and the interaction. Um I always go last in terms of giving my opinion. Um, I know that part of, while I certainly have opinions about what is going on, I know part of this role is making sure that all directors are heard and acknowledged. And wouldn't that be silly for me to go first and give my opinion first? Um, I think that my uh role is to aggregate, collaborate, bring together, this is what the collective board is saying. Um, is that is that right? And and double checking with everyone. I try very hard to talk to each board member in between all the board meetings to get the sense of what's on their mind, what questions do they have, what are they concerned about. That all takes time. Um, but I think that all of that is not only knowledge building, it's relationship building. And um I think the best boards are the ones that are led by uh people who feel that the relationship between each member is important. We're not just strangers who walk into a room and sit down and try to act and sound smart. Um, we are there to collaborate as a team and to help each other and to help the company. And I think um the board chair certainly plays a big role in how that board collaborates and how they operate. And, you know, part of that sometimes is uh having to give bad news. Sometimes there are directors who either their contributions are outdated or their contributions aren't appropriate or their contributions are too much. Um and, you know, sometimes it's hard to um have those conversations. But again, I think that's part of the role.

Steve Schmith 37:00

So powerful.

Philipp Willigmann 37:02

Absolutely powerful. Thank you. Thank you, Karen. Um, so kind of last question, we asked them to all the board members we had on the show. Um, and really love to hear your love to hear your thoughts, um, even though it's a difficult question. Um, but but but from a board perspective, what is one thing you think boards need to be more prepared for um in the future? Um and um why why do you think that? What what what's your what's your thought on that?

Karen Francis 37:37

Can I have two things? Absolutely. I'll say I'll say the two things. One is uh just you know the the ongoing, insanely fantastic uh developments in technology and what that means to the company and all of our operations. I mean, you know, I was uh 20 years ago, the internet was was a business division. That's so funny to think about today. Everything we do is technology and you know, the onslaught of AI and what that is going to mean for companies. Wow, we we we have to be really um opening our brains in a way that we probably hadn't um had to necessarily at the board level. And then secondly, would certainly be the importance of the constituencies on business, right? It's not just did you make your forecast, did you sell as many widgets as you said you were going to sell, and did you get the profit that you thought you were going to get, and therefore did is the Wall Street model aligned with your with your revenue and profit results? There's so many other factors now in terms of brand, what your brand is, your company, your people, uh politics, um uh, you know, global government affairs used to be a position that somebody on the third floor had down the hall. Now, you know, government affairs is a topic that's in the boardroom, right? So I think uh the holistic nature of all the different factors that affect a company are now affecting the board. And the board needs to understand and uh weigh in as as much as we can to help the company.

Philipp Willigmann 39:29

Karen, thank you so much for your time. Um, excited to have you on the show. And uh I look forward to many, many more conversations.

Steve Schmith 39:36

Karen, I just want to say thank you for joining us on the show as well. Very powerful and very insightful. And uh thank you for taking a few minutes.

Karen Francis 39:44

Well, thank you for uh inviting me. I'm glad to be here and uh great to see you both.

Steve Schmith 39:50

Philipp, it's interesting that what Karen is pointing out here is that innovation is a function of capital allocation timing. Being right too early is functionally the same as being wrong. So, in that context, what are some questions our audience can take back to the office, can take back conversations with their peers and leaders?

Philipp Willigmann 40:14

Thank you, Steve. Such an insightful conversation and really honored to have Karen on the show. And I think she pointed out again three very important points which our audience can use to double check if their organizations are ready. One, I love the lamb assessment. Are we risking becoming a sacrifice a lamp for overinvesting in tech cycle that hasn't yet matured enough for us to win? He's talking about the opportunity cost, which leads to a question everybody should ask around what is the specific cost of not doing this deal? And does that cost actually outweigh the risk of the capital deployed? And then again, last but not least, the currency check. Is our investor Y clear enough that the market will support our next major MA pivot or investment in new technology? Or is our stock currency too fragile for the term?

Steve Schmith 41:16

What Karen showed us is the risk of a wrong bet. But what if the storm hits after you've already placed your chips? In our fourth episode, Barry Salzberg, former global CEO, explains why the innovation spigot is the one thing you can never afford to turn off. Join us for part four of Boardrooms in Transition, a special series from Inside CVC.