One Minute Governance: Recent Episodes
Fullbrook Board Effectiveness
NEW EPISODES EVERY MONDAY and THURSDAY
Are you a director, senior executive, investor, or someone who's just curious about corporate governance? Tune in for insights about how things work inside and outside the boardroom, based on 20 years of experience and interactions with thousands of directors from around the world. Each episode lasts about one minute and will provide you with questions to ask yourself, your board and your management team, designed to optimize the way your organization makes decisions.
Matt Fullbrook is a corporate governance researcher, educator and advisor located in Toronto.
This is our first ever video episode of Sound-Up Governance. Let us know what you think!
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May 12-13 (Brisbane) - Breaking Boardroom Patterns: Better Decisions, By Design
June 10-11 (Toronto) - Working Effectively With Your Board: A Program for Senior Executives
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Transcript
Hi I’m Matt Fullbrook. It’s April 2026 and this is a special episode of Sound-Up Governance, cross posted on One Minute Governance. This is also the first ever video episode, so please check that out at ground up governance dot com and maybe on Spotify if I can figure that out. And the video part isn’t just for fun - I actually really want to show you something. It’s a super early visual sneak peek at my upcoming book with Nate Schmold tentatively titled The Hidden World of Boardrooms. And trust me - you kind of need to see it to believe it. More on that in a sec.
FULL TRANSCRIPT AND VIDEO AT GROUNDUPGOVERNANCE.COM
Bonus Crossover Episode from Sound-Up Governance. For more info, visit http://www.groundupgovernance.com
TRANSCRIPT
Matt Intro
Hi everyone! This is Matt Fullbrook. It’s been a LOOOONG time since I posted anything here on the OMG channel, and…actually I don’t have any real updates for you. Sorry! I just wanted to let you know that there’s some new content on the Sound-Up Governance podcast. I’ve just launched a short series of episodes based around a cool webinar I did last year with some experts in business design where we explored the connection between design thinking and good governance. Here’s the first instalment. If you like what you hear, be sure to follow along at groundupgovernance.com
Matt Voiceover
Welcome back to Sound-Up Governance. My name is Matt Fullbrook, and today we have the first in a short series of episodes that come from a webinar that I co hosted a few months back with my old friend Michael Hartmann, who's the Principal of the Directors College at McMaster University. He invited a couple of his friends to join us. Karel Vredenburg, who was the global VP of UX Research at IBM, and Tara Safaie, who's the executive Director of Health and Organizational Innovation at the design firm, IDEO. I've become increasingly convinced over the past few years that good governance is a design challenge. If you're familiar with my framing of good governance as intentionally cultivating effective conditions for making decisions and also familiar with design thinking, then you already know what I'm talking about. I honestly had no idea at first that I was talking like a design guy, but now I'm all the way bought in. Tara, Karel and Michael further reinforced this perspective in our discussion. But we'll get to that a bit later. Let's start first with some definitions. The first voice you'll hear is Michael, followed by Karel.
Michael Hartmann
I remember going out trying to introduce companies to this thing called design, and a lot of eyes would be like, blank, saying, what is this? 25 years later, 24 years later, it's ubiquitous. Design is everywhere. But as my colleagues will say, it's everywhere. Not done well. More often than not, we brought it into Directors College and for a couple of reasons. And we're going to explore those reasons. One, if you think about the core roles, responsibilities of board, CEO, selection, talent. Well, of course, strategy is a critical one. You know, setting the lanes for management, sometimes moving the lanes with management as well. But design is a really interesting way to think about strategy development and execution. I wanted Karel to maybe introduce some of the design. What do we mean by design? And for my colleagues around the table here, how can boards leverage design principles for better strategy? So that's a starting point, Karel, and maybe a question over to you.
Karel Vredenberg
Yeah, let's let me start. And some of the people that are listening, I'm sure have heard this story. If you were in my. In my session. But I love to share that I talked about design thinking at a university was an interdisciplinary lecture. The Dean of the business school said as a question later, said, we're all learning design thinking now. This is really, really good. Do we still need designers? I said, yeah, there's a difference between design and design thinking. And so the notion of design, that intentional process to research, ideate, and then actually create and then iterate on things that you're creating, whether it's websites, apps, products or services. That's sort of design and design thinking is really the, as it states the thinking, the, the way to actually take a perspective on a particular problem, to solve a problem in a, in a more intentional empathic, looking at all stakeholders and alike, more holistic sort of approach. And so that's how I see them being different. And the way that I've used design thinking in companies, both for typically the C suite I've worked with and, and then with boards, is really to open the aperture in ways that they've never thought before. There were a couple of instances where after I spent like a day and a half with, with them, they came up with a set of directions strategically where they realized that there were things that they came up with through this way of thinking that they realized there were certain things that were on their five year plan that were absolutely things they shouldn't be doing. And there were other things that were really simple to do but they'd never thought of them because they'd never used this design lens that now became their number one priority. So I think it's an incredibly powerful tool to be able to set strategy for an organization.
Matt Voiceover
Before getting to Tara's perspective, you'll hear her and eventually Karel refer to Agile. Now I'm no expert in Agile, so please forgive me if any of you listeners are experts and I'm messing something up. In short, it's a set of frameworks and practices originally designed for project management in software development that are rooted in certain priorities and principles. For example, it's more important to prototype, iterate and respond to change than it is to adhere dogmatically to a preset plan. Anyway, here's Tara's perspective on what human-centered design means for organizations.
Tara Safaie
Many of these approaches are a combination of pedagogy and methods and you know, certain steps that you're supposed to take. But they also introduce mindsets or ways of looking at and thinking about problems or context in a way that is different from how many organizations traditionally look at problems. So I think what's useful about design as a methodology, and you alluded to it, Karel, is that it often forces many organizations to think about their problems in a more human-centered way because you have to find a case for a desirable solution before you go on to actually making that solution a reality using more agile methods. Agile and design both have as part of their methodology iterative processes. So where you start in lower fidelity and progressively build your fidelity and an investment and things like that as you learn and as you fail and things like that. And so I think it's worth noting that while the methods themselves often yield great results and they are worth in many cases implementing in the right corners of an organization to yield the outcomes and the products that they can yield. And it's also worth noting where those mindsets that they're bringing to the table are most impactful so the two can be treated in conjunction with one another. And then to make them a more sustainable part of an organization's being, to make them really course through the bloodstream of an organization that requires much more kind of long tail change and a different type of approach integrating it into organizations where they're, where it's not present at the moment.
Karel Vredenberg
Hey, Tara, I want to just add one other thought to that and that is that of course, yeah, I always imagine it as if you think that you have this big canvas of what the solution was going to end up being. If you just do Agile, you'll start so say on the top right of that campus that solutions space. Right. And yes, you'll be able to iterate, but you're going to be roughly still in that top right quadrant of the canvas. Design thinking right at the front of it may well tell you that you really need to be in the bottom left to really serve the market. And that's whether products or services or work of a board where you want to think more deeply about what's the bigger picture view of where this company should go.
Matt Voiceover
So you'll already see an important intersection here with my framing of corporate governance as people making decisions in corporations, I the first and most important step in effective decision making is a clear definition of the problem we're trying to solve. As Tara and Karel are defining it, that's where design starts too. Okay, so let's start moving into some useful insights for boards. I mean the design world has in my opinion generally done a pretty poor job at helping boards to do their jobs well. With this in mind, Michael prompted our guests with a reminder that boards tend to be, well, risk avoidant. So how do we embrace design when that's our starting point?
Michael Hartmann
Board directors, when we query about innovation, one of the common feedbacks we get is we wish we could be more open to risk as opposed to de risking embracing innovation design. I also see that it's a really interesting way to kind of, you know, stress test and build a capacity for risk taking. And I don't know Tara, if you've got some thoughts on that.
Tara Safaie
Yeah, absolutely. A couple of anecdotes. One is that I think organizations that have really adopted design in a powerful way in their organization, have adopted the mindset that ideas are disposable.
Matt Voiceover
I just want to interject here. Imagine a world where we approached governance ideas as disposable instead of embracing them as orthodoxy. OMG, it's like a dream come true. Sorry Tara, you were saying...
Tara Safaie
They have right sized the investment that they put into an idea to the maturity of that idea. So what I see many organizations do, particularly my, my clients in the healthcare space, is that they are very quick to jump on the first couple of ideas that they come up with because they are so deeply expert in the area that they're working in. Like many of them have spent decades learning to be the professional that they are. That expertise gets translated into these ideas that when, when thrown into the thunderdome of the real world or of a patient's world, let's say, just don't survive the key shift that occurs with organizations that are able to adopt design mindsets, you know, kind of deeply in their organization and adopt the level of risk that it requires. Have learned how to test their ideas in low fidelity ways. And so where they are able to identify the most core assumptions that they're holding, maybe because their expertise has kind of put blinders on them, or they only work with a particular type of customer and they want to expand to a new type, they don't know that customer as well, whatever it might be, that they're a western organization designing for a non western customer base or a global south customer base, whatever it might be. And so they're able to understand what the most deeply held assumptions in their solutions are and then design tests to test those assumptions in low fidelity ways. You can't build certainty in any of the paths that you're taking, but you can build confidence. So your goal in any type of design exercise, and again, organizations that have internalized this, know this deeply, your goal is not to be certain. Your goal is to gain confidence. And so organizations that are testing their ideas in low fidelity ways are testing whether their assumptions hold. And as they build confidence, then build the confidence to slowly invest more and more as the stakes get, you know, the stakes get higher. They've invested more in the, in the back as well. And that allows them some of the agility, as we were talking about before, to then respond to a change in market context or a change in the competitive landscape or something else that might shift where those assumptions were tested initially. The risk profile that most organizations have does not necessarily preclude them from having low fidelity and therefore small investment, high risk things on the side. What they are not seasoned in doing is then transversing the space between that low fidelity and very low investment idea to the full fledged one. That's really going to require a lot of money.
Karel Vredenberg
Yeah, I would just add, I want to amplify something you said too, like the low fidelity idea. That's really a prototype, right. And what is a prototype precisely? It's, it's really a low risk way of exploring something. So people talk about, oh, you really should be increasing your, your, your failure rate. You learn from failure. And everybody, you know Silicon Valley loves to say that, right? Yeah, they love to say it because 90% of them fail. But in fact, if they did the kind of things that Tara and I are talking about here, doing just a small prototype, it might be a new way of working as a, as a board, let's say. And you want to just try that out? Well, you can just try it out in your meetings. That's a prototype. And then after, let's say you do, you know, sort of an off site or whatever, let's, let's see what that was like, get some feedback on it and the like as well. So it's this whole mindset of, of doing small prototypes that can fail. But you're not failing big, you're testing first, seeing if something's going to work. And then if it's going to work, then you can scale it up and do it across a whole organizational like as well. It's a fantastic, phenomenal way to de risk by taking risks.
Matt Voiceover
That's a wrap on the first episode in this series. Let me just say that this prototyping approach really works in boardrooms. I like to think of it as crafting a 1% intervention rather than a revolution. An intervention designed intentionally and specifically to increase the probability that we'll get a, a better result in some small part of our work together. Maybe it's a change to reporting or a shift in our agendas, or a new conversation prompt after a presentation or a different lunch caterer. Whatever it is, the consequence of failure is essentially zero and the potential for learning is high. Stay tuned for the next episode in the series coming up soon. And drop me a note to let me know what you thought of this episode. If you liked it, please consider spreading the word. Oh, and as usual, I've provided some notes on today's music on the episode post at groundupgovernance.com Catch you next time.
Head to http://www.groundupgovernance.com for more
TRANSCRIPT:
Hi everyone, this is Matt Fullbrook and I'm back on the Ground-Up Governance platform after a long absence and I've got a new idea. If you're listening to this on a mainstream podcast platform and don't know what I'm talking about, head over to groundupgovernance.com and just start putting poking around. It's the only place you'll be able to check out this new idea, at least for the time being. So, long story short, I created Ground-Up Governance with the amazing Nate Schmold. He's the illustrator who effectively made this whole thing worth following. After a couple of years, Ground-Up Governance became too hard for both Nate and me.
Don't get me wrong, this is for sure at or near the top of the pile of most fun and gratifying things I've ever worked on. But it's so much very difficult work and it got to the point where each new post felt like it was less important than the previous one, but no less difficult or time consuming. Then we both got distracted by other professional and personal things and, well, lots of time passed. So here we are. Sorry about all that.
Just so you know, Nate and I are starting to work on what I hope will turn into another large scale and super fun project. Time will tell on that one. Anyone who follows Ground-Up Governance will be the first to know. In the meantime, I have a cool thing that I want to try out. I'm going to put out new episodes of the Sound-Up Governance podcast, but make them a little bit more like the format of my One MinuteGovernance show.
What I want to do is have conversations with interesting people in the corporate governance space. But instead of turning the recordings into long and heavily edited podcast episodes, I'm going to, you know, grind them up into smaller bits. Get it? I expect each episode to be somewhere in the 3-7-ish minute range. I'm also going to use them as an opportunity to craft some music. Some of it might be kind of janky because I'm not going to have a ton of time to put into it, but the goal is to have different music for each episode, even if some of it is kind of embarrassing or unfinished.
This whole thing is going to start off with someone Ground-Up Governance followers will already know: my awesome friend Andrew Escobar, who's an experienced corporate director, a big governance thinker, an open banking nerd, and one of those obnoxiously thoughtful, generous and fun dudes. He and I had a conversation recently that I think will make up the first 13 or 14 episodes of this project. I'll post the first two on January 20th so be sure to subscribe before then to stay up to date. If you like what you hear then please be bold and let me know. I'm only interested in making content that you find useful, fun or otherwise worth checking out and I only know if you think it's worth checking out if you let me know. You can like or comment on the posts or send me a note privately or whatever else you want. And if you have ideas for people who might make good guests or if you might make a good guest that would be helpful too. I'll remind you about all this when the time comes. Just be prepared to send a thumbs up or down my way so I know how you feel for now. Happy New Year and thanks for listening. It's really exciting to be back at Ground Up Governance. See you in a couple weeks.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Here we are at the end of another season of OMG. Invariably, during the process of writing the last episode of a season of the show, I find myself wondering if I’ll do another one. Not because I don’t want to or because I think it’s not worth it. It’s just never clear if I’ll have any more ideas, let alone FIFTY more ideas. So, who knows? Anyway, I don’t know about you but I think this season has been the one with the greatest potential to transform and improve your board. It’s been about taking the implicit and making it explicit. It’s been about letting go of assumptions and making space for something new. It’s been about taking time to validate the things we think we do really well and welcoming the potential to do things even better, even just a little. My hope in making this show is that every once in a while you might find something in here that sticks with you long enough to actually change the way you work with your board and executives – even if it’s just a tiny change that lasts only one meeting…or even just one minute. Writing this season has caused me to re-think some of my own behaviours when working with organizations. I mean, without OMG I may never have started questioning my own concept – or lack of concept – of what good governance even is. So this is a long way of saying thank you for listening. If you enjoy the show, please share it with a friend and consider leaving a rating or review on your podcast app. It REALLY helps. And when the time is right, maybe I’ll be back for a sixth season. See you then!
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #49: What is the point of the question I’m about to ask? By proposing this question, I guess I’m basically recommending a bit of cognitive behavioural therapy for directors. I won’t dive into CBT other than to say it can help people to develop habits to manage undesired thoughts or behaviours. And if you listen back to the intro of this season, you’ll recall that the inspiration for the season theme is that I think boards and directors have been conditioned, or at least encouraged, to be question-asking machines without giving much thought to the real-world impact and results of those questions. Questions are great! I’m not suggesting you stop asking questions. But try to build the habit where, before asking the question, ask yourself what the point of the question is. If you’re not sure, it might be a good idea to think about it before opening your mouth. If you ARE sure, then go ahead and ask the question. After asking the question, ask yourself if the question achieved its purpose. If not, what else might you try instead of or in addition to the question that might increase the probability that you get the result you hoped for. Could you frame the question differently? Could you make a statement instead? Could you take a break and reset? Could you share a video or song or podcast to help your peers engage differently next time? Could you perform an interpretive dance? I don’t really care what you try as long as it’s got a point, and if you don’t get the result you wanted try not to blame anyone else, but instead consider trying a totally different approach.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #48: What, specifically, are we going to do better next time? I could’ve made this the shortest episode ever by just stating the question and leaving it at that. I suspect it’s obvious what the point of this question is and why it matters. It forces us to abandon the assumption that we’re perfect, and prompts us to make – and hopefully follow through on – commitments. The only reason I have more to say is that I don’t want to pretend that this question is easy to answer. It’s not. The universe of boardrooms is not overflowing with examples of cool new things to try or even little tweaks to conventional processes and approaches. But that doesn’t mean we have to rely on our imaginations. I mean, the whole POINT of OMG is to give you ideas so that you don’t have to come up with your own. And this is episode 250, so there’s lots of material! So, if it’s been a while, take a sec and scroll through the archives of the show and see if a title catches your eye. It might inspire a cool answer to today’s question. Or read The Art of Gathering by Priya Parker or listen to Expert in a Dying Field by The Beths (the song or, even better, the album). Or if you’re getting stuck on details, listen to Perfect Sound Whatever by Jeff Rosenstock. I dunno. Just try something! Also, thanks so much for listening. 250 episodes feels kinda unreal.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #46: Are we compromising instead of being intentional? Don’t get me wrong: compromise is a useful hack. Both in the “let’s make everyone equally unhappy” sense and the “let’s shoot down the middle instead of taking an extreme position” sense. And I think compromise is often really appropriate in boardrooms. That said, compromise often turns into a habit, especially in situations where we’re really time-constrained…like a board meeting. And doing things habitually is essentially the opposite of being intentional. Are your meeting pre-reads designed to make sure everybody can live with them, or are there certain parts that are designed to specifically engage certain people whose perspectives you’d really like to consider? Are your meetings structured to follow a predictable and accepted formula, or are you creating moments where spontaneity or creativity might thrive, at least fleetingly? I spent all of season 4 detailing conditions that matter, and about which you might be intentional. And remember, I’m not talking about revolution or even disruption. Just intention and habit breaking.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #46: Is the way we do things valuable for our owners/members? We’ve said before on the show – including a few times this season – that questions about owners or shareholders or members or whatever term is applicable for your corporation...have different implications and flavours in different jurisdictions. Let’s also note that we’re asking if the way we do things is “valuable” to our owners or members, not whether we’re “CREATING value” for them because that implies a positive financial result, which can never be fully guaranteed no matter what we do. Doing things that are “valuable” to our owners or members might include exploring new ideas or opportunities. It might involve carefully navigating circumstances that might lead to disaster. It might involve mundane things like making sure we are being compliant and transparent and all that other good stuff. And if you’ve spent much time in boardrooms, you’ve probably spent a bunch of time doing stuff that your owners or members might find…let’s say confusing. Not that the time is wasted exactly, but maybe you’ve gotten fixated on a relatively inconsequential detail or circled around an issue a bunch of times without managing to make a decision. Not bad, but not great. But sometimes it can be helpful to imagine your most significant owners in the room and ask yourself: “how impressed would they be by the way we do things?”
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #45: Is the way we do things working for management? Today’s question kinda revisits what we talked about back in episodes 214, 215 and 216, except at this point we’ve answered a lot more questions that will help us do a better job here. Even though for the most part I work FOR boards, it’s most often management that reaches out to me first. In part it’s because there’s no really useful playbook for CEOs and other senior executives to get the most out of their boards. In part it’s because executives ultimately have to live with the work product of board and committee meetings. And in part it’s because the very construct of boards and board meetings – as awesome as they can be – is a weird distraction from the way executives really add value from day to day. And it can be hard for boards to fully sympathize with the experience of their senior managers – even when the directors themselves have lots of their own experience as executives. Today’s question – asked every once in a while through a lens of curiosity – can orient the board’s attention toward the consumer of their work product and potentially reveal interesting questions, insights and even opportunities to make things a bit better. Ultimately, the CEO is our employee and as such we’re responsible for empowering them to do an awesome job.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #44: Is the way we do things working for my fellow board members? I did a session a few months ago with a group of board chairs of cool complex organizations. I made a case to them – similar to the one from the previous episode – that each person in the room has different needs and preferences, and that an important part of a board chair’s work is to understand those needs and preferences the best they can and be intentional about giving directors opportunities to thrive. One of the participants had a very sensible question: “aren’t directors supposed to do what they need to show up ready and willing to do the job well?” My response was that it HAS to be a both-and situation. As in, it’s true both that the directors need to be as ready as possible to do an awesome job AND that an important part of a chair’s job is to do what they can to empower board members to thrive. But why should it stop with the chair? Let’s say you notice that one of your fellow directors is always too cold or too hot. Or that someone is struggling to understand a particular technical topic. Or that someone rarely volunteers to participate even when they likely have awesome insights to share. Or whatever. What could possibly be the downside to taking steps to improve the situation for your peers and increase the probability that they might be the best directors they can be?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #43: Is the way we do things working for me? I’ve said before on OMG and elsewhere that your work as a director isn’t about you. You’re serving others. Nonetheless, you’re still a human being with your own preferences, moods, skills, experience and needs. Sometimes mundane things will dramatically affect the way you show up for something – even if it’s something super important like your board work. Ever hear about that research that showed how judges assign different sentences to criminals before lunch than they do after lunch – even if they committed the exact same crime? Lunch matters. It’s a fact. But other less mundane things also matter, like disability or illness or big life events or neurodivergence and so on. There’s no such thing as a group of people who will all thrive under the exact same conditions. And there’s no such thing as an individual person whose needs and preferences will be the same from year to year, or moment to moment. So, does the way your board does things work for you? What could be better? Listen back to OMG season 4 for a bunch of conditions that you might consider. Is the room too cold? Is the information too complex or not complex enough? Do you need lunch? It all matters because it affects the way you engage in the work of making decisions.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #42: What are we excited about? I know that boardrooms aren’t typically environments that provoke much excitement. And I’m not trying to pretend that getting excited is really the point of a board’s work. But just because it’s not the point doesn’t mean that it’s not worth aiming for. Yes, it’s true that the emotions we feel when we’re in an exciting moment can make it hard to approach decision-making rationally. In fact, there’s cool science that shows excitement and fear, when mushed together, can incite risk-taking behaviour. But also the relationship between the emotional and the rational is complex, in that humans simply don’t really make fully rational decisions. We have preferences, biases, and, yes, emotions that cause us to choose different things in different circumstances. But that’s not exactly what today’s question it about – what if there were a question, opportunity, experience or process or whatever that your board were collectively pretty excited to engage with or try out? Chances are you’d all go out of your way to be thoroughly prepared, well-informed, and ready to dive in and engage when the time came. Even though we can’t expect every moment of every board meeting to be thrilling, it’s worth aiming for every once in a while, even for a few minutes.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #41: What are we afraid of? I wonder if you’ve noticed something that I’ve started to notice lately. There’s a bit of a trend among people who think and speak and write about corporate governance where some of them seem to be trying to pathologize the way that people behave in boardrooms. For example, classifying boardrooms as places where people are scared to speak up and where systemic power structures make it impossible for directors to call out bad behaviour or question status quo. Now, that might all be true. I’m no expert on fear. But in my experience it seems much more likely that everyone in the room is just doing their best, but the problem is that they’re doing it only within the narrow scope of what counts as normal when it comes to boardroom processes and behaviours. And that, to me, is the fear: boards are often afraid to try new things. This, of course, gets reinforced by regulators and institutional investors who are often trying to impose more and more boxes for boards to tick. It’s all mostly fine, I guess. Except we have no real evidence to suggest that those boxes are any good, let alone “best”. Here’s what I’m getting at: what’s something your board would really like to change or try, but is afraid to give it a shot because it might not conform with “best” practice or the expectations of the regulators or institutions? What might it take for us to give it a shot anyway?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #40: Is the way we do things likely to make the world a better place? It’s a coincidence – an actual for real coincidence – that the chunk of my calendar that I had blocked off to write the last batch of scripts for this season of OMG landed on November 6th, 2024. I’m a Canadian living in Canada, but the weight of last night’s US Presidential election is real and inescapable. And this episode is the first on my list of scripts to write today, which is coincidentally and deeply appropriate. There’s a weird – is it a paradox? – inherent in the job of a corporate director. In any kind of incorporated entity. That paradox is that you are required to bring to the table your own experiences, perspectives and opinions, but that you’re somehow required to do so dispassionately and independently. In fact, the very definition of your job is to serve others, although exactly which others depends in part on the jurisdiction where you serve. Here, in Canada, you’re required to take into consideration the interests of every group and individual that stands to be affected by the actions of the corporation. That, of course, is impossible in a literal sense, but it’s still a useful reminder to all directors in this country that it ain’t about you. If you want to be confident that the way your corporation does things will make the world a better place, you can’t rely on your gut, or on any other single set of opinions or perspectives or interests. Some of the stakeholders to whom you owe your duty will have values that clash directly with your own. To do your job well, you may be forced to confront truths that make you extremely uncomfortable. You will certainly need to admit it’s possible you’ve been wrong all along. But that’s the job. It’s not about you. It’s not even about the people who got you into this precious and high-status position. It’s about ALL of the people you serve.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #39: How much should we obsess over our customers’ needs and desires? I’ve only relatively recently become familiar with the world of business design. Ya, given my positioning for more than 20 years inside an academic institution with a powerful business design pedigree, I should probably be a bit embarrassed. But my shamelessness is so profound that honestly, I’m totally fine. Anyway, one of the core elements of business design or design thinking is an obsession with the customer. You can imagine, for instance, a company having what seems like a super cool idea and investing squillions of dollars and hours into it until it finally hits the market…only to realize that nobody cares. But this kind of obsession has implications not just in product design but also in things as big as corporate purpose or as operational as hiring practices or advertising or office design or whatever. And it’s relatively common now for boards of directors to get training on design thinking, including being indoctrinated with the importance of obsessing over customers. I think this can be both a blessing and a curse. A blessing, for instance, when the board is engaged in dreaming about possible organizational futures. A curse, on the other hand, when we’re all the way in the weeds on some operational minutiae that are already foregone conclusions. But that’s why today’s question is more about where we should set the dial. Not forever. In fact, it might just be for the next few minutes. But let’s ask so that the topic is at least on the table and we don’t take it for granted.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #38: How well do we really know and trust each other? You know what governance myth I find super nonsense? That it’s somehow bad for directors to know and like each other. I remember way back in my early days as a researcher on governance projects at the University of Toronto we used to scan through public filings in granular detail looking for the tiniest shred of evidence that directors might have connections to each other outside the boardroom. Like, if it turned out that two directors were members of the same country club or something we would kinda feel like we’d found some sinister smoking gun. There’s no way they could possibly demonstrate independent thought in the boardroom if they’ve both eaten the cobb salad at the same clubhouse or shot a 103 on the same golf course. And this type of cynicism still lingers everywhere in the governance narrative. You see elements of it baked into regulations and proxy advisor guidelines. You see it in the way that certain media frame their coverage of boards. You see it in the gripes of activist investors. But, like, let’s think about this for a second. Boards need to make huge decisions under intense time and information constraints. We want them to consider diverse perspectives as quickly and thoroughly as possible. There’s only one condition I know of that can cause a group of smart people to do that effectively: trust. It’s hard to trust people you don’t know. So, in my opinion, directors really should know each other and like each other and maybe even do stuff together. Yeah, maybe there are fine lines that we should be careful about, but I think the downside of boards NOT trusting each other is the greater risk.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #37: What’s one thing we do that’s completely useless? This is probably the most self-evident question in the entire season. It’s true that baked into this question is an assumption that there’s at least one thing your board does that is, in fact, completely useless. As in, it adds no value to anyone in any way. Maybe it’s a routine agenda item that’s lost its purpose over time. Maybe it’s the way people put up their hands only to say “yes, I agree with what the last person said, and let me tell you why for the next five minutes.” Maybe it’s the way you use Robert’s Rules. Maybe it’s the fact that the board insists that management create reports or other information that we know nobody cares about or will read. Maybe it’s just your tendency to over-complicate or over-simplify things. Or to ask too many questions, or not enough questions. Or to be too quick to criticize management or too quick to let them off the hook. I don’t know. It could be anything, really. Whatever it is, I know there’s SOMETHING. And, sure, “useless” is probably subjective. Different board members might have different opinions and you may never completely align. I just sometimes like framing questions in extremes because it can be easier to come up with useful ideas. Like, this question would be harder to answer if it were “what’s something you might do that could kinda be a little bit less useful than maybe some people probably wish it were?” I mean, we can all come up with a million unhelpful answers to that question. Hey, and bonus points if you have the guts to invite your executives to participate in this conversation.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #36: What are three things we wish management would explain to us in greater detail? Without looking, what do you know about the appendix? As in, the little tube jutting out of most humans’ large intestines. I’m willing to bet that if I sampled 100 people listening to this episode, the only appendix-related knowledge that we all have in common is that sometimes something can go really wrong with a person’s appendix and it has to be urgently removed. I have a suspicion that for most boards of most corporations there are a few things about the business where the board’s knowledge is kinda equivalent to most people’s understanding of the appendix. Some of us might know a lot about it – maybe because we had acute appendicitis and learned it all the hard way. Like a director who may have gone through a crisis and was forced to learn all the nuts and bolts about some weird law or regulation. The rest of us might have heard of that law, and understand implicitly that breaking it is bad, but not have any idea if or how it might apply to THIS corporation. Same thing goes for companies with super complex operations. There are probably some things about the way your company works that you know are important, and that management refers to occasionally, but that nobody ever took a second to step back and say, “hey, I think I’d like to know more about that. It seems important!” I bet you can think of three things that fit that bill. Better to know now than after your appendix has burst.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #35: What are three things we wish management would explain to us in simpler language? Nothing could be more appropriate than the actual 100% true fact that I wrote the script for this episode while listening to a compilation of Curtis Mayfield’s greatest hits. The greatest hits aren’t as satisfying as, say, just listening through the album Curtis top to bottom, but still. As for the relevance to this episode, if you know you know. On a similar note, episode 129 of OMG was called “Is Thing Explainer the best management book?” In other words, everywhere you look there are great examples in the world of people communicating complex information and ideas in simple and impactful ways. You won’t find many of those examples in materials prepared for boards of directors. Which is fair, I guess. We’re conditioned to believe that if we leave out the jargon and exhaustive details then we’re probably failing to comply with some arcane rule somewhere. And in some cases that might be true. That said, just receiving all the jargon and exhaustive detail doesn’t guarantee that the board will, y’know, get it. I am confident that if your board explores today’s question together you will come up with some really useful answers, and everyone will be grateful. For the executives listening, feel free to use Thing Explainer and Curtis Mayfield as inspiration once the board shares their answers.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #34: Are we sure we use our experts well? It goes without saying that you can’t just stick a bunch of smart people in a room together and expect them to get along, let alone to make patient and well-informed decisions together. Things get even worse when those people aren’t just smart, but also have serious depth of expertise in areas that are directly related to the decisions that they need to make. Add to that the time scarcity and information asymmetry that are unavoidable characteristics of the work of a board and, well, we basically have the perfect illustration of why I think good governance is intentionally cultivating effective conditions for making decisions. If we’re not intentional, then our experts will be set up…not to fail, exactly, but certainly not to be as awesome as they could and should be. Just turning to an expert and saying “hey, you’re a pro at this, what do you think we should do?” is opening the door for the overconfidence effect that we talked about last week in episode 235. Just leaving things to chance and hoping everyone engages in the right way at the right time is, well, I suppose it’s the opposite of being intentional and also unlikely to succeed. It turns out that we need to understand not only the nature of each person’s expertise, but also a bit about their personality. We need to have a clear sense of what conversations we need to have (shout out episode 218). We need a sense of what insights management needs from the board. And once we know all that, we’re ready to flip today’s question a bit and ask: what do we need to do to make sure we use our experts well today?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #33: What’s at the top of our expertise wish list? It’s been a couple of months since episode 207 where I urged you to consider what, specifically, makes a director great. I have asked many directors and executives that question and they have never, ever, answered by listing areas of expertise. And I think that makes sense, right? There’s no type or depth of expertise that, on its own, might make someone a great director. But that doesn’t mean we don’t need experts. In general, we’ve been conditioned to believe that the table stakes for boards include things like legal, audit, finance, strategy, executive experience, and so on. I could easily make a strong case for all of those. Without much more effort, I could make a case that they’re expendable. It’s also tempting to zoom in on emerging topics like AI or cybersecurity or DEI or modern slavery or whatever. Also all good options. And if we get an AI expert who’s also a great director who could possibly deny we’ve accomplished something important? But there are only so many seats at the table and we can’t tick every expertise box. And sometimes we might actually want TWO experts in the same area, right? So they can validate each other? I guess what I’m saying is that all expertise is optional, so if we’re resisting the urge to anchor to the status quo what would be at the top of our wish list? If we could add precisely one new area of expertise to our board, what would it be?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #32: How might we empower the loudest directors to be better listeners? Having an ultra-confident expert on a board is a blessing and a curse. I suspect I don’t really have to explain what I mean – it’s pretty obvious. I mean, confident expertise, when the expertise is relevant to the work of the board, is a shortcut to managing information asymmetry and ensuring the board is able to be, y’know, useful. But there’s a very fine line between high confidence and OVERconfidence. Overconfidence is dangerous. I talked about this back in episode 119, and there’s tonnes of cool stuff you can read about the perverse relationship between expertise and confidence by Googling “overconfidence effect”. The other issue with confidence is that the most confident people on boards are the ones who will most readily participate, and will feel most uncomfortable with even the briefest breaks in action. But think about those of us in the room who have less expertise, but whose perspectives might still be critical to making sure we consider our decisions most thoughtfully. We might need a few more seconds or minutes to think. We might need a bit more information. We might not have the confidence or footing to challenge the experts in the room. The moment those experts start getting expert-y, the quieter among us will be more likely to just defer. And that’s a missed opportunity for everyone. Even our experts would be better off having more perspectives to consider. So, what approaches might you try to empower your experts to be listeners first?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #31: how might we empower our quietest directors to make an impact? There’s a surprisingly common and patently absurd notion in the world of boards and corporate governance. It goes something like this: when we recruit a new director, we don’t really expect them to contribute much in the first year – mostly we want them to listen and learn. Most of you OMG listeners will be familiar with this position, and already know that it’s kinda dumb. Because here’s the thing: board seats are scarce. Precious, even. Why the heck would you be OK with one of those seats being filled with someone who’s not empowered to engage, participate and contribute on equal footing with the rest of the board? A much less dumb approach to a new director would be to ask yourself, “what would it take for this new director to participate at 100% from day 1, and how are we going to do our best to make sure that it’ll happen?” Now think about the quietest director at the table, whether they’re new or not. Most of the boards I meet are sitting there wishing that director would say more and participate more willingly. Well, what would it take for that director to participate more, and how are you going to do your best to make it happen. Spoiler alert: just pointing your finger at them and asking them to participate isn’t going to get it done. Don’t be lazy. Do the work.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #30: How many of us wish our work were more spontaneous? I admitted in the last episode – to nobody’s surprise, I imagine – that I generally prefer the unpredictable over the predictable. That doesn’t – and shouldn’t – mean that anyone else should feel the same way. But it does mean that in a generally super-structured environment like a board meeting, one of two things is happening. One, I am trying my best to be useful, but am never really able to give my best. Two, I am subtly or unsubtly pushing for cool stuff to happen, thereby annoying the structure-preferring people in the room. And they’re right to be annoyed! If the meeting were in a spontaneous and experimental mode, our positions would be reversed. They’d be less useful than they could be and probably subtly struggling to rein in the chaos. But this is actually a good explanation for why we generally struggle to get the best out of everyone at the same time. The fact is that no one approach or model will be well-suited to the wide range of personalities and preferences in the room. And for what it’s worth I can guarantee that there is a wide range of personalities and preferences among your board members and executives. Do I have a brilliant suggestion to address this challenge? No. But again, you can’t solve a problem that you can’t describe. So ask the question!
