How Boards Add Strategic Value, with Gerry Murphy

Oliver Cummings: That is an extraordinary list of organizations to have sat on the boards of. I was running out of breath there. But before we talk about your board experience, I'd like to start by looking back at your CEO career. I'm intrigued to hear from you: what were the three most consequential board moments that shaped how you now operate as a board member?

Gerry Murphy: I think I would pick maybe one from each of three experiences.

At Exel, back in the late ’90s, the business had grown out of the road transport division of British Rail. It had a whole mix of things—from commodity transport to really value-added, IT-systems-driven supply chain services. It was very clear that the company at the time couldn’t do everything it had been doing or was trying to do. We had to double down and focus on one or the other kind of business: either asset-based, large-scale trucks and sheds, or value-added, systems-driven logistics. And we chose the latter.

It took several years to clean up the business and to extricate ourselves in an orderly and sensible way from perfectly decent businesses, but things that we simply shouldn’t continue doing because we weren’t ever going to be properly competitive, given our cost of capital and our scale. So I think the first lesson really was understanding (a) what you're good at, and (b) what you have a right to succeed at in the years ahead.

That often means turning your back on perfectly good businesses—even your heritage. I kind of had the same experience more recently at Tate & Lyle, when we decided as a board to double down on science-based food ingredients and effectively move away from the heritage of the business, which had been bulk foods and bulk commodity sweeteners. So it’s a theme that has repeated, I think, a few times in my career.

So I guess that’s the first: figure out what you're good at, what you want to be famous for, and what you have a right to be successful at.

In a similar sort of vein, a few years later at ITV, I inherited a position in pay TV, which had been kicked off by my predecessors in competition with Sky. The premise really was that the UK government would switch off the analog TV signal, thereby creating spectrum space for a digital signal, which was capable of being monetized through additional access—via a set-top box with an access card, in plain English. But the whole premise depended on the government following through on a policy announcement it had made sometime in the late ’90s.

The bottom line, of course, was that the decision was made eventually, but it was made 10 years later. Political expediency got in the way. And the company and its joint venture partner, Granada at the time, had made this big bet on a public policy shift over which it had no control. So lesson two was: don’t bet the ranch on things over which you have no or limited control.

The third—I'm not sure if you mentioned Kingfisher. I was CEO of Kingfisher for five years at the end of my executive career before joining Blackstone. When I joined Kingfisher as CEO in the early 2000s, the business was doing very well, especially in the UK, where it had been growing at several times GDP growth, when its history suggested that, give or take, GDP plus maybe 1 or 2% would’ve been more normal.

It was put down at the time to great strategy and great execution, which was certainly partly true. But the underlying cause of the outperformance was actually a macro factor: it was the change in interest rates following 9/11, where debt and mortgages became very cheap. Therefore, Kingfisher’s customers—B&Q’s customers, for those more familiar with the UK—had money to spare to invest in their homes. And they did just that.

So it was not an output of great strategy or even great execution—it was a macro tailwind. And in the nature of these things, they tend to unwind over time and even turn negative. And that’s exactly what happened.

So the decision we made at the time was to curtail a very ambitious expansion plan, which would’ve involved doubling the number of big stores in anticipation of continuing growth at this higher level.

So the lesson really was to be really objective in analyzing your success or your failure—and unpick those things that are down to management action or strategy, versus extraneous factors.

So those are three kind of lessons that I think I learned over those three experiences that have informed subsequent decisions in later life.

Oliver Cummings: I love that. So: figure out what you're good at, don’t bet the ranch on things over which you have no control, and make sure you understand the macro trends and are on the right side of them.

On the ITV experience—I guess we all suffer from illusions of control. How do you define when you have control? Looking back on that, presumably at the time you thought you had control, or had you just not given it enough consideration?

Gerry Murphy: There wasn’t enough analysis of different risk outcomes. At the time, the government had announced its intention to switch off the analog signal and switch to an entirely digital broadcasting environment. But if you think about it, that in turn meant that millions of people with old analog TVs would have to buy a set-top box. And that gets you straight into major league politics.

People are voters—voters who would have to invest in some new technology in their homes. Even with subsidies, getting people to adopt new technologies, new ways of living, is a challenge. And I think it was underestimated at the time just how sticky old habits and old ways of being would prove, when it came to making political decisions that involved the public.

