Boardroom Insights: Nelda J. Connors on Business Approaches, Outside Influences, and Inspiring Reads

Baker Hughes is driven by its mission to advance the energy sector while adhering to a sustainable framework encompassing people, the planet, and ethical principles. Annually, our Board of Directors undergoes a thorough review to ensure they possess the required skills and capabilities, as well as a diversity of executive experiences and backgrounds.
 
This year, Baker Hughes achieved a remarkable position in Fortune magazine's Most Modern Boards list, climbing from the 6th place in 2022 to the 5th. According to Fortune, this evaluation is rooted in the belief that, in a rapidly evolving business landscape, board innovation and the exceptional performance it entails are dependent on the composition of the board.
 
Nelda J. Connors is a member of the Baker Hughes Board, contributing her expertise in leading large enterprises during her tenure at Atkore International (formerly part of Tyco) and Eaton Corporation, as well as managing smaller to medium-sized businesses. She is the founder, chairwoman, and CEO of Pine Grove Holdings, LLC, a privately held company that invests in and operates businesses primarily in the power generation, software as a service, metals machining, and transportation logistics sectors.
 
Her extensive experience in transforming companies to succeed in the global arena is just one aspect of the diversity she brings to the four boards she serves on. In this context, she explores how contemporary boards enhance and support robust corporate cultures, and she reveals the advantages of a 'sharing economy' in governing at the highest echelons.
 
Question:
How did you reach your current position?
 
Nelda J. Connors:
I started my career as an engineer, and later transitioned into general management. I've held various roles that involved managing business units and companies of different sizes. Despite having experience as a CEO in a public company and working as an executive in diverse industrial sectors, I always aspired to start my own company and gain the firsthand experience of being an investor-operator.

I believed that my past experiences, which included taking a company public and fulfilling global operational roles, had prepared me for the role of an investor. I've been engaged in private investments for over 11 years now. So, my journey to my current position has been shaped by a wealth of valuable experiences gained at some of the world's most prominent global companies.
 
Question:
How did this path lead you to become a board member, particularly on the Board of Baker Hughes?
 
Nelda J. Connors:
My journey towards serving on boards, specifically the Baker Hughes Board, began when my division at Tyco was preparing to go public, and I was poised to assume the role of CEO. The Tyco board recognized the value of equipping me with board experience, as both a member and as someone overseeing their own board. My initial foray into board service was with Boston Scientific, and I've held that position since 2009.
 
As I delved into building my business centered around investments in smaller companies, I remained committed to staying attuned to the experiences of larger corporations. These larger companies are often at the forefront of global business practices. They have resources that smaller entities might not be able to afford, such as strategic consultants and top-tier talents. Being part of boards like Baker Hughes has allowed me to maintain a unique perspective on the latest developments in business thinking, which I could then apply to my smaller enterprises. Conversely, the agility and resourcefulness inherent to smaller companies have also enabled me to introduce valuable lessons and perspectives into the larger corporate landscape.
 
When the opportunity to join the Baker Hughes Board arose, Lorenzo Simonelli, the Chairman and CEO, was seeking individuals with diverse industrial backgrounds and experiences to enrich the collective knowledge of the board. My background, which includes significant international exposure throughout nearly half of my career, as well as a strong foundation in operational excellence and profit-and-loss business unit (P&L) experience, made me a valuable addition to the Baker Hughes Board. In October 2019, I gladly accepted the nomination to join the board.
 
Question:
Tell us about your experience with operational excellence. How has it evolved since you started serving on boards?
 
Nelda J. Connors:
My career commenced in the automotive industry, a sector known for its razor-thin profit margins. In that competitive landscape, the key was to maximize operational profits, a concept often described as 'wringing the dry towel.' As time progressed, diversified industrials like GE began to recognize the significance of continuous improvement and overall operational excellence, along with how lean principles could enhance their operating margins. Historically, within the oilfield service industry, capital was readily available, and while return on capital was an important metric, it wasn't always the top priority. However, today, operational effectiveness stands out as a crucial differentiator.
 
Question:
Didn't the automotive industry experience significant changes? Are there similarities with the energy sector?
 
Nelda J. Connors:
I wouldn't characterize it as upheaval; I'd refer to it as a profound transformation. External forces can compel a shift in your business model. This is precisely where the oil and energy segment finds itself at present. In the automotive sector, failing to sell a particular model or losing ground in the three-year vehicle product cycle could be devastating. You'd have to wait for another three years to make amends, provided you had the capital for such changes. On the other hand, oilfield services operate on a more extended product lifecycle, requiring longer-term bets. More recently, the impact on the environment and impending resource constraints have become the primary drivers influencing the direction of oilfield services and the energy industry.
 