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #29: how many of us wish our work were more structured? Ever notice how lots of people get uncomfortable the moment things get unpredictable? It’s both normal and understandable. And thankfully, most boards and executives approach their work together in a pretty structured and predictable way. But that can make it even more jarring when something unexpected happens, or when someone in the room starts suggesting (or insisting) that we try something new. Even though I personally feel more comfortable in situations that lean toward the unpredictable – at least most of the time – I think it’s obvious that there’s nothing right or wrong about preferring structure. And I bet you can picture how someone’s preference for structure and predictability might affect the way that they engage in discussions at a board meeting. As long as we’re sticking pretty close to the scheduled topics and not introducing any significant new information, they’re right at home. But instead of making an assumption that anyone – or everyone – is happy with the balance we have, why not ask? What if it turns out all of us would prefer to increase the predictability of our meetings? Wouldn’t that be an important bit of information?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #28: How many of us would benefit from an occasional change in scenery? In episodes 192 and 193 of OMG I talked about the importance of breaks and physical movement. These are not trivial nice to haves – they are critical to making sure that people are cognitively engaged and comfortable – both of which we can all agree are important to board effectiveness. Speaking of trivial, it’s maybe a bit too easy to trivialize breaks and think of them just in terms of gaps in our agendas for people to do with what they please. Mostly to grab a coffee and get caught up on email for 15 minutes. But we all know that that’s no break at all. It’s like if I giftwrapped your overflowing work phone and presented it to you like the greatest gift in the world. No, breaks are different from simple agenda items. If you could design the ideal break – one with no constraints, anything is on the table – what would it look like? We might all come up with something different, but I suspect almost everyone’s dream break would include a change in scenery. Maybe you’re out on a walk or sitting on the beach or up on a roof or on your bike or whatever. And the thing about a change in scenery is that you don’t even need a break to get it done. You could hold different parts of your board meeting in different rooms or have a quick walk and talk or even just play musical chairs. So, how many of us would benefit from an occasional change in scenery?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #27: How many of us would like our board meetings to feel more “creative”? As any casual OMG listener will already know, I spend a lot of time encouraging corporate directors and senior executives to do things that are outside of the range of normal behaviours in boardrooms. First off, I’d like to argue that the range of normal behaviours in boardrooms is way too narrow and doesn’t work very well. But second, I am compelled to admit that it can be hard to find the confidence to try things that literally nobody else has ever tried, even when everything that everyone has tried doesn’t work. To that end, I often get challenged by my clients and students on that exact point, usually in the form of “that all sounds fine, Matt, but how do you expect me to go into my boardroom and actually do this stuff?” My initial response often involves the subject of today’s episode. I will look around the room and say, “OK, raise your hand if, in general, you would like your board meetings to feel more creative, whatever that means to you?” Every time I’ve asked this question, more than three quarters of the people in the room raise their hand. And what I’m try: first, that we are all open to trying new things and as a result you probably won’t face as much resistance as you think. Second, just asking a show of hands question requires basically no permission, gets you immediate and valuable information, and in itself injects a bit of active and creative engagement into the flow of a meeting. Creativity doesn’t have to be difficult or complicated or transformative. But it does have to push you outside the range of normal behaviour.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #26: How might subtraction help to solve our stickiest issues? Back in episode 189, I talked about the amazing work by Leidy Klotz and others on a cognitive bias called “subtraction neglect”. Basically, subtraction neglect describes that our brains find it really easy to consider solutions to problems that involve adding stuff and really hard to think of solutions that involve taking things away. Unlike most cognitive biases, we can short circuit subtraction neglect just by asking “how might we solve this problem through subtraction?” So that’s what I’m urging you to do in today’s episode. Think of a typical board meeting – and I don’t care if your meetings are one hour long or three days long – I think it’s safe to assume that you discuss approximately two important problems per hour. Maybe more, maybe less, but two-ish on average. Every single one of those problems will be compromised by subtraction neglect. Even more important are the problems that you’ve put up with forever – maybe you even assume they can’t be solved. Things like information overload or getting stuck in the weeds or whatever. Instinctively, we can see that trying to solve those problems through addition could sorta work, but will probably unintentionally make things a bit worse. But if we get into the habit of asking “how might we solve this problem through subtraction?” We’re opening ourselves to a whole new world of ideas.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #25: Is our pain really necessary? In the previous episode, I admitted that work sometimes sucks, and the work of a board is no different. Despite the fact that we can never completely avoid or alleviate the pain of board work, that doesn’t mean we shouldn’t try. So now that you’ve identified and described your pain points, the next question is whether we really have to suffer, or if there might be a different path. The fact is that almost everything that boards do is optional. In other words, the list of specific activities that a board must perform is short. Now, there’s tonnes of optional stuff that boards should do to make sure that their butts are covered and that they feel confident they’ve discharged their duties. But even here, the range of approaches that boards take to discharging their duties is strangely narrow. Making matters worse, boards have a tendency to want to model themselves after each other. Whenever they need to do something new or different, the first question is “well, what are other boards doing?” The answer, I’m afraid, is “nothing very interesting.” What I’m getting at is that a lot of your pain might be unnecessary, but you’ll never find out if you’re not open to ditching some of the optional stuff and resisting the urge to seek validation from other boards. As long as you’re complying with laws and regulations, I think it’s worth experimenting with novel approaches to pain relief.
Check out Matt's tour schedule here: https://ffm.live/MattinOz
TRANSCRIPT:
Hi everyone. Matt Fullbrook here. This is a quick bonus episode of OMG to spread the word to everyone who follows the show that I’m going to be in Australia and New Zealand next month on a bit of a roadshow. Over the course of the month, I have stops in Brisbane, Auckland, Melbourne and Sydney (in that order) with events tailored for everyone from students to board chairs to CEOs to generally curious nerds. There are breakfast events, cocktail events and casual dinners. If you’re going to be in any of those places in October, or if you know anyone who is, check out the link in the show notes for an evolving list of dates, including links to get tickets or submit RSVPs. If you’re hearing this, I assume it means you’re a fan of the show, and if you like OMG you’ll really enjoy all these sessions. Thanks for checking it out and spreading the word. Hope to see you down under.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #24: What are the most painful elements of our meetings? The work of a board is, well, work. And for almost all of us, work sometimes sucks. The fact that work sometimes sucks is not an indication that something is wrong. It’s just often a fact of life. As long as it also doesn’t suck – preferably most of the time. So, with that out of the way, board meetings are sometimes painful. Different parts of board meetings might be painful to different participants. For example, what’s painful for the board is often less painful for management and vice versa. But in almost all of the cases I’ve encountered, there are parts of board meetings that are painful for everyone. Maybe it’s the times when we pull something out of consent agenda. Maybe it’s the presentations by that one executive who’s just kinda boring. Maybe it’s every time that jerk – let’s call him Matt – opens his mouth and goes on and on about some nonsense. Maybe it’s the sheer quantity and weight of the compliance burden we face. Again, I’m not saying that the pain is necessarily bad, and I’m certainly not trying to imply that I know how to relieve all your pain. But if pain relief is to be found, we need to start by naming it.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #23: What might I do to make things a bit better? Conventional definitions of corporate governance frame it as something that exists: a system of processes and structures that promote transparency and accountability or some other such nonsense. Nonsense because it leaves us with the impression that corporate governance isn’t something that actual people actually do. There’s a similar problem with thinking of corporate governance only as a thing that belongs to the board, as a whole. As in, nobody other than the whole board collectively might have any impact on corporate governance. A weird implication of that framing is that it obscures the fact that individual directors matter. Personally, I believe that an individual director or senior executive can cause good governance to happen. This won’t surprise anyone who’s followed this show for a long time, but when a single person is intentional about the conditions that affect our decisions, that person is literally doing good governance. Just them, on their own, doing good governance. So, what might you do to make things a bit better?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #22: Is benchmarking a sensible way to set CEO pay? If you haven’t listened to the previous episode about knowing whether your CEO is doing an awesome job or not, you might want to take a sec and do that. A very large proportion of organizations I meet, and probably 99% of listed companies in the Western world all set their CEO’s compensation amount and structure in large part based on comparisons to their peers, also known as “benchmarking”. This makes sense if you believe that the most important part of CEO compensation is to avoid having your CEO quit and leave for another organization that pays better. The thing is, we have no idea how low a CEO’s pay would have to go before they might quit. And if we combine that with the stuff from the previous episode about how hard it is to know whether a CEO is any good or not, then we’re left with an important question. The one that’s the subject of today’s episode. One of the main problems with basing CEO pay on benchmarking is that it causes CEO pay to increase rapidly from a starting point that was already unjustifiably high. But even if we don’t care too much about the amount, benchmarking also lets boards off the hook of thinking too hard about what truly effective compensation really looks like. I promise you the answer to that question is not “effective compensation for our CEO looks like whatever everyone else is doing.” So, is benchmarking really a sensible way to set CEO pay?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #21: How do we really know if our CEO is doing an awesome job? Did you know that there’s no evidence that the market for CEOs is efficient? An efficient market is one where supply and demand are basically equal. When a job market is efficient it means that both sides of a potential transaction have lots of information about each other and they are able to confidently assess the talent of the candidates, the appropriateness of the compensation, etc. We don’t have any of that for CEOs. There’s a great summary of this in Larcker and Tayan’s amazing paper Seven Gaping Holes in our Knowledge of Corporate Governance, which I’ve referenced a few times on this show. Anyway, since we have no objective way of knowing whether our CEO is the most qualified person for the job, or whether we’re paying them appropriately, it raises an even more urgent question of how good they might be at their job. You can’t just say, “well the company is really profitable and shareholders are happy, therefore the CEO must be amazing.” Why? Partly because to confidently prove that the CEO is the cause of that success would require you to get rid of the CEO and see what happens. Or to have a multiverse with an infinite number of different CEOs so you can compare them against each other. And how many stories can we think of where a CEO had great performance at the time, but once they were gone we realized that they’d done lots of damage in the process. But answering this question should start, in my opinion, with an open-ended and open-minded conversation about what doing an awesome job really means. In terms of actions AND results.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #20: What really motivates our CEO? If you have the patience to follow me on LinkedIn, you may have noticed me complaining loudly about executive compensation a couple of times in the past year. I think it’s totally broken, and nobody seems to have any interest in fixing it. The fact is, we have no idea what a CEO is actually worth to a firm and we have no idea how different compensation approaches and amounts cause CEOs to behave. And in the meantime, the obsession with benchmarking CEO pay against other CEOs is designed specifically to cause pay to go up forever, thus exacerbating the wealth gap…which we actually DO know is provably bad for everybody. And part of the reason why I find this so infuriating is that the core of the solution to these problems starts with a really simple question, which happens to be the subject of today’s episode. Let’s imagine that it turns out that our CEO likes money. Likes it A LOT! And that’s convenient, because we happen to be paying them in money and not, say, salamanders. So that’s great. Except what if there’s something that might motivate our CEO even more than money (or salamanders). What if it turns out that if we gave them Friday afternoons off they would jump out of bed every morning and work 10x harder, even if we paid them half as much money? Or what if they would literally give up EVERYTHING to dance the Macarena with Taylor Swift? We could craft some huge and ambitious 5-year operational goals and spend that time convincing Tay Tay to get to work on jumping and turning 90 degrees to her left. People are complicated, and so are their interests and motivations. What could you learn by exploring this question?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #19: How, specifically, do our board evaluations make us better? I’ve had the amazing privilege of working with many, many boards on board evaluations over the years. I would guess that the first one I ever worked on was 20-ish years ago and the most recent one was within the past couple of months. Most board evaluations take tonnes of time and money to conduct. They involve some combination of interviews and/or surveys and analysis and reporting and facilitation. If you’re really unlucky as a board, your board evaluation tells you that everything is perfect. It might feel good, but deep down you know you might be pretty good, but definitely not perfect. But even the lucky ones basically never get their money’s worth. Let me put it this way: a great board evaluation should make give you fuel to be tangibly better tomorrow than you were yesterday. Right? Otherwise, what’s the point? Hence today’s question: how do our evaluations make us better? When exploring this question, try to have high standards. As in, try not to settle for “well, we added one more item to consent agenda and that saved us 46 seconds at the last meeting!” And don’t confuse NEW behaviour with BETTER behaviour. Just because something might have changed doesn’t mean it has improved. My hope is that exploring this question will increase your expectations of your board evaluations overall, and of the consultants you hire to conduct them.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT
Question #18: How do we hope to spend our time? Today and in general. Time scarcity is probably the thing that makes board work most complicated. I guess that’s kind of like saying that time scarcity is what makes life most complicated. Still, my point stands. One of the most remarkable things about my work with boards over the years is how similarly different boards tend to spend their time. This is especially true considering that boards really have tonnes of control over what they do and how they do it. Boards could choose to spend an entire year composing a rock opera about a tarantula and an aardvark who become best friends and travel the world, as long as they do the bare minimum of compliance. It wouldn’t be a particularly smart or savvy way to approach their work, but still…it’s up to them. And that’s really my point: if boards can basically do whatever they want with their time, why do they mostly all do the same things? And funny enough, the pile of standard board stuff seems to expand to fill exactly as much time as we have allocated for meetings – or maybe a bit more, but never less. This means boards have a convenient excuse not to try anything new: we don’t have time! But what if we permitted ourselves one conversation – maybe during a strategic retreat so as not to intrude on precious board meeting time – where we pretended that none of what we tend to spend our time on were mandatory. What WOULD we spend our time on. What topics, what conversations, what presentations, what meals and breaks, how much time on which things? Maybe we could take one tiny step toward that dream at every meeting.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT
Question #17: What information do we hope to receive? Building on the last episode about what conversations we hope to have, it’s hard to have a useful conversation without useful information. Now think about all the things that go into making information useful. When it comes to boards, we put a lot of energy into making sure the information we get is comprehensive, relevant and clear. All of that helps a lot. But the challenge of informing a board is obviously waaay more complicated than that. You’ve got a group of people who are guaranteed to have different personalities, preferences and lifestyles. In other words, if they could all design their own ideal pre-reads, each of them would want something different. Now layer on top of that the fact that most boards are made up of people with different skills and technical expertise, so they’d all want and need different levels of explanation and complexity or simplicity for different topics. Given all that, it’s probably impossible to hit the bullseye. But information doesn’t have to come as pre-READS, right? Sometimes using various media to convey information is like a hack to unlock the needs of different people in the room. It’s why most books now come in physical, digital and audio formats. And if you add video, images and illustrations, tables and graphs to the mix. Heck, I bet someone out there could even imagine how to inform boards through taste and smell. So ask yourselves, what information do we hope to receive, and when and how much and what medium, and every other question that might help.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT
Question #16: What conversations do we hope to have at the next board meeting? We tend to have really careful and smart plans for board meetings. Even organizations that lean more to the informal or experimental still usually have predictable and well-structured board meeting agendas and objectives. How well we adhere to the plans is another story. It’s hard to predict how long each presentation and conversation will actually take. And it’s way more common for things to take longer than expected rather than going home an hour early. Either way, we plan topics, we assign speakers, we might even clearly identify certain things as being information-only, or topics for discussion (but not decision), or decision items or educational or whatever. All that clarity helps to keep us focused and informed and useful. But it misses a potentially important element: what exactly do we want to talk about? How do we want that discussion to feel and flow? Whose perspectives do we really need to take into consideration? How do we plan to ensure that we receive those perspectives? When do we want the conversation to happen, and – most importantly – what’s the actual point? As in, when the conversation is over, what do we hope we will have accomplished? After all, if this is well-defined then it becomes way easier to, for example, put a time limit on it and expect to stick to that time limit. More importantly, it increases the probability that the meeting will be useful to everyone involved.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT
Question #15: What do we actually know about AI? Let me be clear: this question is not the same as “have we all used ChatGPT?” It’s also not “Do we know how to provide useful prompts to chatGPT?” Or anything directly about ChatGPT or its competitors at all. At least not necessarily. Instead, the substance of this question is “what do we know about how AI works, how it could work, about its potential applications, and what might it take to deploy those applications?” There’s a reason why people who really do understand AI are hugely divided when it comes to how dangerous it’s likely to be, how disruptive it will be and to whom and when. They don’t agree on what applications of AI will most improve or harm people’s lives. So, let’s not pretend that your board is gonna solve all that. But still, even ChatGPT and other large language models are already better and faster certain useful tasks than people who’ve spent their lives getting good at doing those same tasks. We can get more than passable essays, emails, images, songs, speeches, etc. in seconds basically for free. AI is also really good at pattern-based learning that lets it do cool stuff like reviewing medical imaging even better than people. Better, even, than pigeons, who are also better than people at reviewing medical imaging. True story! But none of that is about how AI works, or how it could work, or how it might be useful to you or your company or its customers. Your board may not easily find the answers to any of those questions at first. Some of them might have no real answers other than what you gain through trial and error, or experimentation. But let’s get back to the actual question at hand: What do we actually know about AI? The answer might be “nothing at all!” Even that’s a better starting point than not talking about it. But get moving!
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #14: When was the last time we asked management how we might do a better job? There are some really useful and normal things that boards do to make sure they’re doing a good job. For instance, most chairs build constructive relationships with CEOs and keep a regular dialogue going about how things are going. Most boards also do some form of board evaluation – formal or otherwise – to highlight problems and opportunities for improvement. The intent of this episode’s question isn’t to undermine the value of those endeavours. They’re obviously good and important things to do. But the question remains. When was the last time WE asked management how we might do a better job? As in, demonstrating a collective interest in learning from management – also collectively – how we might serve them better. In a way, I’m just trying to reiterate the substance of the previous two episodes in a new way. Suppose, for example, the board – while in camera or in executive session or whatever – agrees that the chair will request that the CEO gather feedback from their team based on a few questions. Questions like: “what are some things the board could do before or during or after board meetings that you would find really helpful?” Or, “what’s something that tends to happen before or during or after board meetings that you find really unhelpful?” You could even ask for feedback on specific behaviours or processes if you like. Most importantly, you must be prepared to respond to their feedback – either by actually doing a better job, or by clearly explaining why you think things are better they way they are.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #13: To what extent does the stuff we do get in management’s way? Most of us have had a boss at some point in our lives. More than that, most of us have had the pleasure of working for a great boss, and also the pain of working for an awful boss. When I think of awful bosses, I think of people who get in the way of you doing a great job. I think of people who pile you with work that distracts you from the things that really need to get done. I think of people who lack curiosity about what might make you feel excited to show up to work. I think of people who sorta feel like they’re cosplaying as what they think bosses are supposed to be without worrying too much about whether they’re doing anything useful or harmful. They’re not necessarily hostile or cruel…just not invested in making sure their employees have the conditions they need to thrive. Instead, they’re invested making sure they feel like they’re ticked a bunch of “boss-ish” boxes and can say, “good for me! I bossed like a boss today!” Now, imagine a bad boss that’s actually a whole bunch of bad bosses smooshed together, like a board. I meet boards sometimes who believe that, because they’re the boss, it means they don’t have to serve or support the CEO. But that’s a misunderstanding of any authoritative role. Take stock of the stuff that you do as a board, and the burden it places on management. Some of that burden is essential and value-added. But, I bet some of the burden is optional and value-neutral or worse. And it takes management’s attention and time away from doing things that might make your organization better.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #12: To what extent does the stuff we do help management? One of the unspoken themes of this season of OMG is that there are lots of things about boards that we tend to take for granted. Well, I’m here to say out loud that it’s not granted that boards do stuff that’s useful to management. It’s a fair assumption that boards, in general, really want to be useful to management. It’s also true, however, that boards feel a lot of pressure to spend time and energy on compliance, ask some probing questions and then basically call it a day. “Matt,” you might say, “compliance and probing questions ARE helpful to management!” And sure, that’s technically true. Being non-compliant is bad. Not being questioned can be bad, too, especially because questions can reveal persistent blind spots or validate our assumptions. Both good! But what if boards asked themselves what they might start doing or stop doing that could make the lives of senior executives better? And I’m not talking about a compensation increase. I’m talking about increasing the probability that executives might leave board and committee meetings with new ideas, new momentum, and feeling like they have the support to do an awesome job. Yes, obviously this is a bit of a tall order. But it’s not impossible! And while thinking about this question, if the only answer your board can come up with is some version of butt-covering, then I’m here to argue that you’ve got a big opportunity to do better.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #11: Why is our boardroom laid out the way it is? This question was basically at the beginning of the origin story of my current definition of good governance – the one about intentionally cultivating effective conditions. At the time, I had been in somewhere between 200 and 300 boardrooms and it struck me one day that every single one of them was functionally identical. And because of that I’m highly confident that your boardroom is functionally identical to essentially all other boardrooms. But why? Seriously! Why is your boardroom laid out the way it is? Here’s another way to think through it. What are the things you hope will happen in your boardroom? What are the behaviours you hope to experience and observe? What are the feelings you hope people will feel? What conversations do you hope will happen? If you could start with a blank slate, what elements would you include and how? From the type and style of furniture to the use of technology to the lighting and windows and everything else. Every time I’ve had this conversation with an organization, the dream layout bears little resemblance to a typical boardroom. I’m not advising you throw out your board table and start from scratch – at least not if you don’t want to. But if the layout of the room isn’t ideal for the stuff you hope to happen in the room, then you might want to cultivate other conditions to compensate.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #10: What existential threats might the business face? Considering how obsessed I am with corporate governance, it’s a bit strange how little I focus on risk, huh? I’m about as far as possible from being a technical expert in risk – like an actuary or whatever – but still, I’m not going to try to deny the relationship between risk and governance. I mean, we obviously don’t have effective conditions for making a decision if we lack awareness of the stuff that might go wrong and the probability that those things might happen. In a way, today’s question is an element of question 9 from the last episode. In other words, we don’t really have a deep understanding of the business if we don’t understand the stuff that could, y’know, kill the business. Let me be clear, there is no way to know everything. We like to judge leaders in hindsight for not predicting the unpredictable. We similarly like to put leaders on a pedestal for being super frickin lucky. So, I’m not talking about doing the impossible. I’m just talking about investing in the study of the potential fatal flaws of our business model, structure, competitive positioning, physical or geographical positioning, etc. What is it about what we do, how we do it, who is doing it, and where we do it that might leave us vulnerable to a killshot. Work hard at this question. Poke and prod every potential flaw, and even every area of apparent strength – even just to prove that it is indeed as strong as you thought. Every company has vulnerabilities. When you identify one, it raises more questions like, “what might it take to shore up our defenses, and is it worth it?” Because you may just choose to leave the flaws as is. But it should be a choice! And having that choice starts with asking the question.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #9: To what extent does every director really understand the business? I’ve been pretty outspoken over the years about my thoughts on board composition. In general, I think boards tend not to be sufficiently open-minded about who “belongs” on boards – I hope you could hear the air quotes there. There’s basically no evidence or consensus that suggests any specific type of experience or expertise, or any type of personality or any demographic characteristics might be associated with business performance. This is part of the reason why I prefer to think about governance as being in the world of decision-making, a realm where there is plenty of decisive science to help us to understand how we might mess up and what we can do about it. Still, boards fundamentally exist to run corporations, and even if they choose to hire managers and other employees to do the operational work it doesn’t change the fact that boards are responsible for literally everything that happens in an incorporated entity. So, no matter your experience or skillset or personality. No matter who appointed or elected you to the board. No matter what other valuable things you might be bringing to the table, if you don’t understand how the business of the corporation works it’s going to be really difficult to be useful as a director. Where does the corporation get money from. Why do its customers or funders choose to give it money? How does the corporation spend money, and why? What are the nuances of its structure, and why are they the way they are? What is the competitive landscape? What does the balance sheet look like and why? Why does the corporation do the things it does and not do the things it doesn’t do? What might kill it? I know this is a podcast episode about one question: “to what extent does every director understand the business?”, but an infinite number of other questions live inside it. Collectively, you should be striving for the answer to this episode’s question to be “to a super frickin great extent, thank you very much.”
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #8: What do we even mean when we talk about “duty?” As in how the word “duty” applies to the work of the board and directors. In the previous episode, I suggested in passing that you might want to ask this question, and now I’m making it a bit more explicit. I can say with reasonable confidence – from my experience, at least – that directors and executives refer frequently to a board’s duties without taking a moment to make sure everyone knows what they’re talking about. Fiduciary duty? Moral duty? Ethical duty? Regulatory compliance? And even once you get that part clear, there’s no guarantee that you agree on what your duties are, or even that your own understanding is rooted in fact. Let me give an example. Here in Canada, if you ask “to whom do you owe your primary fiduciary duty?” most directors will confidently answer “to the corporation.” This is a technically correct, but altogether incomplete answer. Many of the directors who provide this answer are unable to confidently answer the simple follow-up question: “OK, what does it mean to have a duty to the corporation?” The legal answer to this question is simultaneously specific and complex. I won’t give away the punchline, because in addition to being specific and complex, it’s also boring and not useful outside of Canada. In any case, I hope my point is clear. If you’re going to bring up board and director duties, take a second to make sure that everyone knows what you’re talking about, and try to make sure that you, yourself, can explain exactly what discharging those duties might entail. Duty is a loaded word. Let’s make sure we’re walking the walk.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #7: To what extent do we agree on to whom we owe a duty? I’ve been blabbing on about this in some form or another for more than 10 years. It’s been the subject – directly and indirectly – of a bunch of OMG episodes going back to episode 4. Still, I’ve never been disappointed by a boardroom discussion about who stands to be affected by our decisions and, among those who are affected, to whom do we owe the greatest duty. Notice that I’m talking about who is affected rather than just talking about who benefits. There’s no decision a board will ever make that is universally good for every affected party. Life is trade offs. When I wrote that sentence it seemed so obvious that it must have been said or written by someone famous somewhere. Turns out it’s seemingly been said or written by everybody ever, because it’s so true. Anyway, whenever your board needs to engage in a decision of any consequence, taking a few minutes to think about the individuals and groups – both inside and outside the corporation – that stand to be affected, and then taking another few minutes to ask “among these affected parties, to whom do we owe the greatest duty?” You can even take the whole list and rank them. You might even take a few minutes to decide what, exactly, you mean by the word “duty.” Anyway, that 15ish minute conversation is likely to be your best use of time in the whole meeting.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #6: Have we empowered our directors to do a great job? It’s one thing to define what doing a great job means, like we did in the last episode. It’s a whole nother thing to figure out what it takes to empower every individual in the room to feel like they can do a good job without too many obstacles. Obstacles come in countless shapes and sizes, so let’s use an example to illustrate. Let’s say we’ve decided that one of the things that makes a director great is their willingness and ability to change their mind when presented with new and relevant information. Some obstacles here are nearly invisible, like confirmation bias, which is a quirk of human cognition that causes us to overvalue information that tells us we’re right…even if that information isn’t reliable or accurate. So, you can see how confirmation bias might make it hard for someone to change their minds based on new information. Other obstacles might be social, like the fear of looking or feeling like a hypocrite or seeming indecisive or doubtful. You can also imagine the time constraints of a board meeting might make people less likely to even want to consider new information in the first place, let alone to take the time to question their beliefs. In other words, empowering directors to be great might require us to be intentional about information, time allocation, social dynamics, personality management, and more. But we won’t know exactly what to be intentional about, or how, if we don’t take the time to learn about each other’s preferences and expectations. Hence this week’s question. Another way to put it is: what would it take for you - and each of the other people in the room – to feel comfortable, and even excited to do the things that make a director great?
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #5: What, specifically, makes a director great? Last episode we asked what board effectiveness looks like under normal circumstances. It kinda goes without saying that an important and related question is what makes a director great. As in, what are some specific differences between a great director and a not-so-great director? We talk a lot about the skills and maybe even competencies that we want. We probably even talk a lot about how we might go about baking those into the way that we recruit directors. You know, the whole skills matrix thing. In most cases, though, the skills matrix doesn’t have anything to say about the stuff that actually makes someone a good director. For instance, let’s imagine we all agree that we want an experienced CEO on our board. I bet we can all also agree that just being a CEO isn’t enough to make someone a great director. But what would make them great? Is it active listening? Willingness to change their mind when presented with new and relevant information? Kindness? Courage? A pleasant singing voice? And don’t get distracted by any research that claims to find any connection or lack of connection between board composition and financial performance. There are all kinds of reasons those studies are flawed. That’s why we’re trying to cultivate effective conditions for our decisions instead of using our skills matrix to directly affect, say, share price. So, ask and answer the question. Then think about how to recruit directors for what actually makes them great.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #4: What does board effectiveness look like on a normal day? We – and by “we” I mean people who talk about corporate governance – have a tendency to talk about the impact of boards through examples of massive failure. Whether it’s Enron or Boeing or Wells Fargo or Theranos or the Challenger space shuttle explosion, we feel compelled to highlight all the ways things might go really wrong, but then we forget one tiny important thing: most boards aren’t in crisis most of the time. So, what does it mean to show up to a regular old board meeting and do a great job? It’s obviously really important to acknowledge how bad things can get, how important the role of the board can be in navigating potential catastrophes, and why it’s helpful to have some anxiety about how things might go wrong. But I think we can all agree that a board’s job is way more than catastrophe avoidance. So, when we show up for the next board meeting, what might great look like? Maybe we don’t even have any consequential decisions to make. Maybe we have every reason to believe that our organization’s future likely to be very bright. And maybe we’ve already done all the work we can do to acknowledge and manage potential catastrophes. So, when a normal meeting wraps up, what would cause us to look back and say “holy smokes! The board absolutely killed it today!” Sure, for some people, it might involve imagining new ways that things might go wrong so that we can be prepared for the worst. For other people it might involve dreaming about how to get even better. But being specific helps. What’s the right tone? What are the right conversations? What would it take to increase the probability that everyone is engaged and participating? How can YOU, individually, be as useful as possible? But if we don’t make an effort to describe board effectiveness under normal circumstances, we’re not likely to get it done.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #3: What is our agreed-upon definition of good governance? Don’t worry, this episode isn’t just me saying “blah blah intentionally cultivating effective conditions blah.” As much as I like my definition of good governance and find it both useful and empowering, I’m under no illusions that you couldn’t come up with something better. Nonetheless, I am highly confident that most directors, executives and governance professionals can’t describe good governance in a way that is both easy to understand and DO-able. And that’s the problem with most of the definitions of good governance that are out there: they don’t give you any idea how to actually get it done! This is also my main gripe with the common temptation to define good governance based on results. As in, I dunno, you know you have good governance when you’ve convinced all your employees to wear funky sunglasses to work every day, or whatever. As if it doesn’t matter if you achieved it by providing free access to irresistibly-funky sunglasses or by blasting people’s workspaces with blindingly bright lights. What I’m saying is that it’s the process that matters! Anyway, if you don’t have a clear, confident and shared definition of good governance, then how the heck do you expect to actually DO good governance? And, if you’re struggling to come up with your own idea, then sure feel free to borrow mine. If you’re having trouble agreeing with each other, then maybe agree to disagree by choosing a “good enough” definition and see what it feels like to live with it for a few meetings. Use it to inform and guide everything from information flow to time allocation to conversation structure to room layout. The worst answer to this question is “we don’t have one.”
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #2: What is our agreed-upon definition of corporate governance? If you’re at all familiar with my Ground-Up Governance platform, then you know I’m kinda obsessed with definitions. I’ve said before that I think the most important and insidious jargon in the world of corporate governance is the term “corporate governance.” How many times have you heard corporate leaders complain about boards crossing the line from “governance” to “operations?” A significant part of the reason this happens is because nobody agrees what “governance” even is. I attended a panel discussion earlier this year where the three panelists were talking about boards and AI. The definition police part of my brain quickly fixated on the fact that each panelist meant something different when they said the word “governance.” One was clearly referring to the rules imposed by the stock exchange and regulators. Another seemed to be using the word “governance” to talk about board composition. And the third was talking about the structure of board meetings. It was a good enough discussion, but imagine how much more clarity and coherence there might have been if the moderator had said “for the purposes of this discussion, I would like us to think of corporate governance as [fill in the blank].” Instead, everyone just kinda went along with this weird assumption that they were all on the same page. Now, in a boardroom this matters even more. I suspect all of your directors and executives can easily agree that an important part of their job is corporate governance. But I have an even stronger suspicion that they don’t have a confident consensus about what corporate governance even is. And it’s hard to do something – and do it well – if we can’t even define it! Especially if we’re all pushing and pulling in slightly different directions without realizing.
This season, every episode of OMG focuses on a question that directors really need to answer.
OMG is written, produced, narrated and scored by Matt Fullbrook.
TRANSCRIPT:
Question #1: Why do we do things the way we do? No matter how confidently and aggressively your shareholders, regulators, governance consultants and board educators might say otherwise, there is no decisive evidence and no consensus that any specific approach to doing board stuff is any better than any other approach. If you take a step back and really think about all of the things your board and executives do in service of corporate governance, not to mention all the conditions that we covered last season, one thing should become clear: most of it is optional. Sure, there are some things that are legally mandated, and other non-fungible rules that will get imposed on you from external authorities. But you even have a lot of flexibility when it comes to how you follow those rules…in most cases, at least. More importantly, all the stuff that’s NOT mandated is optional by definition. That means you have freedom to change. And having the freedom to change means it’s important – and powerful – to ask why we do things the way we do? In some cases, you’ll quickly realize that there’s actually no reason at all. You just do things because it’s the way they’ve always been done. In other cases there will be an identifiable and memorable origin, and maybe even a rationale. But no matter what, asking the question is important. If you’re looking for a place to start with your questioning, just look through last season’s conditions. Use the question format “why do we do [blank] the way we do?” where [blank] is one of the conditions. The fact is, you’re probably doing a bunch of optional stuff with no evidence that it works well, and can’t even remember why you’re doing it in the first place. That means you can ask an even more fun question next: “what might better look like?”
