Intro Transcript:

Hi, this is Matt Fullbrook with a bit of a first for this platform. Today, I’m sharing with you a full episode of SOMEONE ELSE’S podcast. It’s called Policy Crimes, and it’s hosted by a dude called Tristan Markle. The first season of Policy Crimes explores the question: what does homelessness cost? Through interviews with some super interesting experts and academics, Tristan discovers that the answer – financially, socially, politically, and more – is waaay more interesting and complex than you might think. But… in my opinion, at least, the complexity points to some important conclusions. I’ll let you explore those for yourself by listening.

The reason Policy Crimes is relevant to the Ground-Up Governance world is that homelessness provides a deep and provocative case study for a constellation of decision failures. Failures that happen in the face of decisive data, unnecessary and extravagant spending, and human suffering. Exactly the types of errors that we hope to avoid through good governance in the boardroom. Have a listen through and see what lessons you can take away.

I should also say that Tristan and I met, and have been close friends since we were 8 years old. We’ve done so much together and know each other so well that it could fill a whole other podcast. Speaking of which, stay tuned to this space because Tristan and I are going to put out an episode of us interviewing each other which will get posted here soon. In the meantime, you can learn more about the work Tristan and his cool team are doing by heading to srocollaborative.org and even doing a super nerdy technical dive on Google Scholar into his past work on cure and vaccine for HIV/AIDS. For now, check out episode 1 of Policy Crimes where Tristan interviews Professor Dennis Culhane from the University of Pennsylvania. If you enjoy the show, please take a second to subscribe and spread the word.

CLICK HERE for a full episode transcript

A new long-form scripted podcast episode where Matt Fullbrook discusses the shortcomings of board evaluations and shares some new ideas to improve on the status quo. The argument builds on practical experience, academic research, and an analogy to modern music production.

Full transcript available at https://groundupgovernance.substack.com/p/bonus-board-evaluations-dont-workbut

TRANSCRIPT

Matt Voiceover

Welcome back to Sound-Up Governance. My name is Matt Fullbrook and this is the fourth and final episode in this short yet super cool series about the relationship between corporate governance and human-centered design. Once again, the voices you'll hear belong to me. Michael Hartmann, who's the principal of the directors college at McMaster University, Karel Vredenburg, who was global VP of UX research at IBM, and Tara Safaie, who's the executive Director of Health and Organizational Innovation at the design firm IDEO. In this episode, we take some steps to answer the question, "how the heck am I supposed to get anyone in my boardroom to buy into this design thinking stuff?" In the process, we emphasize the importance of the individual - you maybe - in good governance, but we'll get there eventually. Let's start off with a question from Michael.

Michael Hartmann

One challenge I do find is thinking through. We need to renew our board in terms of bringing in some new energy, particularly in the digital space. So I've seen lots of CIOs, CTOs coming in only to find themselves very isolated. And it's the old adage that you need at least a coalition of three or more. So when you think about changing the profile and getting new energy on the board, you also have to think about how do they feel supported as well. Otherwise you're going to have an isolated voice for change. So just one little thing to put out.

Tara Safaie

And in that position, Michael, I think it's particularly worth noting we see this often with social movements.

Matt Voiceover

That's Tara.

Tara Safaie

And we sometimes talk about cultural change in organizations as they tend to mirror social movements. You do need that first instigator and then the most vulnerable position and the most precarious one is the first, that first follower. So that person that see, you know, we often use that video in Woodstock where there's one person dancing all alone on the field and this one person comes and joins and they're confirming that this person isn't a total weirdo. But it could also go south, right? The whole thing could flop. And then there's just two of them and now they've taken a risk and that risk has failed. But it is once you have that second follower and you support and encourage the vulnerability that that follower should followership takes. It is then that it gives kind of permission and encourages someone to be that third person, which then kind of gets you the critical mass that can kind of turn the tide and cause an upswell. And in the Woodstock image, you see the third person come, come over and the fourth, fifth, sixth and Then, you know, next dozen come so quickly. It's really clear that that's the point that it tips. But that vulnerability that, that first followership takes, it's. It's a really high level of vulnerability. And it's really important to ask if your organization, broadly, but also your board is setting the conditions for that vulnerability to not be punished.

Matt

I want to reinforce this by saying there's something really powerful in what you're talking about that I think is extremely... I was about to say rare. That's even not... That's not even a big enough word. I think one of the secrets in what you're saying when we look at it in terms of governance or decision making or especially if we're in a boardroom, is good governance can be the job of a person in a moment. Not the job of a system or some shared process or some shared ideas, but a person saying, I'm pretty sure we need A or B or C to happen, and I'm going to be intentional about a thing here and see what happens. And even if it fails, that's still an example, in my opinion, of good governance. So I think what you're saying is a really useful reframing of this as, yeah, sure, it's an us thing, but in any given moment it can be a me thing.

Karel Vredenberg

Yeah, I like that. I would, I would add one other thought.

Matt Voiceover

That is Karel

Karel Vredenberg

How you can even do this organizationally within a board. To Michael, to your point, in terms of now you've got, you know, these experts, but they're now isolated. I mean, the other way to really bolster this is your committee work and what committees? Standing committees, yeah, they're all required. But ad hoc committees, where you say, you know what, we're just going to put this task force together, basically, that one person can amplify their particular perspective by bringing in all kinds of experts. They just go do something for a month, present back with t o the whole board, sort of the next meeting, and you can now have this ground swell of that second person at Woodstock dancing, you know what I mean? So I think you can strengthen your particular perspective by actually using ad hoc committees.

Michael Hartmann

I know we've come to the final minute, so I'm just going to see Matt, to you and Karel and Tara, any concluding comments to the group.

Matt F

And I will go first because I'm the least important and I'll be very brief, which is, you know, I think that this is, this is a really useful illustration, having the deep expertise in design in this conversation to say well, it's clear to me now that these are basically the same things, right? Governance and design are the same in some ways, and we just sort of... It's the application that I think is a bit mysterious. And I'm really grateful that we got the chance to talk through it and get some really useful ideas. So thank you, Michael, for having me, and Karel and Tara. This has been hugely insightful for me, so thank you.

Karel Vredenberg

I love your summary, actually. Yeah, yeah, I love your summary. I would characterize it as product development without design is a disaster. And if you want to really optimize and be really successful, you need to actually use design for product development. I think the same thing with boards, and I really think that it's going to be even more important as we go into the next phases of what's happening in the world. Quite frankly, I think that boards are going to become even more important, and everything we're talking about is going to be more important, too. Over to you, Tara, for your final words.

Tara Safaie

I really enjoyed this discussion, and I might leave you all with one piece of, I hope, inspiring wisdom, which is that design loves constraints. So all of the challenges that we've talked about today and all of the considerations, all the groups, all the muscle memory, all those things are constraints. And design thrives within constraints. Without them, it would be too overwhelming. And so I encourage you all to adopt a bit of a designer's mindset, to look at some of these very real challenges with the optimism that design offers, and see those constraints as the edges of the sandbox, but with plenty of space in which to play. And that's, I think, what these methods, I hope, inspire you all to do a little bit more. Thank you all for the great discussion. It's been lovely.

Matt Voiceover

Honestly, listening back through this discussion, I think the most important takeaway for me is that I'm not alone. Yeah, yeah, I'm being dramatic. Still, I sometimes feel like I'm the corporate governance version of Tara's first guy, dancing like a weirdo at Woodstock while most of the rest of the space is watching to see if I'm trustworthy and insightful or if I'm just some obnoxious dork making a fool of himself. Thankfully, I'm pretty shameless and I believe in what I'm doing, and I kind of feel like I've found some important allies in the design thinkers out there. The trick is reconditioning boards, and more importantly, individual directors and CEOs and other executives to understand that they have more tools than they think. Think back to the ideas that have come up in this little series, from low risk prototyping to obsessing over the customer, to having the guts to be the second person who gets up to dance with the trustworthy weirdo. Without all that, progress toward truly good governance will be elusive and slow. Thank you to Tara Safaie, Karel Vredenburg, and especially my friend Michael Hartmann for making all this happen. And thank you for listening. I'll be back eventually with some more episodes on some other fun governance topic. In the meantime, if you're interested to know more about today's music, check out the music notes at the end of the episode post at groundupgovernance.com See you next time.

