809: How to Create an Effective Board - with Herman Bulls, Vice Chairman Americas, JLL

Dr. Bill Pepicello: Welcome back everybody. It's your time to edup on the Edup Experience podcast where we make education your business. I'm your guest host for this episode, Bill Pepicello, host of my own podcast, Edup Insights, and the author of the book, Leadership on the Field of Play, available on Amazon. And today I'm filling in for Dr. Joe Salustio. Our very special guest today is Mr. Herman Bulls, who is vice chairman and the Americas International Director at JLL. Did I get that right, Herman?

Herman Bulls: You did.

Dr. Bill Pepicello: Okay. Well, welcome. Glad to have you here.

Herman Bulls: I'm happy to be here, Bill.

Dr. Bill Pepicello: So today's topic is going to focus on boards and governance. And I'll let you know why as I introduce Herman. He has a little bit of experience with boards. He's a retired colonel in the US Army Reserve, served over 30 years. He was professor at West Point and financial analyst in the Army Budget Office in the Pentagon. So he has some education background here. He's in the Alabama Business Hall of Fame. He is a member of the Defense Policy Board. He is the board vice chair of USAA, board chairman of the Board of Fluence. He's a board member of directors of Collegiate Education. Other than that, he hasn't done much. But just to give you a couple of pieces of insight on his career, he has been awarded a variety of awards. He was a Marriott Scholar of business at Brigham Young University. He was an Executive Leadership Council Achievement Award recipient. He was named in Savoy Magazine's Most Influential Black Directors in Corporate America. He is on the USA National Association of Corporate Directors. And I could go on and on, but I want to get to asking him some questions. Because what he's done is fascinating. And what I want to talk about is what role boards in general play in governance all across the spectrum of what's going on today. Now you have a variety of experience here in the business world, little in the education world. And what I'm interested in talking to you about is, you know, what makes an effective director? Is it a blend of technical skills and governance ability or how do you see that?

Herman Bulls: Yeah, well, Bill, first of all, thank you for allowing me to be on the show today. It's quite a privilege. And you went through all those organizations. And I think it's important to note that I've been very fortunate to have both private sector public company board experience, private sector private company board experience, as well as not-for-profits. And one that's pretty significant, and I think goes into your question here as well, is I'm also one of the national governors of the American Red Cross, which is a multi-billion dollar organization that has a humanitarian goal, very similar to colleges and universities, humanitarian in the sense that we want to advance knowledge. 

So going back in terms of just thinking about corporate governance and what the role of the board is, there are really two major functions that the board does. Number one is to select the CEO and/or the president. And that is not a small task. Looking at what are the challenges facing the organizations? What are the skills that are needed now, medium term and long term? And how do you get the right person that can, if change management is required, make that happen. So that's one major function. And the first one I might add, because I've got a theory about mediocre people.

Well, let me tell you the second one first. The second one is strategy, okay? Not to develop the strategy, but to approve the strategy. It's management's responsibility under the leadership of the CEO to understand where the organization needs to go. And board members, good board members have the ability to do what I call see around corners. And that is that ability to anticipate based upon current conditions, anticipated conditions, what is going to be happening. So you've got your CEO and your president, they're focused and they're in the weeds, so to speak. They're in the forest. The beauty of a board, which I know you've served under and on them as well, is that ability to be out of the fray, looking up and looking around that corner and anticipate. 

And I tell people all the time, people come and say, "Hey, Herman, I really want to be on a board. I'm really a great manager and I can really do all these things." Well, believe it or not, that great management and operational experience is a foundation. However, to be a good board member, it's not about providing answers, believe it or not. And for somebody in education, you're gonna find this hard to believe. It's not about answers, it's about asking the right questions. That's what a great board member does.