New episodes of One Minute Governance every Monday and Thursday starting July 8th. This season's theme is "Questions boards and directors really need to answer."
As usual, this podcast is written, produced and scored by Matt Fullbrook. To connect with Matt, head to www.mattfullbrook.com
TRANSCRIPT:
Hi everyone, I’m Matt Fullbrook. Season 5 of One Minute Governance kicks off Monday, July 8th with episodes twice a week for the next six months or so. Ever notice that we’re always telling directors to ask more questions? About seemingly everything! Wanna do an awesome job at AI oversight? Ask a bunch of questions! Wanna make sure your executives are meeting their performance objectives? Ask a bunch of questions! Want everyone in the room to think you’re super smart and paying attention? You got it: more questions! This line of thinking is so super prevalent that you can type “questions boards should ask” into Google and basically every governance-related organization has put out somewhere between one and 10 million articles encouraging directors to ask questions about this or that. Here’s the thing, though: asking questions doesn’t really matter unless you’re doing it for a good reason. Are you trying to start a conversation? Are you trying to redirect the board’s energy into a more productive direction? Is something truly unclear? Because what actually matters is what the question accomplishes, not the question itself. Which brings us to the headline of OMG Season 5: “50 questions boards and directors really need to answer,” because by answering these questions, you’ll get closer to good governance. Each episode will be about a single question, with a bit about why the questions – and, more importantly, the answers – matter. If you find yourself enjoying this season, please do all the normal and super helpful things that support podcasters: subscribe, leave a review, and tell your friends. And if you’re a director or executive and you’d like an ally in exploring some of these questions, head over to mattfullbrook.com and send me a note. It’s good to be back.
Please note that the title is not "why do most corporate governance consultants suck."
Matt tries to figure out why corporate governance advice mostly doesn't work, talks about Beyonce, Benson Boone, Nine Inch Nails, Outkast, and a bunch of other stuff.
Full transcript available here: https://groundupgovernance.substack.com/p/bonus-podcast-why-do-corporate-governance
Playlist of songs referenced: https://open.spotify.com/playlist/0tUKlES6lyQ1KVghsVqfTF?si=ec1369c3f0cd4fac
Thumbnail image generated by DALL-E based on the prompt: "A regular person listening to Hey Ya by Outkast and realising - to their great surprise, since they've heard the song a million times and never noticed - that the chorus melody clashes with the guitar chords"
If you're a fan of One Minute Governance or Ground-Up Governance, you know that Matt is a bit obsessed with definitions. Turns out that when we have clear definitions for a few important concepts, good governance turns woke. And that's good news for everyone.
Adorable image of a guitar pedal created by DALL-E.
FULL TRANSCRIPT HERE: https://groundupgovernance.substack.com/p/bonus-good-governance-is-woke-and
One of the most enduring myths about corporate governance is that we should be able to find a measurable causal relationship between good governance and good performance. I think it's futile.
FULL TRANSCRIPT HERE: http://groundupgovernance.substack.com/p/bonus-good-corporate-governance-does
Ever feel like most corporate governance resources are...just not that awesome? Ever wonder why the heck they aren't better? Matt Fullbrook has, too.
In another long-ish scripted episode, Matt explains that he thinks he's figured out what's going on here...and also talks at length about Rolling Stone's top 500 albums of all time. It all (mostly) makes sense. Promise!
Full transcript here: http://groundupgovernance.substack.com/p/another-bonus-podcast-what-corporate
This is the first and only episode of its kind. A long scripted story about life, death, snacks, Reconciliation, feelings, The Matrix, the desert, and good corporate governance.
FULL TRANSCRIPT HERE: http://groundupgovernance.substack.com/p/bonus-podcast-good-governance-is
Well, we’ve made it. 49 conditions, why they matter, and a little bit about what to do about them. That was the headline of season 4 of OMG: what are some conditions we might cultivate as corporate leaders in service of making decisions. But there’s also an important subtext, at least for me. The subtext is this: “I was wrong.” To be fair, I’m pretty sure I continue to be wrong, but at least now I’m aware. If you’d played the last 52 episodes of this podcast for me even 5 years ago, I’d have basically just scoffed. “Who has time for any of that nonsense when there’s so much work to do, so much at stake, so many boxes to tick, etc.?” Is how I imagine I might have responded. But now, having gone through the work of conceiving, writing and recording this season, I’m more convinced than ever. Just think: 49 conditions and it barely scratches the surface of what’s possible. Even so, if we were interested in how they might affect our decisions and intentional about cultivating them for ourselves, for our peers, for those affected by what we do…just imagine. We’d show up and be more cognitively activated, better informed, more socially cohesive, more efficient. It almost feels like cheating, but I promise it’s not. I think we’re just finally zeroing in on what actually matters in corporate governance. I don’t regret being wrong for (ugh) 21ish years, but I sure am glad to be more right than I used to be. Thanks SO much for listening to OMG. I really want to know what you think of what we’ve done this season. PLEASE consider subscribing and, even better, leaving a review through your podcast platform. And don’t hesitate to reach out to me through my website mattfullbrook.com. See you again in season 5, whenever that is.
If there’s any part of my overall vibe, and of season 4 of OMG in particular, that you find a bit annoying or immature or naïve or whatever, I bet it’s that I’ve got this general optimism that the business of corporate leadership can be more fun and less formal. Actually, it’s not just that it CAN be more fun and less formal, but also that it SHOULD be! As in, the formality of the status quo is working against good governance. I really, sincerely believe it. Trust me, I’m not trying to undermine the seriousness of the jobs of executives and directors. This is not a joke to me, and there are very real and important consequences to doing the job poorly. But honestly, that just makes me more confident that we’re on to something here. We have absolutely no evidence suggesting that the typical solemn formality of boardrooms is any good. And we have plenty of evidence from the science of decision-making that we should be experimenting and socializing and finding ways to create space for a diversity of approaches and perspectives. So, I suppose what I’m saying is that a defining characteristic of a great board is its willingness to let go of formality – even in the environment of a regular board meeting – when doing so will serve the decisions at hand. Do me a favour, start thinking now about how you might cultivate the conditions for a bit of play or wonder or experimentation at your next board meeting, even just for a few minutes.
Because of the accidental bonus episodes I mentioned last episode, here we are at episode 200 (yay!) but we still have this one and two more to go this season. Here we go: Many of the boards I’ve met feel more than a little anxiety about conversations that happen outside of the confines of the on-the-record parts of board meetings. You know what I’m talking about. “Look at those three over there: always gossiping about something.” And it’s true! Side conversations can be exclusionary, faction-forming, and suspicion-arousing. But they’re also entirely unavoidable in a normal human environment. When people are together, they tend to group and hang out and chat. Can we all accept that it’s not an inherently bad thing. The problems come from information asymmetry, relationship asymmetry, exclusion – intentional or otherwise – of specific individuals, and the potential for inscrutable deal-making. It’s obvious how all of these things can impact decisions. The most important first step is to, like, actually talk about this stuff. Concerned about something? Say so – without accusing anyone of anything, please. Feeling left out? Say so – again, without accusation, please. Have some ideas about how to manage or bridge the potential problems? I promise you there are others in the room who want to hear them. Want some other ideas, check out the article Back Channels in the Boardroom by Gardner and Peterson in HBR September 2019. Just promise me you won’t let things fester.
Something weird has happened on OMG. I just realized as I’m recording this episode that I have too many episodes! That means you get two bonus episodes in season 4. Hooray? Anyway, I bet you’ve found yourself in lots of situations in your life where you had to make conversations happen. Maybe an uncomfortable lull at a dinner party. Maybe you’ve been voluntold to lead a meeting. Or maybe it’s just your job to get in rooms and get people going. No matter your approach, there’s a pretty high probability that at least someone in the room found you annoying or boring or corny or whatever. Why am I so confident? Because there’s NO way to facilitate a conversation in a way that guarantees universal adoration. Making matters worse, there’s quite a bit of evidence that the more we do to be loved, the less likely it is that our audience will learn and retain anything. In other words, edutainment is basically junk food: tasty but substance-free. It’s true! The more we do as facilitators and educators to provide our audience with shortcuts to immediate results or success, the better they will evaluate us, and the less they will retain in the long-term. So, in some ways, the best facilitators are willing to sacrifice the adoration of the crowd – at least a little – in favour of leaving them with the tools to succeed in the long term. Whoever is facilitating your boardroom conversations, and for whatever purpose, the greatest gifts you can give them are thoughtful feedback, patience, and a commitment to your work. There’s a hidden message here, though, which is that facilitation does matter because discussion matters. If you’re starting to feel like your board meetings are mostly info dumps, a bit of edutainment probably wouldn’t hurt.
I have feelings about governance education. On the one hand, the complexity and pace of change of external conditions that affect every organization means that basically every director and executive has their work cut out for them when it comes to staying up to date. On the other hand, education on those external factors – even when it’s designed for boards – basically never comes with guidance on how to, y’know, actually do something useful with that education once you’re back in the regular world of a board meeting. At least in my experience. Sure, they might say “here are some questions you could ask about, I dunno, AI and copyright or whatever,” but we all know that question asking does not a great director make. Maybe more concerning is that most education that has “corporate governance” in the title ALSO doesn’t make much of an effort to empower directors and executives to be more awesome at their job. It just seems to be obsessed with case studies of catastrophes, explosions, lurid affairs, and whatever. But understanding some worst-case scenarios is not the same as showing up and being a great director. Is there a moral to this story? If there is, then I think it’s to 1) make liberal use of your organization’s education budget by consuming every course, conference and publication that might give you new and useful knowledge, and 2) invest time and effort into imagining how you’re going to take that knowledge and use it in service of cultivating effective conditions for making decisions in your boardroom.
Spoiler alert: I’m a corporate governance consultant. Not only that, but I’m ultra cynical about the value of reinforcing “normal” corporate governance conventions. Back in episode 79 I tried to provide some guidance about when and why to engage governance consultants – I listened back just now and surprisingly don’t disagree with what I said back then. That said, I really don’t think most organizations are as intentional as they probably should be when engaging consultants for governance-related stuff. Like, what if we had big expectations? Maybe our financial statements should come with a side of audit committee coaching. Maybe our executive compensation advice should come with a heaping scoop of and leadership and team-building facilitation. Most of all, maybe our board evaluations aren’t complete unless we get a decadent dessert of dreaming and co-creation of an exciting boardroom future. What I’m getting at is that it’s not just boards and executives who are stuck in the status quo. Heck, governance consultants are largely responsible for DESIGNING the status quo, and of course reinforcing it, too. And there’s no reason for them to do anything different if they think their clients are happy.
Last episode, we talked a bit about stakes as a condition we can cultivate by just giving ourselves some stakes-free time to practice. In other words, just get rid of them. Stakes are a complex condition, though. Like, if there’s an emergency that threatens to kill your organization, that’s gonna affect the way you need to show up, compared to business as usual. Or if you’re my little corporation that can succeed or fail without affecting, well, anyone really. Compare that to, say, Silicon Valley Bank or FTX where their failure affected a LOT of people very seriously. In other words, sometimes we have no control at all over the ifs and hows of the stakes of our decisions. Sometimes the result of the decision has the potential to significantly benefit or harm a lot of people. But, honestly, this just reinforces the importance of intentionally cultivating the rest of the conditions that we do have control over. Ultimately, what we’re trying to do is set ourselves up the best we can to do the most good and the least bad through the decisions we make as corporate leaders. When the stakes are high, good governance matters more than ever.
For a few years now, it’s really stuck with me that we expect directors and executives to walk into boardrooms and just be awesome. But we don’t really tell them what awesome looks like, and we certainly don’t give them any time to figure it out. Back in episode 70 I talked about the fact that thinking strategically takes practice. And it’s true! Making matters worse, we don’t really give boards any time to practice – every moment is like game time. More than that, they only get to “play the game” once a month at most – often way less than that. I get it. Boards are serious business, and we recruit people who are SUPPOSED to understand how to get the job done well, even under sub-optimal circumstances. If we’re lucky, we get some great stuff done under those conditions. But who wants to leave governance to luck, when we could build and maintain our skills through intentional practice? So, what does practice look like? The most important thing is to take away the stakes. In other words, we’re not making a consequential decision or learning about a complex part of the business or assessing a critical situation. We’re just practicing! The next most important thing is to decide what you need to practice. Struggling to “be strategic”? Not asking great questions? Presentations too boring? Whatever it is, identify something you could stand to get better at, remove the stakes, and give your board and management team some space to play around and try some stuff. Whatever you learn, good or bad, take note and do things a little bit better when the stakes are back on the table.
Of all the things that have been turned on their heads since we’ve gotten used to virtual meetings, maybe the most significant unsung benefit is our ability to accommodate a variety of geographical locations in the same meeting. Remember how hard it used to be when we thought we had to choose between finding that elusive sliver of the calendar when we could get our board members from around the world in the same room at the same time, or else have the dreaded old school blended meeting of in-person and (gag) conference phone? Thankfully, we’ve embraced some better alternatives. But geography matters for other reasons, too. If you have directors in different parts of the world, for example, what if you tried bringing board meetings to them every once in a while? It would be a good faith gesture and potentially an inspiring change of scenery for the board. If you have operations or impact around the world, what if you planned board meetings in locations that enabled the board to witness what’s going on in real life? What about a short trip to cottage country or a bougie excursion to a tropical beach, or a subtle shift to the other side of town. New sights, new sounds, different restaurants, different stuff to do on break, new people to meet. And don’t try to pretend like this stuff is just boondoggles. A different environment, even subtly different, will have an impact on the way people show up.
Last episode I mentioned there are two things that directors tell me most affect their ability to stay engaged. The first was taking breaks. The second, related, factor is physical movement. There’s tonnes of research showing a positive relationship between physical exertion and cognitive performance. But physical movement means different things to different people at different times in different contexts. I, for example, am a fidgeter. Pen clicking, leg jiggling, playing with toys, anything. It just makes me feel a bit better. Other people really (really) hate sitting down for extended stretches. I can relate to that, too. Physical activity can also be a bonding experience. I was at an offsite earlier this summer with a client and the board chair organized an afternoon pickleball session (with beverages). It was AWESOME. Another client of mine, when talking through incorporating physical movement into the cadence of their board work, realized that they were all really into yoga. Now they had a potential physical outlet AND bonding opportunity. In a much more mundane sense, just encouraging people to feel free to stand up and stretch, maybe walk around a bit, can really help them to stay comfortable, engaged, and alert. Bonus points if you google “quiet fidget toys” and put out a few bowls of them at your next board meeting.
If you’re a regular OMG listener, I’m curious if you’ve ever wondered why I do the show in seasons. The honest answer is that at a certain point making the show – as fun as it is – starts feeling like a bit of a burden. I’ll be honest with you, here we are at the 42nd episode of season 4 and my energy level really isn’t what it was back in episode 151. But knowing that episode 200 is the start of an indefinite break does two important things. First, it helps me to stay motivated to push through and keep the quality high. Second, the break gives me space to step back and be thoughtful about what to do next, without the pressure of having to put out two more episodes next week. When I talk to directors about the things that most affect their ability to stay engaged and useful, they give me two related answers. The first is that they need regular and generous breaks. It allows them room to digest what they’ve heard and discussed, while also making sure they don’t get bored or distracted or too frustrated. I know our agendas are over-stuffed and it’s hard to find time for breaks, but…remember subtraction neglect? The second and related thing is the subject of the next episode. For now, let’s take a break.
Before we dive in, let’s differentiate between sound and noise. Sound is audible vibrations in the air of any kind – pleasant or unpleasant. Noise is sound you don’t want. Think about all the ways that noise and sound can impact conversations and presentations. Zoom board meetings are a perfect microcosm. Just think about it: jittery internet connections, bad microphones, feedback, real-life background stuff that sneaks in, your Bluetooth headphones disconnect. Compare that to the luscious tone of my voice in this pre-recorded podcast with carefully crafted and selected music in the background. In other words, we’re dealing with medium, content, technical quality, AND aesthetics here. All of these apply in a physical setting, too. My friend told me about a board meeting in an old hotel where the HVAC system was too loud for participants to hear each other, but it was the only thing keeping the room tolerably warm. How to choose, right? Either you can’t hear each other, or you freeze to death. They chose to ask the hotel for blankets. Clever, right? But noise and sound matter in more subtle ways, too. Another friend of mine recently bailed on a meeting because the person next to her was loudly and incessantly snacking on popcorn. I bet you can also think of gatherings you’ve been to where just a touch of background music transformed the vibe for the better. And I haven’t even said anything about the science. For that, check out the Freakonomics Radio episode called Please Get Your Noise Out of My Ears. In the meantime, trust me: sound can be a superpower and noise can be kryptonite.
You all know by now how much I like saying that good governance is intentionally cultivating effective conditions for making decisions. Every time I think about it, I wonder about new conditions that might impact decisions and how they might be cultivated to good (or bad) effect. But there’s a flipside to repeating a phrase ad nauseam, which is the risk that the words stick but the meaning disappears. People just say the phrase without thinking about it too deeply, or worrying about the impact they might be having. Corporate governance is filled with catchphrases. Maybe the most notorious is ”noses in, fingers out,” and its many variants. I criticized that one – pretty politely – waaay back in episode 13. The reason why “noses in, fingers out” is mostly nonsense is that directors sometimes just use it as a knee-jerk way to shut down conversations they don’t want to have, and feel like the popularity of the expression gives them permission to use it whenever they like. But it’s mostly just a catchphrase. Substance-free. The “did I do that?” of corporate governance. Another popular one in Canada is “directors owe their primary fiduciary duty to the corporation.” Seriously, next time you hear someone say that one, try asking them, “cool, what does that mean, though?” Bonus points if you have a copy of the Canada Business Corporations Act open next to you to compare their response against the actual law. Sorry, I’m not really trying to encourage you to be pedantic. Instead, think of catchphrases and other shortcuts as a condition to be conscious of, and a prompt to ask a simple follow-up question to make sure you’re not skimming over something that’s worthy of a deeper look.
Welcome to the final episode in the OMG urgency miniseries. I recently learned about a mindblowing – to me – cognitive bias that I’d never heard of before. It’s called subtraction neglect. Check out the HBR article “When subtraction adds value” by Adams, Converse, Hales and Klotz, which is based on their very cool research. If you’re more of a podcast person, check out the Less is More episode of Katy Milkman’s Choiceology show. Anyway, I’m pretty sure subtraction neglect might be the insidious heart of our urgency problem. In short, it basically means that when facing a challenge, our brains have a really easy time coming up with solutions that ADD stuff, and a very hard time accessing solutions that SUBTRACT stuff. If you’re anything like me, you’re already going “ohhhh snap! This already FEELS true!” And it is true! When we have a problem, we come up with all kinds of ideas about what we can add to the mix to make things better. The board’s feeling overburdened by the pre-reads? Let’s add an executive summary. We’re struggling to find time to spend on strategy? Let’s add an annual offsite. Makes sense, right? The ultra-weird thing about subtraction neglect is that all it takes is a simple suggestion along the lines of “by the way, you’re allowed to solve this problem by REMOVING something,” and suddenly we can imagine tonnes of new solutions that just weren’t occurring to us before. I won’t lead you too hard here, but think back to the board being overburdened by pre-reads, or the struggle to spend time on strategy. Chances are, you’ve already got some neat ideas about how to improve things through subtraction. And if we solve all our problems by adding stuff, what’s the result? Urgency! Well, by the way, you’re allowed to solve this problem by removing something.
I had a conversation recently with a great friend of mine who’s been on somewhere approaching 3 million different boards. He’s really not sold on my whole vibe when it comes to corporate governance, which is fair and totally fine. He explained a key part of his resistance like this: “Matt, when you’re in a board meeting all you’re thinking about is that Bob’s flight leaves at 6:45 and we have 13 complex agenda items to go, so how are we gonna just get through all of this?” Sure, we’re back to the whole urgency thing again, and it’s super obvious that what my friend described is basically the opposite of effective conditions for making decisions. And this isn’t a knock on him at all. Despite the fact that he’s unconvinced by me, he’s the real deal and then some. And I think he hit on something hugely important here. This hypothetical Bob character is a real person with a real life. I know it’s sappy, but the first thing that came to mind thinking about Bob was that he just really misses his spouse or family and that the board totally has his back. “Bob’s been on the road for two weeks. Let’s make sure he gets home on time to take his boo out for a fancy romantic dinner tonight!” And you know what? I’m completely supportive of directors looking out for each other like that. Understanding your peers as full human beings, and being empathetic toward the complexities of their lives and feelings. Hoo boy, that’s the stuff of board legend. But if every board meeting has the life crushed out of it because we’re cramming through all our important decisions just so Bob can fly to Topeka for his next board meeting. That ain’t it, bro. Song recommendation for the sappy version of the Bob story: “Your Side” by the Beths.
Some of you are tuning in to this episode expecting me to solidly dis the concept of regularly scheduled board meetings, and maybe even urge you to reject it. At the risk of disappointing you, I honestly just don’t feel that strongly about it. Let’s be real, most people have complicated lives with only limited tolerance for spontaneity, especially when it comes to something as fundamentally, um, boring as a board meeting. Having a regular board calendar and cadence matters! In part because it increases the probability that everyone will actually show up. It also adds some structure and predictability around which we can build decisions. Knowing when everyone will be together helps us to plan what information we will share and when, what conversations we need to have at what times, and when we hope to actually, you know, MAKE a decision on a thing. And let’s be fair, boards do bust out of their scheduled meeting flow every once in a while, but usually only because of an emergency or some other thing that forces us out of the gravity of routine. I just can’t help but wonder whether an extreme deviation from the norm might be kinda cool. Like, what if a board’s meeting frequency was something like “we meet once a week virtually for precisely 15 minutes (13 hours per year). These weekly meetings alternate between efficiently ticking some routine compliance box, and creative exploration of some important or zany question. Our quarterly, full-day in-person meetings will be informed by the creative exploration, and mostly free from compliance because that’s all been dealt with already.” That’s 56 board meetings per year, but actually somehow sounds less burdensome to me than a “normal” quarterly or monthly cadence. I dunno. What do you think?
It’s a bit of a mindf… what’s a polite way to say that? OK, I just googled it and it there really isn’t one. Someone suggested “mindception,” but I think that may be the actual worst word I’ve ever heard. Anyway, it’s a bit of a, ugh, mindception how similar most board agendas are to each other. Not just from one meeting to another, but from one organization to another. Quick aside, if you want a shocking dive into a quagmire of misogyny and racism, check out the Wikipedia entry for “hysteria.” Accordingly, you will notice me deftly avoiding that term in a second. Back to agendas. It’s like we’ve got some mass psychogenic illness that leads us to the false belief that a typical board meeting agenda is actually designed to get us the results we want. But that means that whenever we run over time, or fail to engage in meaningful dialogue, or spend inordinate amounts of time on mundane nonsense, or don’t end up hearing from every director, or whatever other not-great thing, that something is wrong with us. Because the agenda is totally fine, right? Why else would so many organizations use basically the same agenda for all their board meetings? And yes, a convenient counter-argument would be to blame the board chair. I agree that many chairs have a hard time managing meeting flow. But what if part of the problem is that they’re working with shoddy materials? I mean, what’s the worst that could happen if you cut the time allocated to presentations by 90%, or scheduled your strategic items at the very beginning of the meeting, or allocated 15 minutes for unstructured dream time? Whatever experiment you try, be sure to try it at least three times before deciding it doesn’t work.
There are lots of reasons why boards get fixated on policies and by-laws and other procedural guardrails. One of the most common and, frankly, justifiable reasons is that there’s just. so. much. Stuff. To. Do. So much stuff. Even just the list of backward-oriented compliance and oversight tasks seems endless and is so time consuming. Most organizations I know wouldn’t even permit themselves the privilege of dreaming of a board meeting that runs on time, let alone one that built in a bit of wiggle room for something extra. The time crunch is real. Another word for time crunch: “urgency”. So much to do. And even when things seem like they might be getting better, it never lasts. It’s like adding a new lane to a highway: we know it’s a bandaid, and SUPER expensive, but solving the actual problem just feels too hard. I get it. In fact, I decided I need to dedicate the next handful of episodes to stuff that’s related to this urgency issue. By the time we get to episode 187, we may actually have identified the real cause of the problem here. You know, like the boardroom urgency version of under-investment in changing driving habits, mass public transit and infrastructure for pedestrians and cyclists. Back to the policies and by-laws thing, though: in my experience, boards often feel like having lots of well-defined rules is a good way to make meetings and decisions more efficient. Here’s one jerk’s opinion: rules that define who should be making what decisions and when: those are your friend. Rules that try to define HOW those people should be making decisions: generally not going to work out the way you think. Real life is just too messy.
I don’t think I’ve said it out loud yet, but the most important theme of season 4 of OMG is that I’m trying to convince you that experimentation is at the heart of good governance. In fact without experimentation - and by extension, creativity – I’m not convinced that good governance is possible. One of the great tragedies of the past two-plus decades of corporate governance trends is how many organizations and governance professionals basically see corporate governance as precisely equal to crafting, deploying and adhering to policies and by-laws. Don’t get me wrong, I think it’s really important to agree on and enshrine important stuff into binding rules. A good and common example is setting a threshold, in dollars, for transactions below which boards will just trust management’s judgment. It saves a lot of drama and time. But it’s also a good example of a rule that’s gonna need to change as an organization grows and shifts. A threshold of $5000 might eventually become $5 million as the scale and materiality of transactions grows. And if we think about cultivating effective conditions for making decisions, this is a great example of a type of rule that can be a tangible illustration of good governance. But if you’re the type of person who thinks making decisions about policies and by-laws is the same as good governance, you and I have really different concepts of what effective conditions look and feel like.
Let me talk about Canadian boards for a second. We indoctrinate our boards with the phrase “you owe your primary fiduciary duty to the corporation.” It’s factually correct, concise and memorable. Problem is, on its own it’s substance-free. Think about it. What the heck does it mean to have a duty to the corporation? Whether you’re a Canadian or not, take a second to think about what it means to you. When asked, many people offer that they think it means you are responsible to look after the long-term survival of the corporation. Some people will say its about taking care of the people inside the corporation. Some people say it’s about keeping shareholders happy. But if we pause on any of those things it becomes clear pretty quickly that none of them are exactly right. For example, if we had to prioritize the long-term survival of the corporation, then we would never take any big swings that might have big downside, and if we went out of business or sold the company wouldn’t that mean that we were in breach of our duty? Anyway, what I’m saying is that understanding the actual spirit and substance of the law matters a lot in boardrooms. Not just to make sure we don’t mess up too bad, but also to give us clarity about what exactly it is we’re supposed to be doing. In the end, even though the law isn’t a condition that we can cultivate directly from the boardroom, it is a condition that should inform our cultivation of other conditions. Including the rules that we set voluntarily, which we’ll get into in the next episode.
For the first time in OMG history, I scrapped an entire script concept in the crafting of this episode. I had a whole nother narrative here that was about rules and bosses and a bunch of other stuff that, sure, matters to corporate governance, but it just didn’t align well with the spirit of our season-long thing about the conditions that affect decisions. So instead, let’s remember back to episode 135, called “is everyone in an organization ‘doing’ corporate governance?” The argument I made there is basically that corporate governance is the sum total of all of the decisions that happen anywhere in an organization, no matter who’s making them. The decisions made on the front lines impact the decisions made at the top and vice versa. Everyone is doing corporate governance. That means that good governance matters everywhere, too. Remember the Wells Fargo fake accounts scandal in 2016 – which seems to somehow maybe be back AGAIN as of August 2023? If not, you can take a sec to google it. A lot of people who educate corporate directors use it as an example of a board failure. I always thought that was a bit of a stretch. But it is a governance failure. They failed to intentionally cultivate conditions for their sales people and their managers to make effective decisions. And I actually think it’s a great exercise for boards and senior executives, from their position at the top of the hierarchy, to wonder about their role in cultivating those conditions. And also wonder how the decisions by those throughout the corporate hierarchy might be affecting conditions in the boardroom. It’s foolish to think there’s no effect.
In the last episode I tried to encourage you not to fall back on the temptation to use your corporate model as an excuse not to try new things in the boardroom. In my experience, the most common constraint related to corporate structures and models is democracy. And democratic processes are definitely a condition that affects decision-making. And let’s be honest, it’s not likely that we can be too intentional about democratic processes themselves, although we can be intentional about other stuff in order to make our democratic constraints less painful. A couple of obvious examples. Let’s say you, me, and some random person called Luis are all siblings, and we’re board members of a company that our parents built, grew, and still own. Let’s also say that our parents are kinda super stubborn and tend to reject any idea that feels weird or different to them. Let’s also say that we think the status quo isn’t working. Well, we can’t change the fact that our parents own and control the company. But you and Luis and I can ask ourselves, “what conditions might make our parents feel more comfortable having a fun conversation about what new things we could try?” Or maybe the three of us aren’t siblings, but instead are board members of a big trade association with a politically complicated membership. Maybe, in fact, the three of us tend to fight a lot in the boardroom because we’re protecting the interests of the regions that elected us. It’s our democratic model that brought us to this point. Take a step back, though. Scroll through some of the previous episodes in this season. Start writing down some of the conditions you might be intentional about in service of cutting through the political BS and, y’know, cultivating EFFECTIVE conditions…instead of crappy ones.
If you’re anything like me, you’re kinda inspired by the idea of good governance as being intentional about all these conditions we’re talking about, but you also find yourself mostly doing the same stuff as always. Or at least you find it hard to break the gravity of your habits and routines. In a lot of boardrooms, one of those habits is to fall back on the excuse of your corporate model as a reason not to try new things. “We’re a huge listed company, it’s just not proper for us to experiment in the boardroom. Or, “we’re a not-for-profit organization, we can’t ask our volunteer directors to try new things or spend their time in new ways.” Or, “we tried something like this before and our regulator didn’t like it, so let’s not try it again even if we think it will make our board way more effective. Or whatever. And it’s true: your corporate model is a condition that affects the way you make decisions. It’s also true that every one of those excuses I just gave is both relevant and totally fair enough. BUT, I want to try to convince you that all you need to do here is take those excuses, change the wording a bit, and then suddenly your corporate model becomes a point of curiosity instead of an excuse or constraint. Like this: “We’re a huge listed company, how could our shareholders benefit from a bit more experimentation in the boardroom?” or “We’re a not-for-profit organization. How could we cultivate better conditions for our volunteer directors to thrive despite time and resource scarcity?” Or “We’re really excited to try new things. What would it take for our regulator to be supportive of the stuff we want to try in our boardroom?” Just making excuses and leaving it at that is the opposite of being intentional.
You can probably tell from the last few episodes that I’m on a bit of a Google Scholar binge right now when it comes to OMG. And if you browse through the conditions we’ve covered so far this season, part of the subtext is that people’s moods matter. I definitely don’t want to leave you with the impression that you’ve failed unless everyone feels great all the time. I mean, sure, I think board meetings are altogether too serious for the most part, but that doesn’t mean they’re not, y’know, work. And hard work at that. Sometimes hard work is just not compatible with a diverse group of people all feeling pumped. But it’s obvious how and why mood matters, right? Take anger or sadness or whatever other powerful and ostensibly negative emotion. If just one person in a group gets super angry, the entire vibe changes for everyone. Same thing if just one person starts laughing uncontrollably or gets super excited. Sometimes these moods are something we can and should try to tap into as a group. Sometimes we need to take a break. Most of all, we can be at least a little intentional, hopeful even, about cultivating a specific vibes for different parts of our meeting. Our moods are naturally different sitting with friends with some scotch around a roaring fire compared to, say, a boring lecture in an auditorium classroom. What are the boardroom equivalents? Oh and back to Google Scholar: as far as I could find, the relationship between mood and cognition and leadership is…let’s just say complicated. So don’t expect to get it right every time.
I like a lot of different smells. A lot of food and drink smells make me happy. I am ambivalent to most cosmetic fragrances, but really like some others (and ya, I also can’t stand some of them). I love many of the varied smells in a natural environment. I even kind of like the smell of skunks because I think skunks are very cute and hilarious, so I get excited when I smell one and sometimes wander around to see if I can find it. Some other people have really negative reactions to smells – both natural and artificial. I did a bit of poking around to see if I could find any research to explain this and the only paper I found that wasn’t just based on either tiny samples or self-reporting in surveys was from 2019 in Regulatory Toxicology and Pharmacology, where Basketter, Huggard and Kimber found “adverse health effects arising from fragrance inhalation are uncommon and remain to be identified and confirmed by methodologically rigorous epidemiological investigations supported by a convincing biological and mechanistic basis.” In other words, yeah some people definitely have bad reactions when they smell certain things, there’s no reason to believe that the fragrances CAUSE the bad reactions. But that’s no reason not to be interested in creating an environment in your boardroom where people feel most comfortable and welcome. What if, and I’m just spitballing here, your board becomes more creative and strategic when the room smells like Cinnabon, and more careful and detail-oriented when the room smells like cedar? What if half of your board members are super bothered by strong smells while the other half gets really stoked when they can wear their favourite fragrances? You’d probably want to know these things, right? And maybe be intentional based on what you learn.
Let’s just get it out of the way: caffeine is one of the world’s great miracles. If you’re not a caffeine consumer, that’s fine: we can still be friends. But, I will never completely get you. For the rest of us, every bit of scientific evidence that I’m aware of suggests that caffein consumption, in moderation, is both good for us – protecting against cardiovascular disease, obesity, diabetes, some cancers, and more – and also has the potential (in my experience) to make us feel like we have a superpower. Also, seriously, check out the 2021 paper in Nursing Reports by Feng, Wang, Jose, Seo, Feng and Ge that looked at a 15 year dataset of 23,898 adults and found an inverse relationship between moderate caffeine intake and mortality from ALL CAUSES! I won’t say that caffeine makes you immortal…although…. Anyway, let’s bring this to the boardroom. I am pretty sure that one of the worst experiences I’ve ever had with a board was when we arrived for our session at 8 in the morning on a Sunday expecting the local coffee shop to be open, only to learn that it was closed until 9:30. We made the stupid mistake of deciding to just push through without coffee for the first 90 minutes. The mistake was most obvious the moment that we got our coffee and the vibe, creativity, and engagement improved by about a million percent. But if we’d taken a step back from the start, we would have known right away that something just wasn’t clicking. Call it an addiction (it is), call it trivial (it isn’t), or dis it any way you like. But don’t try to convince me that caffeine doesn’t matter in the boardroom.
