June 2020 - Peter Crow | Helping boards govern with impact

I returned today from two overnight trips (both were to attend board meetings, meet shareholders and discuss various company matters with management). It was great to get out and about again—to sit together around a board table, meet staff and see the businesses operating following the constraints imposed by the Covid-19 lockdown.

While I was away, a Netherlands-based colleague sent a note saying she'd just started reading through Musings, from the beginning. Why someone would go back and read all of my writings since March 2012 is beyond me, but she has chosen to do so. She said that while many writings resonated, one piece in particular stood out as being as relevant today as when it was first written, in 2012.

Amongst other things waiting for my attention [having arrived overnight] was this article, originally posted by Tony Schwartz on the HBR Blog Network. The article set me thinking. Why are we, in this so-called modern age of productivity, so busy trying to fit so much in to our lives? We use electronic diaries to keep track and save time, but they've come to rule our lives. We seem to be constantly running; going faster, but getting nowhere.

If I drive down the road quickly, my attention is devoted to the road. I don't see the wider vista, just the road. I drive to the view immediately in front of me. And guess what? I stand a real chance of missing vital turning points. Have you ever wondered why car rally drivers have navigators beside them? Simply, they are driving too fast to also concentrate on bigger things like overall direction and goal.

Returning to Schwartz's article. "Speed is a source of stimulation and fleeting pleasure. Slowing down is a route to depth, more enduring satisfaction, and to excellence". This is profound stuff. What do you aspire to? Speed and all its short-term trappings? Or significance? Perhaps it is time to slow down and find out.

Chantal's comment, and my subsequent re-reading of this piece, set me thinking once again about the impact of speed and busyness on decision quality.

How can any director make effective contributions in the boardroom if they are so busy, or moving so quickly, that they do not have time to consider the wider context? The prospect of an electronically-enabled world sounds enticing to many. But is it built on a solid foundation? Are board decisions any better than before?

Directors owe a duty of care to ensure the enduring success of the company governed. For that, they need to create space to think deeply and critically about longer-term options. They ignore this maxim at their peril.

Earlier this week, I had the privilege of framing a discussion on board decision-making with a group of board directors and Digoshen Impact Partners. (Digoshen is a global learning platform to empower experienced and aspiring directors.) The following comments summarise the key points mentioned during this week's session.

At the core, the board of director's main job is to ensure the performance of the enterprise it governs. For that, the board needs to consider information, ask questions and make decisions, strategic decisions. This sounds straightforward. But many boards struggle; and more so in a highly-dynamic environment. For example:

Given these research findings, it's little wonder effectiveness is low. The seemingly unending trail of missteps and company failures tells a sorry story. But boards have options; they hold the ultimate decision-making power and, therefore, are by no means powerless. Boards intent on achieving high levels of decision effectiveness may wish to embrace the following suggestions (discussed during the session):

Preparation and managing expectations: Directors need to prepare well, which includes reading papers carefully, and making other enquiries and asking questions in advance of the meeting. Also, the board chair should ensure adequate time is allocated during the meeting, for healthy debate.
Check alignment: Directors need to consider how the proposal to be decided upon fits with the company’s purpose and strategy, and what benefits will ensue. (This assumes the company has an agreed purpose and strategy, and that it is understood and resourced. Many don’t.)
Analyse consequences carefully: Directors need to think holistically. Check several perspectives (and the consequences), to ensure the effects and impact of the decision are known before the decision is taken. Also check the costs and impact of not making a decision, and the 'do nothing' option. Some options that look initially, may be detrimental over the longer term.
Committees: The assessment of a proposal by a committee of the board is useful to ensure a more robust analysis and recommendation, leaving the full board to concentrate on higher-level risk and alignment questions.
Appoint a devil's advocate: Allocating the advocatus dialobi role ahead of a debate can help ensure assumptions, biases and various points of view are challenged. The board chair needs to remain alert during such discussions however, to ensure vigorous debate does not descend into conflict between directors.
Be prepared to postpone: Sometimes, it's good (even necessary) to postpone a decision until better information is available or directors have had more time to ponder options and implications.
Trust is fundamental: An open, trusting culture amongst directors is crucial, to support the exploration of multiple perspectives and high quality debate in the boardroom. Tension between directors is OK, conflict is not.
Decisions are always collective: The board is a collective of directors, and decisions are taken by the board, not individuals. Therefore, all directors need to agree with the decision—or offer their consensus at least. If any lesser threshold is applied, cliques may form and the effectiveness of the board as a tight unit will be compromised. Directors who cannot agree to support a decision after it is made need to consider leaving the board.
Monitor and verify: Post-decision reporting requirements need to be clearly defined before the decision, so that the board and management clearly understand how progress will be monitored, and how if the expected benefits (from the decision) are being realised, or not.

One final point. Boards are social groups that operate within a stratified social setting, the company and more broadly the wider marketplace. Thus, the actions and outcomes that follow are contingent on many external factors. Things can (and do) change quickly. Therefore, boards need to keep their eyes open, to ensure they have contextually relevant information to hand to make an informed decision; and to remain diligent after the decision, to ensure the expected benefits of the decision are in fact realised.

This musing is based on a session summary I co-authored (original posted on the Digoshen website).

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On slowing down: From speed to success

Towards more effective decision-making