MUSIC NOTES:

Most of the time, whether it’s some simple background music like this or a more complete and thoughtful composition, it starts with just some small thing. In this case, I dialed in the vaguely annoying plinky sound on the Teenage Engineering OP-1 Field and just randomly hit a chord voicing that made me go “oh, I guess that’s kinda nice.” Except for the guitar (my Gretsch Sparkle Jet through a whole bunch of effects) all the other sounds are on the OP-1. Funny thing about the chord voicings that I plinked out is that they’re all pretty ambiguous without any other instrumentation for context. At first I thought about making this whole thing a lot more tense and weird, but decided it was good enough when I kept it simple. Still…I have to admit that the plinky sound gets on my nerves after a while 😑. As always this was recorded and mixed on the fly on the TX-6 and TP-7.

TRANSCRIPT

Matt Voiceover

Welcome back to Sound-Up Governance. This is the third episode in a short series of highlights from a webinar that I co-hosted last year with my great friend Michael Hartmann. He's the Principal of the Directors College at McMaster University. He invited his friends, Karel Vredenburg, who was Global VP of UX Research at IBM, and Tara Safaie, who's the Executive director of Health and Organizational innovation at the design firm IDEO. The four of us talked through a bunch of interesting questions around the intersection of corporate governance and human-centered design. In today's episode, we look at the general reluctance of boards to do anything that deviates too far from what they're used to. And, to many, design informed approaches will feel pretty foreign. Let's get the conversation started with Michael.

Michael Hartmann

So what, what can the board do to help create the conditions for, you know, for experimentation? So as opposed to that. That's a question that seems to be a very rare one because it's the opposite we quite often think about. But have you seen examples where that. Air cover has been, has been created or ways that could be created?

Matt F

Well, may I make a comment before we, before we get the, the answer? Because I want to illustrate some of what's working against us in this, in answering this question, Michael, because it's like the example, the famous one of the firefighters who all died because they wouldn't let go of their tools. Right? Their training is so in ingrained that even in a critical moment they can't let go of it. And every single bit of conditioning that that gets applied to boards causes them to be catastrophe avoiding machines rather than experimenting machines. And so we've got a lot right, I think about and I haven't been through the Directors College course, but I've been through a lot. I've been in a lot of classrooms for directors and I've literally never seen a case study that was about "let us model some great behavior." It's always "let's look at some awful catastrophe and try to learn how not to do that."

Tara Safaie

And can I add one thing there?

Matt F

Yes, please.

Tara Safaie

Like even I might say that many people find themselves on boards because they were very successful in management careers doing exactly that in a management position and were conditioned in those situations to manage their board to not induce catastrophe and perpetuate that. Sorry, keep going.

Matt F

Right. No, no, no. So you really, you interrupted at the right moment because the point I think is made, which is the Michael, your question is a really important one and there's a Reason why these examples are scarce. Right? There's literally no, there's no modeling out in the real world of boards that says you know what, you really ought to be doing this. So I'm curious about the answer. I have no answer. I just have more flavor.

Tara Safaie

Sprinkle more flavor on. Yeah, I might, I might offer one example and it's not a traditional board. But Karel, I'm curious about your answers here too. One is that I think family owned and run organizations do sometimes do this well. Sometimes they have professionalized in ways that kind of shove them into the track that you were just talking about, Matt, where they are like we're real, you know, we're real and professional company. We're going to do it like real professional companies do. And they, and that can work, but it also can fall can put them into the traps that you just talked about. But I think the particular mindset difference that I see in family run and owned organizations is that they inherently have a long term view. They are thinking about not how do I even maximize the value of this organization but and for shareholders and whomever. But they're often asking things like am I creating a company that my grandchildren will be proud to inherit? And it they are working towards things like pride and you know, and that type of deep purpose rather than working on kind of the minutiae of the way that an organization runs and then coupled with that. Actually one of our clients at an organization called Orbia is another conglomerate in Mexico. He said something while he was at the helm of this conglomerate. He said I have to make strategic decisions about this company and then I have to see everyone at Christmas. That is very personal. That I think does put that class of organizations kind of separate from the rest and sets them in a slightly different set of conditions that can cultivate that type of, of riskiness. But it can also have, have its, you know, downfalls. We often see that the odd number generations in family run organizations are the most risk taking and the even number ones are more conservative. First one was like the big entrepreneur. The second one doesn't want to lose the farm. The third one's like eh, screw it, the farm's been around for a bit. We can, we can take a big swing or context has changed and so on. And so that I think is a unique example that some folks here might find some inspiration from.

Matt Voiceover

It didn't occur to me in the moment but listening back to Tara's comments here, I realized that this generational shift in risk appetite might Be kind of analogous to system level or macro shifts in risk appetite socially. I mean, that'll unavoidably show up in boardrooms. One example might be generational differences across populations in general, as in, I don't know, what if Gen Z generally wants to take wilder risks than millennials? Or what if changes in political climate or the actual climate cause over shifts in risk tolerance? These may not be conditions that we have much control over, but they are certainly worth examining and acknowledging. We don't want to miss great opportunities just because of our age, right? Karel had some interesting ideas too.

Karel Vredenberg

Yeah, I think I, I would just reinforce two things. One is the selection of the chair of a board and if you choose just a really traditional, this is how we're going to run things. And you know, like you said, using the example Matt of the firefighter, these are the tools we're going to use and this is all we're ever going to use. And it doesn't matter what happens, this is what we're going to do versus a leader that can work really collaboratively with the management leader, CEO or ED, where they can really partner and say, you know what, we're going to give it some more thought in the board. You can still keep doing the, the, the, the month to month, but we want to take this different perspective and again bringing it back to design thinking. I think design thinking is that tool set and when I teach this stuff I have lots of follow ups and I'm sure several of you out there have had follow up conversations about how do I actually do this on the board, you know, doing a one day session that I lead, do you have the skills to be able to, to do this? And some people do, it's very natural for them to, to sink into this. And if they are also, if they have the kind of relationship with their board members that they can do the introduction of these kind of methods, that's cool. But some people need a professional to come in and do it and Tara's kind of organization probably would provide that and my old organization at IBM would do that as well. Where you're setting the stage for thinking differently like this and once somebody experiences it, it's the equivalent of your firefighter saying oh my God, there's other tools that I never thought I could use. And especially if you, if you write in a fire, but it's going to be a different type of fire that you've ever dealt with before, which is like what a lot of boards need to deal with. And AI is a good example of that, you need to have a different way of using different tools. And so the tools that I think we should be using are the design thinking ones to bring it back to that again.

Matt Voiceover

Interesting, right? I suspect if you've spent any time in a boardroom, you've also spent a lot of time agonizing, or at least listening to others agonize about how to get all the normal work done in all the normal ways. The checklist is long, time is scarce, and the consequences are significant. It takes a meaningful mindset shift to seriously consider veering outside the range of normal behaviors, no matter how painful those normal behaviors might be. Is design thinking the solution for boards? Maybe. It certainly fits well with my vibe, but it might not work for yours. And that'll be the focus of the next and final episode in this little series in which we'll talk about the people part of this whole design and governance thing. Thanks, as always, for listening. If you want to learn more about today's music, check out the music notes at the end of the post at groundupgovernance.com Catch you next time.

MUSIC NOTES

So there’s a weird preset on the Teenage Engineering OP-1 Field that does a little drippy synth arpeggio every time you press a key. I’ve always liked when synths have these presets because the harmony of the arpeggio is relative to the note you press rather than being set to a particular key signature. If that makes no sense to you, another way to put it is that it forces you to use kinda gnarly harmony, which is fun.

Once again, this was all recorded and mixed using the TX6 and TP7, so there’s some slightly wonky edits and solos/mutes…which I also think is kind of fun.

I was paying way more attention to making something cool out of the feel and harmony that I realize in hindsight that I used super cheesy drum sounds (also using the OP-1 Field), but I’ve always had a soft spot for songs like this, for instance, and feel 100% comfortable with cheesy drums. Also, if you haven’t heard what’s happened with T La Rock since 1984, it’s a pretty wild story.

