Isaacson on Doudna and Biotech: ‘This Is the Revolution That Will Most Change Our Time’

Walter Isaacson’s latest book, The Code Breaker, was published on March 9, the day after Isaacson agreed to participate in an NACD virtual chapter event facilitated by Dr. Helene Gayle, president and CEO of The Chicago Community Trust. The event was supported by Baker Botts, Lockton Cos., and Bank of America Corp.

Isaacson is a professor of history at Tulane University and a board member at United Airlines Holdings, as well as the former CEO of the Aspen Institute, chair and CEO of CNN, and editor of TIME magazine. Highlights from the conversation between Isaacson and Gayle—a physician and director whose board service includes roles at The Coca-Cola Co., Colgate-Palmolive Co., GoHealth, Palo Alto Networks, The Brookings Institution, and the Center for Strategic and International Studies—follow.

You’ve written about some incredible people. Why did Jennifer Doudna’s story make such an impression on you and why did you feel that this was a story that needed to be written?

I wanted to do the biotech revolution. This is the revolution that will most change our time. It will be more important than the digital revolution because instead of hacking digital code and giving us things like iPhones, we’ll be able to combine that with the ability to read, and even rewrite, the code of life—our genetic code. Also, RNA has turned out to be more important than DNA. RNA is at the heart of these [COVID-19] vaccines that we’re all hoping to get. I was looking for a way into that story. Back in 2000, all the men in biology were focused on DNA and the Human Genome Project, but a group of women who had almost been excluded from the Human Genome Project focused on RNA and that was Jillian Banfield, Jennifer Doudna, Emmanuelle Charpentier, I could go on.

Jennifer Doudna discovered the structure of RNA, how it can replicate itself, and that it was the molecule that began life on this planet. Through her life, I got to look at RNA, and then she and Emmanuelle Charpentier are the ones who invented this tool for editing genes called CRISPR. Finally, she decided she had to take on the moral issue—the humanity issue—of how we should use this technology. Those of us who are in boardrooms know that even when you have a product or some idea that’s going to work, you pause at a certain point and ask, How can we make sure this is used for good, and that it doesn’t cause any harm?

What did Doudna bring to CRISPR in the way that she collaborated and worked?

She made sure that everybody who came into her lab or into the company she was working at met everybody else and that they got along and clicked, that they were able to be very collegial with one another. I said [to Doudna], “Some people I know who are great leaders like having creative tension. They like having people with sharp elbows fighting each other because they think that leads to more innovation.” She said [paraphrased], “I get that, but that’s not who I am. I believe in teamwork and collegiality, and people having each other’s backs, working hand in glove instead of always trying to best their own colleagues.” I think we need different ways of collegiality, different ways of competition. When you’re on a board, you don’t just look at who the CEO is, you look at the team that the CEO has built; and each CEO has a different style—sometimes they want creative tension. But in Jennifer’s case she wanted collegiality. That led to her working in a transatlantic collaboration with Emmanuelle Charpentier, and also graduate students who are in Vienna, one in Sweden, and in other places. They were able to collaborate working 24 hours a day because they were all in different time zones to win the race to discover how CRISPR works as a gene editing tool.

Talking about the nature of cooperation and the spirit of collaboration, can you apply lessons on team dynamics and leadership to business or other areas beyond science?

I went to ask Steve Jobs late in his life what the best product he ever made was. I thought he’d say the original Macintosh or maybe the iPhone. He said [paraphrased], “No, making products like that is hard. But what’s particularly important is making a team that can continue to make products like that. They said the best thing I ever did was make the team at Apple.” I began to see that teamwork was a thing and [the United States’] founders and their families may be one of the greatest teams ever put together. You need a person of great rectitude like George Washington; you need really smart people like Jefferson and Madison; you need people with high passion, like Samuel Adams and his cousin John. But you also need somebody who can make teams and that’s what Ben Franklin did. So, when I wrote about Jennifer Doudna, I didn’t just write about her scientific ability. I wrote about her collaborative and team-making ability, and most importantly how to be collaborative and competitive at the same time. Anybody who’s on a business board knows the notion of a frenemy or coopetition, or something where you’re cooperating half the time and competing half the time. That’s the hardest thing to do. We all know how to collaborate; we probably all know how to compete. Jennifer Doudna’s life story teaches us how to interweave the two.