Let’s dive in to the second half of season 4 with one of the most important conditions of all: food. Food matters so much to people’s moods, cognitive performance and attention spans that I’m sure it’s obvious why it’s on my list here. Let’s start with the silly extremes. If you don’t feed people anything for long enough, they’re just gonna leave, and that’s after they stop paying attention and/or get all hangry. That said, if you set out a luxurious banquet of everyone’s favourite food with all the associated sights and smells, why would anyone be the least bit interested in the work at hand? Of course, most of us wouldn’t consider either of those extremes during a board meeting. They still illustrate how food can affect us without having to go to Google Scholar to find relevant research. Although, I did go to Google Scholar to find relevant research and I found a paper from 2020 in Advances in Psychological Science by Xie, Xie and Yang where they reviewed prior studies on the effect of hunger on cognitive performance and found that – in their view – the methodology of existing research was based too much on subjective feelings and poor methodology to be reliable. So, for now, let’s trust our guts (literally) and think about how we might be intentional about food to keep our directors and executives sharp, focused, and maybe even a bit excited to show up. I guess what I mean is how can we make sure the literal main course is nutritious, delicious, and satisfying, without it being the figurative main course of the board meeting?
OK, we’re 23 conditions in with 24 to go. How you feeling? I’m willing to bet that some of you have occasionally felt a bit of “really?? Temperature?? We’re talking about a frickin boardroom! Get out of here with this trivial nonsense.” And honestly I’m not trying to convince you that you need to pay special attention to every single one of these conditions during every part of every board meeting. But I think we’re doing a pretty good job so far of showing how each of these factors really does affect the way that we show up. Making matters more complex, each condition will affect different people in different ways. And the best conditions for one decision probably won’t copy and paste to another. So it’s not like we can have a set it and forget it mentality here. But before we add a bunch more stuff to the pile, I want to remind you about something. Good governance is intentionally cultivating effective conditions for making decisions. Notice that I didn’t say optimizing every condition and getting it right every time. The “good” part of good governance is being intentional. So, if you notice someone across the table shivering, that would be a good reason to find a moment to pause and have a quick conversation about the temperature in the room. Good governance doesn’t mean finding the perfect temperature that makes everyone happy. It does mean you have to care when you notice a potential opportunity for one or more conditions to be better than they are. And you know what? The impact of that intentionality is going to be so much more profound than, y’know, talking for a few extra minutes about how you’re going to disclose your board evaluation process in your next proxy, or whatever. Anyway, if you’re not convinced by this conditions thing yet, or even if you are, head over to mattfullbrook.com and send me a note. I want to learn more about how you’re feeling. Alright, on to the next one.
You remember in the before times when people who couldn’t attend board meetings in person would attend by (gag) telephone? It was awful for everyone involved, but especially for the poor souls on the phone. Can’t see anyone. The conference phone audio makes it impossible to hear, well, anything. You sit through any breaks in the action listening to other people socializing. You don’t get to follow the exact flow of the slides or other materials. Worst of all, everyone forgets you exist because you have no presence in the room besides being a ghost on the other end of a phone line. Even when you try to speak, it’s doesn’t come through loud enough to get anyone’s attention. A fate worse than death? Maybe not, but still far from optimal. So yeah, being the one virtual attendee at an in-person meeting is at least a bit better now, what with the advent of Zoom and company. Having your face showing in a square on a screen for everyone to see makes it less likely they’ll forget you. Plus, you can follow along and participate a bit easier. And being able to see a wide angle shot of the boardroom, or maybe even a closeup of everyone in the meeting if your board has gone to those lengths…it makes you feel a bit more like you’re part of the action. But, in my opinion, this is the hardest meeting format for which to be intentional about the conditions because the stuff that works best in-person often doesn’t have the same impact for virtual participants, and vice versa. This might be one of those situations where instead of looking for compromise, you commit to set aside at least a little bit of time focusing specifically on making the virtual participants feel engaged and activated, even if it’s a bit weird for those attending in person.
While the whole world was virtual, I worked really hard on trying to figure out how to do facilitation, teaching and speaking on Zoom or whatever in ways that are engaging, interesting, useful, and that ultimately lead to meaningful learning and even behaviour change. I’m not saying I nailed it, but I feel pretty good now when I’m asked to conduct a virtual session of some kind, whether it’s for an audience of five or five hundred. In other words, I’m now convinced it’s possible to do good stuff in a virtual setting if you put enough work in on the conditions that you can control. Not to mention, the barriers to showing up to something online are way lower – no travel, few physical obstacles, less time commitment, you don’t have to put on all your clothes. Plus you can have lots of people in the same virtual space even if they are physically dispersed, meaning it’s easier in some ways to have diverse groups in a virtual setting than a physical one. All that said, this is not the way that people are used to interacting with each other, especially in groups. It takes a lot of intentional pre-planning to craft each part of a meeting or session so that it has the elements required to get the results you want. It is much more difficult to change conditions on the fly in a virtual setting, in part because everyone has their own set of physical conditions in their home or office, and also because virtual platforms only have so many tools to be spontaneous and creative. In other words, in my experience, the pre-work of a virtual meeting matters a bit more because you’re mostly stuck with it, so be thoughtful and intentional, and be sure to get and give lots of feedback.
I’ll just say it up front, I’m a huge fan of in-person board meetings. This is just one person’s opinion, but I believe that every board meeting that is not an emergency AND requires either substantial discussion or a consequential decision or both should be completely in-person except in super exceptional circumstances. Yes, I know I am leaning a bit away from inclusion here and there are all sorts of reasons why some individuals may not be able to safely show up in person to board meetings under any circumstances. I suspect there are smart ways to accommodate those needs that I’m just not aware of. The thing is that things like body language, whispering to the person next to you, and having a quick debrief during coffee breaks, really matter. These things provide us with information and signals about the people around us that we have no way of accessing if we aren’t all in person together. Being in person also gives us tonnes of additional conditions to be intentional about, including lots of stuff we’ve already covered so far in this season. I promise I’m not trying to imply that boards who hold virtual or blended meetings are doing something wrong. I just think it’s helpful to remember the potential social value of being physically close to the people you’re working with to make decisions.
Sound-Up Governance now available on mainstream podcast platforms: https://pods.to/soundup
TRANSCRIPT
Hi everyone, just a quick announcement that I've removed the paywall on the Ground-Up Governance platform at groundupgovernance.com. Mostly what that means is that the Sound-Up Governance podcast is now available for anyone to hear without a subscription. Sound-Up Governance is a longer form interview podcast featuring lots of quirky corporate governance personalities, people you wouldn't usually come across if you're a regular consumer of mainstream governance content. If you prefer to listen to your podcasts on the typical podcast platforms like Apple Podcasts, or Spotify or whatever, search for Sound-Up Governance now and subscribe. Every week we'll release an episode from the archives until we're caught up. The other change around here is that the weekly definitions and illustrations that we've been putting out on Wednesdays here on OMG are going to migrate to sound governance. If you've been enjoying those, then you've got one more reason to subscribe. Thanks so much for following along. I'm super excited to share even more cool corporate governance content
My friend Andrew recently told me about a platform called Zeck. Go to Zeck.app to check it out. The first sentence on their About Us page reads “Zeck is reimagining the way board decks, board prep, and board governance (the bane of all of our work experiences) are approached...which is to say #DeathToBoardDecks.” Also one of their founders is the actor Edward Norton (?) Anyway, I reached out to them right away to ask if I could interview someone and hear more about the story. I don’t know about board governance being the bane of anything if we think of it as just how boards make decisions, but other than that I love the idea of taking something everyone hates (like board decks) and trying something different and better. And if we’re being honest with each other here, the most significant technological improvement in boardrooms maybe ever was replacing piles of paper with ipads, and even that still has its skeptics. But there’s so much technology that has the potential to improve governance. A podcast is technology, and here you are using it. Could you deploy this podcast or any other one in service of good governance? Sure you could! How about AI? Definitely! Hell, I’ve been thinking about a governance-related game, and every time I have a new idea about it I run it by chatGPT to see if it will come up with something better. I mean, no knock on board management software, but we mainly just use it as a document repository. With all the amazing technology that we’ve integrated into every other part of our lives, it’s a pretty short step to finding ways integrate it into our decisions.
If you missed the last episode, it was about room layouts. Take a minute or two and listen to it now if you haven’t yet. I’ll wait… OK, so now that we have room layouts and furniture on our minds, in an imaginary situation where it is possible to re-furnish your boardroom, what furniture would you want? I mean if you could choose literally anything. Maybe you really do want something modular. Something that could easily be shuffled into different configurations without disrupting the flow of the meeting. What about comfort? My better half, Dana, hates sitting in bar chairs at high top tables, for example. Super uncomfortable for her. I personally think cool looking furniture is awesome, like a really well-designed chair, but then I stop caring about the design entirely once I’m actually sitting in it, at which point all I care about is whether I’m comfortable or not. Other people get super energized by interior design even after they’re sitting in the chair. There’s a balance of function, form, and flexibility that might really matter here. Like, I bet you sit on different chairs and sofas in your home and office depending on what you’re doing – reading, chatting, watching TV, or whatever. Same with the tables or other surfaces you might use – different ones for different functions. And that’s the thing about board meetings: when we do them well, different types of things happen all at the same meeting ranging from consuming information, to lively discussion, to having lunch, to casting votes, etc. Maybe modular really is the way to go, although I’ve never seen it. If any of you listeners end up trying anything like that, please send me pictures! I’d really love to see what stuff you’re trying.
Episode 144 last season was about boardroom layout. In that episode, I admitted that I’m obsessed with boardrooms. Specifically, I’m obsessed with the fact that they’re all laid out essentially the same for literally no reason other than that’s how boardrooms are laid out. If you’re at all convinced that your boardroom layout is an important condition for decision-making, then ask yourself: what favours is a conventional layout doing when it comes to generating inclusive dialogue in an efficient timeframe, or when it comes to stimulating the generation of interesting ideas and perspectives? The answer is likely “no favours at all!” So what’s stopping you from just changing the layout right away? Let’s be honest, it’s mostly the furniture, which we’ll talk about in more detail in a few episodes. The furniture issue is especially true if you’ve got one of those old school huge solid wood board tables and stately chairs. I mean, what are you supposed to do? Take an axe to it and break it up into smaller modular chunks? Hmm…modular chunks, you say? Anyway, getting new furniture isn’t the only way to get creative with the layout of the room. What other rooms or spaces in or near your organization might be more conducive to the type of dialogue we really want during board meetings? While we’re waiting to talk about furniture, maybe you could put a bit of imagination into what kinds of room layouts you find most engaging in different situations. Try not to only think about boardrooms or dining tables, but also hanging out in a living room or maybe a kindergarten classroom, or a party, or any other thing that might spark a different kind of vibe than what we’re used to in a conventional boardroom.
We all know the trope about gender and temperature. Men like it cold, women like it hot. And, for the most part, we unsurprisingly set the temperature in workplaces so that men are happier than women. Layer in conventions about workplace attire, and we have yet another set of conditions that are hostile to women in the workplace (sorry for the layer pun). And this isn’t just about preferences. A 2019 study in PLoS One found that increasing the temperature in workspaces had a greater positive impact on the cognitive performance of women than it had a negative impact on men. In other words, temperature can kinda make us smarter. And it’s better overall if we set the temperature to where the women in the room are comfortable. It’s obviously not all about cognitive performance and equity. It’s also about people’s comfort, and temperature is clearly one of those conditions that can’t be optimized for everyone simultaneously. I mean I might be weird, but sometimes being in a room or car that’s heated beyond my comfort level makes me feel nauseous within a couple of minutes, although I love exercising outdoors on super hot days. Anyway, this isn’t about me. It’s about the fact that temperature affects people’s ability to use their brains good, it affects their moods, it affects their physical comfort, it affects their wardrobe planning. And so, it affects your board effectiveness because it’s a condition that changes the way people engage. Ignore it at your peril.
Have you ever heard someone say that stores set up specific types and intensity of lighting to get people to buy more stuff? Well, as much as that may sound like an urban legend, it’s not just true – it’s super true. Sorry, what I mean is that it’s true that stores are intentional about their lighting, but not just that there’s a specific type of light that makes people buy more, end of story. It turns out, according to a study from Nanyang Technological University and Northwestern University that you can use brighter light to make people want to buy stuff for practical reasons and dim light to make people want to buy stuff for pleasure. Seriously! A study by Cornell University found that diners are more likely to buy healthy food in well-lit restaurants. There are studies showing how lighting affects worker productivity in different types of workspaces. Lighting affects us! It makes us feel and behave in different ways. I’m no expert on lighting and don’t know exactly how to use lighting to achieve different objectives in the boardroom. I don’t know how to set the mood for a conversation where you’re dreaming about the future vs. a thorough review of financial statements. What I do know is that it matters. If you don’t have the resources to track down an expert to help you, maybe just try some stuff. What’s the worst that could happen?
Yes, yes, I know it was only two episodes ago that I went on about being intentional about the cadence of decision-making. And I stand by it! Mostly. You see, being intentional isn’t the same as choosing a path and stubbornly sticking to it. Best laid plans blah blah. But here’s the thing: unexpected stuff happens! Yes you have laws and regulations and policies to follow (more on that later in the season) but those really only affect a little bit of the work of good governance. Here’s a trivial example: Your hip-hop technology company has 15 minutes allocated on the agenda for a discussion of the best albums of 2022. The board mostly agrees that Cheat Codes by Black Thought and Danger Mouse is a great album and deserves to be in the top 5 – maybe even #1. But a debate about whether Danger Mouse’s production style is brilliant, moody and lush or vaguely monotonous and bland leads to an idea for a potential new beatmaking interface – something earth shattering. And then the board chair interrupts, saying “OK time’s up! Let’s review this quarter’s strategic milestones.” It’s true that we agreed to a 15 minute discussion, and that we have lots of other work to do, and that the board’s oversight of strategy is an important part of their job. But let’s be real: who could fault you for just kinda saying “forget the agenda!” and diving into an idea that might revolutionize your company? Not the regulators. Not your General Counsel. Not anyone.
If we made a ranking of the governance conditions that were both easy to improve and super resistant to change, meeting scheduling would be pretty close to the top. It’s also one of those conditions where we kinda look for the compromise that nobody is happy with but everyone can sorta live with instead of trying different things every once in a while that might be AWESOME for some people, even if they might be a little bit worse for others – as long as those others get the chance for something awesome in the future. Here’s what I mean, maybe we hold half-day board meetings on Thursday afternoons because half the board is retired and goes to the cottage for Friday-to-Sunday long weekends, while the other half works full-time and Thursdays are the next best day to take off other than Fridays, when the rest of the board is on their dock with a glass of sangria. Nobody is happy with this arrangement – either because they hit the road late for the cottage or because they miss a half day of valuable work time. Or worse, what about all the people we’re eliminating from eligibility for our board in the first place because they can’t get off work at all, or can’t afford child care? For many boards, we just live with these compromises because they kinda work and they feel fair. But do they work as well as alternating Thursday mornings and Saturday mornings? Do they work as well as back-to-back Tuesday and Wednesday evenings? Do they work as well as offering a child care stipend? Not to mention that at some times of the day, certain people just turn into metaphorical pumpkins. If you’ve noticed the occasional director seeming to doze off or lose focus, scheduling is a good place to start looking for a remedy.
You know when you’re learning something new like a sport or a musical instrument or a language or game or whatever? Sometimes it just clicks right away for some reason and you’re like “UGGGGH can we please just move faster! I’m ready!” But then sometimes it feels more like “wait, stop, stop, stop…WHAT IS HAPPENING? I’m really not getting this. I need to slow down.” And if you’re learning in a group, usually there’s at least one person at either end of that spectrum, both of which are pretty frustrated. That’s how it feels sometimes to make decisions in groups. Especially if we’re not intentional and clear in advance about the proposed cadence. Imagine you’re a CEO who’s spent the past six months eating, sleeping, breathing, digesting all of the elements of a potential new path. You walk into a boardroom expecting the board to sit back, listen attentively, smile broadly, vote unanimously in favour of your proposal, and give you a standing ovation. But it doesn’t go as planned. A board member has a question. Maybe it’s a question that you’ve already considered a million times and feel a bit frustrated that the directors don’t just trust that you’ve thought about it. Maybe five directors have questions just like that one. Maybe you’re starting to get really frustrated. Maybe the meeting ends and you look for a governance consultant online and say to them “my board is SOOOO annoying! They’re always diving into the weeds and make everything so slow!” And maybe that governance consultant will say to you, “let’s imagine ourselves in the board’s position. How might you have involved them earlier and more often to bring them on the journey with you?” Cadence matters. There may not be a perfect balance, but being intentional gets you most of the way there.
Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform.
OK I know this sounds kinda dumb but I Googled “trust definition” before writing this script. So here’s my class presentation on trust. Oxford Dictionary defines trust as a “firm belief in the reliability, truth, ability, or strength of someone or something.” In other words, it’s like the opposite of doubt. And one of the things I like about that definition is that we can imagine ourselves trusting someone’s reliability or ability, but doubting the truth of something they say. The fact that someone says something that doesn’t seem entirely believable to us doesn’t mean we lose faith in their character. And each of these intersecting qualities of trust exist basically everywhere in organizations, maybe even more so in boardrooms. Like, directors need to verify the accuracy of information that management brings to them – this is why boards often hire their own auditors and lawyers. Verification is one thing. But if we don’t trust management to bring us the truth, we have a whole nother problem. If we don’t have a firm belief in the reliability or ability of the directors around us, that’s an equally big problem. So, obviously, trust is an important input into decision-making. But one of the most common errors that I see in boardrooms and beyond is the assumption that if I don’t trust you, it’s a YOU problem. As in, I have no influence over the conditions that affect whether I trust you or not, or whether we collectively trust each other. Frankly, that’s a load of BS. If, for example, there’s a pattern of behaviour that’s affecting your trust level, what are the steps YOU can take to influence that pattern, respectfully?
Building on the previous episode, a close cousin of psychological safety is conflict. One of the most obvious symptoms of a lack of psychological safety in a boardroom is a complete lack of conflict. Conflict doesn’t have to be toxic or personal. It can arise naturally and constructively from disagreement. Disagreement is pretty normal in an environment – like a boardroom – where there are complex decisions at hand with multiple viable paths to explore. If we all agree on a path right off the bat, then one of two things is happening: a bad kind of group think where it doesn’t occur to us to question each other and ourselves, or people feel unsafe expressing their doubts and concerns. I sometimes meet boards that can’t remember the last time they had any disagreement or conflict around a decision. That might sound like paradise to some CEOs out there, but to me it sounds like a place where effective decision-making goes to die. Conflict can be awful and scary – especially the bad kind of conflict where someone is being deliberately attacked. There’s no place for that in any decision-making environment. But conflict can also be inspiring, like the type of disagreements where we all sincerely want to understand multiple perspectives, especially the ones that run counter to our own beliefs. There may be some tension, but we can deal with it gracefully because we’re all fundamentally there for the same reason: to make the best decisions we can for the organization and its stakeholders.
Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform.
There’s a strange thing happening in some boardrooms I’ve encountered over the past few years. The first part of the strange thing is a positive: they’re talking about the importance of psychological safety. In general, I think of psychological safety as a set of conditions where everyone in a group or system feels like they can express what they think or how they feel without fear of being punished in some way. So yeah, no matter how old school you are, I bet you completely agree that psychological safety is important in boardrooms. The second part of the strange thing is not so positive. It seems that some people have misinterpreted psychological safety to mean that they are entitled to feel comfortable all the time. In other words, if someone in the room says something that makes these people feel uncomfortable, they complain that the conditions are not psychologically safe. I get it: feeling uncomfortable can be…well, really uncomfortable. But insisting that you must feel comfortable ALL the time is basically another way of saying “I should be allowed to say anything I want, but you can only say things that make me feel good.” That’s the thing about conditions that make people feel safe expressing themselves. It’s basically inviting discomfort into the room and making an agreement that we’ll deal with that discomfort together, respectfully, thoughtfully, patiently, and in good faith. It may not be perfect, but it’s so much better than the alternative.
Before sitting down to start writing the scripts for this season, I wrote a list of the conditions I wanted to cover. Clearly, personal style is a condition that matters when we’re making decisions, but that doesn’t mean I really know how to define it. It’s not the same as personality, exactly. Or is it? It’s also obviously not about fashion sense, but maybe fashion sense is a result of our personal style? Maybe what I mean by style is the intentional expression of personality. Like if personality is someone’s intrinsic character, then style is how they choose to express it. It might be a feature of someone’s personality, for example, to feel confident expressing their feelings and opinions. The style in which they choose to do so might be through humour or sincerity or song or a combination of the above or something completely different. Some people may dress a certain way to express elements of their personality, and others might prefer more subtle signals. In any case, a boardroom is a room full of people, each with their own style. It can be a place where some people feel safe expressing their style, while others don’t. It can be a place where we encourage styles that are inclusive, or fail to discourage styles that are toxic. It can be a place of inspiration, or a place of convention. When you walk into the room, how will you choose to express the features of your personality? How interested are you in how that choice might affect the others in the room? If the answer is “not really interested at all,” then you might want to review our working definition of good governance.
Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform.
It’s been a bunch of months since I realized that there’s a really strong overlap between good governance and equity, diversity & inclusion. For a refresher of what I’m talking about, listen back to episode 113. ED&I and good governance may not be identical, but maybe a good way to put it is that you can’t be intentional about cultivating effective conditions for making decisions without being intentional about ED&I. Many people are still quick to point out that diversity of demographic characteristics like race, ethnicity, age, gender, and socioeconomic status among MANY others, won’t guarantee diversity of thought and perspective. My first response to that is “are you sure about that?” My more thoughtful response is that even if it’s not a guarantee, it definitely is a shortcut. I mean, a room full of people who look completely different from each other is more likely to have meaningful diversity of thought than a room full of people who look the same. Think of demographic diversity as a diversity of thought hack. Anyway, if good governance is impossible without ED&I, and the diversity part of ED&I is a condition that we have control over, then it’s clear why it belongs in our list this season. This may be one of the more complex conditions because it involves investment in building a community, which takes time. We also have to be conscious of tokenizing and other challenges we might encounter in doing the inclusion part of ED&I well. But don’t try to tell me that you have no way to be intentional about demographic diversity in your organization, your executive team, your boardroom, because…well, come on.
In the previous episode we talked about technical skills, and the potential need for expertise in a bunch of technical areas. Expertise is weird – for a good summary of exactly how weird, check out Range by David Epstein. Expertise also has a strange relationship with overconfidence, including that people with deep expertise tend to have way too much confidence in their ability to make predictions in their area of expertise. So, we have to be careful about balancing technical skill with diversity – including maybe having non experts or even naivete in the room. Someone who’s naïve also needs to be brave enough to slow the experts down and say “I have no idea what you’re talking about and I’d rather not move ahead until I understand.” That’s pretty hard, especially in an intimidating place like a boardroom. Anyway, it’s already clear why expertise is one of the conditions that matter for good governance, in part because we clearly have control over who’s in the room. We have at least some control over who our executives and board members are. We have a lot of control over whether we engage specialized consultants and who they are. We can think about exactly who we will engage at different stages of our decisions and how we’ll do it. Will we ask our experts to make crappy predictions? Maybe we can ask them to ask us questions instead like we talked about back in episode 119. It’s not rocket science. Unless it is, in which case you probably want a rocket scientist in the room, and maybe also a Rocket League expert just to balance things out.
Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform.
Every organization does complicated stuff that’s hard for the rest of us to understand. Not to mention, every organization has to somehow measure whether it’s doing that complicated stuff well or not, which is even more complicated. Add on top of that the fact that every organization’s complicated stuff affects groups and individuals inside and outside the organization in complicated ways. It’s a lot. It wouldn’t be very good if our CEO didn’t understand how our complex operations worked. It wouldn’t be good if none of the board members understood, either. But, let’s say we have a company that makes robots that perform brain surgery. Do you need your CEO to be technically skilled at surgery AND robotics AND software development in addition to all the regular CEO stuff like managing people and projects and financial oversight etc. etc.? What about the board? How many surgeons do you need on a ten-person board? Is it ten? Zero? How many robotics specialists? Accountants? Lawyers? If it’s zero, how do we communicate the important surgical stuff to them in a way that they will understand and feel confident being accountable for? If it’s all ten, where do we find these people who have technical expertise across so many different – and divergent – factors? Don’t forget that you can always supplement with consultants and stuff. No matter what path you choose, there are trade-offs that affect decision-making conditions.
I find it really interesting, strange even, that some people HATE sci-fi but LOVE fantasy, or vice versa. And lots of other people hate or love both. All this despite the fact that they are simply styles of worlds in which stories are set. I mean a magical hero should be just as compelling whether they’re flying a spaceship or a dragon, right? But that’s not how things work. Style matters. Bland and factual or hilarious and abstract? Long and descriptive or pithy and metaphorical? The fact is that there’s no perfect balance that will engage and inspire everyone. And that’s really the point I’m trying to make here. Some people in the room will be inspired by wizards, and others by Jedi, and there may be no middle ground. This is pretty closely tied to the information medium piece in episode 152. Even though the idea of learning styles like “visual learners” has been debunked, that doesn’t mean that different ways of presenting information won’t inspire different people in different ways. Remember in episode 129 when I said Thing Explainer by Randall Munroe might be the best management book ever? What I like about it isn’t just that it’s got really cool illustrations and simple language (although that’s a HUGE part of it). I also like that he takes very serious and complicated stuff and isn’t afraid to make it a bit silly. The silliness makes it more accessible to me. For others, it might be a turnoff, maybe because it feels patronizing. For me, though, it’s the Goldilocks zone – just right. I learn a lot and have fun at the same time. It’s too much to expect that the people sharing information with your board will be gifted storytellers, but I don’t think it’s unreasonable to step back and ask what the current style or vibe is, and whether trying something a little bit different might help to engage people’s attention and imagination.
Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform.
Remember that wish list from last episode about boards wanting information that’s shorter, more detailed, and sooner? What are they really asking for? They just want to be able to come to the table knowing as much useful stuff as possible. That sounds pretty reasonable, right? Funny thing about the content of board pre-reads is that a lot of it is stuff that nobody needs to know or wants to talk about. Sometimes that’s because of regulations – meaning the content has to be there, even if it’s useless. But sometimes it’s something less defensible, like 40 years ago some director asked for a report on usage stats for VHS vs. Betamax and for some reason management still puts time into crafting that report before every board meeting just. because. we’ve. always. done. it. that. way. So you can imagine why having a bunch of useless information in the pre-reads might be a problem. But it’s not just about editing. We can also think about the balance between reporting on the past and asking questions about the future. We can think about the balance between reporting facts and sharing opinions or forecasts. We can think about the balance between data dumps and pithy summaries. But you can be sure about one thing, every decision about what to include or exclude will affect directors’ ability to come to the table ready to engage.
I sometimes remind senior executives that their board’s information wish list is that they want it shorter, more detailed, and sooner. And yeah, sometimes those wishes are mutually exclusive. We’ve all heard the famous Mark Twain quote: “sorry for the long letter – I didn’t have time to write a short one.” And it’s true: creating something brief that also has substance takes time and practice…I should know. But I also think we tend to over-index on the timing piece. Think about it: your board doesn’t need all of the material at the exact same time. It’s not like they’ll consume every part of it simultaneously. It makes sense to have deadlines for getting critical material to your board to make sure they have time to actually consume and understand it. Also to get their thoughts and feelings and questions sorted before they come to a meeting. But it’s also not like they will somehow refuse to read, or watch, or listen to something just because it comes through a week earlier or two days later than the rest of their pre-work. In fact, sometimes we get brilliant last minute ideas or urgent information that we just have to share at the 11th hour. It’s cool – don’t worry about it. But for the rest of the information you’re sharing with your board I think it’s worth wondering how you can time the dissemination in ways that might make their lives easier, or might make them more likely to engage in future-oriented thinking. If you provide a written brief on Monday, could it help to follow up on Friday with a voice memo or podcast that sheds additional light on the topic? Could it help to provide weekly updates by video in between board meetings to keep the juices flowing before the main packet goes out? Different approaches will work in different circumstances, but you can start by just trying new stuff!
Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform.
Let’s say you’ve decided to start a podcast to include as part of your board pre-work. You’ve got a lot of decisions to make. Will it be scripted or spontaneous? Will it be one voice – maybe your CEO – or many, like the entire executive team? Will it be short, pithy, and brilliant like OMG, or long, boring and arduous like other podcasts (sorry). Maybe it will be an interview format. Maybe those interviews will be featured exactly as they happened for completeness, or maybe they will be edited to pick out the juiciest bits with some voiceover added for emphasis. And so on, basically to infinity. Pick a medium and the formatting choices are kinda endless, from font and font size, to length, to punctuation styles, to pull quotes. Some of the formatting might be intended to keep the consumer’s attention, and some might be intended to just add fun flair. Some might be intended to make sure specific pieces of information get seen…and retained. You might use one format for communicating facts and another for commentary. What I hope is obvious, though, is that you have a lot of control over formatting. I might even argue that formatting can serve you really well, but that if you don’t put much thought into it, it’s probably serving you poorly. So…let’s be intentional about it, shall we?
There’s a quote I really like from an article called The Elements of Good Judgment by Sir Andrew Likierman in HBR back in January 2020. Also the article has a beautiful image at the top of what looks like a great gray owl with a super poofy face. Anyway, the quote reads: “As a director of a large listed company, I would get up to a million words to read ahead of a big meeting. Confronted with such a deluge, it’s tempting to skim and to remember only the material that confirms our beliefs. That’s why smart leaders demand quality rather than quantity in what gets to them.” There’s a lot about this quote that I like, but I also see an opportunity missed. It’s just taken as granted that board pre-reads will be, well, pre-READS. Sure, those pre-reads are usually no longer literal physical binders – intimidatingly huge ones, at that – but don’t you find it a bit strange that Mr. Likierman’s focus is only on the amount of information, and not the medium? I mean, I think we can confidently say that people like consuming information through all kinds of media, right? You’re listening to a podcast right now, for instance. Later, you might stream a video on Netflix or Disney or YouTube, or poke through Twitter or Instagram or TikTok. Maybe your team at work does most of its interaction through Slack instead of email or phone or text. Maybe you like looking at your calendar on your desktop computer more than on your phone. Maybe you’re reading the transcript of this podcast instead of listening to it. Anyway, the medium matters. Each of the media I’ve mentioned in this episode COULD be an element of your board packet. And all of them are better than a million words in PDF format.
Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform.
Finally! Season 4 of OMG. Let's start with Matt's latest definition of "good governance"
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Welcome to season 4 of One Minute Governance! This season is gonna be a bit different. Well, I mean it’s mostly gonna be the same. 60-90 seconds or so of me talking about governance stuff a couple times a week. The different part is that there’s a season-long theme. Let me explain. My current wording of my definition of good governance (yes, it’s different again) is “good governance is intentionally cultivating effective conditions for making decisions.” I’ve been testing this out on a bunch of different audiences and it’s resonating – for the most part – pretty strongly. But there’s a sensible question that comes up almost every time: “what do you mean by ‘conditions’?” Good question, right? And it’s completely true that the word “conditions” is doing a lot of work here. Like, a lot a lot. And the fact is that there are tonnes of conditions that affect our decisions – many of which we can be intentional about. So, 47 of the remaining 49 episodes of season 4 will each be about one of those conditions, why it matters, and how we can influence it. These 47 conditions are…not arbitrary, exactly, but certainly far from an exhaustive list. Some may seem obvious, others trivial, and others still that will be left out for no reason other than I didn’t think of them or ran out of time or whatever. Either way, I hope that the journey over the next few months will spark some ideas about how you might intentionally cultivate effective conditions for decision-making in your next board meeting, family dinner, bachelorette party, or whatever. See you in a couple of days!
Season 4 launches May 1st, 2023
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I can’t believe it’s already been like 4 months since we wrapped up season 3 of OMG. I just wanted to check in for a sec to let you know that season 4 is on its way. Soon! Not only that, but it’s gonna be the first “concept” season, with a theme. Yeah, yeah, the whole podcast has a theme, I know, corporate governance, blah blah. But this goes beyond that. Remember how we talked a bunch last season about what “good” governance means – episodes 102 and 140, for instance? Season 4 is a zoom in on the word “conditions.” Seriously, all 50 episodes. And it’s gonna be really fun and interesting, and useful. So, set your calendars. Every Monday and Thursday for 25 weeks starting on May 1. That’s, like, almost exactly a month away, so you have plenty of time to listen to the entire back catalog of 150 OMG episodes. If you need even more content to tide you over, head to groundupgovernance.com, where we have over 50 blog posts, 25 podcast episodes, a bunch of videos, and more. Thanks for tuning in. See you in a few weeks!
SEASON 3 FINALE: While you're waiting for season 4, try using OMG in your boardroom.
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We’ve reached the end of season three of OMG. 150 episodes. I’ve said before that every time I sit down to write for this podcast I’m afraid I won’t have any new ideas. And sure, it would be a fair criticism to say that I don’t really always have new ideas. I do revisit a lot of topics. But I do always feel like I have something different to say, either because I’ve changed my mind or learned something new or am just feeling a bit opinionated and snarky. That inspiration mainly comes from the people in my community. Directors, senior executives, educators, advisors, and sometimes just nerdy weirdos. I get so much insight and energy from the conversations I have with these people, and honestly I probably won’t ever run out of material as long as they’ll keep talking to me. Which brings me to my pro-tip. This pile of 150 episodes of OMG consolidates so many ideas and perspectives that I’ve gathered up over the past couple of years of my governance journey. And even though the stuff I say here may not be “right” or even all that smart sometimes, it definitely can act as a useful conversation starter for you, your board, and the rest of your team. Take advantage the privilege I have to speak to amazing people every day by picking out one or two episodes to share with your board and management in advance of your next board meeting. It’ll only take them a couple of minutes to listen, and it might spark some different thinking. I’ll be back in a few months with Season 4. In the meantime, reach out anytime at mattfullbrook.com if you have ideas or questions that you think I should cover next season, or if you have any other ideas to help make OMG even better. Thank you so much for listening. See you soon.
Let's let go of comparing board chairs to orchestra conductors. A dinner host is a way better analogy.