The only non OP-1 Field element here is the ultra noisy and slightly spooky guitar sounds. It’s my Gold Foil Jazzmaster through a bunch of weird effects on the Hologram Chroma Console and Chase Bliss Habit, and then into a really noisy/hissy Marshall stack emulation on the Tonex. I liked that hiss almost as much as the guitar part, so you’ll hear just that sound come in/out a couple of times.

TRANSCRIPT

Matt Voiceover

Welcome back to Sound-Up Governance. My name is Matt Fullbrook and this is the second episode in a short series of highlights from a webinar that I co hosted a few months ago with my friend Michael Hartmann. He's the Principal of the Directors College at McMaster University, and he invited his friends Karel Vredenburg, who up until recently was the Global VP of UX Research, IBM, and Tara Safaie, who's the Executive Director of Health and Organizational Innovation at the design firm IDEO. All three of Michael, Tara and Karel are experts in human-centered design, which I am decidedly not. Still, I see a clear and important connection between good governance and design. And that connection is what today's conversation is about. Let's get started.

Matt

So I did just the other day I looked on Amazon and just to see how many book results you get when you search for Beyonce and the number was I think 333. And the number of book results that you get when searching for corporate governance is 10,000. So by one totally unscientific metric, corporate governance is way bigger than Beyonce. I haven't read all those 10,000 books, but I have been over the past few years very obsessed with the like trying to figure out if or where there might be a consensus about what governance is... and there isn't. There's no agreement. There's a million definitions. Most of them aren't helpful, aren't action oriented, don't make a lot of sense. And so to me, when I talk about governance, I talk about it's the decision making part. So that just for clarity, that's what I mean. When I talk about governance, I'm talking about decisions. And when I'm thinking about boards and managers and the way they work together, I reflect on my 20 plus years in the space and realize that all of the complaints that I heard 20 something years ago are the same as the ones I hear now. Right? So the interventions that we've tried have not solved the we're stuck in the weeds or there's people in the room who talk too much or there's people in the room who don't talk enough. We have, we've got information asymmetry problems and time problems and so on. I think now that I'm learning more about design and this is where my question is, I think part of the way that design can be applied in a useful way in boardrooms, I haven't seen yet. I see design experts come into boards and say "let's become human-centered, but we're going to obsess over the customer." And I'm thinking, well, okay, in a, in a sense, the friction here is between board and management because they're creating work product for each other. Not even though the, the ultimate beneficiary of the work is the customer. They've got their own consumer here. If the CEO and management team became obsessed with the board and the board became obsessed with management and they were designing their work for each other, to me, that seems like there might be something there. But I, I would love your reaction to that framing and to either embrace or reject it and tell me why.

Karel Vredenberg

So I think that you can use design methods to improve anything.

Matt Voiceover

That's Karel Vredenberg.

Karel Vredenberg

As we do with the Director's College session that I run. We basically take whatever problem, one of the team members and they're all from different boards that are in a team. What are they dealing with right now that they need to fix? Might be, you know, the diversity of the board. It may be the, the relationship between management and the board. Whatever it is, you can use these methods then to hone into doing that. And then you're doing things like using the best ideas from the quietest person in the room. You don't just necessarily have the ones that are all the ideas that we've had in the past. Now you have new ideas to solve that problem as well. So think that we need to think about how to identify what the problems are. You know, at the beginning, beginning of the pandemic, it was like, okay, well how are we going to meet now? How are we going to actually do what we need to do? Well, that's a design problem. Let's actually work that through. And then also even the effectiveness of meetings saying, okay, well, there's different things you do at different parts of a board meeting. Something's just informational, something's just like, well, yes, yes, no and vote on it. There's other things where you need to go solve a strategic direction problem that you probably don't want to sit around a board, boardroom or, or a zoom room just presenting PowerPoint slides. I guarantee you will not be successful at doing really strategically new direction sort of work. You're going to have to do something that is more engaging, that is more design framework led basically to be able to really go a new direction. And, and you need to change the context for doing that. And so you got to not be in the same place. Now that we're not in the pandemic anymore, do it as an off site so nobody is in the place that they're normally in. So there's a whole new environment. I would say that some of that time you want to do it with the board and management together, because that's a big challenge in a lot of boards, is the relationship between the two. You both really have the same objective, but a lot of the time it doesn't feel that way. I think that it can be applied to any of the challenges that you've got.

Matt Voiceover

Before we hear from Tara, I want to drive home a specific piece of what Karel's saying here. As you heard me say a couple minutes ago, I sometimes meet boards that have embraced the notion of human-centered design, but then get conditioned to believe that the only humans who matter are the end user of the organization's products or services. On the other hand, I meet a lot of boards that aren't interested in design thinking at all because to them it evokes images of colorful post-it notes, games, improvisation, and other stuff that to them doesn't feel serious enough to apply in a boardroom setting. I think Karel has made a point here that might help to shift the perspective a bit, specifically that design informed approaches can help to solve any gnarly problem. Trying to be more strategic? Want a better balance of the voices in the room? Can't figure out how to get the board more engaged? Design methodology can help, even if it might feel a little informal. Let's hear from Tara.

Tara Safaie

The question that you're asking Matt to me sits on a couple, sits behind a couple of concepts. One is that the interesting thing about this conversation about designing for boards in general is that you're transitioning from using design methods in a very direct way. Like team or product or company designs for user, user uses product. That's it. You're basically saying board like guides and designs for a team who designs product for customer and then customer uses it. And so you've quickly moved from this very kind of linear connection from, you know, the customer's world to a more systems level, you know, interconnected view. And often we find this in healthcare, right? Like many organizations, for example, in pharma, they can't design directly for the patient because the healthcare provider is sitting in the middle and the insurance company is sitting in the middle. And so all of a sudden you're up here and it's no longer one line that's across the system, It's a bunch of different zigzagging lines. I think the mistake that many boards make is that they don't always ask because the answer can sometimes be, scarily, " No." They don't always ask whether their incentives are aligned between the board and the management and ultimately to be in service of the consumer. I think when we say something like we should be human-centered, the underlying thesis of that is that by that organization being human-centered, designing effectively for their customers or patients or whoever's on the end of that, you know, of that line. By being human-centered, there are upstream benefits across the ecosystem. So if you are human-centered, then your organization will thrive, I think when you are operating at that system's level. Maybe my one tweak to your framework there, Matt, is that that design directly for one another might work if you are confident that the context around both of those groups is shared. So, for example, if they both understand that or they both adhere to the thesis that being, let's say, customer centered will yield better outcomes for their organization than not being customer centered, if they don't share that thesis, then this is just going to end up with, you know, a mismatch. They will be, you know, the management will be designing for board members who are trying to, let's say, maximize the output for shareholders, potentially at the expense of the customers. I don't know, in the short term, and the board's trying to get management to do something. And so if you are confident about your shared context, then I think maybe that design system would work. Both boards and management are in the business, if I may be so bold to say, of setting and designing conditions.

Matt Voiceover

Did your ears just perk up? Yeah. So did mine.

Tara Safaie

So what we often talk about in organizational designs is that one cannot mandate someone's behavior otherwise like. And new information doesn't necessarily always change people's behavior. All of us know alcohol and cake are not great for us, but on our birthdays, we might have a glass of wine and a slice of cake. And if all it took was shaking your finger at someone or giving somebody new information, I'm sure we'd all have six packs and eat only kale. But since that's not the case, what we often look at is what are the conditions around a group, around an organization, around a team that are pushing them or indicating or incentivizing one way of being over another. And because you can't directly mandate behavior, what you need to do instead to get people to behave in different ways is to reset the conditions or to alter the conditions in deliberate ways. So what Karel was saying about getting your board meeting out in a different location changes the conditions in which that conversation is happening, puts you maybe in front of customers where they're looking at you or you know, you're observing something different, or changing the structure of the meeting might change the conditions in which your strategic choices are being evaluated, or something like that. And so I think the key question is whether you all are like yes, boards and management could design for one another if they're operating in the same context, and if those conditions have been designed deliberately to yield, at least to the best of your knowledge, to yield the outcomes you all are after.

