The 2-Year Rule: Securing Your First Public Board Seat While Still in the C-Suite

Written By Ryan Morrison

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Introduction

Transitioning from a high-pressure C-suite role to "retirement" often presents a paradox: the desire for freedom vs. the need for intellectual stimulation. In this episode, Tom O'Toole, former CMO of United Airlines and Hyatt Hotels, pulls back the curtain on two distinct worlds. First, he explains the hyper-rational business of airline loyalty programs—valued in the tens of billions. Second, he provides a tactical roadmap for high-net-worth individuals to construct a "portfolio life" consisting of board service, teaching, and strategic consulting.

 

Guest Snapshot

Guest Name: Tom O'Toole

  • Titles: Former CMO of Hyatt Hotels and United Airlines; Senior Advisor at McKinsey; Associate Dean at Northwestern (Kellogg)

  • Credentials: Led United’s MileagePlus program and oversaw its $22 billion valuation disclosure

  • Current Focus: Public and private board service and strategic advising

  • Additional Areas of Expertise: Applied economics in loyalty marketing and post-corporate career design

 

The Economics of Loyalty: More Than Just Miles

While consumers view miles as a perk, Tom explains that major airline loyalty programs are highly profitable, standalone businesses. During COVID-19, United disclosed a $22 billion valuation for MileagePlus when using the program as collateral for loans.

How the Business Model Works:

  • Currency Arbitrage: Airlines sell miles to partners, such as flower delivery services or banks, at a specific rate (e.g., 2.5 cents per mile).

  • Margin Management: The airline captures a profit margin when those miles are redeemed at a lower internal cost (e.g., 1.5 cents per mile).

  • Inventory Engineering: Award availability is an "engineered outcome" designed to optimize value for the airline while maintaining enough utility to keep the currency valuable.

  • Dynamic Pricing: The industry is moving toward "dynamic pricing," where the cost in miles fluctuates based on projected demand and availability.

  • The Third Currency: Loyalty points are the third most widely used currency in the world, trailing only the US dollar and the Euro.

 

The "Portfolio Life" Framework

Many executives face a "Starbucks problem"—the realization that leisure alone cannot fill the void left by a 30-year career. Tom advocates for an intentional design process to create a balanced portfolio of professional activities.

  • Diverse Components: A typical portfolio includes board seats, teaching, and consulting.

  • Varying Purposes: Each element serves a different goal—boards provide financial rewards, while teaching and consulting provide intellectual engagement.

  • "Experimental Design": Tom describes himself as the "guinea pig" for this model, having successfully balanced multiple public and private boards simultaneously with his academic and consulting roles.

 

Public vs. Private Boards: Understanding the "Bright Line"

For the high-level decision maker who values unfiltered signal: If you are used to being the primary driver of a business and want the "real story" behind an organization, Tom clarifies that the nature of board service changes fundamentally based on ownership.

  • The Public "Bright Line": In a public company, there is a strict separation between the board and management. Directors oversee strategy but must not step across the line to give operational direction.

  • The Private "Pseudo-Operator": Private company boards often expect directors to take an assertive role in management, operations, and business development.

  • Risk and Reward: Board service is "great until it’s not." During crises—such as activist investor bids or cybersecurity incidents—directors earn their compensation through intensive, high-frequency involvement.

 

Securing Your First Public Board Seat

Public board seats are highly competitive. For the time-constrained leader who needs a clear roadmap and shortcuts to confidence, Tom provides a specific, high-efficiency strategy:

  • The Two-Year Rule: Start the search at least two years before leaving your corporate role. It is much easier to secure a seat while you are still a sitting executive.

  • The Skills Matrix: Boards look for specific gaps in their "skills matrix," such as cybersecurity, IT, risk management, or financial expertise.

  • Audit Committee Advantage: Individuals who meet the SEC definition of a "financial expert" and can chair an audit committee are in particularly high demand.

Networking Over Recruiters: While search firms are vital, many opportunities come from peer validation and trusted signals from existing directors.

 

The Strategic Advisor Role: Staying Intellectually Sharp

Senior advisory roles offer a way to maintain professional relevance and "high signal" involvement without the friction of an 80-hour work week.

  • The Intellectual "Edge": Tom uses advisory work not for the money, but to stay "intellectually sharp." Presenting to C-level clients requires staying current with market trends.

  • Variable Demand: Advisors are used when needed; you might have no calls for a month, followed by intense activity for several weeks.

  • Flexible Roles: An advisor may work internally with a client service team or stand in front of a board of directors, depending on the firm's needs.

 

Memorable Quotes

"A portfolio life... doesn't just happen. It has to be very intentionally designed."

"Get your first public company board before you leave your corporate position or you will probably never get it."

"The airline business and the loyalty program business... is a daily exercise in applied economics."

 
 

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Ryan Morrison
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