So it did transpire. Eventually, years later, the analog signal was turned off. It’s been turned off now for quite a long time. Digital terrestrial is the only broadcast signal available—that’s been the case for a while. But it was many, many years later than expected.

And in the meantime, because the switchover hadn’t happened, the digital signal that was available was too weak to give full coverage and to give a high-quality, consistent experience to customers. So it was an inferior product with poor coverage, and that made it fundamentally uncompetitive.

Again, a lesson for later life—particularly as an investor with Blackstone—when looking at propositions that had public policy overlays. Anything that needed a government license, government decision, or enforcement obviously comes with a much higher risk than more mainstream commercial considerations. Trying to work out the behavior of competitors and consumers is one thing—it’s what we do every day. Trying to work out the behavior of governments in a political environment is a whole different level of uncertainty.

Oliver Cummings: It reminds me of the time that we were looking at investing in vocational skills training businesses that were always backed by governments. If you look back far enough in history, they would always go through these cycles: investors would come in, they’d grow very fast as government got behind them, and someone would come and pay a massive multiple. Then the government would change and pull the rug out from under them. They’d go—literally overnight—from huge success stories to being worth pretty much zero. I’ve certainly been scarred as an investor, and I’m always very wary as a board member of any government exposure of any scale as a result of that.

Gerry Murphy: Yeah, exactly that. And one saw that in this country, pretty graphically illustrated in the care sector, where there was a massive investment by the private sector and private equity into care homes—on the basis of an expectation of continued high-level funding from local authorities, which obviously dissipated when the crash happened. So this wasn’t a unique observation.

Oliver Cummings: You talked about the risk analysis at the time being perhaps underdone. In Episodes 85 and 86, we had Dan Gardner, the author of Superforecasting, who’s written a lot about probabilistic thinking. It always struck me after reading him that every board should be thinking probabilistically—understanding what the base rate of something happening is and adjusting from there.

How do you now think about risk thinking? Are you very quantitative now in the way that you go about it as a board member, or how do you approach that challenge differently from what you did back then?

Gerry Murphy: The approach that I’ve taken in recent years when thinking about strategy is to effectively adopt the private equity timeframe. Go out 10 years, and start with the industry. Look at what shape the industry might be in, in 10 years’ time. And to answer that question, you’ve got to work out how that particular industry might respond to mega trends, which are visible now.

They’re not that difficult to enumerate for most businesses. There’s going to be a geopolitical aspect. For any significant business that trades internationally, geopolitics is hard to call, but you can create different scenarios. There’s going to be a climate impact—not from an ESG point of view, but from a fundamental point of view. There’s going to be a very significant technology overlay, in terms of how customers, consumers, and competitors will behave in and around AI and the evolutions that we know are happening in technology.

So just take those three. One can create plausible scenarios—even plausible but extreme scenarios—for all three of those parameters. Put them together, and you can take, if not a mathematically probabilistic view, then at least an intuitively probabilistic view that the world will land somewhere between your base case and your more extreme scenarios.

What it does isn’t so much give you a destination, but it certainly gives you a good handle on the questions that you ought to ask now, in terms of getting the business in the most resilient shape for some of these mega trends.

So is it probabilistic in a mathematical sense? No, it’s not. I think building complex mathematical models around things that are sort of binary variables is not something that boards will spend a lot of time on. But I think having a realistic sense of where things could plausibly get to on these big parameters—and every business will have its own additional ones too—is incredibly valuable.

So for example, in the food business, one could look at the likely development of regulation as it might apply—for example, to high-calorie foods or high sugar, salt, fat foods. Just looking at the public health agendas, it's fairly axiomatic that there will be more intervention by government on a 10-year view, whether you're a manufacturer or a retailer.

Any sector will have its own particular trends that are visible today, that are likely to play out over that kind of a timeframe.

Oliver Cummings: Can you bring some more of those to life for me? That’s very powerful the way you’ve articulated that. But if we work our way through the geopolitical, climate, and technology aspects—what are the practical impacts that you see affecting the sorts of businesses that you're involved with, that are changing the way you plan?