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Back in episode 91, I made an argument against comparing great board chairs to orchestra conductors. But if an orchestra conductor isn’t a good analogy, what is? I think I have something. It’s not perfect, but to me it’s a much better description of an excellent chair. Imagine you arrive at a dinner party. The lighting is comfortable, the temperature is right. The host takes your coat, puts a drink in your hand, and skillfully introduces you to someone you don’t know with a fun conversation prompt. By the time you’ve had a chance to meet everyone, dinner is served. The food is delicious, and beautifully paired with the wine. The conversation flows. There is disagreement – maybe even tension – but everyone feels comfortable to participate and nobody feels attacked. You learn a lot. More than you expected. And before the conversation loses steam, the evening wraps up. You don’t feel too full, or too drunk, or too tired. It might feel a bit like magic, but to the host it was all just intentional and difficult work – before, during, and after the party. The host, of course, is our board chair analog. I know that if you think about it enough you’ll find lots of flaws with the analogy, but none of them as glaring as the orchestra conductor. The dinner host’s work is in service of creating a vibe, of getting the right combination of people engaging with each other in the right ways, of managing countless intersecting variables that may change without notice, and to do so with grace, humour, and empathy. No standing ovation. No spotlight.
Can a company get so big that its leaders barely matter?
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Think of a really big company. Like, REALLY big. Especially if it does lots of things in lots of places. Even more if it makes money in lots of different ways. Maybe a big bank, for example. Let’s also imagine that the company is pretty good. Y’know, it’s making money, has good competitive positioning, and solid reputation. Let’s also imagine that there are no current crises or major obstacles. Last assumption here is that there are enough good people in the company to make sure that the stuff that’s supposed to happen actually happens. Under those circumstances, the generic bank-like company in question is pretty likely to keep going, right? Maybe even thrive. I sometimes wonder if, under those very privileged circumstances, senior executives and board members might barely matter at all. Sure, everyone needs to report to someone and someone needs to be at the top of the food chain and all that. And of course crises, or at least unexpected shocks, are always a possibility – and someone needs to be at the ready to guide the company through the storm. But in a company like the one we described, could it be true that senior executives and boards most important role is to basically just exist? To kinda be accountability sponges just because someone’s butt has to be on the line? I realize we probably want some folks in our company to be dreaming about what cool stuff we could do next, just so we don’t get complacent. But for the most part we’re talking about innovation at the margins rather than at the core. I’m not really recommending anything here – just making the observation that I can imagine a scenario where an organization’s top leaders barely matter at all. What do you think?
Is it really possible for boards to impact organizational culture?
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A lot has been said and written about the impact that boards have, or at least might have, over organizational culture. A lot of what’s been written and said happens in the wake of some culture-related meltdown like at Wells Fargo, or Boeing, for example. Where was the board? How could they have been so blind? If only the board had spent more time actually wandering around the organization, they would have seen the signs, right? I mean, yeah, of course it makes sense for boards to have a clue that their organization’s culture is going down the toilet, obvi. But anyone who’s spent time in and around large and/or complex organizations will tell you that there’s often no one monolithic “organizational culture.” There might be doctrines and norms, values and visions, leadership styles and cults of personality. But in an organization with high diversity of roles or geographies, for example, there’s no way for anyone to fully understand culture, or to have visibility into every little nook and cranny where a crisis might be festering. Of course we want our boards to be sufficiently aware and curious to notice systemic cultural issues and toxicity, and to have the guts to get rid of the leaders who allow or enable those problems. At the same time, part of a board’s superpower is in what they don’t know. They don’t eat, sleep, and breathe the organization. They don’t obsess every minute of every day and night about its tiniest successes and failures. They come into their roles with the benefit of independence. So does an effective board have impact on organizational culture? Sure, I guess. But are they the architects of culture? That one gets a “no” from me.
Could it be possible for governance to be so good that the quality of the people don't even matter?
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One of the most common reactions so far to my definition of good governance as “the act of intentionally creating effective conditions for making decisions” is that I might be discounting the importance excellent people. In other words, I might be implying that if we create the right conditions then it doesn’t matter who’s in the room. First off, it’s not my intention to imply that at all. I think the people in the room are some of the most important conditions that we need to intentionally work on in our good governance journey. But let’s explore this for a moment. Could it be the case that somehow good governance is possible even with bad people? I mean, every person has some kind of strength, right? Maybe we could create conditions where everyone is only able to express their strengths and not their weaknesses. Maybe we could supplement our organizational leaders’ lack of care or interest or aptitude with external support? Maybe still, a truly optimized set of conditions could transform a group of duds into a group of stars? I honestly don’t know, and suspect the answers are deeply circumstantial. But one thing I do believe is that if you’re a leader in an organization and feel like you’re surrounded by duds, then it really is worth exploring ways to unlock their potential. Sure, some people might just be a lost cause. But why just sit there resigned to the fact that you’re surrounded by scrubs without putting in the effort to turn them into superstars?
Or maybe the better question is "what isn't good leadership worth?"
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Way back in episode 54 I wondered about how we could possibly know how much to pay a CEO if we don’t know their compensation floor. In other words, if we don’t know how low a CEO’s pay can go before they will quit, or at least start to under-perform, then we are missing a critical variable to understanding the range of executive compensation that we have to work with. Well, there’s another equally important question: what is excellent leadership worth? Or maybe an even better question would be what ISN’T excellent leadership worth? Sure, senior executives – CEOs especially – tend to make an eye-watering amount of money. And obviously there are a tonne of philosophical, social, economic and moral questions that are important to examine in terms of whether extremely high compensation is good or bad for the world overall. But in the context of a specific organization, and taken in isolation from other intersecting factors, let’s ask the question: what ISN’T excellent leadership worth? Whether you’re a tiny, cash-starved local organization or a massive multinational, what wouldn’t you pay to get the perfect leader? Not that you should irrationally pay more than you need to, of course, but I meet organizations that are, in my opinion, unnecessarily anxious about paying too much for great leadership. In my experience, though, it’s a lot easier to find more money than it is to find an excellent leader, regardless of the organization.
I'm kinda obsessed with re-thinking the layout of boardrooms. Here's why.
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If you’re super attentive, you might have noticed me referring a few times this season to the impact of boardroom layout on good governance. This episode is where I admit that I’m kinda OBSESSED with the idea of re-thinking boardrooms. You remember last episode when I said 1000% improvement can come from 1% change? I think this is a good example of where a small change can have a HUGE impact. Over the past few decades, you’ve probably noticed a whole bunch of experiments in workspace optimization. Cubicles, open concept, private offices, hoteling, space for play, remote work, and more. Smart managers are interested in exploring and better understanding how the work environment affects morale, productivity, culture, innovation, and ultimately organizational success. Absolutely none of that curiosity has broken through the impenetrable barrier of the boardroom door. But let’s be honest: why is your boardroom laid out the way it is? Other than it being the way every boardroom is laid out, that is. What is your current layout good for? How is it serving good governance? What other layouts might contribute to effective conditions for making decisions? What if a “typical” boardroom layout with a single oval or rectangle or square or circle or horseshoe with chairs around the outside and a screen at one end, etc., became illegal? What other options would you consider, and why?
Despite the emergence of a sizeable corporate governance "industry," so much about boards hasn't changed at all.
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The main thing that’s evolved around corporate governance during my 20+ years in the space is that there’s now an “industry” around it. What I mean is that there’s a big system of people – including me – who have found ways to make money by hanging around in the orbit of corporate governance. Think of all the money boards and executives spend on consultants, technology, education, conferences, and more. Just about all of that industry is new in the past 20 years. And honestly, that’s all good to me. The thing is, though, that if we zoom out to a system level of corporate governance, there’s so much that hasn’t changed despite all that investment. If we took a cross section of organizations across the Western world, a typical board meeting still looks and feels 99% the same today as it did 20 years ago. The same rooms, the same agendas, the same presentations, the same results. Just with a bit more time spent consuming governance products and services in between. Yes, maybe we print fewer documents, and our vocabulary has evolved a bit. Maybe we ask slightly more provocative questions, and maybe the people around the table look a bit less male, pale, and stale. All that is sincerely wonderful. But it’s a bit amazing to me how much things haven’t changed. Maybe it’s because everything is optimized exactly the way it is. But I personally don’t believe that’s true. I think the biggest problem is that boards, managers, and the governance industry still lack the imagination and courage to break the gravity of the status quo and imagine what it would look like to be 1000% better tomorrow than we are today. And sometimes 1000% improvement can come from a 1% change.
Compliance is important, but more emphasis on compliance means less emphasis on good governance.
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Earlier this season in episode 104 I confessed that the 20 years of work I did on board ratings was maybe not optimally spent. The heart of the problem is that I was one of many who were perpetuating a false equivalence between good governance and compliance, or in my case good governance and the disclosure of specific information in specific ways. Obviously, complying with rules and communicating truthfully and transparently with stakeholders matter a lot but they’re not at all the same as good governance. And what happens when people like me put pressure on boards and executives to invest their scarce time into compliance with external expectations that are unrelated to good governance is, well, good governance is less likely to happen. If you buy in, even a little, to my definition of good governance as the act of intentionally creating effective conditions for decision-making, then you already know what I’m talking about. A compliance-oriented agenda clearly doesn’t describe effective decision-making conditions. Honestly, the fact that real-world boards of large, sophisticated listed companies spent time worrying about the board ratings that I ran kinda feels embarrassing to me now. If there’s a message here it’s this: to all you regulators, institutional investors, activist investors, researchers, journalists, and anyone else who has the platform and wherewithal to compel directors to comply with more rules and expectations, before you open your mouth please ask yourself if that compliance is really in service of good governance.
Are a set of 150-year-old parliamentary rules really applicable in a typical boardroom?
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I was with a board recently, engaged in a conversation about what “good governance” is (surprise, surprise!). One of the board members asked me where Robert’s Rules of Order fit into good governance. If you don’t know about Roberts’s Rules, take a second to Google them. Anyway, it’s a perfectly fair question. After all, basically every board deploys Robert’s Rules occasionally or frequently, especially when a vote is at hand. It’s a handy process to make sure we know that, in fact, a decision happened, which is good! The reason why I found the question so interesting is that it never would have occurred to me that Robert’s Rules were anything more than a potentially convenient tool, and certainly not a critical component of corporate governance generally or even board effectiveness specifically. Did you Google them? If you did, you probably saw the Wikipedia page which describes Robert’s Rules as “a manual of parliamentary procedure” from 1876. It goes on to explain that the rules “govern the meetings of a diverse range of organizations – including church groups, county commissions, homeowners associations, nonprofit associations, professional societies, school boards, and trade unions.” There’s something a bit startling about parliamentary rules being adopted by all these other types of organizations, and especially by boards, to be honest. Have you ever spent time watching a parliament try to make decisions? If you have, you probably noticed that rules matter a lot because, well, there are constantly arguments between groups of people with misaligned interests, pushing and pulling against each other. If that sounds like your board, then maybe you should hang on to Robert’s Rules for dear life. If not, you might want to consider a less structured approach once in a while.
It was only a few months ago that I proposed my definition of "good governance," and I've already changed my mind.
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I know it’s only been, like, three months since episode 102 where I offered a definition of “good governance.” Well, I’m excited to say that I already think I got it wrong. I’ve had a slight, yet significant, shift in perspective thanks to reactions that I’ve received from clients, classrooms, and listeners. Let’s begin with the definition from episode 102: Good corporate governance means creating conditions that maximize the likelihood that effective decisions will get made. The most important part I got wrong was emphasizing the effectiveness of decisions which isn’t really what I meant to do in the first place. We all know that one of the things about decisions is that you can’t know what the result will be until you make the decision in the first place, and talking about an “effective decision” implies that the result will be good. So that needed to change. I also don’t really like the “maximizing the likelihood” part because that implies that good governance is really a game of chance. On top of that, some people have told me I should add the word “intentional” somewhere, while others prefer “active.” I think I’ll use both. Ultimately, what I really want to convey is that the heart of good governance is an interest and curiosity in the conditions for making decisions throughout an organization. So here’s where all this wordsmithing has gotten me as of November 2022: “Good corporate governance is the act of intentionally creating effective conditions for decision-making in an incorporated entity.” Let me know what you think. Clearly, I’m in a pretty impressionable place right now, so you might just change my mind.
I'm HUGELY grateful to all of you for listening and caring about OMG. So grateful, in fact, that I'm asking you for something more: please consider "liking," following, subscribing, reviewing, and spreading the word.
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It’s sincerely amazing to me that we’re so close to 150 episodes of OMG. Any of you who know what it’s like to put literally anything out into the world – a product or service, artwork, thought leadership, or whatever – you all know that feeling of uncertainty. No matter how confident you are that you’re on to something, there’s always that looming doubt: will anyone care? And let’s be real here, OMG is where I – a solitary and opinionated human being – put my own personal thoughts and opinions about an esoteric and unsexy topic out into the world. There was no guarantee that it would find an audience of any kind, let alone one so thoughtful and engaged as you. So I’ve arbitrarily decided, in episode 139, to ask you for something. Whether you’re a dedicated follower or a recent convert or a first time listener, please consider following or subscribing to OMG on your favourite podcast platform. Please also take a moment and leave a rating or review. Most importantly, the most powerful way to build an audience for a podcast is to simply tell your friends, family, and colleagues what you like about OMG and recommend that they tune in. It probably hasn’t occurred to you that OMG basically can’t be ad-supported without ruining the vibe. Imagine adding a 60-second advertisement at the beginning of a 90-second podcast episode? It would be AWFUL. So, no, sadly spreading the word won’t make OMG any money, but I knew that from the start. No, spreading the word just, well, spreads the word. I believe in what we’re doing, and I hope you do too. Thank you, sincerely, because knowing that you’re listening is what makes creating OMG such a fulfilling experience.
In stark disagreement with my past self from episode 92, I don't think a regular old skills matrix is good for anything. Here's what I think we can do better.
SCRIPT
Less than a year ago, back in December 2021, in episode 92 of this podcast I said the words “I actually really like the standard skills matrix, as long as it’s well-defined and regularly updated.” And I proposed adding a new feature in the form of laying out the bare minimum expectations that EVERY director needs to bring to the table. Just to, y’know, make sure that everyone actually brings at least the bare minimum in addition to their CV. Anyway, I’m here to say that I completely disagree with the December 2021 version of myself. Not only do I not ‘really like the standard skills matrix’ anymore, but I also don’t think that my proposed feature is sufficient to take a plain vanilla skills matrix from trash to treasure. If your skills matrix is going to actually help you to recruit a good group of directors, here’s the information I think it needs – at the very least – to be substantially useful. First, it needs skills – measurable stuff like “basic financial literacy” or “types at least 80wpm,” or “can hit a 95mph fastball”. Second, it needs professional expectations, like “has managed an organization with a $50m budget” or “has taught at least 1000 people how to surf.” Third, it needs those bare minimum things I mentioned before, like “is available to attend 24 meetings per year,” or “is fully caught up on OMG.” Fourth, it needs some indication of interpersonal aptitude, like “demonstrates willingness to change mind when presented with new information,” which can be tested in an interview.” Finally, it needs an indication of how many people on the board need each of those things. With those bare minimum things, for instance, EVERYONE needs those. But how many experienced surf instructors do you need? Is it one? Five? How many fast typists? How many seasoned executives? Put ALL of it in your skills matrix! Otherwise, how can you really assess your recruitment needs?
I keep hearing leaders talk about the increasing volatility, uncertainty, complexity, and ambiguity in the world. I think we might be missing something...maybe even an important opportunity.
SCRIPT
Volatile, Uncertain, Complex, Ambiguous. VUCA. It resonates, doesn’t it? Whether you’re talking about just some schmo like you or me, or a complex organization, things just feel VUCA, right? And it’s becoming such a cliché to say that VUCA is the “new” normal. As in, things are more volatile, uncertain, complex, and ambiguous than ever before and we better get used to it. Personally, I don’t like either part of that statement: the “more than ever” part or the “we better get used to it” part. First off, for everyone but the most fortunate among us, the world has always been VUCA. When you don’t have enough of what you need, whether it’s money, food, shelter, opportunity, that’s VUCA. Maybe what’s new is that those of us who ARE among the most fortunate now have to think way beyond our own wealth or our quarterly results or the interests of our shareholders. Maybe – as individuals and organizations – we need to stop simply, y’know, extracting from the world and instead spend some time thinking about how to make things sustainably better? Maybe the fact that we may need to thing bigger, longer-term, and with more empathy FEELS like things have become VUCA, but what if…stay with me here…what if it’s just no longer possible to entirely outsource VUCA to those more vulnerable? Political instability? Climate change? Economic uncertainty? Your organization has roles to play – big or small – to de-VUCA-fy the lives of those you’re able to affect. Think about it. I’m pretty sure you instinctively already know it’s true.
Boards often don't look for the best directors, and so the people who could be the best directors don't ever consider being on boards. A vicious circle!
SCRIPT
Since I started studying corporate governance back in 2001, a lot has changed in the way that most boards approach the identification and recruitment of new board members. Some of this has been driven by new regulations requiring greater independence and specific expertise. In theory, that should have really affected the composition of boards, especially those of listed companies that are most directly impacted by the new rules. But aside from some cosmetic changes on the independence front, the complexion (literally and metaphorically) of boards really didn’t change at all – for more about how I feel about director independence scroll all the way back to episode 6. Since then, most boards I interact with use some kind of skills matrix to illustrate the capabilities that they’re looking for and measure the actual board’s aptitude against. There’s nothing wrong with that, but my experience that that boards typically use skills matrices to reinforce the status quo. To be fair, there are a LOT of amazing corporate directors out there, but they’re often amazing in addition to (or even despite) their skills and professional experience rather than because of it. And the fact is that boards continue to emphasize measurable professional backgrounds instead of asking “what would a truly excellent new director look like? What would they bring to the table?” This leads to two problems. The obvious first one is that most boards fail to even look for excellent directors in the first place. The second one is equally, or maybe more important. People who could be excellent directors don’t even know that they could be, because they assume – correctly – that they’re not what boards are looking for.
A friend recently suggested to me that literally everyone in an organization is part of corporate governance, and I love the idea!
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I had an amazing conversation with a young person who, despite his age, is a legitimately experienced corporate director and a bit of a provocateur. You can already imagine how much I like him. If you’re interested in learning more, head over to the latest episode of the Sound-Up Governance podcast at www.groundupgovernance.com. Anyway, his name is Andrew Escobar and one of the truth bombs he dropped was something I wholeheartedly believe but had never really thought about before: Everyone in an organization plays a role in corporate governance. Every single person. Thinking of corporate governance as something that begins and ends in the boardroom clearly doesn’t align with my concept of corporate governance, so that’s not new. But this is taking it further. Imagine a massive company with countless employees in hugely varied roles, some of whom probably don’t even know that there IS a board, let alone what a board does or what corporate governance is. Still, those people have positions in the organization only because of a decision that was made at some place in the hierarchy, so we’re already talking about corporate governance. But it goes the other way, too. The experiences of those employees, and their performance, their productivity, no matter how seemingly insignificant, DOES have influence over decisions that happen throughout the organization, and possibly all the way to the top. Not to mention, those employees make decisions themselves. Think about that: EVERY SINGLE PERSON IN AN ORGANIZATION is “doing” corporate governance, whether they know it or not. It’s so cool.
I'm only just now getting to Adam Grant's Think Again and omg its such a useful governance book.
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OK so all you governance nerds out there are probably way ahead of me on this one, but I’m only just now getting to Adam Grant’s Think Again: The Power of Knowing What You Don’t Know. It’s an amazing synthesis of all the great work out there on why thinking is only really great when accompanied by RE-thinking. All presented through engaging storytelling and accessible explanations of complex stuff. In short, it explains how important it is for us to change our minds, frequently, because it means that we’re learning. Finding out you’re wrong about something important to you can feel painful – especially if you were wrong about something that you feel was part of your identity – but ultimately it’s unequivocally GOOD to find out you’re wrong because you now have a chance to be right, or at least more right than you were before. It took about 10 years of studying corporate governance before I started to see the pattern that a willingness to change one’s mind was one of the most common traits that corporate directors valued in their peers. Boards are frequently expected to collectively digest and understand massive amounts of information into clear decisions within infuriating time constraints. One way to manage that is to enter the room with clear and stubborn preconceptions and confidently follow a path without questioning. Another way is to practice letting go of our preconceptions when we get new information, and accept that being wrong isn’t a personal flaw, but not wanting to be right might just cause us to walk off the cliff at the end of our preconceived path.
Rule nerds are the best. They make me feel like I have a superpower, and you should take really good care of the rule nerds in your organization.
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I frequently have the privilege of working with groups of incredibly smart and experienced people on interesting projects, engaging conversations, and fun exercises. The luckiest organizations, in my opinion, have at least one person in the room who is obsessed with the rules: knowing what they are, understanding what they mean, knowing when we’re close to breaking them, anxious when we do in fact break them, and hoping others will take the rules as seriously as they do. Let’s call them rule nerds. I’m admittedly at the other end of the spectrum. I have a great deal of respect for the rules, but mostly ignore them and trust the others around me to help to keep me in line. You can already see why being rule nerds kinda feels like having a superpower. I can go around being creative, or pushing boundaries, or being generally annoying and aimless, and if there’s a rule nerd in the room they will warn me way before I do anything destructive. It’s especially great if the rule nerds also like to have fun. Sometimes, OK frequently, I will ask boards to do exercises with rules that are obnoxiously ambiguous – where part of the exercise is to creatively interpret the rules in a way that will lead to the best or most useful result for your team. The fun-loving rule nerds help their teams to make sure they’re actually, you know, doing the right work, but then also get a kick out of taking ambiguity and making it more precise, more practical, and ultimately creating order out of chaos. Take good care of the rule nerds in your life. If you’re like me, they might just keep you from stepping on some rakes.
Trigger Warning: Sexual Assault
Background Resources:
Hockey Canada Mission & Mandate https://www.hockeycanada.ca/en-ca/corporate/about/mandate-mission
Wikipedia "Hockey Canada Sexual Assault Scandal": https://en.wikipedia.org/wiki/Hockey_Canada_sexual_assault_scandal
Globe & Mail "Hockey Canada used player fees to build a second fund for sexual assault claims": https://www.theglobeandmail.com/canada/article-hockey-canada-created-a-fund-for-sexual-assault-claims-documents/
Globe & Mail "Hockey Canada’s interim chair Andrea Skinner resigns": https://www.theglobeandmail.com/canada/article-hockey-canada-andrea-skinner-resigns/
SCRIPT:
OK so this episode isn’t going to have vibe, the audio quality, or the polish that you’re used to by now. It’s Thanksgiving Sunday in 2022 here in Canada and I’ve got covid, feeling pretty shty and am isolated from family and, y’know, not my usual accommodating open-minded self. Any of my fellow Canadians will be intimately familiar with what’s going on with Hockey Canada right now. If you’re listening and you don’t know, go to the “Hockey Canada sexual assault scandal” Wikipedia page. It’s even worse than it sounds. This is a podcast about corporate governance, so let’s acknowledge the vile, unforgivable behaviour of the players involved, and the immeasurable harm and trauma they’ve caused for their victims, but then let’s bring it back to the boardroom. And honestly, the only conceivable reaction is “what the fck???” Bad enough that your organization is sufficiently aware of the sexual assault perpetrated by your members that you secretly created at least one, and possibly two funds using public and membership money to settle sexual misconduct cases – 21 of them over the past 33 years. Let me read you Hockey Canada’s mission statement: “To Lead, Develop and Promote Positive Hockey Experiences.” Seriously, go look at the mission and mandate page on their website filled with words like “fair,” and “respect,” and “hockey opportunities for all people regardless of age, gender, colour, race, ethnic origin, religion, sexual orientation, or socio-economic status.” Not one statement from the board or management has acknowledged that THEY, as leaders of this organization, deliberately created an environment that enables, covers up, and perpetuates sexual violence. If you don’t agree… Well, take 2 minutes to write down other paths Hockey Canada could have taken than setting aside stakeholder money to pay to conceal these crimes. See what you just did in 2 minutes. Hockey Canada failed to do that in 33 years. They can fck right off.
One valid criticism of my positions on corporate governance is that I don't really pay much attention to the rules. Or to ethics or morality, to be honest. Does that matter?
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My positions regarding corporate governance, and especially GOOD governance leave me vulnerable to a great deal of valid criticism. If you’re not familiar with those positions, have a listen to episodes 2 and 102 respectively. The main criticism goes something like this: corporate governance is itself governed by important rules, like laws and regulations, that are there to try to keep organizational leaders from doing bad and unethical things – either on purpose or by accident. Furthermore, those rules will never be sufficient on their own to completely eliminate bad or unethical behaviour. Since my definitions of corporate governance generally and good governance specifically don’t address legal, moral, or ethical judgment, am I not failing to acknowledge or address the most fundamental objective of organizational decision making: not to do objectively bad stuff? There’s a less philosophical version of this same argument that I encounter frequently, which is “how can I expect individual leaders or groups like boards of directors to figure out how to create the conditions for effective decision-making on their own?” In other words, isn’t it important to establish rules for organizations to follow on their way to good governance? I have repeatedly said on OMG that I reject a box-ticking approach to corporate governance, and I don’t like the concept of “best” practice, but…I dunno, what do you think? Am I missing something here?
People need power to get things done, but even having a LOT of authority doesn't mean you'll have any power. This is a critical thing to understand if we want to understand corporate governance.
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A few episodes ago I cross-posted the first episode of the Sound-Up Governance podcast featuring Professor Tiziana Casciaro from the Rotman School of Management, where I worked for 20ish years. It was no accident that Tiziana was the first guest – she’s an expert on what power is, how people get it, how people lose it. Even more interestingly, she’s got really cool insights into why people with lots of authority – maybe CEOs or corporate directors, for example – sometimes don’t really have much power, meaning they can’t really get anyone to do the things they want. Tiziana describes power as controlling access to something that other people want. That something could be really tangible, like money or a promotion. It can also be more abstract, like comfort or happiness or just feeling cool. I’m sure you can already see where I’m going. What could possibly be more critical to corporate governance than power? Sure, every board technically has a huge amount of authority in their organization. In a way, they have all the authority in their organization. Any authority others have has been delegated to them – on purpose or by accident – by the board. And the board is ultimately accountable for what those others do with their authority. But who cares about authority without power? What difference does it make for corporate governance to happen, for decisions to be made, if nobody actually y’know does anything in response to those decisions? It raises a cool question: “what resources does a board control access to, and why would anyone in an organization care?”
People need power to get things done, but even having a LOT of authority doesn't mean you'll have any power. This is a critical thing to understand if we want to understand corporate governance.
SCRIPT
A few episodes ago I cross-posted the first episode of the Sound-Up Governance podcast featuring Professor Tiziana Casciaro from the Rotman School of Management, where I worked for 20ish years. It was no accident that Tiziana was the first guest – she’s an expert on what power is, how people get it, how people lose it. Even more interestingly, she’s got really cool insights into why people with lots of authority – maybe CEOs or corporate directors, for example – sometimes don’t really have much power, meaning they can’t really get anyone to do the things they want. Tiziana describes power as controlling access to something that other people want. That something could be really tangible, like money or a promotion. It can also be more abstract, like comfort or happiness or just feeling cool. I’m sure you can already see where I’m going. What could possibly be more critical to corporate governance than power? Sure, every board technically has a huge amount of authority in their organization. In a way, they have all the authority in their organization. Any authority others have has been delegated to them – on purpose or by accident – by the board. And the board is ultimately accountable for what those others do with their authority. But who cares about authority without power? What difference does it make for corporate governance to happen, for decisions to be made, if nobody actually y’know does anything in response to those decisions? It raises a cool question: “what resources does a board control access to, and why would anyone in an organization care?”
I think the lessons in Randall Munroe's "Thing Explainer" are more important to effective management than any other book I've read.
SCRIPT
To be honest, I much prefer reading fiction to reading management or leadership books. I’m leaning even further in that direction the more I disagree with my past self. Like, I have written – or caused other people to write – so much stuff about corporate governance over the years that I now believe completely misses the point. I sometimes wonder how authors who contribute to the archives of management literature feel when they look back at their publications even like 2 years later. Do they disagree with themselves as much as I do? Anyway, I’m here to make a book recommendation – one I can’t believe I haven’t made yet on OMG. Please have a look at Thing Explainer by Randall Munroe. He’s got a few other books since then including a brand new one that I’m sure he’d much rather a plug for, but I stand by my position. Each page of Thing Explainer has a detailed illustration kinda like a blueprint or patent drawing of some super complex or interesting thing like a nuclear reactor or a submarine and explanations of how every part of that thing works using only the 1000 most common words in the English language. And in a couple of minutes, you’ve learned how some crazy complicated thing works without learning any new language, and while having lots of fun. It’s probably already obvious why I think Thing Explainer is an amazing management book, but just in case: presenting complex ideas in simple words, while also having some fun, is both possible and a better way to communicate than most managers do. Think of this book as an illustration of what managers COULD be doing.
I think the lessons in Randall Munroe's "Thing Explainer" are more important to effective management than any other book I've read.
SCRIPT
To be honest, I much prefer reading fiction to reading management or leadership books. I’m leaning even further in that direction the more I disagree with my past self. Like, I have written – or caused other people to write – so much stuff about corporate governance over the years that I now believe completely misses the point. I sometimes wonder how authors who contribute to the archives of management literature feel when they look back at their publications even like 2 years later. Do they disagree with themselves as much as I do? Anyway, I’m here to make a book recommendation – one I can’t believe I haven’t made yet on OMG. Please have a look at Thing Explainer by Randall Munroe. He’s got a few other books since then including a brand new one that I’m sure he’d much rather a plug for, but I stand by my position. Each page of Thing Explainer has a detailed illustration kinda like a blueprint or patent drawing of some super complex or interesting thing like a nuclear reactor or a submarine and explanations of how every part of that thing works using only the 1000 most common words in the English language. And in a couple of minutes, you’ve learned how some crazy complicated thing works without learning any new language, and while having lots of fun. It’s probably already obvious why I think Thing Explainer is an amazing management book, but just in case: presenting complex ideas in simple words, while also having some fun, is both possible and a better way to communicate than most managers do. Think of this book as an illustration of what managers COULD be doing.
I really do think that corporate governance is fundamentally broken. But I'm not too worried about it. All we need to do is shift our focus a bit.
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When I launched Ground-Up Governance a couple of weeks back, I wrote an intro piece that began by stating, “Corporate governance is broken.” And I sincerely meant it – and still do! Funny thing is that despite being a dramatic thing to say, I don’t think it's a huge deal... because, honestly, it's not that hard to fix! I’ve really learned a lot in the process of writing this season of OMG in terms of refining what I really think corporate governance is, and what GOOD governance is, and what they’re not. So, the part that’s broken, in my opinion, is that a huge amount of what corporate leaders – executives and boards – actually DO has very little to do with corporate governance, but they don’t seem to be aware of it. Every minute spent on compliance, oversight, presentations, crafting and consuming pre-reads, and so on, only matters to the extent that it is in service of making effective decisions. In other words, unless we DELIBERATELY do compliance, oversight, presentations, and crafting and consuming pre-reads in a way that enhances our decision conditions, we’re basically not doing good governance at all. That’s what’s broken: we spend an unimaginable amount of time on stuff that barely matters to good governance. And very little time on the stuff that does matter. It’s not because we’re ineffective, or because we’re negligent, but because every resource, course, regulation, and recommendation seems to be pushing us AWAY from good governance. My single most important piece of governance advice? Consume all the traditional governance resources you want, understand them, take the salient bits, and then tune the rest of it out!
I really do think that corporate governance is fundamentally broken. But I'm not too worried about it. All we need to do is shift our focus a bit.
SCRIPT
When I launched Ground-Up Governance a couple of weeks back, I wrote an intro piece that began by stating, “Corporate governance is broken.” And I sincerely meant it – and still do! Funny thing is that despite being a dramatic thing to say, I don’t think it's a huge deal... because, honestly, it's not that hard to fix! I’ve really learned a lot in the process of writing this season of OMG in terms of refining what I really think corporate governance is, and what GOOD governance is, and what they’re not. So, the part that’s broken, in my opinion, is that a huge amount of what corporate leaders – executives and boards – actually DO has very little to do with corporate governance, but they don’t seem to be aware of it. Every minute spent on compliance, oversight, presentations, crafting and consuming pre-reads, and so on, only matters to the extent that it is in service of making effective decisions. In other words, unless we DELIBERATELY do compliance, oversight, presentations, and crafting and consuming pre-reads in a way that enhances our decision conditions, we’re basically not doing good governance at all. That’s what’s broken: we spend an unimaginable amount of time on stuff that barely matters to good governance. And very little time on the stuff that does matter. It’s not because we’re ineffective, or because we’re negligent, but because every resource, course, regulation, and recommendation seems to be pushing us AWAY from good governance. My single most important piece of governance advice? Consume all the traditional governance resources you want, understand them, take the salient bits, and then tune the rest of it out!
This is the last crossover episode between OMG and Sound-Up Governance, a new podcast on the Ground-Up Governance platform (www.groundupgovernance.com). In this one, Matt Fullbrook speaks with Lisa Oldridge, a Performance Strategist in Calgary with expertise in governance, ESG, and investment in startups. Lisa helps us to explore the differences between what makes a good company good and what makes a good business good, and shows us that the people are what matter most.
Matt
Welcome back to Sound-Up Governance. Today's episode is the companion to the third edition of the Ground-Up Governance newsletter, which provides definitions for business, company and customer. I know I frequently use the words business and company as if they're interchangeable, even though they're often pretty different. That's fine. Of course, if I say business when I mean company, it doesn't hurt anybody or even confuse anyone too much. But still, I thought it'd be fun to talk to someone who could really help me to understand what makes a good business good, and how that's different from what makes a good company good. And of course, all of this is tied up with the needs, wants, hopes and fears of the customer. So I called my friend Lisa Oldridge, who describes herself as a performance strategist. She works with companies and boards of directors on governance, strategy, ESG performance, and more. Oh, and ESG stands for environmental, social, and governance and refers in general to stuff that's not directly related to money. Not only that, but she's the investment director at The 51 Ventures, which invests money in disruptive female-founded enterprises. Plus, in addition to being a corporate director, and a bonafide a governance nerd, she has also spent a big chunk of her life in institutional equity sales, portfolio management and research. So in other words, Lisa's spent a lot of time and energy being curious about what a good company or a good business looks like, and whether those companies or businesses are worth putting money into. And that's exactly where we'll start. When Lisa is on the outside, looking in, what gets her excited about a business, or maybe a small company that only sells a single product or service.
Lisa
So there's tons of problems out there. Whether or not it needs to be solved is another question. And often you see with founders, if you're talking about really teeny companies, you know, you've seen the typical entrepreneur, they're like, "Oh, my God, we got to solve this problem!" But it's really actually not a problem for that for many people, you want to see that there's a problem that exists, and they've come up with something that will solve this problem. It doesn't have to be like the optimized version of it. You've probably also heard about MVP,
Matt
MVP, or minimum viable product, or, as Lisa puts it,
Lisa
We also call it the shitty first draft of whatever it is, but you probably have a bit of traction there. IP is a big one IP or thought capital or moat
Matt
“Moat",” you know, just like a moat around the castle. It's something special about a business that makes it tricky for someone else to intrude on your territory by making it expensive or difficult to copy your technology, for example.
