Governance as a competitive advantage

Intro/Outro: Welcome to the Corporate Director Podcast, where we discuss the experiences and ideas behind what's working in corporate board governance in our digital tech field world. Here you'll discover new insights from corporate leaders and governance researchers with compelling stories about corporate governance, strategy, board culture, risk management.

Digital transformation and more.

Dottie Schindlinger: Hi everybody and welcome back to the Corporate Director Podcast, the voice of Modern Governance. My name is Dottie Schindlinger, executive Director of The Diligent Institute, and I'm joined once again by my amazing co-host Meghan Day strategy leader here at Diligent Meghan. Happy New Year. How you doing today?

Meghan Day: Couple days in and we're already into the thick of it. I'm sure our listeners would agree.

Dottie Schindlinger: Honestly, I've seen so many memes about 2026. I don't enjoy this free trial. I wanna unsubscribe. It's been a crazy start to the new year, Meghan. I don't even know. I don't know why we thought it would be any different.

Seriously, I don't even know which headlines I actually want to talk about, I kind of don't wanna talk about any of them 'cause the headlines are so dire. I will say, we had a great opportunity to speak to Anddria Varnado, who is a longtime friend of both Diligent and the podcast.

She was a guest back in 2020. She's use to be a member of the advisory board for Diligent Institute. She's an amazing, accomplished director who also is a current operating executive. And so it's always cool to talk to her because she sits on both sides of the table wanted to pick her brain a little bit on if it was up to you to design what governance should look like, what should it look like?

And she had an amazing answer to that question, Meghan. So you know what? 2026 can go pound sand. And instead, I would much rather focus on the future of corporate governance with people like Anddria.

Meghan Day: Exactly. Well, let's give it a listen. I'm excited she's back on the show.

Dottie Schindlinger: Joining us on the Corporate Director Podcast today is Anddria Varnado. Anddria serves on the Boards of Pattern Beauty, Red Robin and Columbia Bank. Anddria, welcome back to the show. Thank you for having me and happy New Year. It's so good to have a returning champion. We always love it when people join us back on the show.

So before we get too deep into our conversation about what's gonna happen this year on boards, let's start by learning a little bit more about you. Let's hear a bit more about your career background and how you came to serve on all these great different boards. I

Anddria Varnado: am very fortunate to enjoy what I do, both on the business and governance side.

I am a business operator and a board director, and I've spent the last several years modernizing and transforming iconic consumer businesses across categories, so companies like Williams, Sonoma, Macy's, and Kohlers. In some cases, that means work has led to launching new brands or growth platforms alongside legacy businesses.

When we talk about my evolution and my path to the boardroom, it was really the combination of these roles that gave me both the expertise, the governance, and the understanding of board dynamics to position myself for a board role to help continue that from a governance perspective at an enterprise-wide system.

Dottie Schindlinger: Well, and I think you're such an interesting person to talk to, Anddria , because you're both an operating professional and a board member, and so you have that kind of unique dual lens, right? You're sort of there in the operational role and you're also in the boardroom. I'd love to talk to you because I think the last time we had you on the show was 2020.

That was quite a year. So a lot has changed. So I'd love to hear your thoughts now about how the role of the director is evolving. I mean, maybe reflect a little bit on how that's changed for you personally.

Anddria Varnado: This is such an important question, Dottie, and it's amazing when we look back at 2020 because both in life and business, I think many of our lives have changed significantly.

And as such, businesses have changed to adapt. Boards have had to change to adapt, and the role of the board director naturally has evolved meaningfully. Many boards aren't just governing for stability and incrementality anymore. They're governing for continuous transformation, and that's what we've seen since 2020.

Even past the pandemic. We have navigated overlapping disruptions, supply chain inflation, technology acceleration, geopolitical. And as a result, boards are spending less time validating plans and more time pressure testing assumptions. And so since 2020, from a board perspective, that's raised expectations for directors, we have to bring deeper fluency and technology and business models.