Because for many board members, something like climate—yes, it matters on a personal level, but they struggle to see how it affects their organization if it's not a highly polluting business or one where the link is obvious.

Gerry Murphy: Obviously different businesses will be more or less exposed to some of these trends. But frankly, any business that has a big global supply chain footprint is going to have to take into account the effect, for example, of geopolitics and of climate on their supply chain. And there are likely to be related issues.

As we speak, we’ve got Trump imposing tariffs on his near neighbors and allies. Now, most of us expect those things to settle down as deals get negotiated. But the direction of travel is fairly clear—we're heading into a post-WTO world where free trade and globalization are almost certainly in reverse.

Looking at the reliability of supply from different parts of the world—reliability we've taken for granted for generations—is almost certainly unrealistic now. So on a 10-year view, boards are going to have to think about reconfiguring where they get their stuff. Instead of relying on imports from countries that may become unreliable, perhaps sourcing from countries where production might cost more but is more reliable and delivers better service.

There’s a fundamental planning aspect to this. I think Eisenhower said it—I'm paraphrasing—“Plans are useless, but planning is indispensable.” This is an example of that. Any plan for 10 years is probably going to be fairly useless in detail, but the exercise of doing it is very powerful. It flushes out some of these big questions.

Likewise, on climate—when you look at where food is grown and where it's consumed, you'd have to ask yourself: are we really going to be airlifting green beans from Chile for UK supermarkets in 10 years’ time? I don't know, but I think there’s a serious question mark over whether that’s viable. These things can become fundamental quite quickly.

And they're not about ESG or ethics or responsibility in that sense—they’re about very practical observations about plausible scenarios that boards should be thinking about.

Oliver Cummings: And if we take that geopolitical one as an example—how have you formed the view that this is a structural change rather than a cyclical one? Because for long-term projects like supply chain reallocation, it could be that by the time you've finished, we’ve got different politics in place.

What makes you think this is a structural shift?

Gerry Murphy: If you take some of the mega trends we've been discussing—climate and sustainability, for instance—that’s not cyclical, that’s structural, for sure.

I think at this stage, it's also possible to assume that much of the geopolitical tension is, on a 10-year view, likely to be pretty structural. I said at the outset that I expect the US will sort out its tariff situation with Canada and Mexico in fairly short order. That’s a cyclical or transactional issue.

But the West continuing to outsource manufacturing to low-cost countries in Asia? That’s probably in secular reverse. This is about building in resilience. It’s not about being entirely dependent on any one model.

I think companies and boards will have to develop alternative sources to give themselves resilience—not complete insulation, but resilience—against some of these quite likely developments.

There won’t be simple, silver bullet answers to any of these questions. That’s not the point. The point is to keep them on the radar screen. Keep looking at them. Don’t take things for granted. Strategy—especially a 10-year strategy—is not a one-time exercise. It’s a continuous process that should be kept on the table all the time. It’s more than a once-a-year discussion. This is real, living, breathing oversight of the future of a business—which is what boards are for.

Oliver Cummings: And talk to me more about the technology macro trend. We just hosted a fireside chat on AI and the boardroom where we had over 700 board members registered. It’s clearly top of mind for a lot of boards.

How are you thinking about the practical implications?

Gerry Murphy: Well, it’s different things in different places. In both of my current companies, we’re starting by looking at how the application of AI could affect the way our consumers behave. That’s the first true north.

How would our customers and consumers behave with the advent of different technology and different devices? How is that going to affect their day-to-day behavior?

I’ve got a five-year-old grandson in New York who speaks to Alexa to ask if it’s going to rain today—so he knows whether he can play football or not. Just think about him and his generation as consumers. They’ll be completely different even from current Gen Z consumers.

So we’ve got to think about that—in terms of how our consumer publics are likely to evolve.

We’ve also got to think about the way we use data in our businesses and whether we’re at a competitive advantage or disadvantage. A business like Tesco, for example, with over 80% of its trade now done through its Clubcard app or membership, has extraordinary data—very high-frequency data—on more than four-fifths of its business.

That’s a very significant data resource. We’ve got to work out how we apply AI to protect it, but also to exploit it for the benefit of our customers and shareholders. I think it’s quite important to get something like AI down from an abstract, conceptual proposition to something much more concrete.

