We have already noted that the board’s job is a thinking one. As a group and as individuals the board must be committed to learning. The board needs skills of active and purposeful inquiry. The best directors maintain open minds on issues always searching for new information. None of this happens by accident. To mould the board into a genuine learning entity needs effort and some planning. Here we cover some basic steps to assist.
Welcome to this final session in a group of six webinars on the principles of governance. Hosted by boardPro and BoardWorks. I'm John Page, this is Graeme Nahkies. In this final session, we're talking about the board as a learning group and the art of questioning.
So welcome back. In our previous session, we tried to outline to you the shape of a good meeting. Here, we're going to go a little bit deeper and talk about how the board does good work. So we like to think of boards as learning groups. I mean, generally speaking, smart people sitting around the table, but they need to learn about the environment and the change going on. And one of the ways to look at is any organization must be learning at least as fast as, preferably faster, than what's going on in the outside world. Because if that doesn't happen, you've got a serious problem.
So we like the idea of the board learning as being central to governance. And again, there needs to be a conscious process about how this happens. It just doesn't happen automatically.
- Yeah, it's really interesting. If you look at the evolution of things like management of people, coaching, which is very popular term these days, and in some ways, we think of ourselves as boardroom coaches. But the whole coaching methodology has changed from giving people information to asking the right questions. And the thing is that most people that come to-- well, many people who come to boards are actually professionals. They're subject matter experts. They're used to having the answers, right? And giving the answers, and expecting those answers to be heated.
Boardroom's different. We need the board to be, as you say, a learning group. And so the predominant mode should be questioning. Asking questions to both obtain information, to tease out conversations, to seek different ways of seeing the world, and trying to put them together.
- And questioning, there's an art to questioning. So not to be confused with inquisition, which is a process of finding out why something went wrong. So that's not terribly helpful. So we're looking for directors to understand the process of open questions, which are exploratory questions and opening.
The last thing that management wants to feel inside a boardroom, and we've all been there, is that the poker's out. Because as soon as that happens, the reaction of the chief executive is to clam up and narrow. And you're not going to get the information you want. And you're not going to engage with the sort of conversation. So that's a natural human reaction under threat is just to close up. So we need this sort of open questioning process.
- Yeah, yeah, I mean, sadly, we see behavior in the boardroom where directors here and there have almost styled themselves on some of the most aggressive interviewers from TV land or the radio. And they talk in terms of hard questions. But what they're really talking about is aggressive, judgmental questions, that, as you say, put the chief executive and their team on the back foot because they're being judged. It's a bit like an interviewer trying to get somebody to admit that they've stuffed something up, right?
- The smartest directors are often the ones who thought about a problem and may indeed have the right answer. But they're not going to share it until they've asked some questions to see what everybody else around the table has got. Because that is process for getting the best input, yeah?
- Yeah, and it's about the board empowering the executive team to take responsibility for sorting things out. So it's no good badgering, inquisition style, the management team because something has gone wrong. The issue really is what have they learned from it? And what are they going to avoid?
One of my favorite stories comes out of the IT sector, where the situation was a project-- an IT project management stuffed something up. They had to write off $ 5 million on this bit of software that didn't really work. He got summonsed up to mahogany row. And it was the expectation he was going to be fired. Sat down with the chief executive I think it probably was.
And the question was well, what did you learn from this? And it was sort of a stunned silence. And the project manager said, well, why do you want to know that? Surely I'm just here so you can fire me. And the chief executive said, hell, no, I've just spent $5 million on your education.
- (LAUGHS) And there's-- one of the ways to look at a very good director as someone who is permanently unsure of an answer. And this is sort of a good way to look at it as somebody who's permanently in beta mode, no? So we're not there yet. We're not sure we've got the right answer. I need to enquire and test constantly. Because if you go in there with a sort of fixed view, that's a very limiting approach to anything.
- Somebody once said that most of the utterances in a board meeting should have a question mark at the end of them, right? So it's a process of continuous and iterative inquiry to get a better collective understanding of what the situation is and where it might lead to.
- I think in your slides, we've got a rugby ball and Graeme was saying, why is the rugby ball there? Well, it's a sort of analogy for a conversation. You start with a problem, or a question, or a situation. And this is the skill of the chair, to let air into the conversation so it goes out. And then to work out when there's enough air, so the ball doesn't burst and it turns the chaos. And then to bring it back to the other end seeking. So the first sets of questions are open questions. What do we see? What do we know? What are our options? And then we try and move back to the other end.