A longer version of this conversation will be published in the May/June 2021 issue of Directorship magazine.

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Shining New Light on Human Capital

In this CEO Letter from the March/April 2021 issue of Directorship magazine, NACD CEO Peter Gleason reflects on Larry Fink’s 2021 letter to CEOs and notes that boards have a role to play in reporting on workforce issues and holding their companies and themselves accountable. Read the full issue on human capital management today.

“Despite the darkness of the past 12 months, there have been signs of hope, including companies that have worked to serve their stakeholders with courage and conviction.” So writes Laurence D. Fink, CEO of BlackRock, the world’s largest asset manager, in his 2021 “Dear CEO” letter, which calls on companies to maintain this momentum of positive change. 

Of all the stakeholders affected by COVID-19, employees are arguably the most vulnerable. Although Fink’s letter focuses on the goal of carbon emission reduction (net zero by 2050) and related disclosures, he does not ignore the human element. 

In fact, Fink says, the “E” and “S” in ESG interrelate. “Improved data and disclosures will help us better understand the deep interdependence between environmental and social issues,” he writes. Fink is a proponent of the framework from the Sustainability Accounting Standards Board, which he recommends along with that of the Task Force on Climate-related Financial Disclosures. 

Importantly, Fink’s letter also calls for more disclosure on how human capital contributes to company value. “A company that does not seek to benefit from the full spectrum of human talent is weaker for it,” says Fink. Such a company is “less likely to hire the best talent, less likely to reflect the needs of its customers and the communities where it operates, and less likely to outperform.” Therefore, he urges “company disclosures on talent strategy that fully reflect your long-term plans to improve diversity, equity, and inclusion.” Every day, I see that more companies are holding themselves accountable, releasing transparency reports and voluntarily reporting on the composition of their workforces. The board has an indispensable role to play, and NACD sees a bright future for business as we deliver on our goal to advance the knowledge of professional directors. 

All of our programs—from Accelerate to NACD Directorship Certification—are designed to support and enhance our mission to educate both current and future directors so that they are capable of leading with confidence and are prepared to meet the formidable challenges of the future, including those identified by Fink in his inspiring letter.

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Busy Director Neglects Board Duty While CEO’s Actions Raise Questions, What Should She Do?

This article was published in the March/April 2021 issue of Directorship. The scenario presented here is anonymized to protect identities.

The dilemma: Cadenza is an entrepreneur. Like many other entrepreneurs, she needed additional income to live on while she grew her business. Among other work, Cadenza provided consulting services to another entrepreneur. When that individual also ran short of funds, Cadenza was paid in equity rather than cash and given a seat on the board. As Cadenza’s own business began to prosper, she paid little heed to the business of her former client. She stopped receiving board papers and attending board meetings. Now, a shareholder from the other company has asked Cadenza what is going on there. Cadenza called her former client (the CEO of that company) and asked for an update. The news was mixed. For a while, things went well—the company successfully raised capital and gained new shareholders. Then, progress stagnated and it appeared that some company assets were transferred to the CEO, or perhaps sold with the proceeds going to the CEO before a dilutionary capital raising and before some agreements were finalized, to “reward” him for intellectual property that once belonged to the company. The CEO also said that the shareholder who contacted Cadenza had been “causing trouble” for some time, asking for information and threatening to take legal action. He asked Cadenza to ignore the shareholder and take no further action. Cadenza is now worried. She knows that she has not fulfilled her duty as a director. She is still listed with regulators and on the company’s website as a board member. How can she protect her reputation and limit the repercussions from her lack of attention?