We had an exercise recently at one of my companies where we basically took a 24-hour day and looked at the ways that AI is already impacting the business—today—in all kinds of ways. Some are in the detail; some more fundamental. And I think just understanding what’s happening even now is a big step forward for all boards. That was a revelation—that there was already so much AI being applied to our business. Once you understand that, you’ve got a much better prospect of trying to extrapolate from it.

Oliver Cummings: Both panelists in our AI and the Boardroom forum made that point. They said some boards are trying the “don’t use AI” approach, but they’re kidding themselves—because it is being used, whether they want it to be or not. That really struck me.

Gerry Murphy: Yeah, and I think another reality is that especially for big companies that have traditionally had the resources to do lots of things themselves—we’re dealing with a world that’s moving so fast that the opportunity cost of trying to build everything from within is overwhelming. The time cost of trying to build everything from scratch has never been greater, given the pace of change.

So it does require just thinking about things differently. Again, back to our original conversation—figuring out what we’re good at. Writing and developing algorithms is probably not what most businesses are good at. There are people who do that for a living—and do it better. So working out what kinds of partnerships and dynamics will work best in different situations is going to be a really important part of most boards’ agendas.

Oliver Cummings: I think that second point—the “how do we use data?”—also really resonates. It’s been striking to me how big a limiting factor that’s been in our own ability to use AI. If you haven’t got your data structured in the right way, you can’t do much. I think many boards haven’t really got their heads around how important that is before you can begin on that AI journey in earnest.

Gerry Murphy: Yeah, I agree.

Oliver Cummings: Before we move on to talk about your non-exec and chair perspectives, can we briefly touch on a recurring theme from past guests? One that’s been highlighted as one of the most—if not the most—critical strategic decisions a board makes: appointing the CEO.

You’ve been on both sides of that. I’m really interested to hear—what have the best boards you’ve been exposed to got right with the CEO succession journey?

Gerry Murphy: In an ideal world, CEO succession is a planned thing. And it often works well when there is an agreed end date for someone’s tenure—a retirement, usually. Someone who has served the company well and has indicated that they want to move on at a certain age or within a certain time frame. In that sort of scenario, a well-run company—which includes the outgoing CEO as a critical component—will have developed at least one and maybe more internal options for succession.

It’s always a good test of a CEO’s legacy to look at the bench strength they leave behind. Really good CEOs will often leave a number of plausible candidates in their wake for succession. And in that happy scenario, the board has the luxury of comparing somebody—or more than one person—they know really well with whomever an external search identifies as a plausible and interesting candidate.

That’s a really effective, dynamic process that can be very rewarding—whether or not the internal candidate is ultimately chosen. I’ve experienced that a few times.

And I’ve also experienced the opposite—where the exit is unplanned, either because the CEO gets a job they prefer somewhere else, or because other events suggest the board has to make a change. In either case, it’s always better to have succession lined up internally, just like in the planned scenario.

If it’s unplanned, it usually isn’t as neat. Oftentimes, good internal succession candidates might not be ready just yet. But again, in a well-run company, the board should have some choices—at least some people against whom to benchmark external candidates.

But I’ve always taken the view that an external candidate should be head and shoulders above any internal option for the board to justify the risk of the inevitable unknowns that come with someone new, versus the much clearer view they’ll have of an internal person—their strengths and their areas for development.

Oliver Cummings: I really like that as a heuristic. Because otherwise, you’re so familiar with all the warts of the person you know, and the external person seems like this shiny, perfect alternative.

Gerry Murphy: Yeah, absolutely.

Oliver Cummings: That “head and shoulders above” bar is very helpful.

Gerry Murphy: Yeah. And the test that a board should apply to a new CEO is their fitness for the next five to ten years—as far as a board can determine that. If it’s a crisis, obviously there’s a different overlay. But for the most part, boards are hiring against a view of the future.

They need to ask themselves: is person A or person B better equipped to take us forward, no matter what they’ve done in the past? I think the view has to be forward-looking.

At the level we’re talking about, competence is generally not the issue. Ambition is not the issue. Track record is usually visible. It’s really about trying to picture the candidate—internal or external—in the world as it’s likely to be going forward, not as it was in the recent past.