Matt Voiceover

Unless you're a super newcomer to this Sound-Up Governance show and the rest of my work on the Ground-Up Governance platform or One Minute Governance or whatever, you'll have heard me talk 40 million times about my definition of good governance as intentionally cultivating effective conditions for making decisions. Needless to say, Tara and Karel are just presenting another really convincing argument to me that good governance is a design challenge. Tara's even using the exact same language as me, which I love. And I also love the specificity of some of the examples. Changing the venue can matter a lot, for instance. Or as Tara says, don't just expect providing information will change behaviour or generate any new big ideas. You have lots more conditions to cultivate. Thanks again to Michael Hartmann from McMaster University for putting together this group. We didn't hear his voice during the episode, but he's the reason why the conversation happened in the first place. We have a couple more episodes to go in this series, so stay tuned. If you're enjoying the show, please spread the word. For more info on today's music, check the end of the episode post at groundupgovernance.com and well, thanks for listening.

Music Notes

This one, like many recent episodes, I built using the Teenage Engineering TX-6 and TP-7. I must have been watching some moody TV show or playing some moody video game or something because this has that reverb-y, murky thing going on that a lot of maudlin soundtracks use these days. Listening back, I think it’s a bit of a weird fit for this show. Whatever…

I remember just playing some chords on my bass - I used a Fender Jazz V Plus for this one - and trying to figure out a way to make it feel good. It ended up in 5/4 time not out of any desire to be weird, but because the pulse of the tune just didn’t feel good in 4 or 3. The little guitar twangs are on my Gretsch Sparkle Jet. All the bass chords and nerdy lead noodling are on the Jazz bass. The percussion was all finger drummed on the MPC Live. I added a bunch of effects after the fact using the TX-6.

Maybe I should start scoring TV dramas instead.

TRANSCRIPT

Matt Voiceover

Welcome back to Sound-Up Governance. My name is Matt Fullbrook, and today we have the first in a short series of episodes that come from a webinar that I co hosted a few months back with my old friend Michael Hartmann, who's the Principal of the Directors College at McMaster University. He invited a couple of his friends to join us. Karel Vredenburg, who was the global VP of UX Research at IBM, and Tara Safaie, who's the executive Director of Health and Organizational Innovation at the design firm, IDEO. I've become increasingly convinced over the past few years that good governance is a design challenge. If you're familiar with my framing of good governance as intentionally cultivating effective conditions for making decisions and also familiar with design thinking, then you already know what I'm talking about. I honestly had no idea at first that I was talking like a design guy, but now I'm all the way bought in. Tara, Karel and Michael further reinforced this perspective in our discussion. But we'll get to that a bit later. Let's start first with some definitions. The first voice you'll hear is Michael, followed by Karel.

Michael Hartmann

I remember going out trying to introduce companies to this thing called design, and a lot of eyes would be like, blank, saying, what is this? 25 years later, 24 years later, it's ubiquitous. Design is everywhere. But as my colleagues will say, it's everywhere. Not done well. More often than not, we brought it into Directors College and for a couple of reasons. And we're going to explore those reasons. One, if you think about the core roles, responsibilities of board, CEO, selection, talent. Well, of course, strategy is a critical one. You know, setting the lanes for management, sometimes moving the lanes with management as well. But design is a really interesting way to think about strategy development and execution. I wanted Karel to maybe introduce some of the design. What do we mean by design? And for my colleagues around the table here, how can boards leverage design principles for better strategy? So that's a starting point, Karel, and maybe a question over to you.

Karel Vredenberg

Yeah, let's let me start. And some of the people that are listening, I'm sure have heard this story. If you were in my. In my session. But I love to share that I talked about design thinking at a university was an interdisciplinary lecture. The Dean of the business school said as a question later, said, we're all learning design thinking now. This is really, really good. Do we still need designers? I said, yeah, there's a difference between design and design thinking. And so the notion of design, that intentional process to research, ideate, and then actually create and then iterate on things that you're creating, whether it's websites, apps, products or services. That's sort of design and design thinking is really the, as it states the thinking, the, the way to actually take a perspective on a particular problem, to solve a problem in a, in a more intentional empathic, looking at all stakeholders and alike, more holistic sort of approach. And so that's how I see them being different. And the way that I've used design thinking in companies, both for typically the C suite I've worked with and, and then with boards, is really to open the aperture in ways that they've never thought before. There were a couple of instances where after I spent like a day and a half with, with them, they came up with a set of directions strategically where they realized that there were things that they came up with through this way of thinking that they realized there were certain things that were on their five year plan that were absolutely things they shouldn't be doing. And there were other things that were really simple to do but they'd never thought of them because they'd never used this design lens that now became their number one priority. So I think it's an incredibly powerful tool to be able to set strategy for an organization.

Matt Voiceover

Before getting to Tara's perspective, you'll hear her and eventually Karel refer to Agile. Now I'm no expert in Agile, so please forgive me if any of you listeners are experts and I'm messing something up. In short, it's a set of frameworks and practices originally designed for project management in software development that are rooted in certain priorities and principles. For example, it's more important to prototype, iterate and respond to change than it is to adhere dogmatically to a preset plan. Anyway, here's Tara's perspective on what human-centered design means for organizations.

Tara Safaie

Many of these approaches are a combination of pedagogy and methods and you know, certain steps that you're supposed to take. But they also introduce mindsets or ways of looking at and thinking about problems or context in a way that is different from how many organizations traditionally look at problems. So I think what's useful about design as a methodology, and you alluded to it, Karel, is that it often forces many organizations to think about their problems in a more human-centered way because you have to find a case for a desirable solution before you go on to actually making that solution a reality using more agile methods. Agile and design both have as part of their methodology iterative processes. So where you start in lower fidelity and progressively build your fidelity and an investment and things like that as you learn and as you fail and things like that. And so I think it's worth noting that while the methods themselves often yield great results and they are worth in many cases implementing in the right corners of an organization to yield the outcomes and the products that they can yield. And it's also worth noting where those mindsets that they're bringing to the table are most impactful so the two can be treated in conjunction with one another. And then to make them a more sustainable part of an organization's being, to make them really course through the bloodstream of an organization that requires much more kind of long tail change and a different type of approach integrating it into organizations where they're, where it's not present at the moment.

Karel Vredenberg

Hey, Tara, I want to just add one other thought to that and that is that of course, yeah, I always imagine it as if you think that you have this big canvas of what the solution was going to end up being. If you just do Agile, you'll start so say on the top right of that campus that solutions space. Right. And yes, you'll be able to iterate, but you're going to be roughly still in that top right quadrant of the canvas. Design thinking right at the front of it may well tell you that you really need to be in the bottom left to really serve the market. And that's whether products or services or work of a board where you want to think more deeply about what's the bigger picture view of where this company should go.

Matt Voiceover

So you'll already see an important intersection here with my framing of corporate governance as people making decisions in corporations, I the first and most important step in effective decision making is a clear definition of the problem we're trying to solve. As Tara and Karel are defining it, that's where design starts too. Okay, so let's start moving into some useful insights for boards. I mean the design world has in my opinion generally done a pretty poor job at helping boards to do their jobs well. With this in mind, Michael prompted our guests with a reminder that boards tend to be, well, risk avoidant. So how do we embrace design when that's our starting point?

Michael Hartmann

Board directors, when we query about innovation, one of the common feedbacks we get is we wish we could be more open to risk as opposed to de risking embracing innovation design. I also see that it's a really interesting way to kind of, you know, stress test and build a capacity for risk taking. And I don't know Tara, if you've got some thoughts on that.

Tara Safaie

Yeah, absolutely. A couple of anecdotes. One is that I think organizations that have really adopted design in a powerful way in their organization, have adopted the mindset that ideas are disposable.

Matt Voiceover

I just want to interject here. Imagine a world where we approached governance ideas as disposable instead of embracing them as orthodoxy. OMG, it's like a dream come true. Sorry Tara, you were saying...

