One Minute Governance

Last episode I mentioned there are two things that directors tell me most affect their ability to stay engaged. The first was taking breaks. The second, related, factor is physical movement. There’s tonnes of research showing a positive relationship between physical exertion and cognitive performance. But physical movement means different things to different people at different times in different contexts. I, for example, am a fidgeter. Pen clicking, leg jiggling, playing with toys, anything. It just makes me feel a bit better. Other people really (really) hate sitting down for extended stretches. I can relate to that, too. Physical activity can also be a bonding experience. I was at an offsite earlier this summer with a client and the board chair organized an afternoon pickleball session (with beverages). It was AWESOME. Another client of mine, when talking through incorporating physical movement into the cadence of their board work, realized that they were all really into yoga. Now they had a potential physical outlet AND bonding opportunity. In a much more mundane sense, just encouraging people to feel free to stand up and stretch, maybe walk around a bit, can really help them to stay comfortable, engaged, and alert. Bonus points if you google “quiet fidget toys” and put out a few bowls of them at your next board meeting.

If you’re a regular OMG listener, I’m curious if you’ve ever wondered why I do the show in seasons. The honest answer is that at a certain point making the show – as fun as it is – starts feeling like a bit of a burden. I’ll be honest with you, here we are at the 42nd episode of season 4 and my energy level *really* isn’t what it was back in episode 151. But knowing that episode 200 is the start of an indefinite break does two important things. First, it helps me to stay motivated to push through and keep the quality high. Second, the break gives me space to step back and be thoughtful about what to do next, without the pressure of having to put out two more episodes next week. When I talk to directors about the things that most affect their ability to stay engaged and useful, they give me two related answers. The first is that they need regular and generous breaks. It allows them room to digest what they’ve heard and discussed, while also making sure they don’t get bored or distracted or too frustrated. I know our agendas are over-stuffed and it’s hard to find time for breaks, but…remember subtraction neglect? The second and related thing is the subject of the next episode. For now, let’s take a break.

Before we dive in, let’s differentiate between sound and noise. Sound is audible vibrations in the air of any kind – pleasant or unpleasant. Noise is sound you don’t want. Think about all the ways that noise and sound can impact conversations and presentations. Zoom board meetings are a perfect microcosm. Just think about it: jittery internet connections, bad microphones, feedback, real-life background stuff that sneaks in, your Bluetooth headphones disconnect. Compare that to the luscious tone of my voice in this pre-recorded podcast with carefully crafted and selected music in the background. In other words, we’re dealing with medium, content, technical quality, AND aesthetics here. All of these apply in a physical setting, too. My friend told me about a board meeting in an old hotel where the HVAC system was too loud for participants to hear each other, but it was the only thing keeping the room tolerably warm. How to choose, right? Either you can’t hear each other, or you freeze to death. They chose to ask the hotel for blankets. Clever, right? But noise and sound matter in more subtle ways, too. Another friend of mine recently bailed on a meeting because the person next to her was loudly and incessantly snacking on popcorn. I bet you can also think of gatherings you’ve been to where just a touch of background music transformed the vibe for the better. And I haven’t even said anything about the science. For that, check out the Freakonomics Radio episode called Please Get Your Noise Out of My Ears. In the meantime, trust me: sound can be a superpower and noise can be kryptonite.

You all know by now how much I like saying that good governance is intentionally cultivating effective conditions for making decisions. Every time I think about it, I wonder about new conditions that might impact decisions and how they might be cultivated to good (or bad) effect. But there’s a flipside to repeating a phrase ad nauseam, which is the risk that the words stick but the meaning disappears. People just say the phrase without thinking about it too deeply, or worrying about the impact they might be having. Corporate governance is *filled* with catchphrases. Maybe the most notorious is ”noses in, fingers out,” and its many variants. I criticized that one – pretty politely – waaay back in episode 13. The reason why “noses in, fingers out” is mostly nonsense is that directors sometimes just use it as a knee-jerk way to shut down conversations they don’t want to have, and feel like the popularity of the expression gives them permission to use it whenever they like. But it’s mostly just a catchphrase. Substance-free. The “did I do that?” of corporate governance. Another popular one in Canada is “directors owe their primary fiduciary duty to the corporation.” Seriously, next time you hear someone say that one, try asking them, “cool, what does that mean, though?” Bonus points if you have a copy of the Canada Business Corporations Act open next to you to compare their response against the actual law. Sorry, I’m not really trying to encourage you to be pedantic. Instead, think of catchphrases and other shortcuts as a condition to be conscious of, and a prompt to ask a simple follow-up question to make sure you’re not skimming over something that’s worthy of a deeper look.