That can be challenging for an internal candidate. They’re part of the existing management team. They often have their fingerprints all over the current strategy and direction. And the question that boards ask—which is tough—is: “What would you do differently from your current boss?”

And that can be difficult, because there’s a lot of co-ownership. People don’t want to seem critical of their current boss. But it’s not about criticism—it’s about trying to understand what the future needs, not where the business has come from.

That can be challenging. And I think a good board selection process will effectively put both the internal and external candidates in a position where they have to pitch their credentials against a future view of the business.

Now, clearly the expectations would be different between someone coming in from the outside, who doesn’t know the internals, and someone who does. But it’s a good process. It often changes the board’s own thinking as the process evolves.

Oliver Cummings: So a prospective CEO can paint a different picture without being seen to criticize their predecessor if they say, “Well, the world I see in the next five to ten years is different from the world of the past, and therefore the approach I’d take would be different.” That’s not to say what we’ve done historically is wrong.

Gerry Murphy: Absolutely. And it can be a very powerful learning experience for the board. I’ve been through a few of these, as you said, and I don’t think I’ve ever wasted ten minutes with an external candidate where I didn’t learn something.

It’s a rare privilege to be in a room with very capable people who bring their experience, energy, enthusiasm, and vision to your business. That’s a very powerful, stimulating learning experience. And even if they’re not the right candidate on a given day, I’ve always learned something from the process.

Oliver Cummings: I agree. People often underestimate the value of meeting more prospective candidates for a NED role. I always try to meet the full longlist—I always learn as a CEO.

Okay, let’s move on to talk about your non-executive perspectives. Where do you see boards adding most value now?

Gerry Murphy: I think it’s around dealing with the bigger issues—the five- to ten-year issues. It’s about bringing diverse perspectives, from diverse experiences of business and life and geography, to bear on big, complex questions.

Generally, well-run companies don’t need non-execs to teach them how to run operations. If they do, there’s something wrong—either with management, or with the board.

So I think it’s on the bigger questions where there is value in thinking differently.

I learned a while ago that non-executive directors might each have a particular spike in terms of experience or domain expertise—but unless a non-exec can contribute meaningfully to everything of consequence the board discusses, they’re unlikely to pull their weight. So I’ve become a very skeptical observer of the “specialist director.”

You want people who are both knowledgeable and experienced, but who are also curious. Curiosity, in a fast-changing world, is a very valuable commodity—for management and for directors alike.

Oliver Cummings: You’ve talked before about how boards should add the most value the further out they look. I liked that framework. But I was reflecting on that in light of Episode 103, where Gerry Brown talked about the six archetypes of board failures, and one of those was around culture.

And that, to me, feels like a very present, day-to-day issue. So where does culture fit into board value-add?

Gerry Murphy: Let me challenge the setup a bit. I think boards add most value looking at the big, long-term issues facing a business. But they absolutely have to be focused on near-term performance and operational delivery. These things aren’t optional.

One gives you the right to focus on the other. Without near-term performance, you don’t have a long term to worry about.

So it’s about balance. It’s not day-to-day oversight, but boards do need to track quarter-to-quarter performance, using a small number of meaningful and relevant KPIs. Some of those will be historic; some will be forward-looking leading indicators.

Boards need to understand the business well enough to have a short agenda of discussion topics on near-term performance—and a dashboard that is intuitive and uses the same information management uses.

That’s the day job. And we shouldn’t forget that.

The medium to long term isn’t a luxury—it’s a necessity. But you only get to focus on that if the near term is satisfactory.

On culture, there are a number of aspects. Boards today are much more engaged in understanding the dynamics inside the business—experiencing it.

There’s no substitute for spending time in the business. And I don’t mean in the boardroom—I mean in the business.

Oliver Cummings: Can you give an example of how you do that?

Gerry Murphy: I spend a lot of time in the companies I chair—factories, stores, warehouses. These aren’t royal visits by the board or the chair. I usually try to go either unaccompanied or with someone close to the day-to-day operations.

So if I’m visiting a Tesco store, I’ll try to do it with the local regional manager rather than the CEO. Likewise, in Burberry, if I’m going to the warehouse, I want to meet the warehouse manager, not the global supply chain director.

