You could boil down Steve Shank’s approach to board service to two words: Be prepared.
Be prepared, most notably, for change. “I’ve been involved with companies that are passing through periods where there’s a need for strategic transformation, where there are significant external threats on the horizon, a need to figure out where the company goes from its current base of strength to a new base of growth,” Shank says. As CEO of Minnesota toy maker Tonka Corp. in the 1980s, Shank kept the company competitive through a tempestuous time in the toy industry, largely through acquisitions and new products. (It was acquired by Hasbro Inc. in 1991.)
While at Tonka, Shank joined the board of National Computer Systems Inc. (NCS) in 1985. At the time, the Minnesota-based company was a top provider of educational software. In 1994, longtime CEO and chairman Charlie Oswald retired. Not only did the board need to replace him, Shank says, but “there was a need for a new strategic direction.”
In hiring Russell Gullotti, then president of Digital Equipment Corp., Shank and the board found someone who could drive growth. Gullotti “really transformed the company, but did so by building off the company’s strategic strength,” Shank says. For his part, Gullotti relied on Shank not only for institutional knowledge but also his corporate leadership experience.
“One of the things that helped me was the fact that he had done it himself,” Gullotti says. In addition, when management made presentations to the board, “Steve was savvy enough to plug into that strategy position to see if we were doing what we said we were going to,” Gullotti adds. By focusing on student testing and management of complex educational data, NCS experienced significant growth before being acquired by British media group Pearson PLC in 2000.
Other Board Service
Polaris Industries Inc.
Advance Circuits Inc.
Donaldson Co. Inc.
That same year, Shank joined the board of cleaning equipment manufacturer Tennant Co., based in Golden Valley. As a director, he helped guide the hiring of CEO and president Chris Killingstad in 2005, who still leads the company. Named lead director in 2009, Shank has provided Killingstad with useful board insights and performance feedback. Board colleague James Hale, former executive vice president of Target Corp., describes Shank as “a very good listener” and someone who did “a great job of managing and directing the board, but with a very light hand.” Shank also pulled together diverse observations and critiques “in such a way that it’s coherent,” says Hale, who retired from the Tennant board in April.
Another Tennant board colleague, Carol Eicher, CEO and president of Innocor Inc., a New Jersey-based foam products manufacturer, admires the board self-assessment process that Shank leads. Shank makes sure that this mutual feedback between directors emphasizes constructive criticism. “The tone in the [Tennant] boardroom is that we come prepared and we do our work—and that there is a high level of engagement,” Eicher says. That tone, she adds, “comes from Steve.”
Shank’s most recent board service presented distinctive challenges. At Minneapolis-based Capella Education Co., he served as both CEO and chair. The online education company, which Shank founded in 1992, was a huge success with students and investors. Shank retired as CEO in 2009 but remains on the board. In that role, he provided institutional knowledge about the business and industry “while absolutely respecting the fact that it was the CEO’s job to run a company and do it his way to make the changes he wanted to make and needed to make.”
Shank’s successor, Kevin Gilligan, has been leading Capella through intense competition, stagnant enrollment and new government regulations. In order to stimulate growth, Capella has acquired companies that provide non-degree, higher-end technology education and certification programs. “That was an important new strategic direction the board has been involved in,” Shank says.
Through his career, “I’ve always strived to be a student of business and a student of business strategy,” Shank says. Businesses should expect to continue facing “rapidly changing external environments,” whether those changes come from customers, regulators or technology. And boards, Shank believes, must be prepared to help companies tackle them. —Gene Rebeck