As two of the longest-serving members of Microsoft’s board of directors, Chuck Noski and Helmut Panke have many stories to share about their time with the company. But what might surprise you is that despite their different backgrounds and diverse roles over the years, both agree that their time on the board has provided one of the most interesting and exciting experiences of their careers.
We sat down recently to speak with Chuck and Helmut about Microsoft’s board of directors, including the unique responsibilities of their respective chairmanships, how the board has evolved over the past 16 years, and what excites them most about the future of technology.
1. You both joined the Microsoft board of directors nearly 16 years ago. Can you tell us how you were invited to serve on the board?
Chuck Noski: In the summer of 2003, I was contacted by a firm in New York to gauge my interest in joining the Microsoft board. Coincidentally, some years before, as the chief financial officer of AT&T, I had spent time with Bill Gates when he was chairman of the board and chief software architect for Microsoft. Later, after meeting with the board’s Governance & Nominating Committee, I renewed my acquaintance with Bill, met with Steve Ballmer and Brad Smith in Redmond, and was elected to the board later that year.
Helmut Panke: In hindsight you could call it a fascinating story — it all started when Bill came to Munich in the beginning of 2003, which was around the anniversary of Microsoft’s German subsidiary and when I was serving as BMW’s CEO. As part of his time speaking with some of Microsoft’s customers, Bill and I met in the basement of an arena where a big celebratory event would be taking place later in the day. We had an intense and healthy discussion about Microsoft’s work in the automotive industry, but that was it. Months later, I received a call from Steve Ballmer, who asked me to meet for dinner in Munich, and at the end invited me to join the board. Then came the necessary couple of additional interviews.
2. Helmut, you were the first director from outside the U.S. to sit on the board. Can you tell us a bit more about how that has shaped your perspective on Microsoft and the technology industry?
HP: Personally, I tend to be outspoken and direct, but some might also call me “a notorious optimist” on things. To that end, I think it is important for everyone to speak up and make their points regardless of where they’re from — it is important to have different groups of people with different levels of experience across whatever the company does. So if a company aims to be an international company, thinking in international terms, it should not just have people from one country like the U.S. on the board. For that reason, I think Microsoft’s board is stronger than the average U.S. board.
3. What is the board’s role, and how has it been involved in the strategic and execution aspects of Microsoft’s transformation?
CN: The role of boards has certainly evolved in the U.S. over the past 20 years. They have always had a role of oversight and corporate governance, but there is more depth now. Boards have more engagement on strategy and risk management, tend to work harder, and act with greater sensitivity to a broader group of stakeholders, including employees, customers and suppliers. Boards have learned to be more attentive to those groups, although appropriately their focus continues to principally be on fulfilling their obligations to companies’ shareholders. At Microsoft, we are no different in that regard. We devote a substantial part of our board meetings to discussing and debating the company’s strategy, monitoring management’s execution of that strategy, and considering the input and expectations of the company’s shareholders and other stakeholders. I have served on several of the board’s committees over the years, and I can tell you that a lot of hard work goes on there, too.
HP: I believe the board’s role starts with oversight, from financials and strategy to personnel development and trends. Beyond strategic decisions we also provide reviews, advice and support for the management team. There is a clear term in German for the supervisory board and its role: “Aufsichtsrat,” which contains the terms “supervise and control” as well as “give advice” in German. What I mean by this is that the board is charged with making sure the decisions are in the long-term interest of the shareholders, but the board should not run the execution game. A good example was the strategic implications ultimately critical to the decision and outcome of Microsoft’s CEO succession in 2014. In that way, one could say the board was a catalyst and influenced the transformation, and when you look at today’s Microsoft mission statement, you can see that the company is not just focused on tech for tech’s sake. Instead, its overriding purpose is to serve our customers.
4. Chuck, you most recently served as the chair of the Audit Committee. What has been a unique challenge or responsibility in that role?
CN: When I joined the board in 2003, many of the provisions laid out in 2002’s Sarbanes-Oxley Act (SOX) were just coming online; SOX essentially being the congressional response to the major corporate failures of companies like WorldCom and Enron. SOX had specific requirements around the role and composition of audit committees in the U.S. When I became chairman of the audit committee in 2004, we did a lot of work in the early years to meet or even exceed the expectations laid out in SOX. For example, I was the first audit committee financial expert to join the board’s Audit Committee; today, all five directors serving on the Audit Committee are designated financial experts.
Coming out of the dot-com bubble, it was really about audit committees building the capability, muscle, discipline and agenda to meet higher regulatory and shareholder expectations. Now, as things have evolved over my years as chair of the board’s Audit Committee, we’re spending time focused on risk management, and information technology and compliance, in addition to the more traditional areas of financial accounting and reporting, and internal controls.