And I’ll spend time in the staff room, drinking coffee or having a sandwich. Maybe even go for a beer after work. You get a sense of people—their interests, concerns, how they think about their jobs, and the company’s role in their lives. It’s very powerful.

This isn’t new. It’s MBWA—Management By Walking About. Boards need enough time—collectively and individually—to develop a feel for the business in these more casual, real-life settings.

Most boards also take workforce engagement seriously. These are usually done by people like Gallup—systematic surveys reviewed several times a year.

Boards spend real time on what those results are telling us, because they’re important. They’re current commentary—but they can also be forward-looking indicators of business stability and the health of human capital.

The Corporate Governance Code now requires a level of engagement with the workforce. It’s an administrative burden—but to my mind, a worthwhile one.

At Burberry, for example, we’ve got a global workforce advisory forum. Tomorrow, we’ll have about 50 people from all over the world on a Teams call. We’ll chat about two or three topics that are current and live in the business.

You’ll hear from senior people in head office, but also from sales assistants in Asia or factory workers in Yorkshire. If you do that often enough and make it safe, people will tell you what they think. It’s really valuable. So to me, culture is critical for any board to understand organically.

There’s also a link between management incentives and culture. Boards need to understand the potential unintended consequences of certain kinds of incentives. You can easily create perverse incentives that drive behavior in ways that are unhelpful.

Most good boards are alive to these issues, but it takes some experience to spot them and take them seriously.

Oliver Cummings: Let’s go back to something else you said—you use the same dashboard as management. A lot of boards get their exec teams to create special dashboards just for them. I fall into your camp, but have you always done that across all your boards? And has it ever created issues?

Gerry Murphy: Yes, is the short answer. Frankly, if the board’s looking for information that management doesn’t have, then either the board is asking for the wrong information—or management should have it.

Figuring that out is worthwhile in itself.

The board should get a subset of the information that management uses to run the business day-to-day. These KPIs will evolve over time, but the board report should be derivative from the management process—not something created just for the board. I’m fundamentally skeptical of any information created specially for board consumption.

Oliver Cummings: I love that. I can hear listeners scratching their heads thinking, “Have we got the wrong management, or are we asking for the wrong information?”

Time is flying, which means it's almost time for the lightning round. But before we go there, I just want to touch briefly on your experience across both private and public companies.

Do you think one governance model is superior? Or what can each learn from the other?

Gerry Murphy: No, they’re different. Each is more or less appropriate at different stages in a company’s lifecycle.

There are situations where public markets create a value anomaly—and in those cases, private ownership may be better. On a day-to-day basis, I really like the alignment you get in private equity situations between management incentives and shareholder outcomes. It’s more leveraged—literally and figuratively—than in public companies, and it’s very effective.

When you have a capable management team that’s fully aligned with value creation, it’s powerful. Where it’s less effective is when it’s overdone or oversimplified—and then it can be value destructive.

But overall, I think it’s a positive model.

Private equity investors are generally more focused on the long term because of the need to exit. They have to plan for a sale.

Public companies, I think, generally do better at managing human capital. They’re more attuned to long-term cultural needs and broader stakeholder responsibilities. So yes—each can learn from the other.

Oliver Cummings: What’s stopping public companies from adopting some of those best practices—like more leveraged incentive structures?

Gerry Murphy: There are two aspects: qualitative and quantitative.

Qualitatively, there’s no real barrier. We should try to align management incentives with long-term shareholder value creation, and work out what that means in each case.

Quantitatively, it’s harder. In listed markets, especially here in the UK, we are not competitive with private equity or with markets like the US. And that’s a real issue.

Oliver Cummings: Is that just because of transparency—the fact that compensation is public and subject to the court of public opinion?

Gerry Murphy: It is public, and it is limiting. I think we’re over-governed on pay in this part of the world, and it’s a competitive disadvantage. We see that when trying to recruit from the US or from large private companies in other jurisdictions. People there can get on with their lives without intense scrutiny of their personal finances. It’s just not very attractive.

Oliver Cummings: If you could design an ideal management incentive structure from scratch, what would it look like?

Gerry Murphy: There’s no one-size-fits-all, but it would be long-term by nature. I’d skew heavily toward the long term—compared to short-term fixed compensation. Highly variable. More weight on long-term outcomes.

