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    Navigating fog: The board as your compass

    Accountability Change Corporate Governance Decision Making Leadership Performance
    I had the very good fortune to be in Boston recently, a brief visit to respond to a couple of enquiries ahead of the main reason for visiting the US East Coast, which was a keynote contribution at the International Corporate Governance Network annual conference in New York. When told Thomas Doorley III, the founder and now emeritus chair of Sage Partners, of my travels, he was quick to suggest we should meet up.
    Tom is a generous man. We have known each other for nigh on a decade now. I always come away from our conversations feeling enriched having sat with him and listened. So, when he spoke of his new project, a podcast series entitled, "Navigating the fog of change", and asked if I would sit with him, an affirmative response came easily.
    Our conversation, which explored the role of boards in times of great change, including the critical 'compass' role, is now available on the Sage Partners' YouTube channel.
    I'd be gratified if you would listen in. It'll cost you 29 minutes, that's all! And, once you've listened, if you have questions or comments, please feel free to reply below, or get in touch with Tom or me. ​
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    AI and board work: What of critical thinking?

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    Just over two years ago, I mused on the topic, "Artificial intelligence and board work." Then, as now, I was interested in the impact artificial intelligence tools might have on the work and effectiveness of boards of directors. While I have mused on the topic of artificial intelligence several times over the years, this is what I had to say in April 2023:
    The rapid emergence and now widespread awareness of ChatGPT has been a catalyst for many of these enquiries, it seems. I have been fascinated by the unfolding situation, not only because of a longstanding interest (I studied artificial intelligence at university nearly four decades ago), but also the speed by which awareness has spread, and expectations climbed to such stratospheric heights, is unprecedented.

    ​AI may become a viable mechanism to expedite board decision-making, of course. But the likelihood  of directors being supplanted any time soon is low (those failing in their duties excepted). For that,     artificial general intelligence (AGI) is likely to be necessary, and some moral and ethical questions will need to be resolved as well. If that is achieved, I may take a stronger position.
    Now, 28 months on, interest and usage is soaring. New systems are being introduced, almost daily it seems, and many companies have set up groups to explore what might be possible. Expectations remain high, partly as a result of bold claims by those offering AI tools and systems for sale, but the prospect of securing 'first mover' advantage is enticing too. ​
    In relation to board work (that is, corporate governance), some say real-time systems and artificial intelligence technologies may obviate the need for a board, although I am not hearing such claims as often as in 2023. (It could be fewer claims are being made, and less often; but might be that I have become somewhat deaf to them too.) What is becoming apparent though, is that cognitive off-loading to AI may have an unintended consequence: laziness and loss of mental agility. Researchers at MIT's Media Lab have observed that people who rely heavily on AI become lazier over time. And, with it, they may be placing themselves in danger of their critical thinking ability atrophying.
    Critical thinking and mental agility are core capabilities of effective directors, so what might this research insight mean for board work? Directors owe a duty of care, to ensure they are adequately informed before the board makes a decision. How might they protect themselves—to ensure, on one hand, they make effective use of tools and systems that help make sense of data but, on the other, not lose the ability to make smart decisions amidst complexity?
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    Who controls your board’s agenda? Who should?

    Accountability Corporate Governance Decision Making Effectiveness Governance Performance
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    I had a fascinating conversation yesterday, with an esteemed board chair I have known for some years. Our wide-ranging exchange saw us dip into several topics of mutual interest including family and my recent 'elevation' to grandfather-hood; an upcoming advisory engagement; the importance of ongoing education for directors, especially in relation to 'soft skills'; techniques to chair a board meeting well; and board agendae.
    During the flowing conversation, Robert (*) said he had recently chaired a meeting in which a couple recommendations within what he called the “QuarryGroup Report” (a board/governance assessment that I completed last year) were to the fore. 
    Referencing the recent meeting, Robert said the agenda was packed, and that management had put up many papers to support the agenda items and ensure directors were well informed on what it deemed pertinent matters. He added that the meeting agenda was too full for meaningful discussions, let alone informed decisions. When I asked how he handled the situation, he referenced the QuarryGroup report. He said three items stood out as having strategic implications for the business and decided that is where the board should spend its time. He spoke with several directors after the board pack was issued and, in board alone time immediately prior to the meeting, confirmed the three items would take precedence. Through this action, Robert asserted control over the board's meeting. Management had proposed an agenda and prepared papers based on what it had thought important, which is OK, but Robert and the board had a different perspective.​
    Some readers may wonder about Robert's actions. Is it reasonable for a board chair to propose ignoring items or altering an agenda? Surely, management understands the key issues that need attention better than the board?
    I suggest the guiding principle to inform a response is this: The role of the board is to govern (to steer, to guide, to pilot). And, if the board is to have any hope of providing effective steerage and guidance, directors need to understand their role, and they need to apply their minds to the major issues and opportunities that lie ahead and make decisions accordingly. For this, the board needs to drive the agenda and ask management to prepare reports accordingly. Research shows that if this does not happen, the likelihood of the board influencing the performance of the company is low.
    When I asked Robert how compliance reporting and historical performance was handled (the board's 'control' role), he calmly said, "That is what committees are for." I smiled, for I was in agreement.
    What are your thoughts on this? Does the principle described hear apply everywhere? 
    (*) name changed.
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    Netflix: What went wrong?

