Diversity of background and experience is critical for Boards. There are so many different challenges that companies face and so many constituencies that are important for their success that having a board with many different perspectives is a big competitive advantage. The latest evidence for this comes from a new paper showing that smaller companies do better than their peers when they put entrepreneurs on their board.
This is only one of many different important perspectives that boards benefit from having. Not many years ago, it was considered unusual to have a board member with significant financial expertise and boards now see that perspective as being essential. Similarly, as AI shows promise, companies operating in markets where that trend is likely to have impacts (autos, finance, etc.) will benefit from having board members with technology expertise.
This is all over and above the benefits of having women and minorities on boards. Even some companies who focus primarily on women, such as Pinterest, have zero women on their boards. Pinterest is a very successful private company, but is there any doubt that it would benefit from having at least one board member who strongly identifies with Pinterest's core user base?
There are many competing priorities that go into shaping the composition of a board. But one of the key themes of this blog is that boards work best when they focus on the strategic issues that their companies face. And it is very important not to let the tyranny of the urgent dictate board matters, including board composition. This is easier said than done, but there are great rewards for those who do it.