Oliver Cummings: Do you have a rule of thumb on how much should be fixed versus variable?

Gerry Murphy: If you take fixed remuneration—typically salary and pension benefits—and variable, which includes an annual bonus and a long-term incentive, I’d say a 6:1 or 7:1 ratio.

One part fixed, six or seven parts variable—and within that, skewed toward the long-term piece.

Oliver Cummings: Gerry, time has flown, which means it’s time for the lightning round, where I’m going to ask you short questions and ask you for quick responses—if you’re ready.

Gerry Murphy: Okay.

Oliver Cummings: First up, I can see a magnificent bookshelf behind you. What’s the best book every board member should read, and why?

Gerry Murphy: I don’t read that many business books or boardroom books. I prefer shorter articles—like Nia’s Harvard Business Review piece on how to be a good board chair. That’s as good a précis as any of the general lessons.

But if I had to pick one proper book, I’d say Walter Isaacson’s Steve Jobs. Jobs was an extraordinary person, and the dynamics between a creative genius, big business, technology, boards, and governance are absolutely fascinating. Take the lessons as you find them—but it’s a really engaging read about an amazing chapter in business history.

Oliver Cummings: Boardroom behavior that irritates you most?

Gerry Murphy: Grandstanding—speaking just to be heard.

Oliver Cummings: Most valuable board ritual?

Gerry Murphy: Private NED sessions before and after each board meeting—as a matter of routine. They don’t offend anybody.

Oliver Cummings: Favorite quote?

Gerry Murphy: I think I mentioned it earlier: “Plans are useless, but planning is indispensable.” — Eisenhower.

Oliver Cummings: Most significant professional insight?

Gerry Murphy: One of my early chairs, Christopher Bland—who at the time was chair of BT and the BBC, and also my chair at Exel—once said to me: “I don’t do plumbing.”

What he meant was, as chair, he didn’t get involved in the weeds. He said, “There are two or three things that really matter at any point in time. The chair and the CEO need to be absolutely aligned on those.” I thought that was a very valuable lesson. I’ve tried to practice that on both sides of the equation.

Oliver Cummings: Worst professional advice you’ve ever received?

Gerry Murphy: I’m not sure it was advice—but I’ve seen differing views when it comes to a management situation that isn’t working. If a senior manager is struggling, after a short time it tends not to get better.

It’s almost always better to deal with it sooner rather than later. Loyalty, inertia, personal relationships—they can all get in the way. But if things are going wrong after a short period, they rarely improve. So: deal with it quickly, decisively, and humanely.

Oliver Cummings: What have you changed your mind on about boards over time?

Gerry Murphy: I think we mentioned it earlier—I’ve come to the view that specialists on boards are suboptimal. I want generalists with some specialist knowledge. That’s a nuanced but important distinction.

Oliver Cummings: When was the last time you got a significant judgment call wrong in the boardroom, and what did you learn?

Gerry Murphy: I’m not going to give you that war story! But I would say—I get things wrong in the boardroom all the time. The point is, it’s a continuous learning experience.

Another early mentor said to me, “The secret of management is to surround yourself with people who are smarter than you are.” And one of the privileges of being a board member or chair is that you’re surrounded by very smart people. You can learn from them all the time.

Oliver Cummings: How are you better today as a board member than when you started?

Gerry Murphy: Lots and lots of scar tissue—from getting it wrong. Hopefully not as often as getting it right—but it’s the getting it wrong that teaches you.

Oliver Cummings: And finally—three things our listeners should take away from this episode, if they take nothing else?

Gerry Murphy: First, business is about people. As I was told by my MBA supervisor 40 years ago—business is not a science. Almost all the big decisions you’ll make as a chair or CEO are about people.

Second, strategy is not a process—it’s a state of mind. It has to be alive and evolving all the time.

Third, what we do should be stimulating, interesting, and fun. It should feed our curiosity. And if the curiosity goes—we should stop doing it.

Oliver Cummings: Well, Gerry, you’ve certainly lived up to that—interesting, fun, and stimulating. Thank you so much for taking the time to share your extraordinary experience and wisdom.

Gerry Murphy: Thank you, Oli. I enjoyed it.