Lisa
And then competition, and actually it's a bad sign when you see that there's no competition, because it's usually especially if you come in and you see a founder or group that are pitching and they're like, "oh, yeah, no, we kind of, we've come up with the thing, but nobody else has!" A, it's probably not true. And B it just gives you a sense of their capacity for understanding future pivots and the market etc. Anyway, so that's more maybe a commentary on their character or their abilities or behaviors.
Matt
There's so much interesting stuff in what Lisa just said that it might be worth rewinding, 10 or 15 seconds just to hear it again. It made a huge lightbulb go off for me. To Lisa, an entrepreneur's understanding of their business can provide an important glimpse inside their character. We'll get back to that in a sec. I wanted a better understanding about this idea that creating something new with no competition might not be all it's cracked up to be. I mean, we've all heard the term first mover's advantage. Isn't that a thing? Shouldn't it be a good thing to be the first one to come up with an idea? I even said to her, "Lisa, I'm trying to do something new and fresh in governance. Am I messing up somehow?"
Lisa
Let me ask you this. Why is first mover advantage? The answer to everything? It's not! I think there's a presumption sometimes "Oh, I've seen somebody else with that. Therefore, it's not going to work. Right?" I think value proposition is the thing that you're selling or bending or creating or innovating on, it's as much where and how it lands as what it is. I had a mentor that that told me, a guy that I worked with, he was awesome. He was like, "Oldridge, the difference between being early and wrong is nothing!" Right? Even ideas that are completely original, still do have competition. And so I guess it's not a red flag to me if someone hasn't figured out who the person who's also doing... I don't know. lavender striped pogo sticks, but who's doing pogo sticks and who's painting toys, lavender. And so what does that look like? Because it also tells you about the customer! One thing that we one thing that I do see is novelty, almost taking precedence over will this actually be used by more than a few people, right? I would rather see a concept or like somebody innovating on a proven thing or direction or widget, but doing it in such a way that's original in the sense that it's adding more value to the end customer.
Matt
So even for someone like Lisa, who studies companies at their earliest stages, looking for the coolest new ideas, the biggest opportunities for innovation and investment, there might not be a difference between being first and being wrong? It made me think of the songs or books or art that I love the most. Sure, there's something fresh and original about them, but they also, you know, give a sense of familiarity. Building on what came before them. Sorry, I'm getting a bit abstract here. But the insight for new businesses is pretty profound. Before we go too much further, Lisa use the term "value proposition." It's one of those terms most of us have heard before, but what does it mean exactly?
Lisa
And value proposition it's business canvas, it's like the middle of it, like the jelly in the donut! It's what your product or service or widget or thing does for your customers to make things better, or to make them feel like things are better.
Matt
And this is how the customer ties into all this. A good business doesn't have to be completely new, it just needs to make the customer feel like things are better than they were without whatever product or service the business offers them. But let's get back to what Lisa said earlier about the character of the leaders involved. We know she looks at the competitive landscape, the value proposition and so on. But what else is she looking for
Lisa
The leadership and the team attributes. You know, are they dedicated? Do they have the horsepower and the grit and all that good stuff? And then I would probably single out the CEO or the founder, like the person who's in charge, as almost like a separate thing, because the earlier the stage of the company, the less actual crunchy information you have. And you're looking for leadership attributes, but then also just you know, the whole humility and brains.
Matt
All of this started to make so much sense. Sometimes from the outside, we can't really see the nuts and bolts that show us the potential of the business itself. So we need to rely on what we really can judge: character, humility, brains. So I wondered if the potential of a person matters so much, could a great leader maybe offset concerns about a bad business or a bad company? In other words, to someone like Lisa, what matters more the person or the business?
Lisa
Could you have, you know, like a superstar person with a not so great company? And what's better that or the inverse? And definitely the former. And that works all the way up with a you know, with with large organizations, I think probably even moreso. A great business with someone at the helm, that's not great, will eventually run out of momentum. You could still make money. In the meantime, though.
Matt
Whoa! We'll take on A founder with a B business over the inverse. In fact, a great business with bad leadership is at best a way for an investor to make a quick buck before the business dies. And you know, what's extra cool? In some cases, emphasizing the people side can create special superpowers for the company and the business.
Lisa
If you're talking about a business inside that company, or a vertical inside a company, or product line, or some kind of an offering. More often than not these days, you're talking about a bunch of people in a company that do a thing. And it's maybe different to the rest of the things that the company does, right? One of the organizations that I sit on the board of has had the situation where, you know, they did a raise, and then they acquired this business unit. And it's really cool hearing about the first couple of days about where it was like, "Okay, you're here because we want you not the thing, but we want YOU!" And over and above that being a good acquisition on paper, can you imagine what that did to the sense of, you know, engagement, and therefore performance, of the company, etc, etc. So it's like, and it doesn't require a lot of investment. It's not like somebody had to write a big check after the fact sort of have these people come on and be super excited about coming into work the next day.
Matt
And there you have it, right from someone who's in the middle of it, studying, assessing, developing and buying businesses and companies and thinking about customers and value proposition, competition and all the other things that can influence whether an idea will succeed or fail. What excites Lisa the most? Character, humility, brains, the people who run these businesses and companies. And emphasizing the importance of those people can further supercharge the organization's performance. In the next episode of Sound-Up Governance, I'll speak with Nick Chambers about communities and stakeholders. He’s an executive search professional and governance expert who specializes in purpose-driven organizations. Thanks for listening.
This is the last crossover episode between OMG and Sound-Up Governance, a new podcast on the Ground-Up Governance platform (www.groundupgovernance.com). In this one, Matt Fullbrook speaks with Lisa Oldridge, a Performance Strategist in Calgary with expertise in governance, ESG, and investment in startups. Lisa helps us to explore the differences between what makes a good company good and what makes a good business good, and shows us that the people are what matter most.
Matt
Welcome back to Sound-Up Governance. Today's episode is the companion to the third edition of the Ground-Up Governance newsletter, which provides definitions for business, company and customer. I know I frequently use the words business and company as if they're interchangeable, even though they're often pretty different. That's fine. Of course, if I say business when I mean company, it doesn't hurt anybody or even confuse anyone too much. But still, I thought it'd be fun to talk to someone who could really help me to understand what makes a good business good, and how that's different from what makes a good company good. And of course, all of this is tied up with the needs, wants, hopes and fears of the customer. So I called my friend Lisa Oldridge, who describes herself as a performance strategist. She works with companies and boards of directors on governance, strategy, ESG performance, and more. Oh, and ESG stands for environmental, social, and governance and refers in general to stuff that's not directly related to money. Not only that, but she's the investment director at The 51 Ventures, which invests money in disruptive female-founded enterprises. Plus, in addition to being a corporate director, and a bonafide a governance nerd, she has also spent a big chunk of her life in institutional equity sales, portfolio management and research. So in other words, Lisa's spent a lot of time and energy being curious about what a good company or a good business looks like, and whether those companies or businesses are worth putting money into. And that's exactly where we'll start. When Lisa is on the outside, looking in, what gets her excited about a business, or maybe a small company that only sells a single product or service.
Lisa
So there's tons of problems out there. Whether or not it needs to be solved is another question. And often you see with founders, if you're talking about really teeny companies, you know, you've seen the typical entrepreneur, they're like, "Oh, my God, we got to solve this problem!" But it's really actually not a problem for that for many people, you want to see that there's a problem that exists, and they've come up with something that will solve this problem. It doesn't have to be like the optimized version of it. You've probably also heard about MVP,
Matt
MVP, or minimum viable product, or, as Lisa puts it,
Lisa
We also call it the shitty first draft of whatever it is, but you probably have a bit of traction there. IP is a big one IP or thought capital or moat
Matt
“Moat",” you know, just like a moat around the castle. It's something special about a business that makes it tricky for someone else to intrude on your territory by making it expensive or difficult to copy your technology, for example.
Lisa
And then competition, and actually it's a bad sign when you see that there's no competition, because it's usually especially if you come in and you see a founder or group that are pitching and they're like, "oh, yeah, no, we kind of, we've come up with the thing, but nobody else has!" A, it's probably not true. And B it just gives you a sense of their capacity for understanding future pivots and the market etc. Anyway, so that's more maybe a commentary on their character or their abilities or behaviors.
Matt
There's so much interesting stuff in what Lisa just said that it might be worth rewinding, 10 or 15 seconds just to hear it again. It made a huge lightbulb go off for me. To Lisa, an entrepreneur's understanding of their business can provide an important glimpse inside their character. We'll get back to that in a sec. I wanted a better understanding about this idea that creating something new with no competition might not be all it's cracked up to be. I mean, we've all heard the term first mover's advantage. Isn't that a thing? Shouldn't it be a good thing to be the first one to come up with an idea? I even said to her, "Lisa, I'm trying to do something new and fresh in governance. Am I messing up somehow?"
Lisa
Let me ask you this. Why is first mover advantage? The answer to everything? It's not! I think there's a presumption sometimes "Oh, I've seen somebody else with that. Therefore, it's not going to work. Right?" I think value proposition is the thing that you're selling or bending or creating or innovating on, it's as much where and how it lands as what it is. I had a mentor that that told me, a guy that I worked with, he was awesome. He was like, "Oldridge, the difference between being early and wrong is nothing!" Right? Even ideas that are completely original, still do have competition. And so I guess it's not a red flag to me if someone hasn't figured out who the person who's also doing... I don't know. lavender striped pogo sticks, but who's doing pogo sticks and who's painting toys, lavender. And so what does that look like? Because it also tells you about the customer! One thing that we one thing that I do see is novelty, almost taking precedence over will this actually be used by more than a few people, right? I would rather see a concept or like somebody innovating on a proven thing or direction or widget, but doing it in such a way that's original in the sense that it's adding more value to the end customer.
Matt
So even for someone like Lisa, who studies companies at their earliest stages, looking for the coolest new ideas, the biggest opportunities for innovation and investment, there might not be a difference between being first and being wrong? It made me think of the songs or books or art that I love the most. Sure, there's something fresh and original about them, but they also, you know, give a sense of familiarity. Building on what came before them. Sorry, I'm getting a bit abstract here. But the insight for new businesses is pretty profound. Before we go too much further, Lisa use the term "value proposition." It's one of those terms most of us have heard before, but what does it mean exactly?
Lisa
And value proposition it's business canvas, it's like the middle of it, like the jelly in the donut! It's what your product or service or widget or thing does for your customers to make things better, or to make them feel like things are better.
Matt
And this is how the customer ties into all this. A good business doesn't have to be completely new, it just needs to make the customer feel like things are better than they were without whatever product or service the business offers them. But let's get back to what Lisa said earlier about the character of the leaders involved. We know she looks at the competitive landscape, the value proposition and so on. But what else is she looking for
Lisa
The leadership and the team attributes. You know, are they dedicated? Do they have the horsepower and the grit and all that good stuff? And then I would probably single out the CEO or the founder, like the person who's in charge, as almost like a separate thing, because the earlier the stage of the company, the less actual crunchy information you have. And you're looking for leadership attributes, but then also just you know, the whole humility and brains.
Matt
All of this started to make so much sense. Sometimes from the outside, we can't really see the nuts and bolts that show us the potential of the business itself. So we need to rely on what we really can judge: character, humility, brains. So I wondered if the potential of a person matters so much, could a great leader maybe offset concerns about a bad business or a bad company? In other words, to someone like Lisa, what matters more the person or the business?
Lisa
Could you have, you know, like a superstar person with a not so great company? And what's better that or the inverse? And definitely the former. And that works all the way up with a you know, with with large organizations, I think probably even moreso. A great business with someone at the helm, that's not great, will eventually run out of momentum. You could still make money. In the meantime, though.
Matt
Whoa! We'll take on A founder with a B business over the inverse. In fact, a great business with bad leadership is at best a way for an investor to make a quick buck before the business dies. And you know, what's extra cool? In some cases, emphasizing the people side can create special superpowers for the company and the business.
Lisa
If you're talking about a business inside that company, or a vertical inside a company, or product line, or some kind of an offering. More often than not these days, you're talking about a bunch of people in a company that do a thing. And it's maybe different to the rest of the things that the company does, right? One of the organizations that I sit on the board of has had the situation where, you know, they did a raise, and then they acquired this business unit. And it's really cool hearing about the first couple of days about where it was like, "Okay, you're here because we want you not the thing, but we want YOU!" And over and above that being a good acquisition on paper, can you imagine what that did to the sense of, you know, engagement, and therefore performance, of the company, etc, etc. So it's like, and it doesn't require a lot of investment. It's not like somebody had to write a big check after the fact sort of have these people come on and be super excited about coming into work the next day.
Matt
And there you have it, right from someone who's in the middle of it, studying, assessing, developing and buying businesses and companies and thinking about customers and value proposition, competition and all the other things that can influence whether an idea will succeed or fail. What excites Lisa the most? Character, humility, brains, the people who run these businesses and companies. And emphasizing the importance of those people can further supercharge the organization's performance. In the next episode of Sound-Up Governance, I'll speak with Nick Chambers about communities and stakeholders. He’s an executive search professional and governance expert who specializes in purpose-driven organizations. Thanks for listening.
Today's episode is the second of three crossover episodes with Sound-Up Governance, a new podcast that's part of the Ground-Up Governance platform (www.groundupgovernance.com). In this one, Matt Fullbrook speaks with Lieutenant Colonel Jamahl Evans of the United States Marine Corps about what duty and accountability mean in his world.
TRANSCRIPT:
Matt
Welcome back to Sound-Up Governance. One of the most common conversations I have with boards of directors and senior executives is about to whom they owe a duty. On the surface, it seems like a simple question, but most of the time, everyone in the room has a different idea of what "duty" even means. So the question of where your duty lies takes a lot more work to explore than most people expect. And when you add in the difference between duty and accountability, plus when and to whom you can delegate duties and accountability. Let's just say it gets tricky, fast. This week's guest is Lieutenant Colonel Jamahl Evans of the United States Marine Corps. In addition to his extraordinary military career, Jamahl is also a corporate governance enthusiast. As you might imagine, duty and accountability are baked pretty deep into everything that goes on in the Marines. But before we dive into that, I'll let Jamahl explain exactly what his job is because it's pretty neat.
Jamahl
I am currently a Lieutenant Colonel in the United States Marine Corps. And what I do in the Marine Corps is financial management. I'm a financial management officer. That's what we call a Military Occupational Specialty, or MOS for short. In that capacity, I'm responsible for the planning and execution and oversight of my command's budget. Now, that's just the MOS piece. As I like to tell my Marines, your MOS is your job. Marine is your profession. So for me, my profession, and my first duty is being a Marine. And that means ensuring that my Marines and I are deployment ready and combat capable at all times. The section that I manage - my full title would be Assistant Chief of Staff, G-8 Comptroller - so that's a section and we've got about 14 Marines in there. So those are the Marines who are directly responsible and accountable to me to make sure that we're doing our financial management functions properly. Outside of that, external to us, are adjacent staff sections, and subordinate commands within the organization with whom we have to work to manage resources: make sure that we're that we've got enough resources and that we're using the resources we have properly.
Matt
Now, I'm going to assume that many of you listening are as ignorant about the hierarchy of the Marines as I am, where exactly does the rank of Lieutenant Colonel fit in the organizational chart?
Jamahl
So as a Lieutenant Colonel, I'm what's called a field grade officer, and there are three levels to that. So it's Major, which is what I was before, Lieutenant Colonel, what I am now, and Colonel, what I aspire to be promoted to in future. Beyond the field grade ranks, are the General or the flag officer ranks, so Brigadier General, Major General, Lieutenant General and Four Star General. So right now I am, what you would consider - although I'm senior to several other ranks - I'm still right smack in the middle of the of the officer and organizational hierarchy. So every promotion, you're getting greater responsibility. And they are also greater opportunities to which you can be assigned. So as what's called a company grade officer - those are junior officers: lieutenants, and captains - you're going to have significant responsibility already. When you become a field grade officer. What's interesting is, now you are a little further away from the junior Marines, and a little more responsible for organizational management. Beyond just making sure your Marines are trained, making sure they're taken care of making sure they're showing up on time and doing their job, now you are responsible for really understanding organizational policies, regulations, understanding what the what the mission of the organization is, and how your unit relates to that and ensuring that happens in the best way.
Matt
Before our interview, Jamahl already knew that we were going to talk about duty and accountability. You'll notice that so far, he's being pretty careful not to use those words, instead referring to "responsibility." I nudged him a bit on that and asked him to tell me to whom he's accountable in his job and whether that's different from his duty. This is where things start getting really interesting.
Jamahl
So to whom I am accountable in the immediate, that would be my commanding general. That is the senior officer who runs the organization. It's a Major General who runs Second Marine Division. So that is the first officer to whom I immediately accountable because it really is his budget that I'm managing. It's not me making solo decisions. It's not Lieutenant Colonel Evans going "I feel like buying this!" No, it is based on the mission of the organization and the intent of my senior leader, which would be my commanding General. So that's the immediate accountability portion of it. Broader, or writ large, when I think about to whom I'm accountable, personally, there is, first of all, the Constitution of the United States. We actually take an oath as officers, and our enlisted Marines take an oath as well. But we take an oath and in our oath is the Constitution of the United States. To support and defend against all enemies, foreign and domestic. So that wraps up the nation, and accountability towards the nation. My authority and my mission come directly from the President of the United States, so I'm accountable to the President of the United States, as well. Then you have United States citizens: the American people are truly the shareholders because it's their tax dollars I'm managing. It's their tax dollars, for whom my senior officers, President, Congress, we're responsible for that. So we do have to take into account and I've done it on several occasions where there were decisions that I had to make when working with partner nations. And I had to make tough determinations because I am managing taxpayer dollars.
Matt
Okay, whoa. We're still only talking about accountability here and already for what's essentially a middle manager in a huge organization, Jamahl is accountable to his boss, and the President of the United States, and every taxpayer? Seriously? And if you thought the complexity would stop there, you were wrong. Let's add duty into the mix.
Jamahl
You would think 20 years in the Marine Corps, I've got a good solid understanding of duty. And I did I had a good personal understanding. Then I got curious about well, what is the actual definition of duty? And the definition I came across was "a legal or a moral obligation." And I didn't, while that's true, I didn't feel that was the full story. And think when when it comes to duty, there is an intangible step of building a sense of duty. We can understand what duty is, but there is a step of building that within an individual. Some individuals just come to the organization with it. Some individuals don't. And I would say that the short answer to your question: Duty is having the knowledge, feeling, belief that you should do what you're supposed to do to the best of your ability, because that's the requirement. Accountability is a bit more on the reactive side. It's how do you explain what you've done? How do you take responsibility for what you've done? Who else shares in that responsibility? So that's where I would see the difference. I would see duty as being a bit more on the front end of actions and accountability on the back end.
Matt
Okay, wait, pause. This is amazing stuff. If you're anything like me, you think of the Marines as being the definition of tangible structure, discipline, order. I mean, if you ask me for the first word that comes to my mind, when you say the word "Marines," it would probably be "duty." But now I'm hearing that duty is something almost soft and squishy, something that comes from the inside, rather than being imposed on you from the outside. Am I hearing that right?
Jamahl
And that was the second thought that I had, after I considered how I would define duty. The second thought being, well, how do you instill it? How do you ensure it? How do you develop it? How does it come about? Like you said, there's some external factor that plays upon you to help build a sense of duty. And the thing I thought about was, okay, well, if I were in an organization, what would help drive my own sense of duty? Because I came to the Marine Corps with a sense of duty. And I thought of one thing or a multitude of things, but I keyed in on one thing that I think helps build that. I think the principles of an organization can drive a sense of duty, and that's your external thing that comes into play. And how it works is when when people see your principles, and I don't care if it's in a slogan or motto anything, there's got to be a connection. And the connection that has to be established is: I either possess the characteristics of those principles already, or those are principles that I want to possess, I want to display those.
Matt
So cool! It's like duty, this thing that the dictionary defines as a legal or moral obligation, might actually be more of a special sauce, where the ingredients are a person's internal drive character and beliefs, plus the purpose and values of their organization. So I wondered: if accountability is basically a set of responsibilities imposed on a person by an external or organizational structure. And duty is something that comes more from inside you, there must be lots of ways that duty and accountability could come into conflict. Like if your moral duty and beliefs make it hard to carry out an order from your boss, for example. In a case like that, what is Jamahl hope his Marines will do to address the conflict?
Jamahl
In my office, I have established with my Marines, we do not use the word "hope". And they find it interesting they find it, you know, they find it funny. But we all know that it's a common theme in the Marine Corps, that hope is not a course of action. So when you talk about anybody who's having kind of a dilemma, or a conundrum, I don't have a hope for them. What I do is engage to see what kind of actions we can take to improve the situation. So to answer your direct question, the first thing is, there historically can be dilemmas between what the organization needs to do and how they need to do it, and what the individual thinks about it. So the first thing, which is one of the foundations, is that a Marine does not have to follow an unlawful order. So if you, as a Marine or as any service person, believe that an order you've received is unlawful or illegal, you do not have to do it. However, if an order is lawful, you might not agree with it, you might have a personal feeling, but you're still going to do it, you have a job to do. And if you've been given given a lawful order, then you execute! Now here's where the development comes into play, to minimize the dilemma that you hypothesized. As we grow within our organizations, it's on the mid-level and senior leaders to ensure that there's quality understanding, quality training, quality conversation, quality voice, making that time for your junior personnel to ask you those tough questions. And I tried to get my Marines to ask tough questions early on. That way they can experience and understand a glimpse that what your perspective is, at your level doesn't encompass the entire picture. And you have to understand that there are threads between what you functionally do and what we organizationally decide.
Matt
Like most important things in life, this is a complex problem. When duty and accountability collide, or when your personal beliefs are in conflict with what your organization asks of you, sometimes you have to, you know, just trust your boss and do the work. But Jamahl is also telling us that it's important for organizational leaders to give their team a voice, a platform, and an opportunity to better understand how they fit into the bigger picture. But again, we're hearing something that kind of doesn't match my own perception of a military organization where everything is super structured, and everyone has to do the same things at the same time. You know, predictable and repeatable. How can you have both that and an environment where everyone has a voice and some influence and problem solving?
Jamahl
Senior leaders have to create space for that to happen. If you're running a completely robotic organization where people just do a thing, and there's no room to either question, consult, understand, develop, grow, then you're going to have people doing robotic things. No military can be at its best when it's just "do the exact thing that I tell you and that's it," because you will have a group of people who will do one thing and will stop. So just like any other organization, we do need to increase the bandwidth for creative thinking, innovative thinking, especially when it comes to problem solving. So those types of behaviors that we want everybody doing the same way in the Marine Corps, we want everyone to be in shape. We don't even want it, we need it. That's a requirement. You're required to be in shape. Two months ago, I ran three miles. I don't like distance running, though I do it as well as I can...I do pretty good. But we want our Marines staying in shape. We want our people healthy, and not just physically healthy, mentally, and emotionally healthy. So it's on again, senior leadership to engage and be aware that that's happening. Shifting over to the behaviors where we want to expand and have that bandwidth to learn and to grow. That's where your innovation piece comes in. Where we want Marines thinking about developed solutions to problems, branch scenarios. "What would you do?" is a great question. "What would you do?" It's a very easy thing to sit down with your personnel and go over a scenario, something that happened in your career, "Hey, this, this happened. What do you think you would do in this situation?" You have that conversation. The next step, in that is the daily activities, daily tasks, daily operations, giving your people that space to make decisions at their level.
Matt
It surprised me a bit to hear Jamahl talk about the importance of not just physical health, but also mental well-being in the Marines. But now that I think about it, it really shouldn't have surprised me at all. It can be an extraordinary, stressful and dangerous job. And it made an impact on me to hear him talk about it as part of the duty of being a Marine. The duty to care for your own physical and mental well being, but also that of the people around you. How does that actually play out in the real world of the Marine Corps?
Jamahl
When you place a focus on engagement, treatment, development, recovery, and then success, you establish a continuum that's understandable by your junior leaders. One of the things I think the Department of Defense is great at is messaging the need to be aware. Messaging the need to be aware and see signs. And we've had a lot of messaging over the years. But it's something that is important, because we're talking about the health of the organization. So what gets a message down to mid-level and junior leaders is "here are different signs, things that you should be looking for. If you've never had to deal with this before. Here's something that could trigger in your mind a something might be wrong." I have had the experience of walking past a Marine and getting a greeting, they say "Good morning, sir." I'll say "Good morning." And sometimes I'll say "how are you?" A lot of people don't like that greeting because you really just say it and you pass the person and you go. But about three times in my career I've said good morning to a Marine and I've looked and I said "how are you?" And they will respond with "fine" or "okay". And it's just something in the eyes. And three times I've had to pull the Marine aside and say, "seriously, I know I'm not your commanding officer, you don't even know me. But are you good?"And then those three instances I've hadn't read, say "no." So then I would stop what I was doing, call whomever I was going to meet whatever meeting I was going to say, "Look, I can't make it, I have a situation." And I'll take that Marine into the office. Now sometimes that results in one hour, two hour conversations. But so long as that Marine leaves with something functional to get them to the next step. I'm not going to cure everything. I'm not trained to cure everything. And I don't have the time to cure everything. But what I can do is show you where the door is, and open it and say, "Look, you can step through that door. If you can do nothing else, you can step through that door, because we may be side by side, fighting against an enemy. And I gotta know that you're good." And it's not just for junior members either. It goes for our senior members, and I'll share one more story when I've worked... I was a Major and I worked with a Lieutenant Colonel. He was he was my Commanding Officer and I was his Executive Officer. And I noticed the level of stress that he was fighting. He wasn't losing it or anything like that - he was completely capable. But you can see fatigue in people. One day I heard him come on deck. And he was walking his office was after my office. That way I catch all the people that want to try to go and see him. So I hear him walk into his office, and about three or four different Marines approached him with a with an issue, something they had, "Sir, this or that." So they walked by my office. I said, "Sir, do you have a moment?" And the way he normally did it he would just say "yes." But you could see the fatigue in his eyes. So he came in, I said "Sir, do you mind if I close the hatch?" And he said, "not at all". So you close the hatch - for your listeners a hatch is a door. Naval terminology - and he sat down on the couch in my office, and he said, "What do you have?" And I said "nothing, sir, you just looked like you needed to have a time when nobody's asking you to do something." And he smiled and looked at me, he goes, "You up for tacos?" I said, "Yes, sir." So we went and had lunch. So sometimes we have to look out for senior leaders in the same way to look out for junior people. So it just, it just takes compassion, awareness and engagement.
Matt
There it is! Even in an organization as structured, complex and disciplined as the United States Marine Corps., Sometimes it's important to just go and have tacos with your boss. I learned so much from my conversation with Lieutenant Colonel Jamahl Evans and we covered a lot more ground than what you heard in this episode, so you'll hear more from him in the future. If you have a question, story, or insight you’d like to share, please send a note or a voice memo to soundup@groundupgovernance.com, and we may feature you in a future episode. On the next episode of Sound-Up Governance. I talk with performance strategist, investment guru and corporate governance enthusiast Lisa Oldridge about businesses, companies, customers, and how they all fit together. Until next time.
Today's episode is the second of three crossover episodes with Sound-Up Governance, a new podcast that's part of the Ground-Up Governance platform (www.groundupgovernance.com). In this one, Matt Fullbrook speaks with Lieutenant Colonel Jamahl Evans of the United States Marine Corps about what duty and accountability mean in his world.
TRANSCRIPT:
Matt
Welcome back to Sound-Up Governance. One of the most common conversations I have with boards of directors and senior executives is about to whom they owe a duty. On the surface, it seems like a simple question, but most of the time, everyone in the room has a different idea of what "duty" even means. So the question of where your duty lies takes a lot more work to explore than most people expect. And when you add in the difference between duty and accountability, plus when and to whom you can delegate duties and accountability. Let's just say it gets tricky, fast. This week's guest is Lieutenant Colonel Jamahl Evans of the United States Marine Corps. In addition to his extraordinary military career, Jamahl is also a corporate governance enthusiast. As you might imagine, duty and accountability are baked pretty deep into everything that goes on in the Marines. But before we dive into that, I'll let Jamahl explain exactly what his job is because it's pretty neat.
Jamahl
I am currently a Lieutenant Colonel in the United States Marine Corps. And what I do in the Marine Corps is financial management. I'm a financial management officer. That's what we call a Military Occupational Specialty, or MOS for short. In that capacity, I'm responsible for the planning and execution and oversight of my command's budget. Now, that's just the MOS piece. As I like to tell my Marines, your MOS is your job. Marine is your profession. So for me, my profession, and my first duty is being a Marine. And that means ensuring that my Marines and I are deployment ready and combat capable at all times. The section that I manage - my full title would be Assistant Chief of Staff, G-8 Comptroller - so that's a section and we've got about 14 Marines in there. So those are the Marines who are directly responsible and accountable to me to make sure that we're doing our financial management functions properly. Outside of that, external to us, are adjacent staff sections, and subordinate commands within the organization with whom we have to work to manage resources: make sure that we're that we've got enough resources and that we're using the resources we have properly.
Matt
Now, I'm going to assume that many of you listening are as ignorant about the hierarchy of the Marines as I am, where exactly does the rank of Lieutenant Colonel fit in the organizational chart?
Jamahl
So as a Lieutenant Colonel, I'm what's called a field grade officer, and there are three levels to that. So it's Major, which is what I was before, Lieutenant Colonel, what I am now, and Colonel, what I aspire to be promoted to in future. Beyond the field grade ranks, are the General or the flag officer ranks, so Brigadier General, Major General, Lieutenant General and Four Star General. So right now I am, what you would consider - although I'm senior to several other ranks - I'm still right smack in the middle of the of the officer and organizational hierarchy. So every promotion, you're getting greater responsibility. And they are also greater opportunities to which you can be assigned. So as what's called a company grade officer - those are junior officers: lieutenants, and captains - you're going to have significant responsibility already. When you become a field grade officer. What's interesting is, now you are a little further away from the junior Marines, and a little more responsible for organizational management. Beyond just making sure your Marines are trained, making sure they're taken care of making sure they're showing up on time and doing their job, now you are responsible for really understanding organizational policies, regulations, understanding what the what the mission of the organization is, and how your unit relates to that and ensuring that happens in the best way.
Matt
Before our interview, Jamahl already knew that we were going to talk about duty and accountability. You'll notice that so far, he's being pretty careful not to use those words, instead referring to "responsibility." I nudged him a bit on that and asked him to tell me to whom he's accountable in his job and whether that's different from his duty. This is where things start getting really interesting.
Jamahl
So to whom I am accountable in the immediate, that would be my commanding general. That is the senior officer who runs the organization. It's a Major General who runs Second Marine Division. So that is the first officer to whom I immediately accountable because it really is his budget that I'm managing. It's not me making solo decisions. It's not Lieutenant Colonel Evans going "I feel like buying this!" No, it is based on the mission of the organization and the intent of my senior leader, which would be my commanding General. So that's the immediate accountability portion of it. Broader, or writ large, when I think about to whom I'm accountable, personally, there is, first of all, the Constitution of the United States. We actually take an oath as officers, and our enlisted Marines take an oath as well. But we take an oath and in our oath is the Constitution of the United States. To support and defend against all enemies, foreign and domestic. So that wraps up the nation, and accountability towards the nation. My authority and my mission come directly from the President of the United States, so I'm accountable to the President of the United States, as well. Then you have United States citizens: the American people are truly the shareholders because it's their tax dollars I'm managing. It's their tax dollars, for whom my senior officers, President, Congress, we're responsible for that. So we do have to take into account and I've done it on several occasions where there were decisions that I had to make when working with partner nations. And I had to make tough determinations because I am managing taxpayer dollars.
Matt
Okay, whoa. We're still only talking about accountability here and already for what's essentially a middle manager in a huge organization, Jamahl is accountable to his boss, and the President of the United States, and every taxpayer? Seriously? And if you thought the complexity would stop there, you were wrong. Let's add duty into the mix.
Jamahl
You would think 20 years in the Marine Corps, I've got a good solid understanding of duty. And I did I had a good personal understanding. Then I got curious about well, what is the actual definition of duty? And the definition I came across was "a legal or a moral obligation." And I didn't, while that's true, I didn't feel that was the full story. And think when when it comes to duty, there is an intangible step of building a sense of duty. We can understand what duty is, but there is a step of building that within an individual. Some individuals just come to the organization with it. Some individuals don't. And I would say that the short answer to your question: Duty is having the knowledge, feeling, belief that you should do what you're supposed to do to the best of your ability, because that's the requirement. Accountability is a bit more on the reactive side. It's how do you explain what you've done? How do you take responsibility for what you've done? Who else shares in that responsibility? So that's where I would see the difference. I would see duty as being a bit more on the front end of actions and accountability on the back end.
Matt
Okay, wait, pause. This is amazing stuff. If you're anything like me, you think of the Marines as being the definition of tangible structure, discipline, order. I mean, if you ask me for the first word that comes to my mind, when you say the word "Marines," it would probably be "duty." But now I'm hearing that duty is something almost soft and squishy, something that comes from the inside, rather than being imposed on you from the outside. Am I hearing that right?
Jamahl
And that was the second thought that I had, after I considered how I would define duty. The second thought being, well, how do you instill it? How do you ensure it? How do you develop it? How does it come about? Like you said, there's some external factor that plays upon you to help build a sense of duty. And the thing I thought about was, okay, well, if I were in an organization, what would help drive my own sense of duty? Because I came to the Marine Corps with a sense of duty. And I thought of one thing or a multitude of things, but I keyed in on one thing that I think helps build that. I think the principles of an organization can drive a sense of duty, and that's your external thing that comes into play. And how it works is when when people see your principles, and I don't care if it's in a slogan or motto anything, there's got to be a connection. And the connection that has to be established is: I either possess the characteristics of those principles already, or those are principles that I want to possess, I want to display those.
Matt
So cool! It's like duty, this thing that the dictionary defines as a legal or moral obligation, might actually be more of a special sauce, where the ingredients are a person's internal drive character and beliefs, plus the purpose and values of their organization. So I wondered: if accountability is basically a set of responsibilities imposed on a person by an external or organizational structure. And duty is something that comes more from inside you, there must be lots of ways that duty and accountability could come into conflict. Like if your moral duty and beliefs make it hard to carry out an order from your boss, for example. In a case like that, what is Jamahl hope his Marines will do to address the conflict?