Tara Safaie

They have right sized the investment that they put into an idea to the maturity of that idea. So what I see many organizations do, particularly my, my clients in the healthcare space, is that they are very quick to jump on the first couple of ideas that they come up with because they are so deeply expert in the area that they're working in. Like many of them have spent decades learning to be the professional that they are. That expertise gets translated into these ideas that when, when thrown into the thunderdome of the real world or of a patient's world, let's say, just don't survive the key shift that occurs with organizations that are able to adopt design mindsets, you know, kind of deeply in their organization and adopt the level of risk that it requires. Have learned how to test their ideas in low fidelity ways. And so where they are able to identify the most core assumptions that they're holding, maybe because their expertise has kind of put blinders on them, or they only work with a particular type of customer and they want to expand to a new type, they don't know that customer as well, whatever it might be, that they're a western organization designing for a non western customer base or a global south customer base, whatever it might be. And so they're able to understand what the most deeply held assumptions in their solutions are and then design tests to test those assumptions in low fidelity ways. You can't build certainty in any of the paths that you're taking, but you can build confidence. So your goal in any type of design exercise, and again, organizations that have internalized this, know this deeply, your goal is not to be certain. Your goal is to gain confidence. And so organizations that are testing their ideas in low fidelity ways are testing whether their assumptions hold. And as they build confidence, then build the confidence to slowly invest more and more as the stakes get, you know, the stakes get higher. They've invested more in the, in the back as well. And that allows them some of the agility, as we were talking about before, to then respond to a change in market context or a change in the competitive landscape or something else that might shift where those assumptions were tested initially. The risk profile that most organizations have does not necessarily preclude them from having low fidelity and therefore small investment, high risk things on the side. What they are not seasoned in doing is then transversing the space between that low fidelity and very low investment idea to the full fledged one. That's really going to require a lot of money.

Karel Vredenberg

Yeah, I would just add, I want to amplify something you said too, like the low fidelity idea. That's really a prototype, right. And what is a prototype precisely? It's, it's really a low risk way of exploring something. So people talk about, oh, you really should be increasing your, your, your failure rate. You learn from failure. And everybody, you know Silicon Valley loves to say that, right? Yeah, they love to say it because 90% of them fail. But in fact, if they did the kind of things that Tara and I are talking about here, doing just a small prototype, it might be a new way of working as a, as a board, let's say. And you want to just try that out? Well, you can just try it out in your meetings. That's a prototype. And then after, let's say you do, you know, sort of an off site or whatever, let's, let's see what that was like, get some feedback on it and the like as well. So it's this whole mindset of, of doing small prototypes that can fail. But you're not failing big, you're testing first, seeing if something's going to work. And then if it's going to work, then you can scale it up and do it across a whole organizational like as well. It's a fantastic, phenomenal way to de risk by taking risks.

Matt Voiceover

That's a wrap on the first episode in this series. Let me just say that this prototyping approach really works in boardrooms. I like to think of it as crafting a 1% intervention rather than a revolution. An intervention designed intentionally and specifically to increase the probability that we'll get a, a better result in some small part of our work together. Maybe it's a change to reporting or a shift in our agendas, or a new conversation prompt after a presentation or a different lunch caterer. Whatever it is, the consequence of failure is essentially zero and the potential for learning is high. Stay tuned for the next episode in the series coming up soon. And drop me a note to let me know what you thought of this episode. If you liked it, please consider spreading the word. Oh, and as usual, I've provided some notes on today's music on the episode post at groundupgovernance.com Catch you next time.

MUSIC NOTES

As session file is what we call the computer file for audio recording software - you know, like a recording session? The session file for this song is called “corny 12-string”. I’ve really started to enjoy recording music on the Teenage Engineering TP-7 and TX-6. It’s not very easy to do granular overdubs and basically impossible to do any meaningful editing. Which means you basically have to get the best takes you can in the time you can. In my case, that’s not very much time. So you end with one good thing and one not so good thing: a bit of spontaneous magic, and a heavy dose of sloppiness. Anyway, this one started with my playing some corny chord changes on my dad’s (probably knockoff) Rickenbacker 12-string. Some equally corny slap bass on my Ernie Ball/MusicMan Stingray 5 bass. Some preeeety shaky finger drumming on the MPC Live. A bit of synth that I can’t remember if I played on the Teenage Engineering OP-Z or the Nord Lead A1. And then me kinda messing around in real time with mixing and effects and some silly DJ restarts - which you’ll hear at the very end of the episode. Fun stuff.

TRANSCRIPT

Matt Voiceover: 00:00

Welcome back to Sound-Up Governance. My name is Matt Fullbrook, and this is the tenth and final episode in my epic conversation with my brilliant governance friend, Andrew Escobar. Today's episode is a bit longer than the others in this series because were working through some thinking on a really interesting topic. Between the board chair, the CEO, and the rest of the executive team, who should be deciding exactly what we talk about and how deep we dive and when? Is it possible that there ought, in fact, to be no clearly defined distinction between where the board ends and management begins? Andrew kind of makes that point today, and frankly, I'm pretty sure I agree all the way. Have a listen and let me know what you think.

Matt F: 01:02

It's been really hard for me to convince CEOs to have discipline around deciding specifically what conversations they hope to have at the meeting that's coming up and sharing that hope. What do you think it would take to make it more...to make it easier for boards and managers to feel comfortable saying, "hey, you know what? I really hope to...this is what I really want to talk with the board about at the next meeting, and here's what I'm doing to make that happen?" Or why is it uncomfortable?

Andrew Escobar: 01:43

Why is it uncomfortable for whom?

Matt F: 01:45

In my experience, the discomfort is usually on the CEO's part. But boards don't make it any easier.

Andrew Escobar: 01:53

I wonder if that discomfort is because they think that that time is exclusively or the balance of it is for the board and the directors, as opposed to everyone.

Matt F: 02:05

Okay.

Andrew Escobar: 02:06

And I do think it is. That's time for everyone. Even if the decision is. Even if the decisions are the board's, the time leading up to that decision, I think you need to get that balance right. And so I might want to. Of course, I approach regularly scheduled meetings with, a sense of what conversation do I want to have? Or what direction do I want this conversation to go? But I think I'm more interested in hearing from the team, and I do mean the team, maybe not the CEO specifically, the team, what they were hoping to get out of our time together. And you set an agenda and that sort of dictates the conversation, but not always. Can you be a bit explicit about it? I'd like to think that you have the comfort with a management team to say, "we really want you to bring us some direction here as well." Like, where did you want this to go? Like, if we wrapped today and we made a decision, but we hadn't touched on these particular aspects of the decision, would you be disappointed? Would you be, heck, Would you be angry? Would you be bummed out? What, what aspects do you not want us talking about as well? And like, it's not that I'm going to leave it off the table, but it's useful to know. And I think that's a bit of vulnerability. And I don't think that people like to be vulnerable in a, in a board setting.

Matt F: 03:41

How do you imagine yourself feeling if on the front page of your pre read it says, "here are some conversations we really hope to have at the meeting upcoming. And here's a few questions that might be helpful for you to consider to get yourself in the right headspace to have those conversations. This, of course, doesn't mean you can't ask whatever questions you want. We can still have whatever other conversations you want to have. But this is really what management. These are some of the things management really wants. The board's support, insight, feedback, whatever." How would that feel?

Andrew Escobar: 04:16

It really depends.

Matt F: 04:17

Okay.

Andrew Escobar: 04:20

Am I seeing this for the first time? Do I trust that this has actually come up already and that because we're really putting emphasis on this time together, we're not trying to surprise anyone necessarily. We're actually, I can trust that the chair and the CEO or the committee chair and the cfo, they've already had this discussion together. And what they're bringing me is more of a collective view of the conversations that need to happen. I can place more trust in it if I know that it didn't come from one specific individual and that there was some sort of editing involved that involves the management team, that involved the board. I don't necessarily need to know the full details of how you arrived at it. Because that wasn't the decision. The informal decision around what we're going to talk about or what we hope to talk about. But I do want some trust around it that this is coming from more than one individual at the organization. In what ways has this been edited? So it's not just your individual views. I need it to be more representative of the challenges and opportunities that you're facing. Like then one single person's hope for our meeting time.

Matt F: 05:43

Right. I'm going to oversimplify, maybe beyond what's reasonable, but for the most part, let's just say this happened. I don't think what you're saying is, oh, I need to know that the CEO has had a conversation with all of the CEO senior, the C suite about this to make sure that everybody wants to have the same conversation. Because it doesn't matter that much necessarily, if everybody wants to have it. But let's say the simplest version of what you're talking about is the chairs, or let's say the CEO really does this. " " Like, I just really...this thing's been keeping me up all night, and I'd really like to have the board's feedback on it." Right? And.