Julie Garland McLellan, nonexecutive director and board consultant: The best way to manage the risks of directorship is to do the job diligently. Cadenza’s lack of attention to her duties as a director could have serious repercussions. She has four options:

Lie. Claim she resigned when she stopped working with the CEO and that she expected the CEO to file the paperwork to that effect. This is stupidly risky—not to mention unethical—and if unsuccessful, she will have perjury and other deceptions added to her negligence.
Stay quiet, remain on the board, and hope the CEO will sort it out. This is extremely high risk. If she allows the company to misappropriate assets, she could incur personal liability and be guilty of inaccurate reporting.
Resign fast and hope the CEO will sort it out. This is also very high risk. There is probably evidence of the timing of asset transfers, and she was on the board when they occurred.
Start doing the job. Get a full briefing of what has happened at the company, where the assets have gone, what the CEO has done, and what the prospects are for reinstating any disputed assets. This is high risk.

The fourth option, to me, is the only ethical one and the least risky. To succeed, Cadenza will need to reestablish a good working relationship with the CEO. Her duty is to the company. She must ensure that the CEO properly accounts, then either returns or pays the company for any assets appropriated and sold. She must also understand the positions of the major shareholders and the background of the capital raising.

Intellectual property is often contentious in small start-up and scale-up companies. CEOs may believe that it is their know-how; shareholders may view it as the company’s asset. Cadenza needs legal help identifying what belonged to whom and putting in place systems to control intellectual property and other assets.

Ron Heinrich, chair, Assetlink Group; director, Go Gentle Australia, FarmLink Research, Intersales Temora, Commonwealth Lawyers Association; partner, HBL Ebsworth Lawyers: Cadenza has clearly breached her duties as a director, namely her duty to exercise reasonable care and diligence, by failing to keep herself informed about the activities of the company. As a director, Cadenza had an obligation to act in the best interests of the company as a whole, rather than in the interests of a particular shareholder. She is potentially liable for damages for breach of director duties. She could also be liable to pay a steep financial penalty, as well as potentially be disqualified as a director.

Resigning as a director is not an option. In these circumstances, Cadenza should do all that is possible to mitigate the situation by taking various steps, including the following:

Formally request in writing that the CEO provide full details and copies of the documents that show assets transferred or sold to the CEO. If the CEO refuses to supply such details and copies of the transaction documents, the shareholders could turn to the courts for an order to inspect the company’s books and records.
Convene a meeting of shareholders as a director to discuss the transfer or sale of company assets for the apparent benefit of the CEO.
Recommend to shareholders that they bring a derivative action against the CEO. Importantly, the company is regarded as the proper plaintiff in such circumstances and therefore any proceeds that flow from the derivative suit would be recovered for the company.
Seek advice from a good corporate commercial lawyer as to how best to protect her own position.

Albert Froom, managing partner, Leaders Trust; global practice leader, financial services, AltoPartners: Is there a good way out of this for Cadenza or for the CEO or for the shareholder? Cadenza has obviously failed to fulfill her duties as a nonexecutive director, and by her own admission took no notice of the board packs that were sent nor did she attend any meetings as her business activity increased.

In truth, the shareholder (the investor!) who speaks up and goes to Cadenza, the nonexecutive director, after trying to get information through the CEO has taken the right steps. But until now, the things that might be wrong only appeared to be wrong, with no proven facts known yet to Cadenza or the shareholder.

So what should Cadenza do? She can still act on the rumors! She is still on the board and can fulfill her role by conducting her own due diligence—reviewing past board papers, financial statements, supporting materials, and meeting minutes that were sent to her to establish whether the rumors are true and that business was conducted in the interest of the company and its shareholders.

If she does not have the most recent board papers, she should request them from the company secretary. To reduce her reputation damage, Cadenza should act immediately, informing the shareholder that she is on a fact-finding mission and that she will act accordingly. Based on her findings, she might inform the authorities, either confirming or negating the shareholder’s suspicions. If her findings show that the rumors are true, she can explain that she was just in time but acknowledge to the authorities that she should have been more attentive, learned a valuable lesson, and pledges to be more attentive as a director. She should also consult a lawyer about possible legal actions from the shareholder, the authorities, or even the CEO. A comprehensive media statement should also be prepared that is approved by the lawyer and the board at large in the event the situation is leaked to the press.