We have to bring a broader view of risk that includes resilience and reputation. And we have to take a more active posture as thought partners to management. Context and all of this still matters of course, but the bar for rigor and engagement has clearly risen.

Dottie Schindlinger: Anddria, that's so well said. I mean, honestly, I can't agree with you more, right?

It's just, it's been such a tumultuous cycle, these last five years, and there's so much more pressure on boards. It's interesting. We do the Director of Confidence Index once a quarter and we do the what directors Think report once a year. Our latest research from Diligent Institute shows that directors are now feeling a little bit more optimistic, cautiously optimistic.

They were feeling very, bearish about things all last year, all 2025. And then the final director confidence index that we did at the very end of the year showed a little uptick. And so I wanna talk to you about some of the things that they told us. They're focusing on deploying AI growth through mergers and acquisitions.

How does that align to what you've been hearing? What are some of the biggest trends on your mind for 2026?

Anddria Varnado: Well, again, this is such a salient point and I would lean more towards cautious than optimistic, even though we'll put those two together and these are the right things to be cautious about for both the technological and economic period we are currently in.

AI and growth opportunities, most likely through m and a, just given the ability to be able to move capital in the position businesses are in. These are both front of mind. So on the AI front, many boards have moved past asking what can AI do for us? All the areas that we can pull it in. But really asking where does it create durable advantage?

Because I think we've all seen the. Increase number of companies that are participating in AI initiatives, but frankly, a lot of people can't really communicate what that really means for them. And so there's a really big governance question about for us in our specific industry and our business and what's important to our customers, where can we gain an advantage?

Where do we need to lean in versus where might not be as important to us? And I think those are really important questions to ask on the m and a front. As I mentioned, interest is returning for a number of reasons. One, businesses are just in different positions where they might be willing to consider some m and a where they haven't in the past, and then also capital becomes a really interesting place.

One of the things that I'm excited about 2026 we'll get to later is how companies are thinking about. Capital allocation, how boards are supporting them, how we're seeing them be more creative. But in general, there's greater discipline around capital efficiency, integration risk and value creation. So I'll add on to a couple of your 2026 themes that stand out to me.

More selective growth with higher conviction. Increased focus on operational and financial resilience and a board composition that reflects the real operating and industry experience of companies. There is optimism, there's caution. It's earned. It's grounded in realism.

Dottie Schindlinger: That's super helpful. Thank you.

That's great to break it down that way. Let's talk a little bit more about how things are shifting. I mean it, you know, the business landscape, dramatic shifts over the last five years. I think it's really tempting to take a minute and sort of imagine if we had the opportunity to build a new company from the ground up and do it differently.

What would it look like? And so I'd love to ask you that question. If you had an ideal company, what would the governance structure look like? I'd love to have you answer this question because you've been on both sides of the table, right? You've been the operating executive, presenting to the board, talking to the board, trying to get things from the board, and you've been the board member asking questions, probing management, trying to find out more information.

So how would you set things up to maximize long-term performance and resilience?

Anddria Varnado: You know, this is a great question again because we can imagine it's the beginning of the new year. What are our New Year's business and board resolution? But if we were to imagine this new company, you know, I'd start by saying we've learned a great deal over decades of corporate governance, and I'm proud of the evolutions we've seen.

When I think about some of the biggest changes in governance, they have been shaped by moments of crisis or extreme transformation that have made governance stronger. So if we had the opportunity to update our operating processes as far as governance, even further, I designed governance. In many ways the same way I design businesses with clarity, adaptability, and long-term value creation in mind.

I'll think of three things that I'd share with you, but this is probably not all of it, but I'll share. These are the top three things. So first, an alignment with the board on values, risk appetite, and capital priorities with a clear view of all stakeholders. And so when companies make disciplined choices that are genuinely better for customers, employees, and partners, that creates a virtuous cycle that strengthens the business and over time.

Delivers durable shareholder values. So the focus is actually viewing the company through the view of all stakeholders and building a board and governance processes that values that perspective. Second is board composition. I build boards around capability and pattern recognition, not just titles. So we're bringing together functional industry market and other experts and leaders with deep industry fluency alongside those who are in the forefront of emerging businesses and channels in many ways.