    Accountability Corporate Governance Effectiveness Governance Leadership Strategy Tough Questions
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    Over the years since it was founded by Marc Randolph and Reed Hastings (in 1997), Netflix has been at the forefront of entertainment and innovation. Initially a rental service, the company introduced a streaming option in 2007 and, as they say, the rest is history.
    The company has also garnered attention for its innovative approach to corporate governance—one based on proximity more so than distance. I wrote about it several years ago. The approach, founded on governance by walking about and pragmatic reports, ensured directors were adequately informed to make smart decisions. 
    But that was then. Now, eight years on, things have changed somewhat.
    Jay Hoag, a venture capital investor, was voted off the board recently, after pressure was applied by Institutional Shareholder Services, a data analytics and proxy advisory firm. It turns out Hoag missed three quarters of the board and committee meetings he should have attended. Given the Netflix board usually meets quarterly, it follows that Hoag attended once per year. Quite how anyone can contribute well if they don't attend meetings, is beyond comprehension. 
    That shareholders have taken a stand on the matter is laudable. Well done ISS, for bringing Hoag's absenteeism to the attention of shareholders. But other questions remain:
    • What confidence can shareholders have if the board only meets quarterly, and in directors who  seemingly turn a blind eye to chronically absent colleagues?
    • What of accountability and board effectiveness? When was the last board/governance assessment completed, and was it any more than a cursory exercise?​​​
    If boards are to have any hope of governing with impact, all of the directors need to be appropriately engaged (capable and​ present). Ideally, the board should adopt a robust governance framework too, to expedite effective steerage and guidance. How does your board stack up in this regard?
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    Navigating towards outcomes, via uncertainty

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    Monday was a public holiday in New Zealand: King’s Birthday is the selected day in most British Commonwealth countries on which the birthday of the reigning monarch is celebrated. The day dawned fine, so the decision was made to walk around the Waikareao Estuary, a tidal body of water about eight minutes drive from home. The 8.3km track is flat, with wide gravel paths and steady boardwalks, offering easy walking and plenty of room for runners, cyclists and walkers.
    With the main decision of the morning made, the only remaining ones were, “Which direction?” and "Coffee stop?" Clockwise, starting at the southern end, and Yes, at the northern end near the bridge.
    Our intention was to walk and talk; to reflect on events over the past couple of weeks; to check-in on upcoming commitments; and, importantly, to dream about the future. And that we did. The walk was refreshing, for the only ‘agenda’ item was to ‘be’: to enjoy the morning and, eventually, return to the car. Along the way we walked; we talked; we stopped; we enjoyed the views; we took a few photographs; we watched birds wading; we read signage; we stepped to the side as family groups rode past; and, having returned to the car, we realised we had not only achieved our goal, we had enjoyed ourselves too. (We also noticed no one actively reading their social feeds or anything like that!)
    Contrast this vignette with how modern society tends to work: We feed on knowledge; we cram our days (as if busyness signals progress); we live connected; we chase the clock; and we strive to solve problems. Ultimately, we crave knowledge and certainty—what to do, who to meet, where to go, how to get there. This, despite humanity’s poor record forecasting what might happen tomorrow, much less next year or next century.
    Not-knowing is hard for directors. But boardwork, like leadership and life itself, is not about having all the answers. It is about creating the conditions where better questions can surface and be explored. Uncertainty can be the start of something real, as the author of this article attests. ​When was the last time your board took time out dwell amidst ambiguity and uncertainty; to strategise; even to dream?
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    The [high] value of white space

    Decision Making Ethics Monday Muse Performance Teaching Tough Questions
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    When was the last time you stopped and thought about your work, your contribution and the value you offer others? Are you adding value, or simply occupying space? 
    Most leaders say taking time for self-reflection and to think is important, if high performance is to be sustained. But many do not follow through. Instead, they remain 'on': making lists, completing tasks, checking emails, and responding to social media feeds—all in the name of getting things done. Some even speak, proudly, of workaholism and busyness. Such behaviour is lauded in many modern societies. But is 'always on' and busyness conducive to high performance? Or is it a delusion? What of personal and professional relationships; of curiosity; of gaining new insights; of becoming a better person?
    Allocating uninterrupted time—white space—for reflection, thinking and dreaming is critical if organisational leaders (especially board directors!) are to have any hope of contributing well. 
    The idea of dedicated white space was an anathema for me through the first half of my career. But as I got underway with my doctoral research (circa 2012), something changed. Gradually, the guilt I felt when stepping away from my desk when I was stuck subsided: the act of changing neural activity (from sitting staring at a problem, to going for a walk or riding my bike) often had the effect of helping clear the mental block I had been struggling with!
    Since completing my doctoral research in 2016, I continued to prioritise white space, as follows:
    • Early morning (0530–0700, six days per week), to read inspirational texts, news feeds and topical articles.
    • Daily walks, to activate my cardiovascular and musculoskeletal systems.
    • Evening (a 60-minute block before retiring for the night, at least five nights per week), to read what a close friend calls 'brainy books'—books on philosophy, psychology, neuroscience, human nature, history and trekking, but also the 'great books'. 
    • Long-haul flights have become precious white spaces too, because I am left alone to do what you want. I keep a pencil and paper to hand, and record my thoughts (often my best ideas!)
    None of this makes me good, or any better than anyone else. However, my dedication to allocating white spaces and holding them sacrosanct has seen me become more curious. My mind seems to have become more malleable too. Hopefully, my contributions have become more valuable as a result—but this is best assessed by others, not me. 
    Does the idea of white space resonate for you? If so, would you mind sharing your experiences, so others can benefit from them?