New Council membership criteria
It was my privilege to convene the first Hedera Council meeting of 2020 at our headquarters in Dallas, Texas – three days before the Updated WHO recommendations for international traffic in relation to COVID-19 outbreak were published. Even though this will almost certainly be the only physical gathering of the Council in 2020 -- we have since shifted from all-day quarterly meetings to bi-monthly videoconference meetings that run a couple of hours each -- I am pleased to report that the attendees took full advantage of this timely opportunity to establish a strong foundation of collaboration and shared purpose that will serve us well going forward. This was especially true of our newest members.
Google, for example, which had just announced their membership in the Council a couple of weeks earlier hosted a wonderful reception for all of us at their Google Cloud facilities nearby. We learned more about the connection between their growing Google Cloud business and our growing ecosystem of applications being built on the Hedera network.
Wipro, which was announced as a member shortly after this Council meeting, and Avery Dennison introduced their companies and explained their business interest in Hedera. The team at Avery Dennison, which was in the process of joining when they attended the Q1 meeting as guest observers, has given me the following statement to share with you today, noting this is the first public mention of their membership on the Council:
“At Avery Dennison, we believe in a future where every physical item will have a unique digital identity and digital life. With over 15 years’ experience in RFID technology, Avery Dennison is a world leader in digital identification technologies. We are pleased to be part of the Hedera Governance Council exploring what the future holds for the connectivity between people, products and systems.”
As we have reported before, the Council publishes its official and verified meeting minutes shortly after they are approved at the subsequent meeting. You can now read through the proceedings of our Q1 meeting as captured in the official minutes here. It was our best meeting to-date, on topics such as use cases and an interactive SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis whiteboard session.
In particular, I’d like to highlight for you today some of the changes the Council has called for in the criteria for new Council members going forward.
First, a reminder, the Hedera Hashgraph Limited Liability Company Agreement provides for a transition period between when Hedera was a single-member LLC and when the Hedera Council is operating with all 39 seats filled. Until that time, the Original Member (Swirlds) makes all Council member appointments. That said, Swirlds takes guidance from the Council’s Membership Committee regarding objective criteria for members, which has and will be subject to change based on what members learn as we go. In the Q1 meeting, the Membership Committee proposed the following changes, which were approved by the Council.
- Changed: instead of 18 subjectively defined vertical market segments to draw representation from, we will now rely upon the good work done by GICS and use their top level 11 industry sectors going forward. This means that Swirlds will work to ensure the Council has at least one member from each of those 11 sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Communication Services, Utilities, and Real Estate.
- Changed: instead of a subjective assessment of the value of, or trust in, any given applicant’s brand, the Council has simplified this aspect of the criteria to recommend the applicant be ranked in the Fortune 500, globally or in region.
- Changed: instead of a general guideline to ensure the Council has representation from a set of diverse regions around the world, the Council has given the specific recommendation that at least 3 members on the Council must be headquartered in each of the following regions: North America, South America, Europe/Middle East/Africa, and Asia Pacific.
- Changed: instead of limiting representation from any single industry sector to no more than 3, the Council no longer puts any upper limit on the number of companies from a given sector so long as at least 1 member on the Council comes from each of the 11 sectors listed above and the 2 new categories listed below.
- Added: the Council added the recommendation for at least 1 member organization be a top 10 ranked university as measured by either overall ranking or computer science program ranking, globally or in region. Swirlds has already taken action on this guidance with the appointment of University College London who is ranked 8th in the QS World University Rankings
- Added: the Council also added the recommendation that at least 1 member be a trustworthy Non-Governmental Organization (NGO) widely recognized as credible with a proven track record of contribution to the greater good of society.
We see Council members continue to follow a trajectory of stronger engagement over time, as they progress from initial technical discussions, to understanding more deeply how hashgraph works, to discussing how they can use not only the technology but also the shared resource of Council membership to be successful.
It isn’t just the Council as a whole that is deeply engaged. The Board of Managers has been meeting at least every other week and providing a more hands-on approach to corporate governance that the management team has welcomed with open arms. The committees have increased engagement and been consolidated into the current set of clearly complimentary functions we have now. In fact, just last month I introduced a new governance structure for creating sub-committees, because the Technical Steering and Product Committee (TechCom) was getting too big and too busy to cover all their topics in the course of normal business. They now have a Cybersecurity sub-committee to work on topics such as the application of the NIST Cyber Security Framework to Hedera.
I am pleased by the progress the Council has made since we convened the first meeting with our five inaugural members in Seoul one year earlier. I encourage you to take advantage of Hedera’s transparent governance model by reading the newly published minutes. Take care and stay safe.