Dr. Bill Pepicello: That's right, that's insightful. And yeah, I have served on some boards. I'm the chairman of the Board of Trustees at American Intercontinental University at the moment, was the chairman of the Greater Phoenix Economic Council and the Banner Health Foundation here while I was still working. So I have some experience, but not nearly the breadth that you do. One of the things that I'm interested in is having served on this variety of boards, what commonalities do you see? And where do the differences lie? And here in particular, I'm thinking about your service on the board of directors of Collegiate Education.

Herman Bulls: Well, first of all, Collegiate is an education technology company. And it is actually the third spin-off of Rasmussen College, where I started, which was a for-profit, just like your organization. The gentlemen and ladies that I was working with on that were very entrepreneurial in nature in terms of saying there is a problem and now let's find a solution by getting the combination of technology and smart people together and figuring out how to do it. 

So with Rasmussen to start with, I mean the thing we had to do there is decide where there were market opportunities. And I might add, and you're very familiar with this, that a lot of the for-profit education companies, some of them had challenges because they focused on one thing, right? Maximizing profit. Okay. For a long term, we actually were a public benefit corporation. And I think your listeners just need to know what that is, it's kind of a self-imposed, you don't get any economic benefit from it other than saying part of your goal is to basically make the world and the nation better in terms of what you do and how you do it.

And that was very consistent with my values and goals as opposed to saying, hey, I'm going to just put something out there and get people to do it. Because as you know, a lot of young people and older people went into a lot of debt with the promises of how they could do online education. And Rasmussen was actually a merge of online and we had dual modality in terms of how people could learn. And we sold that company to the Wiley Company at a very large multiple. So it was very, very successful. And we had basically put Collegiate together as another arm of it to provide that technology spoke where there was marketing, enrollment management, et cetera. So we basically got another company that we established there.

And by the way, I'm mixing it up a little bit. In any event, we sold Rasmussen and now we have Collegiate. And in terms of the challenges there, I think the biggest challenge that organizations have to make, and when you're an entrepreneur, and I've started a couple of companies, I can tell you, it's not easy to always do this, but what is the best thing for the long term? Okay, you have to answer what the long-term is. So the long-term is not yesterday. Did I have enough money in the bank to make payroll? And I know you know about that as well, Bill. 

But if you look at an organization like Collegiate, first of all, look at the landscape of what's happening in colleges and universities, right? You know, all of the, and our target market, you know, it's not Harvard and Yale and Stanford, right? They have the resources and the ability to go out and get a lot of smart people to do a lot of great things. However, the smaller institutions that don't have the ability to have the breadth and depth of expertise that you may need just to get started, right? So you talked about, you know, whatever your digital strategy is, okay? Not many of these small colleges have somebody that understands digital and what's the best way and how do you buy it and when do you do it, et cetera. So having that ability to do that for a certain segment of the college and university population is very, very important. And that's a need that Collegiate is trying to fill.

Dr. Bill Pepicello: Well, from your perspective, how do you build a board that is both high performance but sustainable governance? What's that mix look like in your experience? Did you see it from various perspectives?

Herman Bulls: I certainly have. The first thing that comes down to something I was going to answer earlier for you, you can take a great strategy and with mediocre management and/or mediocre board, you're probably not going to be as successful as you could be. You can take a mediocre strategy with a great management team and a great board and you're going to be successful. Because what does that mean you have? That means you have agility. That means that you have the appropriate experience. That means that, and we'll just talk about diversity in its broadest sense. Okay? And this is a diversity of thought, diversity of experience, diversity of ideas. However, I do want to give special emphasis and every board I'm on, it's something that, don't make it the first thing I talk about, but I certainly talk about.

