Directors’ Discussions: the magic dust

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“It’s not the rules and regulations. It’s how people work together.” Jeffrey Sonnenfeld

“Boards should be: seats of challenge and inquiry that add value … the high-performance board … is competent, coordinated, collegial, and focused on an unambiguous goal.” David Nadler

“… build a context in which exciting conversations can occur, so that people can learn something new about themselves or others, discover new insights, hear and make counter-intuitive arguments, and come to creative and novel solutions to problems” Lynda Gratton and Sumantra Ghoshal.

“Conversation … is the magic dust that underpins board effectiveness”. Tomorrow’s Company

Verbal communication is the hallmark of human social interaction; and the product of human interactions determines the behaviour and performance of organisations. Thoughts are exchanged verbally in discussions through conversation (informal exchange), dialogue (formal exchange) and debate (formal contest). Healthy discussion is an opportunity to express thoughts, to acknowledge differences and similarities in thinking, to demonstrate interest in and harness others’ thoughts, to develop both understanding and new thoughts and to arrive at good decisions.

Gratton and Ghoshal’s taxonomy of business discussions is based on the mix of technical authenticity (e.g. analysis and rationality) and emotional authenticity (e.g. belief systems, feelings and meaning). Although they did not explore the application of their taxonomy to boards of directors, each species of discussion has its place among directors and requires appropriate time, space and business context.

Dehydrated talk is neither technically nor emotionally authentic. While it’s dry, and ritualised, it is sometimes appropriate, e.g. for correction and approval of minutes and for declaration of interest in a matter before the board. Dysfunctional dehydrated talk tends to dominate board discussions when rules, usually unwritten, formalise how people are addressed and who speaks when, for how long and on which subjects. It also dominates when the setting is one of constraints and allocation of insufficient time for exploration and discovery.

Disciplined Debate is technically but not emotionally authentic, although debate may generate emotions! Healthy board debate is a Socratic dialectic of thesis, antithesis and synthesis. It is a robust, rigorous routine that directors can use to arrive at decisions, such as investments and divestments. Important ingredients for productive, disciplined debates are access to the same information, fair process and clear decision-making criteria. While useful, debate is constrained to discrete, known options and, therefore, it is not creative. Even after healthy and robust debate, decisions may fall foul of the traps of decision-making, such as bias towards confirming evidence and maintenance of the status quo. Disciplined debate may be followed by creative dialogue.

Creative dialogue is technically and emotionally authentic verbal exchange among thought peers. Its purpose among directors is synthetic, creative and decisional: to develop new insights and understanding from different perspectives; to decide what’s right and good; and, ultimately, what to do and not to do. Its form is captured in a somewhat oxymoronic phrase: structured, but flexible. Creative dialogue requires preparation, adequate time and no distraction. Active, articulate participation is essential for creative dialogue, but it takes time for boards to develop a willingness to ask big, broad and deep questions and for directors to express a point of view, while being open to consideration of different perspectives.

Intimate exchange has low technical but high emotional authenticity. It usually takes place in informal settings. It’s an opportunity for directors to exchange what they stand for, to demonstrate care and trust and for a modicum of humour. Intimate exchange is the portal to a collegial or friendly atmosphere ‘in the boardroom’, to unity of purpose and esprit de corps, which is common to effective boards, but sadly missing from ineffective boards.

Effective boards develop a rich social context that enables healthy discussions, especially creative dialogue. Such a social context makes directorship energising, satisfying and worthwhile; its features include:

Mutual trust and transparency (congruence between what directors think, say and do) that enables candid exchange of thoughts;

Self-disciplined work that delivers on promises;

A moral purpose and clear business goals;

Values that create clear, but wide boundaries for the direction and content of discussion.

Boards usually comprise members who are diverse, well educated, and expert at something. Such groups are prone to become dysfunctional! Some features of a dysfunctional social context in a board include:

Strict form and routines;

Distrust;

Arrogance;

Bad behaviour; and

Threats of sanction.

Dysfunctional discussions such as inappropriate dehydrated talk and hostile debate lead to a dystopia of disharmony, distrust, dissatisfaction, disaffection and dismal outcomes.  

Somewhat counter-intuitively, a board’s most fruitful discussions may be intimate exchange of thoughts because they are an opportunity to demonstrate care, to develop camaraderie (mutual trust and friendship) and to collaborate in getting work done. It also creates the harmonious social environment necessary for Socratic debate and creative dialogue.

Roger Stewart©

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Roger Stewart is a truant from medicine and academia. He has been both an executive and non-executive director of companies in Southern Africa, Europe and the USA. He is a Fellow of the Institute of Directors.  He applies systems and value thinking to complex problems such as governance. He writes on corporate governance in his personal capacity.

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