Andrew Escobar: 06:23

Oh, but then I need. I need to know that, though.

Matt F: 06:25

Right? Sure.

Andrew Escobar: 06:25

That's okay, too. And so I don't. Sorry to interrupt. Because, like, that, what you just said, I always wanted to encourage more of, like, if there's just something that you really want to talk about, I want to hear it. And that just might not be the CEO. It might be another member of their team, and it might be someone on the board as well. But t hat's a card you can only play a few times. And it's. This is such an overused word, but it's a bit of a vibe. You can feel it. If it's genuine, you know that this is not just important to the individual. They feel that it's important to all of us that we discuss it. And that can be, you know, when you see it.

Matt F: 07:15

I find it really helpful in a context of whether it's a board meeting or any other type of thing, where part of the point is to make decisions, to move something forward, to, like, for the person whose job it is, to, like, take the result of the decision and operationalize it. To me, it's the most important thing, not the only important thing, but the most important thing is to make sure that they got what they needed out of the engagement in this meeting to go and do their work the best they can. And any time that they say, whether it's urgent or not, "this is a conversation I really would... I'd feel I'll feel better leaving this room doing this thing as long as I've had this conversation with this group." I think I'd be really receptive to that no matter how many times that happens or no matter who's, like, whether there's a consensus or whatever, like the person who needs to own it, to me, that gets weight.

Andrew Escobar: 08:17

I'm not sure if we've discussed this, so bear with me if you have.

Matt F: 08:21

Yeah, sure.

Andrew Escobar: 08:24

In that delineation between the board's responsibility and management's responsibility that people seem to really want to delineate, I've always struggled with the notion that there is a clear delineation between the board's role and management's role. I don't view that. I feel strongly about it and I think that that is a tough thing to admit as a young corporate director. It scares other directors, it scares management when you don't view a clear delineation. But what I do believe is that it's the board's role to often stay zoomed out on what is happening. And especially on the day to day decisions. You're often zoomed out because you have to be. You are not engaged on a day to day basis. You cannot possibly zoom in on every detail. And so when you think of it like that, the emphasis should be on the person who has to operationalize the decision. Or ideally it's the team that has to operationalize the decision. That their needs are being met. And it's your board, it's your job as a board to figure out how to then meet their needs. I do think of it like that. And when you think like that, you know, being zoomed out and it's, it's that individual's needs. Absolutely. And that's usually how you're operating. I guess I always tend to default, because it's the most enjoyable part about being a director, are those times when by necessity you need to zoom in. And the more you zoom in, the more you are bringing in more people. Right? Now you're zooming in on a specific issue and by necessity you have to bring in other directors. You have to view it as a board. You have to not just take this one team's view of it. You need to get more of an organizational pulse check on how this decision is going to impact, how are we going to operationalize this? And so it isn't about any one person or team's needs on how, how that conversation should be shaped. And it's not even just in this meeting. this is the conversation we're going to have. Over the next year, how are we going to tackle this really big problem? The board wants to be zoomed in on this issue. That's like, that is the toughest part of governance. And when I think like what is good governance, those are the, those are the times that I care about the most.

Matt F: 10:48

I think maybe in a way what I'm talking about, when I've seen it done, and this is rare, when I've seen it done with not just intent, but like clarity of purpose, it's in response. It's usually me responding to a CEO saying, "man, the board is always in the weeds. And I'll say, okay, well, yeah, that's frustrating. But like, what are we going to do? What are you going to do to make this better for everybody? Right. Because the CEOs got a lot of influence here. I think this is like a tool when done well for management to say, zoom in with me on this. This is where I could really use that. You know what I mean? And it doesn't mean the board can't zoom in on other things, but it's like an invitation. And it's like, because the board obviously wants to zoom in somewhere because it's better, it's more fun and so on.

Andrew Escobar: 11:52

I actually really like how you have extended this thinking that I have because what you're saying is that the board, a well performing board, when engaged in good governance, they should be zoomed in on the issue like you are zooming in. But there are times when you're being sort of directed or invited by the team, by the CEO to zoom in on a specific issue. And there are other times when you as a board want to zoom in on a specific issue. And maybe that is where the, like the ongoing consternation of some directors and CEOs lies. Right?

Matt F: 12:32

Yeah.

Andrew Escobar: 12:33

Who has the right to zoom us in? And are you too fixated on zooming in on the wrong things?

Matt F: 12:40

And a lot of the time in my experience, to your just to take this and make it slightly more specific. A lot of the time when boards are zooming in in ways that aren't useful, it's not because it's like, oh, I'm dying to do this. It's because that's just where the gravity is for that one person in that moment. And so they'll ask some granular question because it was interesting to them, but it's not because they have this sincere desire to spend lots of time on that. And I think that what I'm when I encourage especially CEOs to have and boards too, but especially CEOs to be like, I want to know or I want to design for myself, you know, even in theory, this is the type of, this is the conversation or one of the conversations I hope to have with the board because they've got insights on these types of things that I don't have. These people especially, I'd really like to get their perspective. Here's a way that I might frame some questions or frame the conversation. Here's some material I might give them in advance to make them more prepared and more comfortable, you know what I mean? Like, that level of. Like, this is the stuff that decreases the probability that the board is just going to be like, all right, we just got fixated on this thing that no one cares about. Right. So I think we're talking about the same thing. Does this resonate?

Andrew Escobar: 14:01

Yeah, it does, because I think it squares with how I think about where you should be operating as a board member, and that is zoomed out by default. And you do. You do need a CEO or their team to bring you in, and it's so much more important that they have. If they think of it like that, I think that's actually really productive.

Matt F: 14:29

Yeah.

Andrew Escobar: 14:29

Right. There are going to be times where they're inviting you in and they need to sort of drive that conversation, and you've got to welcome it. As long as we're still preserving those other opportunities where it's going to be the board inviting themselves in.

Matt F: 14:43

Yeah. And. And where the board also has the discipline to invite themselves back out if they realize they're not being useful. Right.

Andrew Escobar: 14:49

Yep.

Matt Voiceover: 14:51

You see what I mean? By the end of this conversation, I think we'd sketched out a really good concept and vocabulary that both describes why balancing board and management and strategy and operations is so difficult, and also why my whole thing about good governance as intentionally cultivating effective conditions can be so use. Now that we've reached the end of the Andrew Escobar series, I want to thank him so much for being so fun and smart and interesting. If you find him as cool as I do, I happen to know that he's open to new board positions, so drop me a line through groundupgovernance.com if you want an intro. And that's also where you can find a full transcript of today's episode, including some notes on the background music. It may be a few weeks before I'm back with more episodes, which will feature a whole different conversation. In the meantime, stay healthy and happy, and thanks for listening.

Music Notes

Umm. I guess the expression of the day is “iterate quickly and recklessly!” I randomly chose a drumkit on the MPC Live that was called “dubstep”…as in this. I finger drummed some stuff and then played a simple bassline on my p bass just to sketch something out. Listening back to the bassline, it really sounded more like dub than dubstep. So I decided to lean hard into that. Next step: delete dubstep drums. Now, it’s important to say that I don’t know how to make dub music. That’s fine. I’d been listening to some Scratch Perry lately and also Spotify tells me that this has been one of my favourite songs for the past couple of years (probably due to the fact that it has three of the literal best basslines in history all jammed in one song). So I ignored my lack of skill and understanding and just played some stuff, did some on-the-fly mixing and today’s tune is what you get. Recorded and mixed on the TX6 and TP7, guitar was the Gretsch Roundup, new drum parts were also on the MPC Live, although not using any dubstep sounds. Guitar and drums were processed through the Chroma Console.

TRANSCRIPT

Matt Voiceover: 00:00

Welcome back to Sound-Up Governance. My name is Matt Fullbrook and today we have the ninth installment of my conversation with Andrew Escobar, a corporate director, open finance expert and keen AI tinkerer. Andrew was one of the first people I knew who built their own LLM model. So I was interested to ask him AI related stuff might be on his mind as a director. For reference, this conversation took place in September 2024, which in AI terms is like 500 years ago. Still, in my opinion at least, Andrew's insights are just as relevant as they were a few months back...even if my references to current events are a bit out of date. Let's hear what he had to say.

