Problem Solving With the Board of Directors
Management teams run the company, and the board of directors provides governance and direction to do so. That seems simple enough to maintain some role clarity. A useful guiding phrase, repeated often by those with board experience, is “noses in, fingers out.” The meaning of that phrase is that you, as a board member, should stick your nose in and poke around, but keep your fingers out of the day-to-day management of the business as that is the responsibility of management.
Most of the time, that works quite well. Everyone has their roles, processes operate as they should, and the world keeps on spinning. Where it goes wrong is when things change then the roles, or the tasks, aren’t quite as clear. Shifting expectations and new challenges are two places this occurs, and we will explore both.
This is made more difficult by the fact that most board members are operators in their own right. They are either current or retired CEOs or coming from other executive roles, and they are used to solving the set of problems in front of them with their best set of solutions. They are problem solvers, and when solutions are needed, it is difficult to turn that off. This can lead to confusion between the board and management – who owns the problem, and who owns the solutions?
Old problems in a new light
Sometimes the balance of how a topic is managed is thrown into imbalance, which requires shifts in roles and the nature of the work. Most of the time, this is because there are new opportunities or because the challenge is more difficult than before. The topic of strategy comes to mind. The role of the board in shaping strategy has changed quite a bit over the last 20 years. There is a good reason for that – strategy is more dynamic, and the world moves faster, and it requires more engagement and partnership between the board and management.
Strategy is a form of problem-solving. You are establishing clear gaps that must be closed, understanding cause and effect, shaping and testing various solutions, and putting them into action to close the gaps. This is problem-solving, just with more variables and often new territory to breach. Much of strategy is simply prioritizing which problems you already know about are most important. This oversimplifies the matter, but broadly speaking strategy is about solving problems.
The old way boards would engage in strategy focused on two bookend moments. On the front-end boards would offer a little input, ideally helping shape the problem or at least asking some good questions that help with the strategic thinking. On the backend, boards have a role in judging and approving the strategic plan, although often at this point you are so far along that you don’t have much choice but to approve the plan.
There has been a legitimate push over the past 10-20 years for boards to be more involved in strategic planning. In many polls, the company strategy is often listed as one of the most important topics on the board agenda. After all, focusing on execution of a bad strategy is a bad approach. To meet this challenge, many board members take the half-step of throwing strategic solutions on top of the pile of ideas. These fall into the category of “if I were king for a day” but also violates the “noses in, fingers out” standard.
A better way for boards to engage is to be highly engaged but not just about bookends of the process, but in the two following ways. First, be highly engaged in framing the strategy gaps. Is the magnitude of the gap clearly understood? Is it stretching far enough? Are the boundary conditions the management team puts on themselves too constraining?
Then, rather than second-guessing the outcomes of the strategic planning process, poke at the process itself. Ensure that the management team has a sound, robust process for developing their strategy. How are they going about grasping the current state? How are they executing the known factors, versus exploring the unknown factors? How are they developing and testing potential new solutions?
This is difficult because you are working against past practice, momentum, and most likely your own instinct. It is difficult to reset your engagement as just a single board member and so it is worth discussing as a group. Equally difficult but for different reasons is engaging in new problems that require the board’s attention.
The urgency of the new problems
New problems pop up every so often that require the board’s immediate and ongoing attention. Recent examples include environmental impact, cyber security, and DEI (Diversity, Equity, and Inclusion). There is a typical evolution that these issues go through. First, the board of directors becomes very involved at establishing its importance, and where the organization should position the topic in relation to other issues. The second phase is offering solutions, usually considered best practices and largely accomplished through copy-and-paste learning from what other organizations are doing. This phase can go on for quite a long time. The third phase, which represents a sense of maturity and a return to the norm of “noses in, fingers out” is ensuring that there is a process, complete with metrics, that the management team will use to engage the challenge.
The best path forward is to skip over the 2nd phase, or at least ensure it is as brief as possible. Time spent in this phase can be very confusing, while ideas coming from every angle with no clear means to organize, sort, and prioritize the ideas. Push for a focus on the process early on. Even if the management team does not yet have a handle on the topic and is unable to do things such as establish metrics and decision-making criteria, the questions will drive them in this direction while ensuring they still maintain ownership and accountability for the topic.
These are some topics that the board can help frame along with the management team to ensure there is a good approach to navigating the topic.
- Is there a discrete and defined gap to close, or is this a perpetually moving target? Information security, for example, is always a moving target and will likely always be, so continued search for the gold standard is as important as closing the known gaps.
- Is this a single big problem, or hundreds of smaller problems? This is important so that you don’t go chasing big programs when instead you need to ignite the organization’s ability to solve many contributing problems.
- Who owns the problem? Is this challenge something that should have a dedicated owner, should be assigned to an existing officer, or should be collectively owned by each executive beginning with the CEO?
The earlier in the evolution you begin framing the process by which the big challenge is being managed, the sooner the management team can take ownership and drive the solutions forward.
The relationship between the management team and the board of directors is dynamic. The equilibrium is thrown out of balance when shifts in topics, or brand new topics, enter the conversation. Pay attention to the role clarity and underlying process and you will maintain the effectiveness of both groups of participants.