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How Boards Can Ensure the Accuracy and Quality of ESG Data

Investors are increasingly demanding that companies provide both quantitative and qualitative environmental, social, and governance (ESG) risk and opportunity disclosures. Customers, employees, and other stakeholders have also added their voices to the call. Yet even as organizations make progress in offering this information, real challenges remain. 

Investors and others rely on ESG information in their decision-making; ESG reporting thus requires the same level of oversight and management that financial disclosures receive. This includes processes and internal controls applied with a rigor that ensures the completeness, accuracy, and consistency of disclosures. Only then are the disclosures “investor-grade.”

However, nonfinancial information does not typically receive the same level of attention as financial data and most organizations do not have a formal reporting process in place to collect, accumulate, and disclose it. Too often, companies disclose nonfinancial metrics that are not fully substantiated with supporting information, or they cannot confirm that the metrics contain no material errors. 

As boards and management evaluate their organizations’ ESG reporting, the overarching question is, How can the board ensure that the ESG data disclosed are accurate and high-quality, so that investors and others can rely on them? 

Below are eight further questions for boards to ask.

How can the board leverage sustainability standards or frameworks when considering the metrics to disclose? Frameworks and standards can help companies understand what information investors and other stakeholders are looking for and make disclosures meaningful to a broader audience in lieu of highly customized metrics that may lack comparability to peer companies.

What are the sources of the data? Information may come from various functions in the organization, including some—such as human capital, engineering, or manufacturing departments—that are not used to disclosing investor-grade data. Some of the data might be manually developed or tracked, making it harder to verify. 

What policies, processes, and internal controls are in place to ensure data quality? Companies should take a hard look at the control environment in which the data are produced. Too often, there are minimal controls in place. Effective underlying processes and internal controls around where information originates and how it is reported gives management comfort on its accuracy, completeness, and consistency.

How is the data consolidated and will we need to implement information technology (IT) system changes? To compile certain metrics, companies may need to consolidate data at a global level or from across various departments, but some organizations may not have IT systems in place to consolidate nonfinancial data. Consider, for example, having to collect data on global worker headcount, greenhouse gas emissions, or safety issues. Manually consolidating this data in spreadsheets increases risk. Some businesses may choose to improve the efficiency and accuracy of the consolidation process by modifying their IT systems to support the effort—but that comes with an investment of money, time, and resources. Another challenge might be local laws and regulations; specific countries restrict what types of employee data can be collected.

Is greater assurance needed over the data disclosed? As boards discuss ESG disclosures, they may want to consider assurance over the metrics and information reported. Nonfinancial data are not typically included in financial statements, so they may not belong under the scope of external audit’s assessment. Additional assurance that ESG processes and policies are followed and effective can be requested and performed by internal audit, external auditors, or another controls-focused function. 

What governance structure exists to review and oversee this data? As companies look at the control environment, it is important to establish a governance structure for ESG metric disclosures. Boards should understand who at the organization is responsible for reviewing ESG information and how frequently reviews are conducted. A common pitfall with ESG disclosures is that reviews typically occur only annually. If a company finds that it is missing ESG information from interim periods, it may be too late to retrieve the necessary data.

Is a management-level disclosure committee involved? Many companies have a management-level disclosure committee in charge of financial reporting. This cross-functional team—usually including individuals from operations, legal, internal audit, finance, and other business groups—helps the company determine whether disclosures are accurate and complete. This broad group of individuals understands the importance of reporting to investors and can also be utilized to review nonfinancial ESG data disclosures. The disclosure committee will want to make sure the information and metrics accurately convey the company’s messaging and are truly investor-grade.

What is the role of the board? Some boards may have a separate sustainability or risk committee, while others may designate responsibility for overseeing ESG reporting to the full board. As this reporting makes its way into earnings calls, annual reports, Form 10-K filings, or proxy disclosures, it should be viewed similarly to financial reporting. Consider the role of the audit committee, as well, which has the most experience in this type of reporting and an understanding of the importance of policies, procedures, and internal controls.