Jamahl
In my office, I have established with my Marines, we do not use the word "hope". And they find it interesting they find it, you know, they find it funny. But we all know that it's a common theme in the Marine Corps, that hope is not a course of action. So when you talk about anybody who's having kind of a dilemma, or a conundrum, I don't have a hope for them. What I do is engage to see what kind of actions we can take to improve the situation. So to answer your direct question, the first thing is, there historically can be dilemmas between what the organization needs to do and how they need to do it, and what the individual thinks about it. So the first thing, which is one of the foundations, is that a Marine does not have to follow an unlawful order. So if you, as a Marine or as any service person, believe that an order you've received is unlawful or illegal, you do not have to do it. However, if an order is lawful, you might not agree with it, you might have a personal feeling, but you're still going to do it, you have a job to do. And if you've been given given a lawful order, then you execute! Now here's where the development comes into play, to minimize the dilemma that you hypothesized. As we grow within our organizations, it's on the mid-level and senior leaders to ensure that there's quality understanding, quality training, quality conversation, quality voice, making that time for your junior personnel to ask you those tough questions. And I tried to get my Marines to ask tough questions early on. That way they can experience and understand a glimpse that what your perspective is, at your level doesn't encompass the entire picture. And you have to understand that there are threads between what you functionally do and what we organizationally decide.
Matt
Like most important things in life, this is a complex problem. When duty and accountability collide, or when your personal beliefs are in conflict with what your organization asks of you, sometimes you have to, you know, just trust your boss and do the work. But Jamahl is also telling us that it's important for organizational leaders to give their team a voice, a platform, and an opportunity to better understand how they fit into the bigger picture. But again, we're hearing something that kind of doesn't match my own perception of a military organization where everything is super structured, and everyone has to do the same things at the same time. You know, predictable and repeatable. How can you have both that and an environment where everyone has a voice and some influence and problem solving?
Jamahl
Senior leaders have to create space for that to happen. If you're running a completely robotic organization where people just do a thing, and there's no room to either question, consult, understand, develop, grow, then you're going to have people doing robotic things. No military can be at its best when it's just "do the exact thing that I tell you and that's it," because you will have a group of people who will do one thing and will stop. So just like any other organization, we do need to increase the bandwidth for creative thinking, innovative thinking, especially when it comes to problem solving. So those types of behaviors that we want everybody doing the same way in the Marine Corps, we want everyone to be in shape. We don't even want it, we need it. That's a requirement. You're required to be in shape. Two months ago, I ran three miles. I don't like distance running, though I do it as well as I can...I do pretty good. But we want our Marines staying in shape. We want our people healthy, and not just physically healthy, mentally, and emotionally healthy. So it's on again, senior leadership to engage and be aware that that's happening. Shifting over to the behaviors where we want to expand and have that bandwidth to learn and to grow. That's where your innovation piece comes in. Where we want Marines thinking about developed solutions to problems, branch scenarios. "What would you do?" is a great question. "What would you do?" It's a very easy thing to sit down with your personnel and go over a scenario, something that happened in your career, "Hey, this, this happened. What do you think you would do in this situation?" You have that conversation. The next step, in that is the daily activities, daily tasks, daily operations, giving your people that space to make decisions at their level.
Matt
It surprised me a bit to hear Jamahl talk about the importance of not just physical health, but also mental well-being in the Marines. But now that I think about it, it really shouldn't have surprised me at all. It can be an extraordinary, stressful and dangerous job. And it made an impact on me to hear him talk about it as part of the duty of being a Marine. The duty to care for your own physical and mental well being, but also that of the people around you. How does that actually play out in the real world of the Marine Corps?
Jamahl
When you place a focus on engagement, treatment, development, recovery, and then success, you establish a continuum that's understandable by your junior leaders. One of the things I think the Department of Defense is great at is messaging the need to be aware. Messaging the need to be aware and see signs. And we've had a lot of messaging over the years. But it's something that is important, because we're talking about the health of the organization. So what gets a message down to mid-level and junior leaders is "here are different signs, things that you should be looking for. If you've never had to deal with this before. Here's something that could trigger in your mind a something might be wrong." I have had the experience of walking past a Marine and getting a greeting, they say "Good morning, sir." I'll say "Good morning." And sometimes I'll say "how are you?" A lot of people don't like that greeting because you really just say it and you pass the person and you go. But about three times in my career I've said good morning to a Marine and I've looked and I said "how are you?" And they will respond with "fine" or "okay". And it's just something in the eyes. And three times I've had to pull the Marine aside and say, "seriously, I know I'm not your commanding officer, you don't even know me. But are you good?"And then those three instances I've hadn't read, say "no." So then I would stop what I was doing, call whomever I was going to meet whatever meeting I was going to say, "Look, I can't make it, I have a situation." And I'll take that Marine into the office. Now sometimes that results in one hour, two hour conversations. But so long as that Marine leaves with something functional to get them to the next step. I'm not going to cure everything. I'm not trained to cure everything. And I don't have the time to cure everything. But what I can do is show you where the door is, and open it and say, "Look, you can step through that door. If you can do nothing else, you can step through that door, because we may be side by side, fighting against an enemy. And I gotta know that you're good." And it's not just for junior members either. It goes for our senior members, and I'll share one more story when I've worked... I was a Major and I worked with a Lieutenant Colonel. He was he was my Commanding Officer and I was his Executive Officer. And I noticed the level of stress that he was fighting. He wasn't losing it or anything like that - he was completely capable. But you can see fatigue in people. One day I heard him come on deck. And he was walking his office was after my office. That way I catch all the people that want to try to go and see him. So I hear him walk into his office, and about three or four different Marines approached him with a with an issue, something they had, "Sir, this or that." So they walked by my office. I said, "Sir, do you have a moment?" And the way he normally did it he would just say "yes." But you could see the fatigue in his eyes. So he came in, I said "Sir, do you mind if I close the hatch?" And he said, "not at all". So you close the hatch - for your listeners a hatch is a door. Naval terminology - and he sat down on the couch in my office, and he said, "What do you have?" And I said "nothing, sir, you just looked like you needed to have a time when nobody's asking you to do something." And he smiled and looked at me, he goes, "You up for tacos?" I said, "Yes, sir." So we went and had lunch. So sometimes we have to look out for senior leaders in the same way to look out for junior people. So it just, it just takes compassion, awareness and engagement.
Matt
There it is! Even in an organization as structured, complex and disciplined as the United States Marine Corps., Sometimes it's important to just go and have tacos with your boss. I learned so much from my conversation with Lieutenant Colonel Jamahl Evans and we covered a lot more ground than what you heard in this episode, so you'll hear more from him in the future. If you have a question, story, or insight you’d like to share, please send a note or a voice memo to soundup@groundupgovernance.com, and we may feature you in a future episode. On the next episode of Sound-Up Governance. I talk with performance strategist, investment guru and corporate governance enthusiast Lisa Oldridge about businesses, companies, customers, and how they all fit together. Until next time.
Today's episode of OMG is actually a crossover with a new podcast, Sound-Up Governance, which is part of the new Ground-Up Governance platform. Episode 1 features an interview with Tiziana Casciaro, author of Power, for All: How it Really Works, and Why it's Everyone's Business. If you like what you hear, please consider heading over to groundupgovernance.com and subscribing.
SCRIPT
The next three episodes of OMG are gonna be REALLY different. Well, actually, they’re not episodes of OMG at all, but episodes of a brand new podcast called Sound-Up Governance, which is part of my new Ground-Up Governance platform. Sound-Up Governance features interviews with experts who don’t necessarily come from the regular pool of corporate governance “gurus” so to speak. Instead, they are experts in stuff that’s really important to doing corporate governance well, and can help us to understand what’s really going on in our organizations. First up is Professor Tiziana Casciaro, who literally wrote the book on power and authority. If you like what you hear, head over to groundupgovernance.com to learn more and consider subscribing.
Matt
Welcome to Sound-Up Governance, part of the ground up governance network. My name is Matt Fullbrook. And in today's episode I speak with my friend Tiziana Casciaro, Professor of Organizational Behavior at the Rotman School of Management at the University of Toronto. We launched the Ground-Up Governance newsletter this week with the most fundamental concepts in corporate governance: authority and power. I mean, what could be more essential to corporate governance then trying to understand who's allowed to do what and what it takes for one person to influence another person? Luckily for us, Professor Casciaro, recently co authored a book with Harvard's Julie Battilana called Power for All: How it Really Works, and Why it's Everyone's Business. And just so I don't mess anything up, why don't we let her tell us a bit more?
Tiziana
It's a book intended for all in this world, not only in Canada, not only the US, but really, truly everywhere, who have contended with power, have struggled with it been frustrated by it, while understanding that it's important for them to have it, and know how to use it. And we have tried to give tools and understandings that allow people to grow in their influence, but also learn how to deploy it for good.
Matt
It never much occurred to me to think very hard about what power really is, or how, if at all, it's different from authority, or why, for example, people in really visible or influential positions sometimes fail to make a difference, am I missing somethingZ
Tiziana
Power is often very much confused with authority, or or I should say, authority is often confused with power. They are different, however. Authority is the formal right to issue orders and directives and make decisions. And it comes from the position you occupy in a formal structure. So your role puts you in a place where you get to make certain decisions. Power is different, however. Power is the ability to influence the behavior of other people. And you can influence them sometimes through your formal authority. If I have the right to decide whether you're going to be promoted or not, that gives me power over you. It's not just authority, but it's actual power. Why? Because you want something from me: a promotion. I have control over your access to this thing you want because I have the right to decide whether you will be promoted or not. And therefore I exercise influence over you. That's what power is made of. It's made of controlling your access to something you desire. But you see, already in the definition of power, that I may control, access to something you want without having formal authority.
Matt
So can a person create power? Does that even make sense?
Tiziana
Absolutely makes sense. A person can increase their power, if they understand this simple principle of where power comes from. If I know that power comes from controlling access to resources you want, all I need to accrue more power is understand what is it that you want. And that's where people become very confused between the notion of formal authority and the power broadly conceived, formal authority has to do with something very specific. I have certain decision rights in a certain context over certain things. But that covers only a small part of what you might want, you might not just want a promotion, you might want for instance, to be managed by somebody who understands you, that understands your gifts, your talents, your complexity as a human being, values it and makes you feel good by giving you a platform where you can be your best self every day at work. Those are much more psychological resources, that are not written down in any formal organizational structure. They are much more subtle, and yet they are extremely important to people, they drive who they want to associate themselves with, whether they I want to be led by you or not, whether I will trust the decision you make. And even if you make a decision through your formal authority, and the decision comes at me, your actual underlying power - so, your ability to influence my behavior - will come down to how willing am I to execute on that decision?
Matt
Okay, now we're really getting somewhere. No wonder some people have authority, but still can't get anyone to do anything. Power isn't only about controlling access to tangible resources, in some cases is way more important to just make someone feel good, feel valued and motivated. Since Ground-Up Governance is ultimately about corporations, how does all this apply in a typical corporate structure with a board, a CEO...in other words, a model that's got a well defined, built in leadership hierarchy. Once again, here's Professor Tiziana Casciaro.
Tiziana
The problem of the hierarchical structure you're describing is that it tends to concentrate power in the hands of very few people. And what we know from research in all kinds of disciplines is that power concentration tends to be bad in the long run, not only for the majority of people who don't have power, and therefore are just on the receiving end of the decisions of the few. But it can also be detrimental to the few in power, to the extent that having that much control can lead them to abuse their power. They lose sight of their unilateral capacity to shape the life of others and the other people who are receiving these decisions. Sometimes they become resentful of this asymmetry. And for good reason, if they're not unreasonable in becoming resentful. And when you have resentful people that you're leading, it's not good. Because they might push back, they do push back, the moment they have a little bit of room to show you that you're abusing your power. And I don't like it.
Matt
Uh oh So, concentrating power at the top of an organization sounds risky. What about a board of directors? How do power and authority work there?
Tiziana
So, you are a director on a board. And and because of that role, you will have certain rights to issue directives for the company and its leadership, and jointly with the other board members, you can come up with certain decisions that then presumably get implemented. So imagine one of these board members that in addition to the formal authority that accrues to them, by virtue of occupying that position on the board, they have something else going on for them. Maybe they have extra good connections to a stakeholder that the management of the company cares about, or that the board cares about. And they have to go through me to get to those guys in that stakeholder groups. In that case, I will end up having more influence over the decisions of the board and the behavior of the executives that leave the company, because I've got something that they want. And I control it in the sense that there aren't many alternative ways for them to get to those stakeholders, they kind of have to go through me.
Matt
It almost seems like part of the problem is the way that boards are structured, I asked Professor Casciaro if we should be trying to build boards so that every director somehow has an equal amount of power. I mean, maybe that would be the ideal condition for making good decisions and balancing everyone's interests.
Tiziana
The reality is that resources are unequally distributed across each and every one of us. And it's unavoidable that you will not have the quality you're describing on the board. But what you can do is to create decision making processes that make it harder for people to go off and establish relationships of influence that are disconnected from the goal that the board is presumably pursuing. So you can have decision making structures where it's one board member, one vote, that you have a way to express your preferences that does not allow easily for you to be swayed by others, which could protect you from their influence when it stems from things that have nothing to do with a decision at hand.
Matt
All right, so maybe it isn't possible to distribute power equally, but we can just use processes that balance things out a little. That's what we should be working on right?
Tiziana
But then you lose something when you do that. When you create a structure in which the decision is made almost independently by each board member, what you lose is the learning and the ability to engage with ideas other than your own that can actually and actually do oftentimes improve decision making. I can come in with my own independent judgment, which is all fine and dandy because it becomes not subject to your undue influence as my fellow board member. But I don't get to hear your argument, I don't get to really make my own decision better, because I don't get your input. So that's what what you're the tension, you're juggling here, you're navigating this pull toward independence, but also want to secure the beauty of multiple minds, struggling with a complex decision, where each and every one of us individually, cannot really understand every component.
Matt
We've learned how authority and power are different, and that people can in fact, take steps to generate power. We've all heard about the potential corrupting effects of power socially - morally, even - can we take steps to, you know, use our power for good?
Tiziana
Ultimately, you're going to have to contend with what you have done with your life. What have you impacted? What are you leaving behind? And this is a level of insight into yourself that sometimes escapes us when we are in the middle of the action. We are the CEO of a company, complex stuff coming at us from every which way, and we kind of forget that actually, we want to accomplish something here. In addition to being rich and famous. We want to accomplish something other than that. So it's very important for people to understand that there are many goals you can accomplish. And power is essential to accomplishing all of them. You cannot get anything done without power. It's a form of energy in many ways that allows you to change the world around you, and move it in a direction you think is worthwhile. So you have to empower, for lack of a better word, people to acquire the power they need to pursue those objectives. And sometimes the people that have formal authority are not the right people. They're not pursuing the right objectives anymore. Maybe they started out with dreams and ambitions that were perfectly good and constructive, but along the way they lost sight of them. So the book tries to give everybody an opportunity to understand how power works so that they can acquire it, and then set up their power - and this is something that boards actually are very important contributors to - set up their power so that they don't get lost along the way. Because power does go to our head. It does. It does contaminate our purpose. It does distract us from our limitations and our need for other people to help us along the way. It makes us hubristic, it makes us self focused. So you need to not only give people tools to acquire power, but also give them tools to keep it in check.
Matt
Thank you for listening to episode number one of Sound-Up Governance. The fact that you're listening means you're a Ground-Up Governance subscriber. So thank you sincerely for your support and engagement. Next week, I'll speak with Lieutenant Colonel Jamahl Evans, Sr. of the US Marines as we work through our next batch of words: accountability, delegate and duty. If you want to reach out with a question or insight or an interesting story, send an email or voice memo to soundup@groundupgovernance.com. And we may feature you in a future episode. Thank you for tuning in. See you next week.
Today's episode of OMG is actually a crossover with a new podcast, Sound-Up Governance, which is part of the new Ground-Up Governance platform. Episode 1 features an interview with Tiziana Casciaro, author of Power, for All: How it Really Works, and Why it's Everyone's Business. If you like what you hear, please consider heading over to groundupgovernance.com and subscribing.
SCRIPT
The next three episodes of OMG are gonna be REALLY different. Well, actually, they’re not episodes of OMG at all, but episodes of a brand new podcast called Sound-Up Governance, which is part of my new Ground-Up Governance platform. Sound-Up Governance features interviews with experts who don’t necessarily come from the regular pool of corporate governance “gurus” so to speak. Instead, they are experts in stuff that’s really important to doing corporate governance well, and can help us to understand what’s really going on in our organizations. First up is Professor Tiziana Casciaro, who literally wrote the book on power and authority. If you like what you hear, head over to groundupgovernance.com to learn more and consider subscribing.
Matt
Welcome to Sound-Up Governance, part of the ground up governance network. My name is Matt Fullbrook. And in today's episode I speak with my friend Tiziana Casciaro, Professor of Organizational Behavior at the Rotman School of Management at the University of Toronto. We launched the Ground-Up Governance newsletter this week with the most fundamental concepts in corporate governance: authority and power. I mean, what could be more essential to corporate governance then trying to understand who's allowed to do what and what it takes for one person to influence another person? Luckily for us, Professor Casciaro, recently co authored a book with Harvard's Julie Battilana called Power for All: How it Really Works, and Why it's Everyone's Business. And just so I don't mess anything up, why don't we let her tell us a bit more?
Tiziana
It's a book intended for all in this world, not only in Canada, not only the US, but really, truly everywhere, who have contended with power, have struggled with it been frustrated by it, while understanding that it's important for them to have it, and know how to use it. And we have tried to give tools and understandings that allow people to grow in their influence, but also learn how to deploy it for good.
Matt
It never much occurred to me to think very hard about what power really is, or how, if at all, it's different from authority, or why, for example, people in really visible or influential positions sometimes fail to make a difference, am I missing somethingZ
Tiziana
Power is often very much confused with authority, or or I should say, authority is often confused with power. They are different, however. Authority is the formal right to issue orders and directives and make decisions. And it comes from the position you occupy in a formal structure. So your role puts you in a place where you get to make certain decisions. Power is different, however. Power is the ability to influence the behavior of other people. And you can influence them sometimes through your formal authority. If I have the right to decide whether you're going to be promoted or not, that gives me power over you. It's not just authority, but it's actual power. Why? Because you want something from me: a promotion. I have control over your access to this thing you want because I have the right to decide whether you will be promoted or not. And therefore I exercise influence over you. That's what power is made of. It's made of controlling your access to something you desire. But you see, already in the definition of power, that I may control, access to something you want without having formal authority.
Matt
So can a person create power? Does that even make sense?
Tiziana
Absolutely makes sense. A person can increase their power, if they understand this simple principle of where power comes from. If I know that power comes from controlling access to resources you want, all I need to accrue more power is understand what is it that you want. And that's where people become very confused between the notion of formal authority and the power broadly conceived, formal authority has to do with something very specific. I have certain decision rights in a certain context over certain things. But that covers only a small part of what you might want, you might not just want a promotion, you might want for instance, to be managed by somebody who understands you, that understands your gifts, your talents, your complexity as a human being, values it and makes you feel good by giving you a platform where you can be your best self every day at work. Those are much more psychological resources, that are not written down in any formal organizational structure. They are much more subtle, and yet they are extremely important to people, they drive who they want to associate themselves with, whether they I want to be led by you or not, whether I will trust the decision you make. And even if you make a decision through your formal authority, and the decision comes at me, your actual underlying power - so, your ability to influence my behavior - will come down to how willing am I to execute on that decision?
Matt
Okay, now we're really getting somewhere. No wonder some people have authority, but still can't get anyone to do anything. Power isn't only about controlling access to tangible resources, in some cases is way more important to just make someone feel good, feel valued and motivated. Since Ground-Up Governance is ultimately about corporations, how does all this apply in a typical corporate structure with a board, a CEO...in other words, a model that's got a well defined, built in leadership hierarchy. Once again, here's Professor Tiziana Casciaro.
Tiziana
The problem of the hierarchical structure you're describing is that it tends to concentrate power in the hands of very few people. And what we know from research in all kinds of disciplines is that power concentration tends to be bad in the long run, not only for the majority of people who don't have power, and therefore are just on the receiving end of the decisions of the few. But it can also be detrimental to the few in power, to the extent that having that much control can lead them to abuse their power. They lose sight of their unilateral capacity to shape the life of others and the other people who are receiving these decisions. Sometimes they become resentful of this asymmetry. And for good reason, if they're not unreasonable in becoming resentful. And when you have resentful people that you're leading, it's not good. Because they might push back, they do push back, the moment they have a little bit of room to show you that you're abusing your power. And I don't like it.
Matt
Uh oh So, concentrating power at the top of an organization sounds risky. What about a board of directors? How do power and authority work there?
Tiziana
So, you are a director on a board. And and because of that role, you will have certain rights to issue directives for the company and its leadership, and jointly with the other board members, you can come up with certain decisions that then presumably get implemented. So imagine one of these board members that in addition to the formal authority that accrues to them, by virtue of occupying that position on the board, they have something else going on for them. Maybe they have extra good connections to a stakeholder that the management of the company cares about, or that the board cares about. And they have to go through me to get to those guys in that stakeholder groups. In that case, I will end up having more influence over the decisions of the board and the behavior of the executives that leave the company, because I've got something that they want. And I control it in the sense that there aren't many alternative ways for them to get to those stakeholders, they kind of have to go through me.
Matt
It almost seems like part of the problem is the way that boards are structured, I asked Professor Casciaro if we should be trying to build boards so that every director somehow has an equal amount of power. I mean, maybe that would be the ideal condition for making good decisions and balancing everyone's interests.
Tiziana
The reality is that resources are unequally distributed across each and every one of us. And it's unavoidable that you will not have the quality you're describing on the board. But what you can do is to create decision making processes that make it harder for people to go off and establish relationships of influence that are disconnected from the goal that the board is presumably pursuing. So you can have decision making structures where it's one board member, one vote, that you have a way to express your preferences that does not allow easily for you to be swayed by others, which could protect you from their influence when it stems from things that have nothing to do with a decision at hand.
Matt
All right, so maybe it isn't possible to distribute power equally, but we can just use processes that balance things out a little. That's what we should be working on right?
Tiziana
But then you lose something when you do that. When you create a structure in which the decision is made almost independently by each board member, what you lose is the learning and the ability to engage with ideas other than your own that can actually and actually do oftentimes improve decision making. I can come in with my own independent judgment, which is all fine and dandy because it becomes not subject to your undue influence as my fellow board member. But I don't get to hear your argument, I don't get to really make my own decision better, because I don't get your input. So that's what what you're the tension, you're juggling here, you're navigating this pull toward independence, but also want to secure the beauty of multiple minds, struggling with a complex decision, where each and every one of us individually, cannot really understand every component.
Matt
We've learned how authority and power are different, and that people can in fact, take steps to generate power. We've all heard about the potential corrupting effects of power socially - morally, even - can we take steps to, you know, use our power for good?
Tiziana
Ultimately, you're going to have to contend with what you have done with your life. What have you impacted? What are you leaving behind? And this is a level of insight into yourself that sometimes escapes us when we are in the middle of the action. We are the CEO of a company, complex stuff coming at us from every which way, and we kind of forget that actually, we want to accomplish something here. In addition to being rich and famous. We want to accomplish something other than that. So it's very important for people to understand that there are many goals you can accomplish. And power is essential to accomplishing all of them. You cannot get anything done without power. It's a form of energy in many ways that allows you to change the world around you, and move it in a direction you think is worthwhile. So you have to empower, for lack of a better word, people to acquire the power they need to pursue those objectives. And sometimes the people that have formal authority are not the right people. They're not pursuing the right objectives anymore. Maybe they started out with dreams and ambitions that were perfectly good and constructive, but along the way they lost sight of them. So the book tries to give everybody an opportunity to understand how power works so that they can acquire it, and then set up their power - and this is something that boards actually are very important contributors to - set up their power so that they don't get lost along the way. Because power does go to our head. It does. It does contaminate our purpose. It does distract us from our limitations and our need for other people to help us along the way. It makes us hubristic, it makes us self focused. So you need to not only give people tools to acquire power, but also give them tools to keep it in check.
Matt
Thank you for listening to episode number one of Sound-Up Governance. The fact that you're listening means you're a Ground-Up Governance subscriber. So thank you sincerely for your support and engagement. Next week, I'll speak with Lieutenant Colonel Jamahl Evans, Sr. of the US Marines as we work through our next batch of words: accountability, delegate and duty. If you want to reach out with a question or insight or an interesting story, send an email or voice memo to soundup@groundupgovernance.com. And we may feature you in a future episode. Thank you for tuning in. See you next week.
Today I launched my new platform, Ground-Up Governance. If you ever wished there were corporate governance resources that were less complicated, expensive, and...well, boring, then please have a look. I'm super excited about it and hope you like it!
SCRIPT
Today, September 12, 2022, marks the launch of my new project, Ground-Up Governance. On the surface, it may look like just a newsletter, but once you dive in it’s more like a hilarious graphic novel meets encyclopedia with tonnes of illustrations, audio, video, storytelling, and, well, you get the picture. Or you probably don’t, actually. Just head to groundupgovernance.com to start poking around! The whole point of Ground-Up Governance is to strip away the unnecessary complexity that makes corporate governance seem so difficult, inaccessible, and…boring. Not just that, but it took me like 20 years before it occurred to me that I couldn’t explain what “good governance” is, and most board members and executives I know can’t explain it either. I don’t want to harp too much on definitions here, but if we don’t know the meaning of the words we’re using, I think that’s a big problem. Check it out now – most of the content is completely free – and join me and a super cool cast of other characters on a journey to make corporate governance simpler, more accessible, and way more fun.
Today I launched my new platform, Ground-Up Governance. If you ever wished there were corporate governance resources that were less complicated, expensive, and...well, boring, then please have a look. I'm super excited about it and hope you like it!
SCRIPT
Today, September 12, 2022, marks the launch of my new project, Ground-Up Governance. On the surface, it may look like just a newsletter, but once you dive in it’s more like a hilarious graphic novel meets encyclopedia with tonnes of illustrations, audio, video, storytelling, and, well, you get the picture. Or you probably don’t, actually. Just head to groundupgovernance.com to start poking around! The whole point of Ground-Up Governance is to strip away the unnecessary complexity that makes corporate governance seem so difficult, inaccessible, and…boring. Not just that, but it took me like 20 years before it occurred to me that I couldn’t explain what “good governance” is, and most board members and executives I know can’t explain it either. I don’t want to harp too much on definitions here, but if we don’t know the meaning of the words we’re using, I think that’s a big problem. Check it out now – most of the content is completely free – and join me and a super cool cast of other characters on a journey to make corporate governance simpler, more accessible, and way more fun.
Special OMG guest Jeff de Cagna explains the importance of fit-for-purpose boards. Although his specialty is associations, the message applies universally!
SCRIPT
Hi, I’m Jeff De Cagna, executive advisor for Foresight First LLC, located in Reston, Virginia. My sincere thanks to Matt for inviting me to be the guest host for this episode of the One Minute Governance Podcast.
The focus of my work is on helping professional, trade, and other association boards become fit-for-purpose by setting a higher standard of stewardship, governing, and foresight, or SGF. The crucial question I pose to boards is one we should all ask as we consider our personal responsibility for addressing this decade’s intensifying challenges: what will our successors say about us? The purpose of this question is to push association boards to focus their attention on how their actions, rather than their words, will help shape a different and better future for the people who will follow them in the years and decades ahead, with a specific emphasis on future humans they will never know personally.
At the heart of SGF is the board’s duty of foresight, a term I originally coined in 2014 and recently redefined to integrate both more than two years of painful pandemic lessons and a clear-eyed recognition of the serious struggles still ahead: the duty of foresight requires association boards to stand up for their successors’ futures through intentional learning, short-term sacrifice, and long-term action. In contrast to the legal mandate that underpins boards’ fiduciary duties, the duty of foresight is a choice—a profoundly ethical and moral choice—that fit-for-purpose association boards must make every day.
Special OMG guest Jeff de Cagna explains the importance of fit-for-purpose boards. Although his specialty is associations, the message applies universally!
SCRIPT
Hi, I’m Jeff De Cagna, executive advisor for Foresight First LLC, located in Reston, Virginia. My sincere thanks to Matt for inviting me to be the guest host for this episode of the One Minute Governance Podcast.
The focus of my work is on helping professional, trade, and other association boards become fit-for-purpose by setting a higher standard of stewardship, governing, and foresight, or SGF. The crucial question I pose to boards is one we should all ask as we consider our personal responsibility for addressing this decade’s intensifying challenges: what will our successors say about us? The purpose of this question is to push association boards to focus their attention on how their actions, rather than their words, will help shape a different and better future for the people who will follow them in the years and decades ahead, with a specific emphasis on future humans they will never know personally.
At the heart of SGF is the board’s duty of foresight, a term I originally coined in 2014 and recently redefined to integrate both more than two years of painful pandemic lessons and a clear-eyed recognition of the serious struggles still ahead: the duty of foresight requires association boards to stand up for their successors’ futures through intentional learning, short-term sacrifice, and long-term action. In contrast to the legal mandate that underpins boards’ fiduciary duties, the duty of foresight is a choice—a profoundly ethical and moral choice—that fit-for-purpose association boards must make every day.
A few months ago I promised/threatened to write a book. My thinking has changed a bit, but I still believe there are a lot of issues in corporate governance that we can solve together. More news very soon!
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT
Back in January I released an episode of OMG – episode 99 – called “I think I might write a book.” All the reasons I thought about writing a book are just as relevant now, and I haven’t conclusively banished writing a book from my to-do list, but I’m not as excited about writing a book as I was. Partly because I feel like the time it takes to get from idea to actual physical book is so long that I probably won’t even agree with myself anymore by the time the book is out. But there are still problems I’d like to try to HELP to solve. Corporate governance is still, in my opinion, deeply misunderstood – even by the people who run the “corporate governance machine” so to speak. Few people, even those who are rightfully considered experts, can articulate what good governance is in a way that anyone could understand and take steps to implement. Maybe most importantly, for anyone who wants to play a role in corporate governance in the future, there’s just about nowhere to go that will empower you to walk into a role as an executive or corporate director for the first time with the confidence that you’ve “got this.” Because everyone seems to have a different understanding of what “this” really is, and very few are taking steps to make it easier to grasp, let alone taking steps to encourage or enable new and better people to enter the space tomorrow than those who were there yesterday. So instead of a book, I’m trying something else. Something a bit less conventional. Two episodes from now, I’ll tell you everything. For now, to the extent that you see the same problems as I do, get in touch with me with some words of encouragement. I’ll really appreciate the support.
A few months ago I promised/threatened to write a book. My thinking has changed a bit, but I still believe there are a lot of issues in corporate governance that we can solve together. More news very soon!
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT
Back in January I released an episode of OMG – episode 99 – called “I think I might write a book.” All the reasons I thought about writing a book are just as relevant now, and I haven’t conclusively banished writing a book from my to-do list, but I’m not as excited about writing a book as I was. Partly because I feel like the time it takes to get from idea to actual physical book is so long that I probably won’t even agree with myself anymore by the time the book is out. But there are still problems I’d like to try to HELP to solve. Corporate governance is still, in my opinion, deeply misunderstood – even by the people who run the “corporate governance machine” so to speak. Few people, even those who are rightfully considered experts, can articulate what good governance is in a way that anyone could understand and take steps to implement. Maybe most importantly, for anyone who wants to play a role in corporate governance in the future, there’s just about nowhere to go that will empower you to walk into a role as an executive or corporate director for the first time with the confidence that you’ve “got this.” Because everyone seems to have a different understanding of what “this” really is, and very few are taking steps to make it easier to grasp, let alone taking steps to encourage or enable new and better people to enter the space tomorrow than those who were there yesterday. So instead of a book, I’m trying something else. Something a bit less conventional. Two episodes from now, I’ll tell you everything. For now, to the extent that you see the same problems as I do, get in touch with me with some words of encouragement. I’ll really appreciate the support.
Ever feel like you're "stuck" with the wrong people on your board? Things are probably aren't as bad as they seem.
Background Music is Of the Stars by KC Roberts & the Live Revolution.
SCRIPT
OK so the title of this episode might not seem correct to some of you, but it’s technically correct, which is the best kind of correct. The truth is, there are no circumstances in which you are unconditionally entitled to a seat on a board. Even in my one-owner, zero-employees corporation where I’m the only board member, I’m only entitled to a board seat as long as I fulfill any legal and regulatory duties. But let’s talk about some more useful situations that go beyond simple legal compliance. I meet a lot of organizations where the board and/or management seem resigned to the fact that they have to live with one or more bad board members, or with a board that, as a whole, just…doesn’t have the right people. In most corporate models, there are specific democratic processes for the election and removal of directors, but using democratic constraints as an excuse for living with bad directors is just taking a complex human issue and boiling it down to compliance again. A seat on a board is a privilege, not a right. There’s no specific person who is entitled to a seat if they are not willing, prepared, and committed to contribute to effective decision-making in the ways we’ve discussed already this season. Yes, your organization might have board seats set aside for representatives of an ownership or stakeholder group – and you should be working with those groups to make sure their representatives are, y’know, good directors! Or maybe you have an ineffective director that has several years left in their term. How about helping them to improve instead of just waiting for their time to come. And if improvement doesn’t come? Thank them for their service, and start the conversation about it maybe being time to make space for the next, more effective director. Directors are, or at least should be, more than seat fillers. They are the gatekeepers of good governance.
When it comes to good governance, the conditions for great decision-making will never be perfect. But the journey is what counts.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT
One thing I noticed when I first read chapter 1 of the Heath Brothers’ Decisive is that I fall victim to the four villains of decision making basically every time I make any decision. I bet you felt the same. And it gets even worse when you’re trying to make decisions as a group. Everyone brings their own “flavour” of the four villains to the table, making it super difficult to manage everything perfectly. Decisive offers some cool ideas, which you should review and test out yourself. I want to suggest that the status quo of boards of directors specifically, and corporate governance in general, create basically the perfect conditions for the four villains to thrive: time scarcity + information asymmetry + expertise asymmetry + rule-driven norms and so on, so on, so on. So here’s the thing: if you buy into my definition of good governance even a little bit, the definition being actively creating conditions that maximize the likelihood that effective decisions will get made, then the status quo of boards – from the rules of order, to the structure of meetings, to the layout of the boardroom to the flow of conversations – all of it has the significant potential to work AGAINST good governance. So, to the extent that you see a bit of the four villains of decision-making in yourself, your organization, and your boardroom…what you’re seeing is NORMAL, but it’s also bad governance. The next time you craft an agenda, prepare a board presentation, frame a key decision, kick off a conversation, read your pre-read materials, etc. Keep the four villains in mind and ask how you can set yourself, your board, your management team up to create the conditions for effective decisions. It won’t be perfect, but the effort itself is, in my opinion, the key to good governance.