Welcome to the final episode in the OMG urgency miniseries. I recently learned about a mindblowing – to me – cognitive bias that I’d never heard of before. It’s called subtraction neglect. Check out the HBR article “When subtraction adds value” by Adams, Converse, Hales and Klotz, which is based on their very cool research. If you’re more of a podcast person, check out the Less is More episode of Katy Milkman’s Choiceology show. Anyway, I’m pretty sure subtraction neglect might be the insidious heart of our urgency problem. In short, it basically means that when facing a challenge, our brains have a really easy time coming up with solutions that ADD stuff, and a very hard time accessing solutions that SUBTRACT stuff. If you’re anything like me, you’re already going “ohhhh snap! This already FEELS true!” And it is true! When we have a problem, we come up with all kinds of ideas about what we can add to the mix to make things better. The board’s feeling overburdened by the pre-reads? Let’s add an executive summary. We’re struggling to find time to spend on strategy? Let’s add an annual offsite. Makes sense, right? The ultra-weird thing about subtraction neglect is that all it takes is a simple suggestion along the lines of “by the way, you’re allowed to solve this problem by REMOVING something,” and suddenly we can imagine tonnes of new solutions that just weren’t occurring to us before. I won’t lead you too hard here, but think back to the board being overburdened by pre-reads, or the struggle to spend time on strategy. Chances are, you’ve already got some neat ideas about how to improve things through subtraction. And if we solve all our problems by adding stuff, what’s the result? Urgency! Well, by the way, you’re allowed to solve this problem by removing something.

I had a conversation recently with a great friend of mine who’s been on somewhere approaching 3 million different boards. He’s really not sold on my whole vibe when it comes to corporate governance, which is fair and totally fine. He explained a key part of his resistance like this: “Matt, when you’re in a board meeting all you’re thinking about is that Bob’s flight leaves at 6:45 and we have 13 complex agenda items to go, so how are we gonna just get through all of this?” Sure, we’re back to the whole urgency thing again, and it’s super obvious that what my friend described is basically the opposite of effective conditions for making decisions. And this isn’t a knock on him at all. Despite the fact that he’s unconvinced by me, he’s the real deal and then some. And I think he hit on something *hugely* important here. This hypothetical Bob character is a real person with a real life. I know it’s sappy, but the first thing that came to mind thinking about Bob was that he just really misses his spouse or family and that the board totally has his back. “Bob’s been on the road for two weeks. Let’s make sure he gets home on time to take his boo out for a fancy romantic dinner tonight!” And you know what? I’m completely supportive of directors looking out for each other like that. Understanding your peers as full human beings, and being empathetic toward the complexities of their lives and feelings. Hoo boy, that’s the stuff of board legend. But if every board meeting has the life crushed out of it because we’re cramming through all our important decisions just so Bob can fly to Topeka for his next board meeting. That ain’t it, bro. Song recommendation for the sappy version of the Bob story: “Your Side” by the Beths.

Some of you are tuning in to this episode expecting me to solidly dis the concept of regularly scheduled board meetings, and maybe even urge you to reject it. At the risk of disappointing you, I honestly just don’t feel that strongly about it. Let’s be real, most people have complicated lives with only limited tolerance for spontaneity, especially when it comes to something as fundamentally, um, boring as a board meeting. Having a regular board calendar and cadence matters! In part because it increases the probability that everyone will actually show up. It also adds some structure and predictability around which we can build decisions. Knowing when everyone will be together helps us to plan what information we will share and when, what conversations we need to have at what times, and when we hope to actually, you know, MAKE a decision on a thing. And let’s be fair, boards do bust out of their scheduled meeting flow every once in a while, but usually only because of an emergency or some other thing that forces us out of the gravity of routine. I just can’t help but wonder whether an extreme deviation from the norm might be kinda cool. Like, what if a board’s meeting frequency was something like “we meet once a week virtually for precisely 15 minutes (13 hours per year). These weekly meetings alternate between efficiently ticking some routine compliance box, and creative exploration of some important or zany question. Our quarterly, full-day in-person meetings will be informed by the creative exploration, and mostly free from compliance because that’s all been dealt with already.” That’s 56 board meetings per year, but actually somehow sounds less burdensome to me than a “normal” quarterly or monthly cadence. I dunno. What do you think?