You can't govern what you don't understand, what you can't see, what you can't empathize with it, whether it's new platforms or evolving customer behaviors. I use the example of the $60 billion global social commerce channel, like TikTok, shop boards need real fluency in what is currently shaping their markets.

And this is not about age, it's not about tenure. It's really about. Can you look at these opportunities to understand, to govern them? So that's where I start to think about board composition. The goal isn't sameness. It's a collective relevance to what the company's specific strategy and markets need and what their realities are.

And then the final piece, which I think is just really important as the board continues to evolve, it's embedding learning into governance markets, technology, customer expectations. They evolve way too quickly for static models, so effective boards need to intentionally build in. This ongoing exposure to these external perspectives and emerging risk.

None of this is radical, but it is simply about being proactive, and I think that's what allows companies to perform and compound value over time.

Dottie Schindlinger: That's such a good and practical approach, Anddria. So let's talk a little bit more about where we can take things from here. We hear from directors constantly that they want less presentation and more time for strategic discussion in meetings.

That's, you know, a common refrain. It's been that way for a very, very long time. Not sure why it's not getting better. Seems to be the most common complaint is we don't spend enough time in strategic discussion. So if you could Redesign the typical board agenda from scratch, what would you add? What would you remove?

How would you shorten it to make more room for a strategic conversation? What would you do?

Anddria Varnado: So, I do wanna acknowledge the point about, reporting and. It's a great intention that in many ways has taken a different direction because we've talked about measuring what's important, and over time everything became important.

So we're measuring it all. We're recording it all. But also, you know, one of the things that I've learned is two people can look at the same number and interpret it differently. So I think one of the things is when it comes to reporting, it's not just a readout. It's about looking at. An item, a metric or something together and saying, well, how are you looking at that?

You know, if you are management, why are you reporting this? What's important? What are you seeing? And then we can have the discussion, and I think reporting becomes more of a catalyst for discussion rather than an end point or a readout. I'd also move on to your point around this forward looking strategy and pressure testing assumptions.

I think supporting these concise materials with clearly surface decisions and risk, and so having. Maybe shorter presentations if you need them. More discussion, more intentional. Time around talent and succession. More discussion around what's on the forefront, what's coming, what could ultimately shape our business.

I think really focusing on the key points of the business, what's been done, where we're going and why, and having that discussion along with clear action items. And so less content doesn't mean less rigor, it just means a better use of the board's collective judgment.

Dottie Schindlinger: Do you have maybe a couple of very concrete steps that boards could take to get a little closer to that ideal state?

What would be some simple, quick, practical things they could do to get closer to that vision?

Anddria Varnado: Sure. First conduct a board skills and time audit, not just to who is on the board, but how is time actually being spent? And I think that goes all the way to chairpersons, to management, to individual committee members, especially if we go back to that comment about reporting versus strategic discussion.

Looking at how and where time is being spent to be able to say, is this what we want? Is this the outcome that we want? And then second, and I think this is a partnership with management, I wouldn't have this be board led, but make sure you're piloting one or two strategic deep dives each year. I know many boards, they do an annual strategy review, but at this point in time, going one year before the next strategy review can be really difficult.

And so you might do that. Continuous strategy review annually, but then also adding points in time where you check in specifically on the strategy, the long-term goals, what's working, what's not working, what's need to change to keep it slightly more real time. Again, I wanna like decipher and discern that there's a difference between what management doing is boards thing.

So we don't need the board in the strategy every two weeks because strategy is a long-term view, but making sure that we're, we're updating and having the discussion frequently, especially as our circumstances are changing.

Dottie Schindlinger: So I wanna ask you another question here because, it occurs to me as you're speaking that there's a lot of things that we call best practices in governance that may not really be, there's no data to back them up that they're best practices, they aren't really great.

So are there things on your list of pet peeves that are called best practices that you think might really be holding boards back?