Matt: 00:55

Let's imagine you're joining a new board. And you, more than most, are familiar with what AI is and how it may or may not be useful or relevant or harmful or whatever in general to organizations. So you've started on a board or maybe you're about to start. What's something you actually want to know with respect to a new organization and AI? We could just be generic. If you're a new director, what's something someone actually should want to know?

Andrew Escobar: 01:31

To be clear, I am not an expert on an AI.

Matt: 01:33

But you know more than most.

Andrew Escobar: 01:36

Maybe not. Maybe. Actually I don't know. But you know what? Maybe, maybe more than most directors. Sure. I think few directors have actually tried to build a model themselves. Right. I'd want to know what that organization is doing today. That's a great starting point. I'm sure you've considered. I'm going to assume you've considered how AI is going to impact your business. I think that's a conversation that most boards and management teams have had. But what have you done to actually build and think through this and be more hands on? And are you doing it in a safe way? I'd want to know your comfort level as an organization with what I do think is a pretty big challenge and a big opportunity and a bit of upheaval in the regular course of, honestly, business and society, you know. And if the answer is, well, you know, we haven't done much, I don't know if I'd be concerned or not because again, every organization is different. But I need to know what the starting point is before I do anything next.

Matt: 02:48

Are there answers? And maybe you can't get universal on this, but maybe give a shot. Are there answers that you can imagine getting that would automatically make you go, oh, this is bad?

Andrew Escobar: 03:01

Yes, yes, I need to be very careful here. I actually don't think this is something that a specific organization did. They were asking, I believe it was chatGPT, a specific question about their specific business. And they got a very specific answer back. And it was revealing of that organization's strategy. That would be concerning to me just to know that that was out there. But that just might be, you know, regular IT practices. Data leak. I don't know what it, what it could have been, but if you were telling me that you were doing something with your data with a very public model where that data is exposed, I would be concerned because I actually don't know how it's being used. I don't know what the impact is to our data and how it's being used because it wasn't being done in house. And that early experimentation can happen very much segregated and separate from the outside world. Like it is absolutely possible for you to even to dip your toe into AI and to do it in a safe and contained way. But if the answer was we were using public models and we gave it a small data set and we wanted to see what it would do, it would cause a red flag because you didn't approach the problem with a lot of intent.

Matt: 04:32

This is related, but not in a governance way. I don't even remember where this, the study happened. Did you see, and if you did see, did you believe, that it was like over 40% of new content on the internet is AI generated right now, according to some source. Which means that of course AI is mostly being trained - like the language models especially are being trained on AI generated content. Which, you know, doom loop obviously. But like it just seemed like, it seemed like such an excessive number to me, you know?

Andrew Escobar: 05:14

New content. I probably think it's more. Yeah, right. And that's a question of like quality versus not quality. But I almost think that's the wrong metric because like, if I have a question, I might use Perplexity to ask a very particular question and get a really precise answer back. Is that new content? Like that's new content. That's new content that's been written, that's sort of more unique to my situation. And so I don't know, I don't worry about the deluge of what's being called slop on the Internet created by AI. I'm be much more worried about what we're doing to protect ourselves and our data.

Matt: 05:58

I can't remember, it was just announced today or yesterday. A reasonably significant news outlet had fired their art critics and replaced them with AI.

Andrew Escobar: 06:08

Oh God.

Matt: 06:10

Who wants to read AI generated art criticism. Like, who, literally, who in the world would like to read that? And I think the answer is literally nobody.

Andrew Escobar: 06:22

Nobody right now, maybe.

Matt: 06:25

Yeah. Until... And that what it's going to do is AI will be judging AI generated art for the purpose of AI consuming AI generated art criticism. And then we can just ignore it.

Andrew Escobar: 06:39

Hopefully.

Matt: 06:40

Yeah, right.

Matt Voiceover: 06:43

One of the things that's so important about Andrew's perspectives here is that the temperature is low, the future of anything is by definition uncertain. And if you add AI to the mix, well, I challenge you to predict next month, let alone five years down the road. A lot of the dialogue around boards and AI suggests that being behind the curve is basically like having a terminal illness without knowing it. Or they're told that everything's going to be fine as long as AI is at the core of every agenda item. Neither of those extremes is practical for most organizations, nor are they rooted in the reality of this whole uncertainty thing. In hindsight, I wish we'd done a deeper dive here, but so it goes. You could always make an AI generated podcast if you want to hear more. Thanks for listening to Sound-Up Governance. If you enjoy the show, please spread the word.

MUSIC NOTES:

Today’s music started with me listening to the end of the song Hearts Alive by Mastodon. The end, in this case, means the last three minutes of a roughly 14-minute prog metal journey. It’s one of my favourite rock guitar moments ever. Anyway, the connection between Hearts Alive and this gentle, chill trippy guitar thing will only make sense to anyone who’s got a guitar in their hands and plays both tunes. The lineage will be at least a little clearer. I played this on my Fender gold foil jazzmaster. All the rest of the sounds were done on my Moog Sub 37, which I’m always delighted to have an excuse to bust out.

Matt Voiceover

00:09

Welcome back to Sound-Up Governance. My name is Matt Fullbrook, and today's the eighth episode from my epic conversation with my friend and trusted governance ally, Andrew Escobar. If you've been listening to this whole season so far, can we just take a second and marvel at how much cool stuff Andrew has to say? And there are still at least three more episodes to go. Today he gives us some advice about how to build confidence as a director that you're being useful to management. After all, management is the consumer of the board's work product. So why wouldn't every director be deeply interested in being useful to them? Let's hear what he has to say. 

Matt

00:53

How in your world, your. Your experience as a director, how explicitly do you think about your own work, but also collectively the board's work through the lens of. To what extent is the stuff that I do actually useful to management? 

Andrew Escobar

01:10

I think that's a huge amount of my thinking. It really is my evaluation. That's who I actually want to be useful to. And maybe not just like your CEO or the senior leadership team. I think it's a bit more expansive depending on the size of the organization. But I always think about how is this work going to positively or negatively impact the work of the team? How does this cascade throughout the organization? And if it's not going to cascade, that's actually a problem for me. I would want decisions that we're making as a board or my input as individual director to shape a decision that is going to cascade potentially throughout the organization. And that starts with your management or senior leadership team. And so I do think about that a lot. 

Matt

02:05

How do you know or to what extent do you try to learn whether it is useful? 

Andrew Escobar

02:13

You ask! You can ask, believe it or not, you can just ask if you're being helpful or not helpful, and are you being constructive or not? Because sometimes you're creating work for a team as a board or as a committee. But that might be okay. It's not about making. I've always said it's not about making a CEO or a team's job easier. You might in fact be making their job harder. But it might be useful to you as a board, but. And in your view, useful to the organization as a whole. But it needs to be well received by the management team in some way or another. Right? 

Andrew Escobar

02:56

There's a recognition that, yeah, you're asking a lot of questions, or this specific question that's going to be tough for us to get you answers on, or this initiative is Going to be hard for us. But we understand the reasoning behind it. Right? That that decision is clear to us for these reasons, right? It's not about just making decisions. It's about understanding why the decision was made. So it's constantly checking in and making sure that it is being well received or understood. Like, okay, we made a decision. Do you understand that decision? And that seems obvious, right? Well, like, you made a decision. It's, it's clearly minuted. You can walk away from it. It's gonna, it's gonna happen. Maybe not. Sometimes it doesn't. Or sometimes it's not prioritizing the way you thought it would be. Or they're off to the races and prioritizing and you thought, "okay, well, this isn't a... we didn't need this done now, like, let's hold off on this.". And so how do you do the work of a director? How do you aim for good governance if you're not checking in with one, each other on the board, but two, the management team? And how are you going to do that? Because it's maybe not up to me as an individual director to be checking in. Is it the chair, Is it the committee? That is a whole other challenge around good governance. 

Matt

04:10

So is that, when you think about this question, the bigger question of like, am I used doing things that are useful to management, or is the board doing things useful to management? Because I agree with you, it's an important question to say, okay, well, who should be asking the question? Who should be interacting with management to figure this out? Let's say that person is not you. Let's say there's, you know, it's clear Andrew's not the guy who's going to have this conversation with management. How do you learn whether you're doing anything that's useful? 