5. Helmut, you most recently served as the chair of the Regulatory & Public Policy Committee. What has been a unique challenge or responsibility in that role?
HP: Our primary task is to safeguard our shareholders by acting on and looking at where regulations are or will go. We also help the company understand the risks or commitments it is making with a change in course of policy. Reporting, monitoring and compliance are all part of that, but ethics are actually the starting point for what we do — from reinforcing our commitment to environmental responsibility to understanding public discussion about what companies should consider when doing business with different industries. Look at the global issue of privacy, which is not just a simple tech issue anymore, or digital safety around the world in the face of terrorist acts. Risk and reputation management must be carefully balanced with both IT and operations opportunities.
6. How have Microsoft’s board meetings changed over the years? Any especially memorable meetings that come to mind?
CN: Generally, our agenda topics have evolved to reflect the growth and evolution of Microsoft as well as the outside world. Navigating external issues has become a much bigger part of how we think about Microsoft’s role in the world, too. If I think about the board meetings that stick out in my mind, though, serving on the committee that selected Satya Nadella as our CEO and the board discussions around acquisitions like LinkedIn certainly do.
HP: Microsoft’s role and responsibility in society, and the potential impact of a certain product solution on parts of society, are significantly more part of board discussions than they were previously. This is reflected in the simple fact that when I joined the board, board meetings took up just one full day. Now, they take two or more days to cover all the issues, allow us to be fully informed and provide an opportunity to give all the guidance needed. I will say in all my years, I have never been bored at any of the meetings!
7. You’ve each served on many different boards in your career. What has been different or unique about the Microsoft board?
CN: First, I think for our country and our economy, Microsoft is a very important company. Second, the track record of companies reinventing themselves and having a successful second act is not that common. A lot of companies with amazing names and great success have faded. When I joined the board almost 16 years ago, many thought Microsoft was past its prime, but the subsequent progress that was in some cases started by Steve, and then re-imagined, defined and executed by Satya and his team, has been remarkable. This corporate renewal of Microsoft has been pretty unique.
HP: In general, the companies I’ve been on the board of have had the shared strategic target of providing better solutions to their customers instead of just achieving a lower price point in the market — Microsoft included. What surprised me about Microsoft’s board applies to Microsoft as a whole. It’s a company with a strong blend of individuals working together to provide better solutions to society and customers in important areas; now, those solutions are available no matter what environment users are working in, be it one of our platforms or that of another company. We have the mentality and strategy to bring the better products to everyone regardless of competition.
8. Chuck, you were recently honored by the world’s largest business education alliance as a leader who has created a lasting impact in both business and society. How has your time on the Microsoft board contributed to that impact?
CN: As chairman of the Audit Committee, I’ve worked closely with Microsoft’s Chief Financial Officer Amy Hood and her financial team over the years to set a high standard for financial reporting, disclosure and controls. The goal has been to be transparent, effective and responsible. I feel good about how Amy and team have responded to this challenge to be outstanding in this area. I always say that a good reputation is hard-earned and easily lost — Microsoft knows it is important to get up every day and fulfill its responsibilities in this space with excellence.
9. Helmut, you’ve spoken about combining the elements of technology and emotion to create “the ultimate driving experience” when you were at BMW. How have you seen technology and emotion come together at Microsoft?
HP: If you want to win in the consumer segment of electronics, IT and software, the product must have a spontaneous “wow” effect in the customers. They need to be the ones who say, “I’ve got to have it!” For Microsoft, I think step-by-step decisions in the Surface line have created just that — beautiful and superior devices that people want and that bring meaningful opportunities for users whether they be architects, artists or even journalists, to name a few.
10. What do you think has been the most interesting development in technology, and is there anything you’re particularly excited to see in the future?
CN: One of the most interesting trends I’ve seen in my tenure has been the convergence of personal and enterprise computing — increasingly, I believe the opportunities for people at work and at home are extraordinary. The other piece of that is artificial intelligence (AI) and machine learning (ML). For AI and ML, it’s fascinating to think about what comes next in terms of the opportunities for communications, productivity and enhancing the quality of people’s lives. How we develop and deploy technology will be exciting, but how we address the societal implications as business leaders will be challenging. As an industry, we must have the maturity to act thoughtfully and responsibly.
HP: I believe that ML has been and will be the most interesting development over the years. Ten or 15 years ago, only experts like Microsoft’s Harry Shum or Craig Mundie were speaking about it, and now it’s everywhere. That said, my excitement for the future is there, but I think now the challenge for the generations coming after us is to understand what advancements we should not pursue, while also understanding which technological innovation will make life better for everyone.