One Minute Governance (Matt Fullbrook)

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

Despite the emergence of a sizeable corporate governance "industry," so much about boards hasn't changed at all.

SCRIPT

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.

Director performance is difficult to measure, and maybe even harder to manage.  What are the best boards doing to manage under-performance?

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 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 #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.

Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform. 

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.

OK I said it.  I don't think a shareholder can be completely independent in the boardroom.

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.

Could it be possible for governance to be *so* good that the quality of the people don't even matter?

SCRIPT

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?

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.

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.

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?

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?

SCRIPT

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?

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?

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.

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.

As weird as it may sound, it's true!  Individual directors have no authority.

Does paying directors just create a new opportunity for self-dealing?

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.

The huge dollar amounts of CEO pay are impossible to ignore, but are they really the most important issue?

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.

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.

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.

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.

I'm kinda obsessed with re-thinking the layout of boardrooms. Here's why.

SCRIPT

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?

Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform. 

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.

Finally! Season 4 of OMG. Let's start with Matt's latest definition of "good governance"

SCRIPT

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!

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!

How can group think be so wrong when it feels so right?

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.

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'm only just now getting to Adam Grant's Think Again and omg its such a useful governance book.

SCRIPT

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.

I've learned an important lesson about post-covid boardrooms.

The first episode of One Minute Governance introduces the series and sets the tone. 

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/

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.

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.

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 #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.

There's a lot of drama in Canada right now around dual-class share structures.  Is it time for a change?

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. 

SCRIPT

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.

I'm not convinced that aligning directors' interests with shareholders' interests actually increases independence.  Especially if a director isn't wealthy...

What exactly is director independence, and why (if at all) does it matter?

I wish I knew a lot more about the governance of subsidiaries...

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 #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.”

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.

Ever find yourself frustrated or confused by governance regulations?  Maybe you should phone your regulator

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!

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.

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.

Boards measure their own performance.  That's hard!  

I like to think about "strategic thinking" as a skill that takes constant practice to do it well.

We have a talent problem in governance.  Help me fix it!

Most boards conduct some sort of self-assessment, but what's the difference between a good one and a bad one?

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.

SCRIPT

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 sh**ty 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 f*ck???” 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 f*ck right off.

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.

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'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 hear a lot of experts talking about the "board of the future".  Here's my take on what that might mean.

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.

"Where were the directors?" was basically the question that launched the corporate governance "industry" in Canada.  Turns out it's still an important question...

Are a set of 150-year-old parliamentary rules really applicable in a typical boardroom?

SCRIPT

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.

Episode 100 was supposed to be the season 2 finale, until something annoying came across my desk...

Direct representation of external stakeholders in boardrooms can be thorny - how much does it matter?

SEASON 3 FINALE: While you're waiting for season 4, try using OMG in your boardroom.

SCRIPT

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.

Every Wednesday, OMG will share an audio version of a definition from the Ground-Up Governance platform. 

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?

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.

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.

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!

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.

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!

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!

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've talked about stakeholder capitalism before, but not everyone agrees that it's even possible, let alone whether or not it makes sense.

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?”

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.

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.

The Carver Policy Governance (R) model is pretty divisive.  Here's my take...

A friend recently suggested to me that literally everyone in an organization is part of corporate governance, and I *love* the idea!

SCRIPT

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.

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.

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.

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.

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 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.

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.

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.

Director term limits and age limits are increasingly common ways to manage board renewal.  Are they any good?

Or maybe the better question is "what *isn't* good leadership worth?"

SCRIPT

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.

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.

It's hard enough to agree on what corporate culture means, let alone what the board's role should be in its oversight...

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 #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.

Is it *really* possible for boards to impact organizational culture?

SCRIPT

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.

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.