Question:
In your role at Pine Grove Holdings, what are your fundamental investment principles?
 
Nelda J. Connors:
Frequently, I acquire or invest in companies that may be the sole manufacturing entities in their local communities. These companies may provide employment opportunities ranging from as few as 20 to as many as 200 jobs in their respective locations. Despite their size, these non-service-based businesses play a crucial role in society. While service-based businesses are undoubtedly essential, I firmly believe that manufacturing jobs are a cornerstone of society, contributing to the creation of middle and upper-class wealth.
 
A thriving middle class is vital for the survival of a community or a nation, as it is instrumental in generating wealth. This is one of the reasons I focus on companies of a certain size. Exercising control over them enables me to implement strategies I know to be effective from my experiences in larger corporations.
 
Question:
Baker Hughes has been actively involved in technology acquisitions as part of its growth strategy. It seems like a period of consolidation is taking place. How do you perceive this current phase?
 
Nelda J. Connors:
The management of one's portfolio is a constant necessity, and Baker Hughes is no exception to this rule. Continually, we assess our portfolio to identify the growth potential within it. Some of these prospects may be small at present, but they hold the promise of yielding substantial dividends in the future, aligning with the evolving energy landscape. It's imperative to make strategic investments in these areas, sometimes necessitating multiple attempts to secure a few valuable ones. Concurrently, we maintain investments in areas with the prospect of moderate growth or divest from those that provide a source of cash flow. This approach has proven effective in various industries and remains pertinent here at Baker Hughes. It's a strategy that Lorenzo and the management team are diligently pursuing, with the full support of the Board.
 
Question:
Fortune magazine recognized Baker Hughes as one of the top five most modern boards. How do you define a 'modern board'?
 
Nelda J. Connors:
The modernization of the Baker Hughes Board was not a coincidence but a deliberate and distinctive process. When I was invited to join the Board, I observed that the leadership team at Baker Hughes was characterized by a high degree of diversity in various aspects. The Board subsequently mirrored the diversity already present within the management team, a unique approach for an industrial company.
 
Question:
Fortune noted that modern boards tend to engage more with the management and executive teams than in the past, which brings diverse experiences to bear on various challenges. Do you have substantial interaction with Baker Hughes' executive leadership team?
 
Nelda J. Connors:
Yes, indeed. This aspect of the onboarding process was also distinctive. I had the opportunity to meet with the entire senior leadership team and some of their immediate colleagues. These interactions were essential in understanding their roles within Baker Hughes, their mission, and their perspectives on the company's strategy and transformation. When new individuals join the company or take on new responsibilities, we are exposed to them, facilitating our comprehension of their outlook on the company and their specific roles.
 
This alignment ensures that we don't require extensive re-education at each Board meeting. Instead, our discussions tend to be seamless, even when there has been a lapse of 60 days since the previous meeting. Furthermore, most directors actively stay informed between meetings by independently monitoring the company or accessing information shared by the company.
 
Question:
You currently serve on the boards of Baker Hughes, Zebra Technologies, Otis Worldwide, and Boston Scientific. Do they share any common approaches to conducting business?
 
Nelda J. Connors:
What's intriguing is that, for the most part, these companies are in different phases of transformation and are focused on managing the associated risks. A board typically has four core responsibilities: overseeing performance, granting approval and allocating resources to support the strategy, managing succession plans through hiring and development, and addressing risk management. The level of engagement in these four areas depends on where a company stands in its business cycle or the market conditions at the time.
 
Furthermore, I often draw on the lessons I've learned from one board and apply them, where applicable, to another, creating a beneficial cross-pollination of insights. There's an element of sharing involved. Baker Hughes, for instance, boasts a robust board, and I actively absorb thoughtful questions and insights from fellow board members. I then consider how to apply them to other boards without attribution, contributing to the overall collective wisdom.
 
Question:
Are there activities outside of work that influence your approach to board responsibilities?
 
Nelda J. Connors:
Occasionally, during my commutes in Chicago, which can turn a 30-minute drive into an hour or more, I make use of the time by listening to audiobooks, podcasts, or TED Talks. This gives me the opportunity to explore alternative thought processes, aiding in the refinement of my own thinking. It often inspires me to formulate the most pertinent questions or offers a different perspective that I can apply when assessing what a company is currently undergoing.
 
Question:
What types of books do you prefer to read, and have you recently come across an inspiring book?
 
Nelda J. Connors:
My favorite genre of books is biographies. I tend to read more biographies than business-related literature.
 
One book I found particularly inspiring is "Principles" by Ray Dalio. Despite his background as a hedge fund manager, the book delves into the art of creating a business, leading a multi-generational team, and setting up the operation in such a way that one can retire without concern about its continuity. It's a valuable resource on leadership.