Overconfidence is my "favourite" of the Heath Brothers' four villains of decision making. It's simultaneously super obnoxious and super universal. And boardrooms provide the perfect environment for overconfidence to thrive and get in the way of your decisions.
Background music is Of the Stars by KC Roberts & the Live Revolution
ADDITIONAL RESOURCES:
Freakonomics Radio Season 9, Episode 46
Gender Differences in Overconfidence and Decision-Making in High-Stakes Competitions
Gender Differences in Performance Predictions: Evidence from the Cognitive Reflection Test
The Power of Precise Predictions
SCRIPT
Maybe “favourite” isn’t the perfect word here, but I’ll say it anyway: overconfidence is my favourite of the Heath Brothers’ four villains of decision-making. It’s so complex, insidious, unconscious, and nearly ubiquitous. Overconfidence even FEELS good, so…well, it’s pretty hard to steer completely around it in group decision environments like boardrooms. Take some time to scan the academic literature on overconfidence, including awesome recent stuff by Philip Tetlock from University of Pennsylvania, and the amazing book “Range” by David Epstein. Basically, it turns out that the more expertise you have in a specific field, the worse you get at making predictions about that field…and the more confident are at making those bad predictions. Another messed up thing about overconfidence? It’s deeply gendered. Men, unsurprisingly, fall victim to overconfidence far more readily than women – hence the tendency to “mansplain.” Women, on the other hand, are more likely to be victims of UNDERconfidence, which as you can imagine also impedes effective decision-making. I’ve put some interesting links in the episode description for you to check out if you want to see more of the research in this area. People usually become corporate directors specifically because they have deep expertise in some area or another. So, as experts, how can we be useful in the boardroom without inviting the villains into the mix? My best advice is to lean on your expertise to ask big questions, tell cool stories, start interesting conversations…instead of just telling people what you think the future holds. No matter how confident you feel.
Boardrooms might seem like emotionless environments, but they really aren't. Even though we can't stop ourselves from feeling emotions, we can definitely acknowledge and manage the influence our emotions have on our decisions.
In this episode, I refer to a recent episode of the No Stupid Questions podcast. Listen to it here:
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT
Another of the Heath Brothers’ villains of decision-making is short-term emotion. Many of us think of corporate decisions, especially those that happen in boardrooms, as being predictable, regulated, structured, even somber. In my experience, that tends to be a pretty accurate description, but that absolutely does not mean that the process is devoid of emotion. Is embarrassment an emotion? According to the recent episode 109 of the awesome podcast “No Stupid Questions,” it definitely is. I talk to a lot of corporate directors…like a lot a lot…and there are as many as not who’ve confided in me that they’ve found themselves at one point or another unwilling to ask a question or raise a concern because they were for all intents and purposes EMBARRASSED. To admit they don’t know, to disagree with a respected colleague, to push against the status quo, or whatever. And if someone – likely several someones – in your boardroom are too embarrassed to express themselves, then that somber boardroom vibe is clearly working at cross purposes to good governance. And that’s not even addressing the times that directors might spontaneously feel anger, frustration, pride, elation…all in ways that could negatively impact their ability to be impartial participants in making decisions. In your homework, the Heath Brothers offer some good advice here. I think I would boil my own advice down to something pretty simple: sllllooowwww doowwwwnnn. Good decisions take time. Most decisions aren’t emergencies, and if they are, you’re even more likely to get tripped up by short-term emotion!
Next up on the list of the "villains" of decision-making is narrow framing. It's basically what we do to make decisions look and feel simpler than they are. And it's a major problem!
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
Another one of the Heath Brothers’ villains of decision making is what they call “narrow framing.” Here’s my take. I always felt like the expression “don’t bring me problems; bring me solutions” was just about the stupidest thing a leader could say. First off, isn’t it a leader’s job to help to, y’know…lead people through solutions to difficult problems? Maybe more importantly, it feels like an attempt to force people to expedite a decision. What’s the easiest and most defensible way to expedite a decision? Probably to artificially frame it as a go/no-go scenario. “Are we gonna do X or not do X?” Or maybe if we’re lucky it’s a slightly more creative “are we gonna do X, or are we gonna do Y?” And in my experience, the conditions for decision-making in boardrooms are so bad that to a senior manager the idea of bringing multiple options to the board – as opposed to a done-deal ready for approval – is like a living nightmare. But what’s the point of a board? For my take, listen back to episodes 3 and 51. I don’t think any of us would answer that the point of a board is just to be an approving machine. In fact, even when managers bring go/no-go decisions to the board, they’re usually only doing it because it’s really hard to figure out how to engage the board in an efficient AND useful discussion about multiple paths or options. But the fact is that virtually every decision truly does have multiple paths or options beyond “yes” and “no”. The best way to start building better habits is to just rip off the band-aid and TRY bringing a decision to the board earlier, before management has digested it into a go/no-go binary. Give them a chance to help you narrow it down and provide varied perspectives. Whatever part of the discussion goes well, say out loud that it was good, and try to recreate those conditions again in the future. Whatever goes poorly, say THAT out loud and try to avoid those conditions in the future. Whatever you do, don’t just relapse back into your old, narrow framing habits.
By now, we've all heard about confirmation bias, and if you did your homework from the last episode, it'll be really clear to you how it gets in the way of effective decision-making. So, what are we supposed to do about it?
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
Now that you’ve read chapter 1 of Decisive by the Heath Brothers, let’s take some time to talk through what they call the four villains of decision making, starting with confirmation bias. Since you’re interested in corporate governance, chances are this isn’t the first time you’ve heard or read about confirmation bias. The unconscious compulsion to embrace information that supports what you already believe to be true, and to reject information that contradicts what you already believe to be true. Let’s be super, extra, ultra clear here: YOU, no matter who you are or what your perception of yourself might be, DO THOSE THINGS! YOU embrace information that supports what you already believe – regardless of whether you are correct – while rejecting information that contradicts what you believe. You aren’t broken. It’s just how people work. And you can already picture how this messes things up when groups – like boards of directors, for example – are trying to make decisions on short timelines and with incomplete information. Add on the fact that even that incomplete information sometimes gets delivered to boards in vast quantities – maybe hundreds and hundreds of pages. How else can we expect directors to synthesize all of it in the process of preparing for a meeting or decision? Confirmation bias gives us a shortcut – pay attention only to the stuff that tells us we’re probably right. If you want advice on managing confirmation bias beyond what you learned in Decisive, a google rabbit hole awaits you. For now, try just re-framing board meetings as an opportunity to try to prove yourself WRONG. It’s way more fun than loudly trying to convince people you’re right, and you’re WAY more likely to learn something from your peers.
Since we've established good governance as actively creating conditions to maximize the likelihood that effective decisions will get made, let's start exploring what it means to make good decisions. Over the next five episodes, we'll use the first chapter of Decisive by the Heath Brothers as our textbook. Download a free copy here: https://heathbrothers.com/member-content/decisive-chapter-1/
As always, the background music is Of the Stars by KC Roberts & the Live Revolution.
SCRIPT:
I’ve spent the last 114 episodes talking about corporate governance as the way decisions get made in a corporation, and the first chunk of this season talking about good governance as creating the conditions for effective decisions to get made, but what does that even mean? Well, this is one question where we – meaning YOU – have access a rich trove of scientific research and real-world evidence, so you won’t have to just trust me and OMG to get you there. And lots of organizations apply what we’ve learned from all those insights to empower MANAGERS to make good decisions. Think of all the cool ways that meetings have changed over the years, or workspaces, or onboarding, or offsites. The thing is, no matter how well these new approaches work, they basically never find their way into boardrooms. Board processes, structures, rules of order, agendas, boardroom layouts…they all just basically stay the same, or close enough to the same that the impact on decisions is essentially nothing. And you know what? The moment you start paying attention, I bet you’ll basically see and feel boardroom decisions suffering as a result. Over the next few episodes, we’ll go over a few important elements of good – and bad – decision conditions. Our textbook, so to speak, will be the first chapter of the book Decisive by Chip and Dan Heath. Your homework is to read it before the next episode comes out in a few days. You can download a free copy by following the link in the episode description. I’ll also put some links to some other cool articles on decision making in case you’re interested. Have fun!
Now that we've established some definitions and busted some myths, who's actually responsible for "doing" good governance?
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
At this point, I think we’ve done enough mythbusting and detective work that we’ve got a reasonably good idea of what good corporate governance is and isn’t. And even if you’re not convinced by my perspectives, you at least have a good sense of where I stand. So, if we stick with the conditions we’ve set so far in this season it leaves us with the important question of who is responsible for good governance. For establishing it. For measuring and monitoring it. For redefining it when needed. For being curious about new ways to achieve it. I believe the questions and answers apply at two different scales. First, inside an organization – your organization, maybe. The way your board and your managers create the conditions to integrate and synthesize the interests of your stakeholders, your owners, your employees, and more, so you can generate decisions that generate value and minimize harm, all guided by a clarity of purpose. But there is also a system-wide responsibility influenced, for sure, by organizations, and also by governments, regulators, academics, consultants, customers, communities, and more. An easy example would be that regulators can – and sometimes do – create conditions for listed companies that make it more difficult for them to have good governance – requiring them to spend time on box-ticking that could be spent on value-added decision-making. All in the name of systemic risk management. Not that that’s an inherently bad thing. It’s just a clear example of the impact – positive or negative – that outsiders can have on the governance effectiveness of corporations. My hope is that the system and the organizations within it can establish greater clarity and alignment around what good governance is in the first place, so that we’re all pushing in the same general direction.
This episode was originally called "ED&I is not the same as good governance," but now I'm not so sure...
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
I’ve talked a lot about Equity, Diversity & Inclusion on OMG before – have a listen to episodes 19 through 21 and 59 through 62 if you want a refresher. I believe super strongly that diversity of perspectives, lived experience, personalities, cultures, expertise, etc. etc. is a critical factor for making good decisions. Without it, we fail to challenge each other, we miss important information, we fail to consider essential risks and opportunities. And inclusion is the superpower that activates diversity. I like to think of inclusion as the act of creating conditions for everyone in the room to engage, participate, and thrive. It’s super difficult, and it’s probably impossible to optimize inclusion for everyone at the same time all the time, but the journey itself is central to activating diversity. Equity can be a bit more abstract, but I think of it as the result of doing D and I really well, where everyone has equal access to authority, power, resources, and influence. Well, it’s time for me to confess something: I started writing this episode’s script with the title “ED&I is not the same as good governance” and I think I may be kinda sorta proving myself wrong. If good corporate governance is the act of creating conditions in an organization for effective decisions to happen. And if ED&I is getting a broad range of perspectives to the table, making sure everyone participating has the opportunity to engage, participate, and thrive, and ensuring equal influence in the process…I dunno. Maybe it’s not a perfect description of ideal decision-making conditions, but it’s pretty frickin close!
Boards are an important part of corporate governance in most organizations, but an effective board is not the same as good governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
I said earlier this season that board effectiveness and good governance aren’t the same. When I say “board effectiveness” what does it mean to you? I even struggle with this one, which is troubling given that my company is called “Fullbrook Board Effectiveness.” My URL is even boardeffectiveness.ca. If anyone would have a pithy, inspiring definition of board effectiveness it would be me, right? Let’s put that aside for a second and ask another question: “If your board is effective, whatever that means, do you automatically have good governance?” Thinking through the previous episodes from this season, we already know that good governance isn’t box ticking compliance, it’s not good operational performance, it’s not succession planning, etc. I don’t even think it's all of those things mushed together. On top of that, I think we’ll all instinctively feel like having a great board is somehow also not enough to have good governance. Even amazing boards are still reliant on great managers to help them to access the right information at the right time, facilitate great meetings, generate exciting strategic options, and so on. So already we know that great boards are only POTENTIALLY great unless they have great management. But a great board would always hire great managers, right? That one gets a “lol” from me. Anyone who’s ever had responsibility for hiring and promoting people knows that no matter how perfect your processes, you can never guarantee you’ll get it right. There are other ways we could explore this question, but I think I’m already convinced that board effectiveness and good governance aren’t the same thing. But what is board effectiveness? I’m open to suggestions, but for now let’s steal from our definition of good governance a few episodes back. Board effectiveness is when a board is working to create conditions in the organization that maximize the likelihood that effective decisions will get made.
Organizations that survive for a long time - generations, even - are really impressive, but it doesn't mean they have good governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
I contributed to a paper a few years back that found over a 50 year period that family-controlled listed companies were significantly more likely to survive for the entire stretch than non-family firms. Cool finding, right! The problem is that it’s not all that clear to me that survival is always a good thing. I can imagine myself being a founder or business owner who, for example, resists an offer to buy my company – one that might be in the best interests of my organization and its stakeholders – just because I want to stay in control or keep my name on the door. There’s nothing wrong with that – as the owner, it’s my prerogative. I can kinda do what I want. But in this case surviving – aka not getting absorbed by another company – is clearly not the same as good governance. Of course there may be cases where survival is indicative of good governance. A company that survives and thrives over a long time probably didn’t succeed in spite of bad decisions. I think the point here is similar to a couple of episodes back where I argued that good financial performance isn’t the same as good governance. It can be pretty tempting to look at a company that has survived for a long time – generations, even – and think that just because it continues to exist it must have great leaders and effective governance. But if we take a moment, we can all imagine how an organization might survive despite awful governance, maybe on the fumes of what was once a great idea. Sure, it’s surviving, but is it “living”? Is it “thriving”?
I don't care how good your return to shareholders is...it doesn't mean you have good governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
I’ve already talked about stakeholder capitalism vs shareholder capitalism a bunch of times on OMG – have a listen to episodes 5, 31, 48, 52, 56, etc. So I’ve already established pretty clearly that I believe organizations can and should make decisions that take into consideration the interests of a broad range of stakeholders – not just shareholders. So in the assessment of whether shareholder value and good governance are the same thing, that’s my stance. If you make decisions that generate value for shareholders without taking the interests of other stakeholders into account, I believe that’s BAD governance. What makes this a bit tricky is that there are jurisdictions – the United States, for example, where boards are required to prioritize the interests of shareholders. In other words, if the board makes a decision that benefits some other stakeholder at the deliberate expense of shareholder value, then they have failed to discharge their legal duty. I encourage organizations in the U.S. to remember two things. Even when the interests of shareholders seem at odds with those of other stakeholders, they probably aren’t. If you take time to generate multiple options and examine them through different lenses and different time horizons, there is almost always a path that benefits shareholders and, say, the environment. The other thing to consider is this: what if the rules are bad – and I’m not saying they are…? What if a change in the rules would be good for your organization, for your customers, for your employees, for your country, your society? There are lots of loud voices in the U.S. speaking up in favour of stakeholder capitalism. Maybe you could add your voice to the chorus.
I don't care how good your financial performance is...it doesn't mean you have good governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
Corporate governance evolves slowly. Even in a single boardroom, real governance change tends to happen at a glacial pace, but on a system level…man. Seriously, every single little change to regulation – however, toothless or insignificant – gets treated like some kind of revolution, and then the real-world impact is basically nothing more than symbolic, or maybe a tiny addition to public disclosure. Perhaps the most frustrating example of things that take forever to change is the insistence among many corporate leaders that as long as an organization is performing well, it must have “good governance.” I agree to a tiiiny extent, in the sense that if you observe performance over a long enough period, say 20 years, then a corporation with great performance is unlikely to have awful governance. Right? A failure to make effective decisions for 20 years would only lead to amazing long-term performance with extraordinary luck? As for short- and medium-term performance, anyone who insists that they are useful indicators of good governance can go fly a kite, if you know what I mean. Let’s think of some governance disasters – oh right, we listed some a few episodes ago: Enron, Theranos, etc. and others we didn’t mention like Wells Fargo or Boeing – you know what most governance catastrophes have in common? The catastrophe is revealed in the wake of AMAZING financial performance. Think of the Financial Crisis – basically the culmination of a thousand awful decisions by a thousand corporations, all performing EXTREMELY well! Nah, financial performance is not the same as good governance.
I often hear people say that hiring the CEO is the most important thing that a board can do. Still, even doing a great job at hiring a CEO isn't the same thing as good governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
I had originally planned to do an episode later this season called “Is hiring and/or firing the CEO really the most important thing a board does?” and maybe I still will, but I feel like this topic fits nicely in the sequence we’ve got going on right now. The idea that a board’s most important job is always to choose the right CEO kinda bothers me. I think the problem is that it seems like such a lazy, unambitious concept of what makes boards valuable. And also puts too much emphasis on one element of good governance – an important one, at that – but still just one piece. If I were trying to describe my ideal board of directors, it wouldn’t sound anything like “you better hire the perfect CEO, and if you don’t…you better fire them quickly and make sure the next one is perfect.” As far as I know, most CEOs are just people. Some people are exceptional leaders of people OR projects. Very few people are exceptional at both. Regardless of what your CEO is great or awful at, don’t you think that what differentiates an average board from a great board might be its ability to help to activate the CEO’s superpowers, and provide a bit of air cover around the CEO’s weak spots – however tiny they might be? Sure, every board needs to take the selection of the CEO REEEAAALLLY seriously, and to be courageous enough to fire the CEO when it’s time to go in a different direction. But the most important part of a board’s job? I’m not so sure about that.
Increasing emphasis on corporate purpose is a really good thing, but it's not the same as good governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
This is probably the most obvious of all the titles in this sequence. Of course purpose is not the same as good governance. Take any incorporated entity, from a one-man-shop like my company, Fullbrook Board Effectiveness, to let’s say Amazon, it’s really helpful to be able to answer the question “why does this organization exist?” if you want good governance to happen. Does Fullbrook Board Effectiveness Inc exist just as a tax shelter for my work, leaving me free to just kinda do whatever I want for a living? Does it exist to make the world a better place by helping organizations to make better decisions? Is it something else? Without some clarity, it’s hard to figure out if you’re making good decisions. Imagine being a director on the Amazon board and starting to come to terms with the organization’s countless operational activities and hundreds of thousands of employees. Without a clear understanding of Amazon’s purpose, it would be impossible to sit at the table and assess the potential value of a new opportunity, or even to know what kind of questions to ask or what conversations to have. Purpose, mission, vision…they’re all so important to sorting through the paths in front of you that it’s hard to imagine good governance without them. But even when you get them right, there are still a lot of factors that affect decisions, like culture, people, processes, physical space, legal constraints, and, well…you get the picture.
LOTS of experts will tell you that corporate governance is all about strategic oversight. I'm here to argue that there's a lot more to good governance than that.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
Let’s get something important out of the way right off the bat: good corporate governance and board effectiveness aren’t the same thing. In fact, there are plenty of incorporated entities out there that don’t even have functional boards of directors, but that doesn’t mean they don’t have good governance if we stick with the definition of good governance from a few episodes back. Either way, if there is one challenge that’s generic to just about every BOARDroom I’ve been in, it’s the struggle to find the right balance between the board’s focus on operational matters vs it’s focus on strategy – or, how much do we reflect on the past vs. how much do we dream about the future? It’s very common for people who talk about corporate governance to emphasize that the board has little to no role in operations, and should spend as much time and energy as possible on future-oriented strategic matters. We’ve talked about this a bunch of times before on OMG so I won’t belabor it. Suffice it to say that I believe boards can and should focus on whatever they think is going to result in the best decisions for the organization and its stakeholders. But even in a case where a board chooses to focus on day to day minutiae, or even to run the organization entirely, that doesn’t relieve them of their obligation to make sure that the organization has a well-articulated purpose, strategy, strategic plan, and objectives. Either way, it’s pretty clear that strategic oversight is not the same as good governance.
Sure, the "G" in ESG stands for "governance," but ESG and good governance aren't the same.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT:
ESG is an initialism referring to Environmental, Social & Governance. I remember when I first heard the term ten, eleven, twelve years ago, I assumed that what it was trying to get at was an organization’s governance when it comes to environmental or social factors, and it’s secretly how I continue to think of the term. But that’s not what ESG means out in the real world. ESG is really just a catch-all for non-financial factors that people might want to take into consideration when running an organization or measuring an organization’s performance. Whether you like my definition of ESG or the real-world definition, or some other interpretation, I bet it has started to impact your idea of what good corporate governance looks like. Here’s a generic example: if an organization fails to take environmental or social factors into consideration when making an important decision – say, opening a new mine, or cutting down old-growth forest – I ma, they completely fail to take any interest at all in the potential environmental or social impact of their decision…is that good governance? OF COURSE NOT! Not just because it seems somehow immoral or evil, but because it’s important to consider as many factors as possible or else we’ve failed to create the conditions for an effective decision. But let’s say we DO take E and S into account when doing G. Is that sufficient on its own to say we have good governance. Um…no.
Thinking of compliance as good governance is probably the most common, and distracting, false equivalency in corporate governance.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT
I spent nearly 20 years running a project at the University of Toronto’s Rotman School of Management that resulted in a couple of different sets of what we called “board ratings.” Fundamentally, these board ratings were just sets of rules against which we would score the governance disclosure of big listed companies. If a company’s disclosure was in line with the rules, they would get a favourable board rating. Even just describing it out loud makes it seem kinda silly, doesn’t it? Applying generic rules to 250 different companies in different industries with different models, structures, sizes, and people. The implication being that somehow I – as the manager of the project – had come up with the single answer to what an effective board is, and thought I could measure it through public disclosure. Well, as absurd as that sounds, it’s basically the same as most of the rules, regulations, and laws that apply to corporate governance. And lots of corporations OBSESS over complying with all of them – even the optional ones like the board ratings I managed. It helps them to signal to the world that they have good governance. But when it comes to our definition of good governance, compliance is virtually meaningless. There isn’t a single regulation or law that sets corporations or boards up to make good decisions. That doesn’t mean compliance is bad or useless – in fact it’s probably pretty valuable for a lot of reasons. But good governance isn’t one of them.
If I'm going to give you a definition of GOOD governance, I guess we'll need one for BAD governance, too.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT
In the previous episode, I suggested that we define good corporate governance as creating conditions that maximize the likelihood that effective decisions will get made. I’ve had months to sit with it, and you’ve only had a few days but it still gives us a useful starting point for a bunch of conversations. Including thinking about what BAD corporate governance might mean. The most high-profile conversations about bad governance – or good governance, for that matter – are usually triggered by big, sexy crises or blowups. Especially if there’s a criminal or systemic element to the story. Theranos, Volkswagen, Enron, the Financial Crisis…they all prompted interesting conversations about corporate governance and in some cases played a role in kicking off major policy changes affecting disclosure requirements, board composition, and more. But does bad disclosure mean you have bad governance? Does less-than-perfect board composition mean you have bad governance? What, really, do the Volkswagen, Theranos, and Enron cases have in common that they don’t ALSO have in common with lots of other organizations that have never had a crisis, and never will? Maybe I’m overstepping here, but could the definition of BAD governance just be the absence of good governance? In other words, the definition of bad corporate governance is NOT creating conditions that maximize the likelihood that effective decisions will get made. It’s a bit of a scary thought, isn’t it? What even ARE the conditions that make effective decisions happen? Before we get into it any further, let’s take a break for a few days and sleep on it.
I'm putting a definition of "good corporate governance" out there just so that you know exactly what I mean when I refer to good governance. Feel free to let me know what you think.
Background music is Of the Stars by KC Roberts & the Live Revolution
SCRIPT
Welcome to season three of One Minute Governance. It’s been a long break, and it’s good to be back. I signed off the last season with a bunch of unfinished business, including a threat to write a book. Lots more to come on all of that very soon. In the meantime, let’s kick off season three by revisiting the heart and soul of what OMG is all about. You all know by now that I like to define corporate governance as “the way that decisions are made in a corporation…meaning ANY incorporated entity regardless of structure, purpose, size, or complexity.” A lot of people have a hard time with this definition because it doesn’t say anything about boards, or managers, or rules, or processes, or anything like that. Putting it another way, my definition doesn’t tell anyone what they should be DOING. I mean, decisions can just kind of happen, right? Without anyone thinking about or doing anything at all. Well, in my opinion, just letting things happen is still corporate governance, for better or for worse. But is it GOOD governance? What does GOOD governance even mean in the first place? I’ve thought about this a bit over the past few months and think I have an answer that will at least serve as a good starting point for season three. Here it is: Good corporate governance means creating conditions that maximize the likelihood that effective decisions will get made. There it is! It might not sound like much, but sit with it for a while before accepting or rejecting it entirely. I’ve had a couple of months to live with it and you know what? It grows on me more each day. Welcome to a new season of OMG.
Season 3 of OMG is finally almost here! I can't wait to dive back in.
Oh, and if you like the background music, the song is Of the Stars by my band KC Roberts & the Live Revolution. Check out the whole new album, Grit, here:
https://ffm.to/kclr-grit
SCRIPT:
Season three of One Minute Governance launches on Monday June 27th, just a few days away. I’ve always thought of OMG as a platform for taking complex topics in corporate governance and finding ways to make them more accessible. Or even sometimes to find seemingly simple elements of corporate governance and showing that they might be more complex than they seem. If I have an overarching goal for the podcast, it’s to provide boards, senior executives, advisors, and other governance nerds a new lens through which they can ask questions, provoke discussions, or just sit and think about how organizational leaders might do things a bit better tomorrow than they did yesterday. In episode one, I’ll finally take an audacious stab at figuring out what GOOD corporate governance might be, followed in episode two with a definition of BAD governance that’s might be even more ambitious. We’ll do some, exploring, some storytelling, and some mythbusting, all a minute or so at a time. Oh and this year’s background music is Of the Stars, performed by my band KC Roberts & the Live Revolution from our new album Grit. If you like it, it’s available wherever you get your music.
Episode 100 was supposed to be the season 2 finale, until something annoying came across my desk...
We already established that learning about corporate governance can be embarrassing. I think I might be able to help. One way is by writing a book. I'll tell you more soon, but in the meantime, send me positive vibes and any questions you think I could help to address.
There are lots of reasons why successful and influential people might feel reluctant to go back and learn the basics of corporate governance. That's OK, although I wonder if we might be able to find a way to make it more comfortable...
I rely on other, smarter people for inspiration. To that end, I wanted to do an episode acknowledging some organizations out there that push my brain in new directions when it comes to corporate governance and leadership. It's not an exhaustive list, nor is it intended to be a "best of" - it's just some folks who have been on my mind of late. Please check them out!
www.the51.com
https://www.blackopportunityfund.ca/
https://www.futuredirectors.com/
https://fnmpc.ca/
https://filene.org/
https://neythri.org/
"Where were the directors?" was basically the question that launched the corporate governance "industry" in Canada. Turns out it's still an important question...
Corporate governance basically never changes, and every time any little thing happens it seems like a huge deal. Why is that?
It can be hard to engage entrepreneurs in conversations about governance. They have a lot of other important stuff on their minds. Here are a few tips.
Board skills matrices have been around forever, but there's a new (to me) feature that I think would make them even more useful.
Lots of effective directors compare great board chairs to orchestra conductors. I'm not so sure the analogy is so apt...
I've spent a lot of time leaning into my definition of governance as the way decisions are made in an organization. Maybe we should finally spend some time talking about what a decision is...
Here are my suggestions of questions that will actually help you to build better governance if you're new to the space.
I think most corporate governance regulations aren't actually about corporate governance at all. If regulators want governance to improve, they need a different approach.
There's a lot of drama in Canada right now around dual-class share structures. Is it time for a change?
It surprises me that I've never talked about the impact that senior executives have on the effectiveness of their boards. So here we go!
This episode approaches corporate culture from a different angle than episode 81. How can a board zero in on its definition of and role in corporate culture?
It's hard enough to agree on what corporate culture means, let alone what the board's role should be in its oversight...
Misinformation will corrupt any decision process. How important is it to manage the risk of misinformation in the boardroom?
Every board can improve, but should you hire a governance consultant to help? What do governance consultants even do in the first place? How do you know if you're getting good advice?
Many boards spend lots of time and money on governance education, but don't do a great job at making sure the whole board benefits when a director attends a course or conference. We can do better than that...
Governance education is everywhere. Sometimes it's excellent, and sometimes it's awful. A lot of the time is exorbitantly expensive. Do you need it?
Jamahl Evans is back! Many organizations miss the mark with their mission statements. Without a clear and action-focused mission, how can you make effective decisions?
More about Jamahl: https://www.linkedin.com/in/jamahl-k-evans-sr-64638b124/
Following Frances Haugen's incredible and awful revelations about Facebook's internal research, imagine you were on the Facebook board. What questions would you ask? What future would you help to build for the organization?
I've talked about stakeholder capitalism before, but not everyone agrees that it's even possible, let alone whether or not it makes sense.
SPECIAL GUEST ALERT: Today's episode features the incredible Paul Smith from Future Directors Institute sharing his perspective on what makes it hard to LEAVE boards of directors.
Learn more about Paul and Future Directors here: www.futuredirectors.com
I don't really understand why so many people dislike the "corporate" part of corporate governance. It kinda drives me crazy.
I'm SUPER excited to welcome Jamahl Evans, a U.S. Marine Corps Officer and fellow governance nerd, to OMG. After like a year of prodding I've finally convinced Jamahl to share some of his perspectives on the show. In this episode, he talks about the importance of embracing constructive conflict.
More about Jamahl here: https://www.linkedin.com/in/jamahl-k-evans-sr-64638b124/
I like to think about "strategic thinking" as a skill that takes constant practice to do it well.
Asking big questions is easy, but engaging a board in a constructive discussion about a big question can be challenging!
No matter how powerful and influential corporate leaders might be, they still need the right conditions to thrive.
Sometimes it's hard to reconcile scientific research about governance with the reality of being in a boardroom.
Ever find yourself frustrated or confused by governance regulations? Maybe you should phone your regulator
Some people seem to think that some organizations are higher than others in a hierarchy of governance. I don't buy it.
Direct representation of external stakeholders in boardrooms can be thorny - how much does it matter?
The biggest bottleneck to board diversity is the slow pace of board renewal. Is it really such a big problem?
I'm all for age diversity on boards, but sometimes I wonder if young directors - or any new directors, for that matter - really know what they're getting themselves into.
Finding the courage to explore big and difficult topics can help your board to achieve great things.
It's difficult enough finding good directors in the first place, but building a good compensation committee is a whole other thing...
I think boards could use executive compensation as a tool to align CEO interests with those of a broad range of stakeholders.
The huge dollar amounts of CEO pay are impossible to ignore, but are they really the most important issue?
It turns out that we don't know how low CEO pay can go before having negative consequences...
Executive compensation takes up a huge amount of bandwidth in boardrooms. Why haven't we figured out how to do it right yet?
To kick off season 2, I revisit one of my favourite questions from season 1 - and I actually take a stab at answering it this time!
I hear a lot of experts talking about the "board of the future". Here's my take on what that might mean.
I've decided that in celebration of the 50th episode of One Minute Governance I will be taking a break until the summer. This episode recaps Season 1.
Netflix has implemented some of the most unique board-management information sharing processes I've seen. Would they work for your organization?
This episode indulges my governance and musician lives and explores a recent decision error by the Canadian Music Week festival.
We often say that "networking" is the best way to get on boards. I think building a community is far more powerful.
The "three circle model" is perhaps the most recognizable tool in family enterprise, and it's hugely valuable for a lot of reasons. When it comes to governance, I think it's an unnecessary distraction.
Business families and their advisors often put too much trust in their "gut" or instinct in their approach to governance.
Most experts in the family enterprise space seem to think that boards are only valuable when a company is big, complex and/or multi-generational. I'm pretty sure I disagree.
Family ownership is the dominant business model in the world, and contributes a significant majority to Canada's GDP. Why doesn't family enterprise governance get more attention?
Today's episode is brought to you by One Minute Governance's first ever guest, Meron Tecle. Meron wonders why boards don't use their skills matrix disclosure as an opportunity to show shareholders how they really approach board composition.
Great directors are rare, and not always easy to spot even if they're right there in front of you. What are some of the things you should look for?
Board chair is one of your organization's most important positions. Plus great board chairs are rare. Plus it takes time for a new board chair to settle into the position. How ready are you for chair succession?
It seems obvious that we'd want to seek consensus in the boardroom, but what exactly is the chair's job in reaching that objective?
Great board chairs are even more rare than great directors. Where did they learn to be so good??
It's become almost universal in Canada for board chair and CEO positions to be held by different people. Is it always the best approach?
Director performance is difficult to measure, and maybe even harder to manage. What are the best boards doing to manage under-performance?
In my opinion, it's a myth that non-profit board experience gets your foot in the door for paid board seats, but that doesn't mean you shouldn't sit on non-profit boards!
A lot of us dream about getting on a board one day, but excellent directors are very rare. How do you know if the job is right for you?
Why do we always insist on looking for a connection between good governance and good performance?
OK I said it. I don't think a shareholder can be completely independent in the boardroom.
I'm not convinced that aligning directors' interests with shareholders' interests actually increases independence. Especially if a director isn't wealthy...
This is the most impulsive - and longest - episode of One Minute Governance so far. I recorded this on the evening of January 6th, 2021 after watching events unfold in the United States and seeing lawmakers express their horror at a situation that they had, in effect, deliberately created. The analogy for boards is this: confidently voice your dissent, and ensure it is recorded. Otherwise, you are complicit in the consequences.
Many organizations reject governance insights that come from other sectors. I don't think that makes a lot of sense...
Most boards conduct some sort of self-assessment, but what's the difference between a good one and a bad one?
Director term limits and age limits are increasingly common ways to manage board renewal. Are they any good?
CEOs may be the most sought after candidates for board positions, but I've met a lot of CEOs who are bad directors. Why is that?
I want to make the argument that board diversity is about more than the list of who's in the room. And I try to make that argument here. Tune in to see what you think.
In some ways, board diversity is just a numbers game. Does that mean diversity is a box ticking exercise? And isn't ticking boxes "bad" governance?
Managing unconscious bias in the boardroom is harder than it seems. It helps if we remember that "unconscious" means we have no idea what our biases are.
One of my pet peeves is when managers ask their board if anyone has any questions. In my experience, it never (ever) turns out well.
If "Noses In, Fingers Out" isn't the ultimate rule, then when, exactly, is it OK for directors to dive in?
"Noses in, fingers out" has become a bit of a governance cliche, and it makes sense. But shouldn't directors sometimes get their fingers in at least a little?
We tend to put big, widely-held and publicly listed companies on a governance pedestal, but haven't they actually been the root of some of the biggest failures?
Clearly, an overburdened director is an ineffective director. But is overboarding really a good indicator of governance risk?
The more I think about director independence, the more weird questions arise. Ever wonder if you need to be wealthy to be independent? I have.
We talk a lot about corporate governance, but what would you say if I asked you what it is?
There's a lot of talk about whether organizations should prioritize shareholders or a broader group of stakeholders. How do we figure out the answer?
OK I know it's a condescending question, but would all of your board members agree on the answer?