- It's the divergence, convergence dichotomy. And it's the first stage that you talk about is about exploring, and understanding, and gathering as much information and understanding as you can. And then starting to converge on a consensus for a decision.
- And so it give us a style of questioning, not with a poker, but softly and waiting. Silence is a perfectly good tactic in the boardroom. Waiting, for example-- what did we learn? How do you feel about this? What do you suggest are the options forward for this?
- One of the hardest things for directors and interviewers alike is to ask the question then shut up, right? Because you need to give the person who is answering the question time to gather their thoughts. And if something has seriously gone wrong, to see how far they are prepared to acknowledge that and what they've learnt from it without putting words in their mouth.
- And, of course, learning has a partner called failure. And we are hesitant, often, about embracing failure. But unless there's bit of failure, we never learn. So the boardroom has to accept that there will be failure. The trick is obviously not to make it on the big bets, preferably, but to learn as we go.
And one of my favorite stories is here is about Unilever trying to design a nozzle for making soap powder. 450 iterations before they got it right. They're a big company, they can afford the time. But they were prepared to go through 450 iterations before they got the right answer and accept the failure that had gone with it. So there will be failure. There will be error. But from that, we get learning.
- It's really important for board members to actually accept that very issue that things aren't going to be perfect. And if they are in punishment mode, if they're in judgment mode, if that there's a sort of a sense that they're trying to catch the management team out, they won't learn anything, because they won't get any useful information. And they won't get any learning, either on the board side or on the management side.
- So and rushing to decision which is sort of part of the same issue is also not helpful. There's a famous saying attributed to Einstein, it's true. He said, "if I was given an hour to save the world, I'd want to spend the first 55 minutes defining the problem." And this quote in the boardroom, if there was a major decision to be made, the first thing a chair would want to do is make sure that everybody has the information that they need to make the decision. And that is often even phoning around ahead of the meeting, saying, Graeme, what do you need to help you make this decision? To make sure that it's on the table so that we've got it. And it's perfectly acceptable not to make a decision as well.
- That is a decision, right? And I'd just like to re-emphasize something you said earlier. And that is that not all the wisdom and knowledge is inside the boardroom. Boards that I've seen have done this very well, have deliberately gone out to bring into their boardroom discussions, people who might be critics, for example, of the organization. To try and understand, that perspective. And to be quite intentional, use that word again, about exploring things that they don't know a lot about. And that also, then, raises issues in the learning sense of the commitment of boards and the members to continuing professional development and continuous learning about things.
- To be better directors. A director has a specific skill.
- It's a discipline.
- It's a discipline. It needs learning around it. And maybe we just close this with an Alfred Sloan story about the decision. This is about coming to decisions too quickly. Alfred Sloan was the chief executive and President of General Motors back in the day, where if it was good for General Motors, it was good for America.
At the end of a meeting he said, gentlemen-- because there have been all gentlemen-- I see we've made a decision on this matter. I suggest we go away for a month and think carefully about how we got there so quickly and come back and try again. And I think that's got a lot of learning in that. If it's too obvious, it's probably not it.
- And I think that story concludes with them actually, when I did come back, making a completely different decision.
- Yeah, and we do know that the best decisions have a reflection period in them. And we do we know this from research.
- Which raises another process issue, too, is that boards shouldn't be confronted, if at all possible, with making a decision that's brought to them on the day, right? They should-- and the term that we often use is that the executive team should take the board on the journey, right? Which means that with important decisions, you want to build up to the final decision. Giving the board a chance to get their fingerprints on the way the decision, challenge them. The problem definition occurs in the first place, rather than just being presented with a pet answer and being asked to approve it.
- And again, we know that you have to consider multiple options, because decisions that only consider one option are almost certainly poor decisions. So the more you consider, the better chance of a great result. So I think we've sort of covered this in summary. The board has to be a learning group. A director has to learn. It's a journey of being a good director. It is a specific discipline that has some skills to it.
And the role of the board is to ask the right question, absolutely fundamental. And not to be a consensus driven organization all the time. You do want a little bit of teaching in the boardroom, sand in the oyster if you will, because again, we know that drives better decision making.
- It's a contest of ideas, as opposed the contest of egos, which sometimes happens in boardrooms.
- So, look, thanks for joining us across these six short seminars. Thank you, my colleague Graeme. Thank you to boardPro. We really do hope this has been useful. If you want to continue the journey and learn some more, look to our website, boardworks.nz. We've got lots of great articles. We're committed to writing and have done for 20 odd years. There's a lot of reference up there. And boardPro's own site has a lot of material. So please avail yourself of it. Thank you for your time. And we hope it's been useful to you.