Andrew Escobar

04:43

I don't know. 

Matt

04:44

Yeah. 

Andrew Escobar

04:44

I'm going to tell you, though, maybe it's the opposite. I'm going to actually approach it to the time when I had most clarity around if what I was doing was helpful or not. And that very much was taking it on myself to ask the team, is this helpful? How are we getting in your way? How does that impact you? I want to know what we can be doing different. And I might not agree, but when I did that most clearly every time it was beneficial, I think to me, and I would like to think to the board as a whole. But it wasn't always formal. It wasn't like the reporting structure of the chair will bring this to the CEO in their debrief and then report back. 

Andrew Escobar

05:31

Sometimes it's just an informal chat or sitting next to each other at dinner and having that again, that relationship with them where they can be honest with you and you can be honest with them. And that's, you know, thinking back to relationships, I think that is fundamental. 

Matt Voiceover

05:50

25ish years ago, at the beginning of my career studying corporate governance, I spent a majority of my time reading granular details in public filings from big Canadian corporations to gather data for a couple of different projects, including one that continues to this day as Board Games in the Globe and Mail newspaper. At the time, there was this conventional thinking that any personal ties among directors and/or executives was worthy of suspicion. Like if we knew that two directors on the same board had worked together before or were members of the same country club, we'd basically think of it as a gotcha moment and assume that they were in cahoots. Andrew's point today, though, is a perfect example of why that thinking is completely wrong. Social ties can lead to trust. Trust can lead to honest conversations, which can lead to valuable feedback, etc. Let's hold onto this message the next time we feel the urge to judge a board through a cynical lens. Next time we take a total left turn and talk about AI. So be sure to subscribe if you want to stay up to date. And if you want to learn more about today's music, check out the notes at the end of the post at groundupgovernance.com. If you enjoyed today's episode, please tell a friend to check out the show. Thanks for listening. 

Music Notes

Today’s music was a total experiment. In my files, the track is called “I’m a DJ”. Not because I’m an actual DJ, but…I pulled out some fun DJ tricks to make it happen. It started with the slightly spooky echo guitar part, which I played on my Fender Gold Foil Jazzmaster using some effects on the Headrush MX5. The drums were a combination of “finger drum” style playing (especially the slightly sloppy hi hat sounds") and sequenced (kick and snare), which led to a bit of a sloppy feel at times. Oh well. The bass is just a sawtooth synth. All of the drums and bass were done on the Teenage Engineering OP-Z. The actual DJ part was knitting the track together “live” using the TX-6 and TP-7. All the jittery re-starts, the muting of the bassline, the little record scratch sound, etc. was me just doing DJ tricks. Again, not perfect. But it has a fun energy, right?

PS: Every time I’ve been in a guitar shop with the Gold Foil Jazzmaster, all the guitar nerds act like they’ve seen a celebrity. Not because it’s the best or most sought-after guitar in the world. It’s really just that sexy to look at in person.

TRANSCRIPT

MATT VOICEOVER

Welcome back to Sound-Up Governance. My name is Matt Fullbrook and I'm back for another episode with governance rogue and open finance expert, Andrew Escobar. We left off the previous episode talking about the potential for informality to enhance decision making in boardroom. Today we build on that and suggest one very specific, highly doable thing that you and your board could try right away. It's easy, it saves time, and it costs nothing. Before we get there, I'm going to drop you into the middle of a point I was making to Andrew about how Nobel laureates in science have something really interesting in common with each other.

MATT

What was that study? What did they find? 22 times more likely than a sort of normal scientist. Nobel laureates are 22 times more likely to be artistic performers of some kind. And, 22x is such a big number that there has to be some causal thing happening in one direction or the other. I don't know what. Like, it's too abstract for me to be able to say what, but it occurs to me that, like, this idea of art enhancing technical skill or the other way around, I'm not sure which, is something that boards probably really want to think about. Right? And if that's true, if it's true that art and science enhance each other in some way - in a person, not in the world, but inside a person - that art probably matters for boards in a way that hasn't been considered. Bringing this up because this... It's not an informality. It's a, like, letting go of the comfort of formality for a moment. It creates an opportunity for us to engage in these things in ways that we would never do with, like in a super structured environment. Then maybe that's part of the art. I don't know.

ANDREW ESCOBAR

The art versus the science of decision making?

MATT

Yeah. Or of getting together as a group and doing something useful in a boardroom, whatever that is. Right?

ANDREW ESCOBAR

There's probably something to that, because when you think about what are the times that I've most enjoyed myself in a formal board meeting or in a formal board setting, probably there was a bit of artistry to it in that it was unstructured or there was intentional time for unstructured activity, thought like that... That is a bit of an art. And I don't know how to. You can't quantify it.

MATT

There's no mystery that people learn very effectively through play. Right? It doesn't matter if you're 2 years old or 200 years old. Play helps. I'm not saying that we want to make board meetings playtime, but we do want to learn stuff. Right? And I think there's the... We avoid a lot of shortcuts like taking informal moments or introducing play or whatever things that might make our work better and faster. Because as you say, like, it just doesn't feel like what a board is supposed to do. I think it's a really stupid, conventional, constraint.

ANDREW ESCOBAR

This is one of the things I've always wanted to do and I never have and hope I get to do it in the future. Maybe there's a bit of artistry to this. Like, I've always wanted to take a board decision and instead of delegating it in the early stages to a committee or figuring out how the board is going to tackle it, maybe divide the board into two. And have both groups, like, they're not committees, they're just, t hey're just two groups of the board, approach this in potentially radically different ways. What would happen? Would that get different results? Would that raise different issues? Like, what would happen? And again, like, I don't. I don't know if that'd be a good use of time, but it might be a great use of time.

MATT

Well, this is. You're leaning into something that I. I mean, it's actually so mysterious to me why boards don't break into small groups during meet. During board meetings ever. Like, literally never. I've never seen it happen except for when I've like, forced them to do it.

ANDREW ESCOBAR

I've never seen it happen in a formal meeting. I've seen it happen in, you know, strategy, strategic planning. We set a day and so, you know, three groups, different rooms, doing, yeah, really great work. But why, why can't you. What's stopping you from doing that in a structured meeting? A lot, but. But I don't know. Figure it out.

MATT

Right. And when you say a lot, it's mostly none of the... We could make a list of the things, but none of those things is provably good. None of the reasons why we don't do this are like, oh, well, yeah, that's a great reason not to try breaking into groups

ANDREW ESCOBAR

Because they're solvable. You know, like, oh, well, how would we minute that? I don't know. You would have.

MATT

Ask your lawyer.

ANDREW ESCOBAR

Yeah, ask your lawyer. And maybe they would tell you you can actually just have a section of the meeting that had three separate minutes of those groups. I have no idea. But find a solution.

MATT VOICEOVER

Oh, man. This is why I love Andrew so much. " I have no idea, but find a solution." I might adopt that as my corporate governance mantra. And it's true that many of the organizations I've met over the years feel like the most difficult obstacle to trying new approaches to the way that their board and executives do their work is that it just feels like they don't have permission. On top of that, it's not like there are all kinds of other boards out there doing interesting new stuff that you can learn from. Whether you like the idea of breaking into small groups or not, I bet you can already imagine how it might be helpful to some boards in some circumstances. Anyway, thanks for listening. There's more to come with Andrew, and at the time of recording, I'm not sure what music will go with this episode, so please check the music notes at the end of the episode post at groundupgovernance.com for more info on that. Thanks for listening.

MUSIC NOTES

This beat happened because I loaded a really fat sounding sawtooth bass synth sound into my OP-Z and just started mashing a note in particular rhythm that i liked and sequenced a beat over it. I added some kinda spooky percussion that reminded me a bit of Numbers on the Boards by Pusha T (which I LOOOVE). The guitar doodles are on my sparkly Gretsch using some effects on the Headrush MX5. This was all recorded through the TX-6 and TP-7, and then mixed down back through the TX-6, which is also where the stuttery tape effect on the guitar came from. Quick and dirty - nothing fancy. Just caught a vibe and went with it for a sec.