Companies are refining their messaging and expanding their disclosures to meet stakeholder expectations. As stakeholder expectations relating to not only the type of disclosures, but also to the quality of the information within and supporting them, continue to grow, a board-level understanding of how the company can produce investor-grade ESG disclosures is critical.

Maria C. Moats is the leader of the Governance Insights Center at PwC US.

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NACD, ISA, and World Economic Forum Release Joint Cyber-Risk Principles

The release today by the World Economic Forum, NACD, and the Internet Security Alliance (ISA) of global principles and metrics for cyber-risk oversight is an important turning point in how cyber risk will be understood.

Historically, cybersecurity has been conceived as a technical issue, and by extension, the management of cyber risk is shifted down corporate organizational charts to operations personnel. This has led to an almost exclusively technical or operational approach to addressing cyber risk with the hope that effective cyber-management principles will “bubble up” from the information technology (IT) department.

By almost any measure, that approach has been largely inadequate. 

According the Forum, revenues for cyber criminals this year will total about $2.2 trillion—roughly equivalent to the annual revenues of the United Kingdom. Ransomware premiums have risen from the modest five-figure sums of a couple of years ago to up to seven-figure sums now. Although the recent systemic attacks on SolarWinds Corp. and Microsoft Exchange Server were executed by nation-states (Russia and China), we know from experience that, like most innovations, the techniques used in these attacks will fairly rapidly be diffused among a wide variety of attackers. Things are going from very bad to much, much worse.

Meanwhile, enterprises have been consciously engaged in digital transformation for several years now. In the early stages of digital transformation, the focus was on using the wonders of the digital age purely as a revenue-enhancing tool. As time went on, however, the dark underside of digital transformation—cyber risk—became apparent. This and the increase in frequency and severity of cyberattacks has prompted leading organizations to appreciate cybersecurity as a strategic business issue that is part of the core business mission and intimately correlated with organizations’ need for digital transformation.

In this construction of cyber-risk oversight, cybersecurity flows downward through the business from the board to senior leadership and across a reimagined organization that treats cyber risk as an enterprise-wide issue. The principles and methodologies that the Forum, NACD, and the ISA have produced, in the new paper Principles for Board Governance of Cyber Risk, define a process for how boards and senior managers can implement their respective roles in best addressing growing cyber risks.

The NACD and the ISA have been partnering on cyber-risk oversight handbooks for nearly a decade. Meanwhile, the Forum has been operating its own program through its Centre for Cybersecurity. Happily, the three organizations found that their independent investigations yielded substantially similar conclusions, which have been fairly easily integrated in the below list.

Cybersecurity is a strategic business enabler.
Boards need to understand the economic drivers and impact of cyber risk.
Cyber-risk management needs to be aligned with business needs.
Enterprises need to ensure that organizational design supports cybersecurity.
Cybersecurity expertise needs to be incorporated into board governance.
Systemic resilience and collaboration need to be encouraged.

Although the first five principles largely echo previous publications from the three collaborating sponsors, the sixth principle is relatively new. This principle emphasizes that boards must be concerned with more than simply securing themselves and their businesses; in the digital age, modern organizations must appreciate that they are part of a broad and interdependent digital ecosystem. The size and nature of the risk illustrated by recent attacks such as those mentioned above highlight that not only are individual entities under attack, but supply chains and the system itself are subject to attack, as well. As a result, collaboration and information sharing are not simply wise policies; they are imperatives, just as environmental, social, and governance issues are. Although cyber risk needs to be addressed from an empirical and economic perspective, the needs of the greater enterprise system must also be included in cybersecurity ethics and practices.

Friso van der Oord is senior vice president of content at NACD. Larry Clinton is president of the Internet Security Alliance. Daniel Dobrygowski is head of governance and trust at the Centre for Cybersecurity at the World Economic Forum.

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