NACD Directors Summit 2024 and the Institute for Real Growth (Day 3)

Role of the Board in Stakeholder Value Creation

“It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult.”  — Seneca the Younger

Day 3 of the NACD Summit put a spotlight on stakeholder value creation, driven by the insights from the Institute for Real Growth (IRG) and an amazing panel led by Lara (Livingstone) Lee . As businesses navigate an era where intangible assets like human capital, culture, and innovation define long-term success, boards are challenged to rethink traditional measures of value. A striking reminder of this shift can be seen in the changing composition of market value: In 1975, tangible assets represented 83% of the S&P 500’s market value. By 2020, that number had plummeted to just 10%, with 90% of value now stemming from intangible assets (employees, culture, innovation, IP, suppliers, community). This shift underscores the importance of aligning board strategies with a broader, more human-centered definition of value.

"Value creation includes both producing economic benefits today and growing the capacity to produce those benefits into the future. Boards should be asking how both kinds of value are being created, not just FOR stakeholders, but WITH stakeholders. When we grow the whole pie, every slice gets bigger." --Lara Lee

Understanding Stakeholder Complexity

IRG’s research emphasizes that today’s most successful companies manage stakeholder complexity as a core competency. These organizations don’t merely respond to stakeholder demands—they proactively engage and build lasting trust across diverse groups, including customers, communities, investors, and employees. High-growth companies that excel in this area understand that creating value now requires a balanced focus on both immediate and long-term stakeholder needs.

Embracing Long-Term Vision and Purpose

A key theme from the panel discussion led by Lara Lee was the power of purpose-driven, long-term vision in achieving sustainable success. High-performing companies embed stakeholder engagement into their strategy, viewing it as integral rather than supplementary. This message resonated with summit insights on emerging technologies, where boards were encouraged to adopt a long-term perspective on tools like AI, understanding both its potential and risks. In an era where intangibles drive value, aligning corporate purpose with a future-focused approach is essential for sustainable growth that resonates with stakeholders.  

"If we want governance to be a value-adding function for the companies we serve, how do independent directors need to develop ourselves to think and lead differently? How must our board practices and culture evolve?" --Lara Lee

Fostering Collaborative Ecosystems

IRG research also highlights the importance of collaborative ecosystems to drive stakeholder value. Leading companies increasingly engage in partnerships across industries and with external organizations, including NGOs and government entities, to innovate and address collective challenges. Discussions at the summit on cybersecurity and digital resilience reinforced this, underscoring that resilience often hinges on collaborative efforts. For boards, prioritizing such partnerships strengthens both their risk management and their ability to drive value through cooperative innovation.

Leadership that Champions Humanized Growth

IRG introduces the concept of “Da Vinci Leadership,” where board members combine curiosity, resilience, and empathy. Leaders who model authenticity and transparency build essential trust, particularly in areas like AI governance, where ethical engagement with stakeholders is paramount.

A compelling example comes from E.L.F. BEAUTY , where leadership has embedded inclusivity and accessibility into the company’s DNA. Their commitment to “democratizing beauty” extends beyond products to fostering diversity within the company and on its board, with a workforce that mirrors the diverse consumers they serve. This approach has driven not only financial performance but also strengthened stakeholder relationships by authentically aligning corporate values with social impact on issues that their customers care about. Effective directors demonstrate that true leadership is not just about technological prowess but also about fostering a culture that values the human side of governance.

So what next for Directors?

The IRG framework for humanized growth provides boards with a strategic lens for navigating a world where intangible assets drive market value. Day 3’s discussions reaffirmed that value creation extends beyond financial metrics; it requires cultivating an organization that thrives by meeting the needs of a broad array of stakeholders to create sustainable shareholder value.

Seneca the Younger’s insight reminds directors that bold, adaptive strategies are essential to overcoming today’s complexities. By embracing courage and purpose, boards can inspire trust and deliver sustainable value creation in this new landscape of intangibles.

Tarang Amin Diane Hessan Mariana Peneva Teresa Sebastian, NACD.DC Libby Sartain Rita Johnson-Mills Paul Connelly, NACD-DC Steve Seger William "Bill" Jones, NACD.DC Ike Harris Cynthia Falardeau Beth Dailey Merin NACD Nashville Cindy Baerman African American Directors Forum Santa Clara University Leavey School of Business Leavey Executive Center at Santa Clara University Belmont University - Jack C. Massey College of Business #BCBR