Anddria Varnado: I wouldn't necessarily say I have any pet peeves because I appreciate the thought and rationale behind a lot of these items, but I would say that to some degree when it comes to these materials, there's a standardization of some things of like, well, we use this.

Let's just update this process. Or So-and-so's using this. Let's just go with this. And I think. When it comes to the materials or the cadence or even the agendas that can crowd out real discussion and especially time for real discussion. One of the things as far as best practices, I would say, is just update your materials to the structure of the format that leader or that board needs to be most effective.

Best practices, like most things should be used as a starting point, not the end state. I love that.

Dottie Schindlinger: Well, before we, turn our attention to my three favorite questions, I'm gonna ask you anything that you have a sort of final thoughts to leave our audience with about the future of corporate governance and how to navigate this moment of crazy change that we're living through.

Anddria Varnado: Well, when it comes to navigation, I would say stay curious rather than defensive directors don't need to have all of the answers, but we do need to ask sharper questions and earlier do the research understand. Spend time with the customer in your segment in your industry to find out as much as you can.

Because in this environment, governance quality is becoming a competitive advantage, not just a safeguard.

Dottie Schindlinger: Alright, well, before we let you go, Anddria, there are three questions that we love to ask every guest that joins us on the show. These might be familiar to you 'cause I think we probably asked you these same questions back in 2020, but I bet the answers have changed.

So first question is, what do you think will be the biggest difference between boardrooms today and 10 years from now?

Anddria Varnado: Boardrooms will be more dynamic, more data enabled, and more comfortable engaging earlier in uncertainty. And just the quick context is I think the COVID Pandemic taught boards a great deal about how to govern through ambiguity, how to move faster, ask different questions and support management in real time as boards continue to refresh with directors who lived.

Through those operating environments, that capacity and that capability will only strengthen. And so we will see various formats of boards. We will see meetings continue to move virtually in different locations. We'll see agendas change. The core duties won't change, but how boards fulfill them.

Absolutely will.

Dottie Schindlinger: And earlier you mentioned the importance of board education, so I'm very excited to ask you this next question. What was the last thing that you read or watched or listened to that made you think about governance in a new light?

Anddria Varnado: Interestingly enough, it was a press release that a company put out and this company specifically, talked about where their strategy was headed in a really high level way, but it was enough that sparked me to say, this strategy is different from what I've seen or heard anywhere in the industry.

And so I started to double click into that and look at their business model. And what I've seen is. A few companies, they're making significant shifts in their business models and it's signaling a different change. It prompted me to look more closely about how their board in this particular company was supporting this level of innovation, how they were navigating capital to support it, how they were supporting the bets of the leadership and CEO.

And so it reinforced something that I've seen consistently is that governance can be a differentiator. For strategy. Not that the board is creating the strategy, but how they support and engage in the CEO so you can learn from anywhere. So the press release was actually the spark of, something different for me this year.

Dottie Schindlinger: And finally, Anddria ,what is your current passion project?

Anddria Varnado: Dottie, as you and I were catching up outside of the podcast it made me think about something around my passion project is that this year it's not quite a resolution, but I've committed to learning different things. I've personally found that whether it's in business or in life, when I am actively engaging in something different, it.

Forces a bit of change in how I think about things in other areas. So for example, a pickleball lesson might give me the space to think about something in business. And while I have learned that pickleball will not be my new hobby of the year, it has inspiRed me to continue to seek out different things of learning in different environments.

And that is my current passion project.

Dottie Schindlinger: I love that. I can't wait to find out what you land on as your new hobby and maybe your new hobby is trying new hobbies.

Anddria Varnado: That might be it. Always learning.

Dottie Schindlinger: Well, Anddria, thank you so much for joining us on the show. It's been great to have you back and great to catch up with you.

Thank you for having me back, Dottie. I appreciate it.

Meghan Day: That's a great interview to kick off the new year and really, I think, set. A strong foundational tone for what boards need to be thinking about this year.

Dottie Schindlinger: Yeah, I like too that she's just got such practical advice, right? Like, you know, just making sure that directors are taking time to get the education that they need and, continuing to be curious.

