Nvidia announced Jensen Huang’s resignation on Thursday, naming CFO Colette Kress interim CEO and Harvey Jones its first-ever board chair (Nvidia 8-K). It followed an independent board investigation announced on November 8 (AI Business). Of all the questions this raises, the one that interests me most is what boards can learn from it.
Imagine being a director at Nvidia and telling Jensen he needs to change the way he runs the company. Here is a man who created several trillion dollars of shareholder value doing things conventional management wisdom would have advised against. And yet, that is part of the job shareholders pay directors to do. The board needs a point of view on how the company operates, not just how it performs.
Take the span of control. Huang reportedly had as many as 60 direct reports (Yahoo Finance). I have no issue with that if he could make it work, and clearly he did. But how many of those executives got to make the kinds of decisions Jensen made?
You can delegate a lot of work without delegating much authority. And without exercising authority, it is hard to develop the judgment needed to be a CEO. I explored this in The Corner Case. A flat structure can be fast and still fail to produce a successor.
So what should boards do?
Discuss succession at least twice a year, with and without the CEO present. There should be a plan for tomorrow morning and another for three to five years from now.
Know the bench firsthand. Directors should spend time with the next two levels of management, independently assess potential successors, and influence the assignments they get. They should also know which customer, partner and government relationships depend disproportionately on the incumbent CEO.
Tell shareholders the process. The board doesn’t need to name potential successors, but it should disclose how succession is handled. Semafor reported that the word “succession” appears zero times in Nvidia’s latest annual report, against 25 in Microsoft’s (Semafor via AI Weekly). Huang himself said the next CEO has to be hired, just as the board could fire him. That is the right principle. It just needs a visible process behind it.
Plan for the board itself. Why stop at the CEO? How many boards have a good succession plan for themselves? Huang, Tench Coxe and Harvey Jones have all sat on Nvidia’s board since 1993 (The Next Web), and average tenure is nearly 15 years, roughly double the S&P 500 norm. Long tenure brings institutional memory that is hard to replace. But refreshment isn’t only about adding skills. It is also about keeping the ability to challenge a founder. Directors who have spent decades alongside a brilliant CEO find that harder to do. Bloomberg noted that Nvidia’s board has no current or former S&P 500 CEOs (Bloomberg). Tenure norms and a skills matrix reviewed every year would help.
Build enough AI fluency to challenge management. Many boards are being asked to approve billions in investment and fundamental changes to business models in an area where few directors have firsthand experience. I don’t expect every director to become an AI expert. I do expect the board collectively to have enough expertise to challenge management without relying on management to educate it. A director should be able to ask which parts of the company’s competitive advantage will survive when its competitors have access to the same AI capabilities, and then independently assess the answer. That question sits at the heart of Migrating Scarcity.
Watch where AI moves decision-making. As AI makes execution easier to scale, companies may concentrate authority in fewer hands. But AI can just as easily spread decision-making to more people, because it puts analysis and judgment tools in front of people who never had them. The economics of either path can be attractive. The governance implications differ. The board should understand which direction management is choosing, and why.
To its credit, Nvidia named an experienced internal executive as interim CEO very quickly. We don’t know enough about its long-term succession planning to judge the board conclusively.
But I would encourage every board to ask itself two questions at its next meeting.
1. If our CEO left tomorrow, how much of our competitive advantage would leave with them?
2. And if the answer makes us uncomfortable, why are we waiting?
