Industry experience is important and its needed presence on a board is reasonably obvious.

However the problem is when a board is composed of predominantly industry-based directors. There is not enough "outside" experience that can bring lateral and 'out of the box' solutions to the corporation.

Using the argument of enhancing industry experience to enhance performance, one might argue that corporations composed solely of industry-based directors should outperform those corporations with fewer industry-based directors. This is demonstrably incorrect. Performance to circumstance and challenge is context specific.

Surely the directors' role is to not only know the corporation's industry (that's a given) but should also have experience in bringing solutions to the corporation's context. This may or may not require specific industry knowledge. Some of the issues may require knowledge of value-chain, HR, IT, up-stream and down-stream management, financial systems, compliance, governance and so on. These are not necessarily industry specific issues although they may be.

As an analogy, there are two types of strategists: those from within an industry with extensive experience of it; and those strategists who work in all industries and understanding how stuff is done elsewhere and can import a valid solution.

The problem with the first type is they think 'like the industry'. If they were so effective, there would be no problems in those industries in which they are found because they would have solved the problems. A strategist is a tactician who has experienced other approaches to problems and knows what does work, what can work and what doesn't work.

Directors are the same.