And that is the diversity of the team. And as we look at Bill, what's happening in the United States, and you're probably familiar with some of these statistics. If you look at the Census Bureau, under the age of 18, the majority of people in America in the latest census are what? People of color, right? So we extrapolate that 2035, 2040, 2045, kind of doesn't matter. Sometime in the next 20, 25 years in America anyway, the majority of people are going to be people of color. And if you think about that great philosopher, Wayne Gretzky, who says, you have to skate to where the puck is going to be. And I think that's very appropriate in this situation. And the way I explain it in the corporate boardrooms I'm in, it says, OK, if this is where we're going, okay, and the market is definitely gonna go there. Who's going to innovate and make your products? Okay, and where are those individuals gonna come from? Who's going to sell your products? And probably the most important of all, who's going to buy your products? So if we do not have a perspective in that boardroom that covers those three major areas, we're probably not going to be as successful as we could be. And that's why diversity in terms of ethnicity and gender in the boardroom is critical. 

And look, this is something for all your listeners out there that kind of want to be on a board. And I've interviewed a lot of boards. I've turned down a lot of boards, particularly over the last few years when there was a, your listeners may or may not know that I'm African-American, where there was a big surge in demand after George Floyd, right? Everybody wanted, and I've been doing public company boards for over 20 years. So this is not a new rodeo for me. However, people like to go with people that are experienced and can, you know they feel can do things because your typical corporate board, you know, you got from eight to 12 people and that's a mindset. And people like to be around people that they enjoy being around.

However, the big challenge or sinkhole could be if you got a bunch of people around and you're all the same, okay? You're gonna group think, you're not gonna have that diversity of thought, experience, et cetera, that I talked about earlier, and that is so important. And the point I was making about anyone that's listening that's an aspiring board member, whether it's on the local YMCA board or local community college board, or you want to be appointed by the governor to be on the state board, or you want to be on the Harvard board. Understanding and having the ability to, number one, have a vision and idea, and having the ability to communicate that in a manner that you don't make it antagonistic. So I'm very assertive and aggressive in my thought process. I'm very thoughtful in my communication process. 

And one of the things I've done, and my late wife taught me this is I try to take the word "but" out of my vocabulary. So Bill, let's assume you and I are in a board meeting and you may make what you feel is a very insightful comment. And I say to the team, "I agree with Bill, but" Bill, what's your mind going to start doing?

Dr. Bill Pepicello: Yeah, you don't agree with me at all.

Herman Bulls: Yeah. You're thinking of an antagonistic type thing and you're not listening. Right. And I may actually have something good to share, but your mind is processing, anticipating as opposed to listening. If I say, "I agree with Bill's points and I would like to add" your receptivity is going to be so much more open. And those are just, that's just one little technique that I utilize in the boardroom. 

And I'll tell you another thing I do, particularly around the diversity issue. If there's something, obviously you get the material before the board meeting and as a board member, you see some board members, they'll say, "slide number 54, you've misspelled V." Well, that adds no value whatsoever. Okay. But it makes that individual feel good because they want to prove that they saw it and read it. So that's something that I would do offline with the appropriate staff member and they would thank you so much for it. And there would be an openness of connectivity and a relationship established. 

If there's an issue, particularly around diversity, generally speaking, a lot of the boardrooms I've been in, I've been the only African-American or maybe one of two. So there's not much of a critical mass, right? However, I may go beforehand and talk to the women on the board. And then if I'm going to bring up diversity, guess what the first diversity I'm going to talk about? Gender diversity. And what am I going to do? I'm going to get allies. Is that, well, in addition to gender diversity, let's talk about the ethnicity. And all of a sudden you get a conversation going where people aren't leaning back in a defensive manner. They're leaning in and you're able to talk about these issues.

Dr. Bill Pepicello: Yeah. That's really insightful. Having sat on a number of boards, one of the things I noticed is that institutions of higher education sometimes aren't as savvy as they might be in putting their boards together, either by diversity or a mix of abilities of their staff. I mean, when I've looked at boards that have not been successful, if you look at for-profit education, you can name them, but I won't. One of the things is that there wasn't a good mix. Sometimes there was too much business and not enough education. And people didn't understand that running an institution of higher education isn't the same thing as running a TV cable company and that you need a different perspective there.