And you know how to, how to take something that a lot of directors complain about. Too much reporting, not enough strategic discussion, and flip it on its head and say like, okay, use the reporting as the jumping off point for the strategic discussion. Like how can we have a meaningful strategic level conversation about some of the numbers we're seeing?

And of course what that means is you have to be a little bit more thoughtful about what numbers you look at and, and you know, is this actually measuring the heartbeat of the business or is this just something we're reviewing? 'cause we've always reviewed it. I thought that was such good practical advice.

Yeah. The idea of doing a time

Meghan Day: What are you looking at? How is the board spending? Its time. It's a great practice to do once a year. For any board.

Dottie Schindlinger: I love this episode too, Meghan, because, like it's just good. It's good to get back to how do we do this better? Let the news cycle do what it's gonna do. In the meantime, we all still have to run our boards. We all still have to do our jobs, and we all still have to figure out how are we going to get. Growth to happen in this crazy environment. How do we make sure that our companies are resilient? I will tell you, she mentioned that she had read a really interesting press release and I wanted to press her on like, what company was that?

She didn't wanna talk about it. Later I found out what company it was, and it is a fascinating tale. I can't share the company. I promised her I wouldn't do that. But what I can tell you is it's a company that had trouble and has gone through lots of different mergers and acquisitions and is trying really hard to reinvent itself You can find lots of examples of companies that have gone through this process and what they say in press releases is always very interesting and telling, and some do an incredible job and some don't do as great of a job. The thing that I wrote down, Dottie, 'cause you know,

Meghan Day: I love to take notes during these interviews is you can't govern what you don't understand and.

It's just, it's spot on. Again, it's not about age. It's not about any of these things that are often sensitive issues for board members. It just, chef's kiss.

Dottie Schindlinger: Totally perfect. I can't agree more. It's one of those things we talk about a lot. In fact, we have a team here at Diligent, including Rebecca Sheret and others who put together educational programs for Diligent.

It's really about how do you help to uplevel your existing board and also make sure that the board composition reflects where the company is going, not where the company was. And I think that's something a lot of boards struggle with. Board freshmen can be slow, it can be clunky. Let's just call it what it is.

There's a lot of ego involved. There's a lot of people kind of clinging to board seats that maybe the company isn't getting benefit from anymore. It's not easy. I'm not, not saying, you know, sugarcoating any of it. It's all very, very hard work, but it's also important work. And I do think we're starting to see companies, especially kind of in the last half of last year, take a hard look at whether or not.

They have the leadership talent that they need to take the company where it needs to go. And that's not just at the board level, that's across the C-suite, that's across division leaders. Do we have people who are thinking AI first? Do we have people that can bring a fresh perspective in and understand the fundamentals of the business and how they're changing.

It's an important set of questions. This is a good time to do that kind of work, right? It's the new year. Your, as she said, your board resolutions. You know, how do we think about growth differently in the coming years, and how do we make sure we've got the talent we need to pull it off?

Great stuff. Well, that wraps up another episode of the Corporate Director Podcast, the Voice of Modern Governance. I'd like to say a few special thank yous, first and foremost, to our governance prognosticator, Anddria Varnado, podcast producers Kira Ciccarelli, Steve Clayton, Laura Klein, and Rebecca Sherratt.

Our sponsors for the show, including KPMG. Wilson Sonsini and Meridian Compensation Partners, and most especially, thank you to Diligent for continuing to sponsor this show. If you like our show, please be sure to give us a rating on your podcast Player of Choice. You can also listen to our episodes and find more from Diligent Institute by going to diligent.com/resources.

If you serve on a nonprofit or public sector board, tune into our sister Diligent podcast leading With Purpose for Expert conversations on governance, risk and compliance that makes an impact for mission-driven organizations. Thank you so much for listening.

Intro/Outro: You've been listening to the Corporate Director podcast.

To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about corporate governance and tools to help directors do their job better, visit www.diligent.com. Thank you so much for listening. Until next time.