It’s a bit of a mindf… what’s a polite way to say that? OK, I just googled it and it there really isn’t one. Someone suggested “mindception,” but I think that may be the actual worst word I’ve ever heard. Anyway, it’s a bit of a, ugh, mindception how similar most board agendas are to each other. Not just from one meeting to another, but from one organization to another. Quick aside, if you want a shocking dive into a quagmire of misogyny and racism, check out the Wikipedia entry for “hysteria.” Accordingly, you will notice me deftly avoiding that term in a second. Back to agendas. It’s like we’ve got some mass psychogenic illness that leads us to the false belief that a typical board meeting agenda is actually designed to get us the results we want. But that means that whenever we run over time, or fail to engage in meaningful dialogue, or spend inordinate amounts of time on mundane nonsense, or don’t end up hearing from every director, or whatever other not-great thing, that something is wrong with *us*. Because the agenda is totally fine, right? Why else would so many organizations use basically the same agenda for all their board meetings? And yes, a convenient counter-argument would be to blame the board chair. I agree that many chairs have a hard time managing meeting flow. But what if part of the problem is that they’re working with shoddy materials? I mean, what’s the worst that could happen if you cut the time allocated to presentations by 90%, or scheduled your strategic items at the very beginning of the meeting, or allocated 15 minutes for unstructured dream time? Whatever experiment you try, be sure to try it at least three times before deciding it doesn’t work.

There are lots of reasons why boards get fixated on policies and by-laws and other procedural guardrails. One of the most common and, frankly, justifiable reasons is that there’s just. so. much. Stuff. To. Do. So much stuff. Even just the list of backward-oriented compliance and oversight tasks seems endless and is *so* time consuming. Most organizations I know wouldn’t even permit themselves the privilege of *dreaming* of a board meeting that runs on time, let alone one that built in a bit of wiggle room for something extra. The time crunch is real. Another word for time crunch: “urgency”. So much to do. And even when things seem like they might be getting better, it never lasts. It’s like adding a new lane to a highway: we know it’s a bandaid, and *SUPER* expensive, but solving the actual problem just feels too hard. I get it. In fact, I decided I need to dedicate the next handful of episodes to stuff that’s related to this urgency issue. By the time we get to episode 187, we may actually have identified the real cause of the problem here. You know, like the boardroom urgency version of under-investment in changing driving habits, mass public transit and infrastructure for pedestrians and cyclists. Back to the policies and by-laws thing, though: in my experience, boards often feel like having lots of well-defined rules is a good way to make meetings and decisions more efficient. Here’s one jerk’s opinion: rules that define who should be making what decisions and when: those are your friend. Rules that try to define HOW those people should be making decisions: generally not going to work out the way you think. Real life is just too messy.

I don’t think I’ve said it out loud yet, but the most important theme of season 4 of OMG is that I’m trying to convince you that experimentation is at the heart of good governance. In fact without experimentation - and by extension, creativity – I’m not convinced that good governance is possible. One of the great tragedies of the past two-plus decades of corporate governance trends is how many organizations and governance professionals basically see corporate governance as precisely equal to crafting, deploying and adhering to policies and by-laws. Don’t get me wrong, I think it’s *really* important to agree on and enshrine important stuff into binding rules. A good and common example is setting a threshold, in dollars, for transactions below which boards will just trust management’s judgment. It saves a lot of drama and time. But it’s also a good example of a rule that’s gonna need to change as an organization grows and shifts. A threshold of $5000 might eventually become $5 million as the scale and materiality of transactions grows. And if we think about cultivating effective conditions for making decisions, this is a great example of a type of rule that can be a tangible illustration of good governance. But if you’re the type of person who thinks making decisions about policies and by-laws is the same as good governance, you and I have really different concepts of what effective conditions look and feel like.