Louise Smith is chair at Stripe and Innovate Finance, and global digital leader at WTW. Previously, Louise has held a number of roles in organisations such as NatWest (formerly RBS), Lloyd’s, and Barclays. Here, she draws lessons from recent high-profile bank failures, and the influence that chairs can have on organisational culture.
How can chairs get to grips with culture and make a mark on it?
Personally, I believe it’s crucial that you spend as much time with the team as you can before coming in — and the appointments process usually gives you the time and the opportunities needed to do this. You want to get to know everyone and find out both what worries them and what they’re passionate about. Fostering this candour from the start means that when things get difficult you’ll be surrounded by people who trust and understand each other. However, this takes time, so it’s best to make this investment upfront.
I’ve worked in organisations where teams experience actual fear when they hear they will be bringing something to the board. Making sure that the board is welcoming and friendly makes presenting there a less daunting task for your teams, and underlines the board’s role in supporting and enabling the strategy. I am passionate about the board being a fearless space but one of supportive challenge and open dialogue, getting to the real things that a board should care about in today's world. Even more so as we face an environment of constant change, disruption, and unpredictability. A board must flex and adapt quickly.
“A board must flex and adapt quickly.”
Another thing I’m keen on is getting feedback from the board and looking at our board (and chair) evaluations. It’s especially useful in finding the balance between leaning in and leaning out. Looking back at my first role as chair, I didn’t always get that balance quite right and leaned too far into the operational detail, sometimes at the expense of the wider picture. But, with the help of my colleagues’ feedback over the years, I think I’m much better at finding that balance now.
What can boards do to be more effective?
Build a strong foundation of respect, so that the board becomes an environment where people are comfortable saying they don’t know how something works or what it means. Sharing what they know, what they don’t know, where they need help, and where they are worried. If a Board is just a broadcast of data and stuff then we’ve added no value and failed on our accountabilities. The role of the Chair is also to listen well.
Revealing these knowledge gaps matters, as once you’ve identified them you can address them and ensure that the board is up to date on emerging trends and technology — for example, at Innovate Finance we are constantly looking at specific topics as they emerge to develop our own understanding and effectiveness. I personally believe it's not acceptable for a board to not seek to understand enough about, for example, the role of technology as it is not ‘just’ the role of the technology leader. And it also creates an environment in which everyone is constantly learning and upskilling themselves, including through making mistakes, which encourages leaving your ego aside.
What lessons should boards draw from recent bank failures?
One of the things that struck me with these recent collapses is the breakneck speed at which the situation unrolled and developed. And in all these cases, whether you look at SVB, Signature, or Credit Suisse, their failures come down to poor leadership.
“In all these cases, whether you look at SVB, Signature, or Credit Suisse, their failures come down to poor leadership.”
It’s also interesting to look at the role that social media played: the UK side of SVB was a separate entity and looked like it would be alright — but Twitter was on fire, and suddenly the UK site was in jeopardy. Seeing that made me challenge our own teams around what the social media strategy was and who owned it because I’ve often seen this aspect of the business become fragmented and suffer as a result. Social media has the power today to bring down banks, so we should take it seriously and engage with it. A question I ask constantly now, who is accountable in the organisation – if there is more than one name, I think this is a risk.
As chair, are there any golden rules that you try to follow in the boardroom?
Proactively bring people into the conversation. It sounds obvious, but there are quieter people sitting around the edges of the board who may not be as open about their views. I’m really conscious of this, and it manifests itself even in the way people sit around the boardroom table. I remember one board where all the women sat on one side and men sat on the other — it wasn’t like they had walked in that way all at once, but they separated themselves that way as they sat down. As chair, you’ve got to be sensitive to things like this and peoples’ personalities to ensure that everyone’s voice is listened to and everyone gets an opportunity to contribute in a way they are comfortable with.
I also believe that to be truly effective on a board you can’t just leave your life as an executive behind you. Especially today, with the pace of change being as it is, business models are shifting rapidly in the wake of new technologies and the opportunities they open up. Maintaining executive roles alongside non-executive roles helps keep me grounded and focused on what’s happening in the industry, in turn making me a better board member.
“I also believe that to be truly effective on a board you can’t just leave your life as an executive behind you.”
Fundamentally boards have key accountabilities, and the Chair is an absolutely privileged role. We should be held to account by the teams, customers, investors, regulators, and also ourselves. I think we now have the opportunity to evolve how those roles support businesses and the industry in an environment that dictates flex and change. It goes well beyond the metrics and KPIs to embed it into the culture.