Herman Bulls: Bill, that's why it's so important that the nominating governance and starting even with the CEO and definitely chairman of the board, you gotta do your board matrix, okay? And on that board matrix in terms of thinking on the top X axis, thinking of what are the critical skills that you need from finance, to marketing, to technology, to cyber. And there's a diversity box up there too, for both ethnicity and gender. And then you down the Y axis, you're gonna put, you know, these are the names of the people and then look at your boxes that are important for you going forward. And if you look around there, you've got some boxes that are blank, okay, with the skillsets that you have determined that are important for you going forward. That is a foolproof way of saying that you should review the composition of your board.

Dr. Bill Pepicello: Yep. Excellent points. One of the things that occurs to me is I am contacted frequently by venture capitalists and people who want to invest in education or who want to do startups. And it's interesting that when they say, is higher education a good investment right now? I always say no. Because if you're a venture capitalist and you're looking for a quick turnaround, higher education is not the place to go. You're not gonna make a lot of money quickly and the people who thought that they would have already been proven wrong in many cases. So do you interact with investors and venture capitalists in some of your ventures?

Herman Bulls: To some degree, and let me even go back a little bit and explain what I do slash did at JLL. So as you know, I was in the military, taught at West Point, joined JLL, developer, asset manager. And I saw an opportunity, a friend of mine who also graduated from West Point was on the board of the Maryland education foundation. And I was talking to him and he said, you know, colleges and universities, I got to tell you, they just don't manage their resources very well, et cetera. Long story short, I put a business plan together that looked at federal, state and local governments, colleges and universities and not-for-profit organizations. And one of the commonalities amongst those types of entities is they have what? They have program objectives. And certainly they need to be physically sound, but it's a program objective. 

And as I put my team together at JLL, it wasn't the same team that I would take to IBM and Goldman Sachs, right? Because they just want, I gotta be bottom line, bottom line, bottom line. Here we've got a trade-off with bottom line and making sure that the program objectives are being met I, on the federal government side did a lot of work with the GSA, did a lot of work privatizing army housing, billions of dollars worth. And then on the education market where I had a very, very keen interest and looking at places, the way I explained it, Bill, I was looking for places to make university as a great place for people to live, work, play and learn. And with that, some of the biggest projects I worked on initially was what we call gateway projects. So I did the one, if you've been on the campus of University of Pennsylvania, their bookstore and hotel. Ohio State bookstore and retail area, Georgia Tech, technology square, hotel, meeting space, classroom space, conference center, et cetera. And working on and worked on several student housing projects, right? 

Because organizations such as universities have to see what are the things that they can monetize. It's hard to monetize the chemistry building because there's no direct revenue going with that. However, as you know, the food services and housing and retail, a different story. Where there can be a cash flow, we can get investors interested in it. And it generally results in a ground lease that the university may have been underutilizing to start with. So you say, we can not only help you with your programmatic objective, i.e. you needed new housing, you need a new student center, we can also help you economically. 

And I was on the board of American Campus Communities. And maybe your audience members will know they're the largest student housing REIT in the United States. And I was on that board until actually last year. And you talk about investors. That's my reason for saying this. Blackstone bought the company for over $10 billion. Okay. Wow. They had bought one platform. So what they see and Blackstone's a pretty good, pretty good investor. What they see long-term, even though we know, you know the statistics, we're gonna go down a little, we've had that big push. However, at the major universities, both state and private, they will continue to be winners. And as you know, on the left edge of that curve, where a lot of the smaller liberal arts colleges that just don't have that economy of scale to make it, they're gonna continue to consolidate. I'm not gonna use the word fail, I'm gonna say consolidate.

And as a result of that, I think there will continue to be opportunities. My team at JLL, I'm just finished up running all the facilities, for example, at Tennessee State University. And I'm making a big focus on HBCUs, just help Morehouse look at housing situation. Working right now with Charles Drew University out in LA on housing situations, have worked with Clark Atlanta University, have worked with Tougaloo College. So, and not to mention the Harvards and the Yales, the Stanfords and the Penns and Drexels, et cetera. So there are a lot of opportunities because higher education, you know, as well as I do, the issue has been what? Costs have gone up just exponentially.

And the boards and governing bodies, I don't want to say they haven't done a good job, however, the opportunity has been just to do what? Raise tuition, raise tuition, raise tuition. And as a result of that, even your state universities, I don't call them public universities, they're state-supported universities. Cause as you know, they're getting sometime less than 20, 30% of direct fees from the state. Now they're getting grants and other things from federal government. It may be up to 40 to 50%. But the rest of that revenue, it is a business. And the CEO and president's gonna have to run it in such a way that they balance it. And as you know, the health centers generally are a drain if they're not run appropriately, yet they are very strategic to the community.

Because universities are what I call anchor institutions, particularly with a lot of the gateway development we do where you've got this nexus between the university and the campus. Well, generally, and I'll use University of Pennsylvania as a perfect example, worked on that over 20 years ago, or minority neighborhood, they think the university is very rich. The university is, you know, maybe just focus on, hey, what do we need? What do we need? And what we help them do is say, you got to step back and say, what does the community need? And you've got to be that impetus, okay, to start a development or redevelopment process. And you might have to put a little money up at risk, but your overall goal is to do what? Make all boats rise.

Dr. Bill Pepicello: Yeah. Well, I've got one more very specific question for you here before we wrap this up. I see that you're going to speak to the African-American Student Union at the Harvard Business School to some of our future leaders. What are you going to tell them? What advice you got for them?

Herman Bulls: Well, I'm going to tell them, and the subject is going to be on corporate governance. So it'll start just like you and I started this conversation today. I'm going to tell them starting out that these kids are phenomenally motivated and qualified. However, I'm still gonna tell them that nothing is guaranteed for them, okay? That they are starting over. And it reminds me of my plebe year at West Point, coming out of high school, all these young men and women are big people on campus. And you go there, we take everything from you and you've gotta prove it again. So I'm gonna tell them, don't rest on your laurels. I'm gonna tell them, don't start with, "I'm a Harvard MBA," because that's what people expect you to start with. I want you to start with good sound analytics. 

And I'm gonna tell them, and we haven't talked about it much here, Bill, but one of the, I have six things I talk about, and I'll do this real quickly, that are critical to success, whether you're in education, business, an astronaut or zoologist. And I'm gonna talk about them real quickly. 

Interpersonal skills, and that's about being a continuous learner and having the ability to relate to people. 

Analytical skills, right? This is bigger than this, both on a qualitative and quantitative basis. 

We've got to talk about your communication skills, three components of that. Writing, speaking, and the one that I have to work on myself, listening, very important communication. 

The next one is leadership, and it's probably the most important one. And leadership in my simple definition is the ability to lead a group to accomplish a common goal, and there are all types of leaders and there are all ways to lead. That's important. 

The fifth one I talk about, I'm gonna tell them about is entrepreneurship. And that's really about risk-taking. Bill, I jumped out of airplanes, but you don't jump out of airplanes without a parachute. And when I did it, you even don't jump out without a reserve parachute. So there's one thing to take a risk and be an entrepreneur, but you still got to look at mitigating factors. 

And the last thing that's gonna be critical is to have passion for what you do.

Dr. Bill Pepicello: Wow. Well, I hope they're going to listen to that message, Herman. That's very powerful. And I think that that perspective will go a long way towards helping them succeed. Well, I want to thank you, Herman. We've been talking with Herman Bulls, who's the vice chairman and Americas International Director at JLL, and a very experienced board member and expert in governance. And thank you very much, Herman.

Herman Bulls: Thank you, Bill.

Dr. Bill Pepicello: And with that, ladies and gentlemen, you've just had ed-upped.