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Reflections on 5 years of board service

by Jamie Flinchbaugh on 12-10-13

Boardroom 002

I’ve written about lean in the boardroom, and plan to write much more on the topic. I recently resigned my post at the Board of Directors of a privately-held company during its turnaround. Upon my planned departure, I wanted to share some of my reflections on this experience, as each board of directors is unique, just as each job of any other kind is unique.

Composition matters (more than most think)

Great hay is made when a sports team recruits the star athlete, for talent is very hard to develop through just a little more hard work. But if that player doesn’t connect with their team, learn to work together, then even more news is made of their failure. In every team sport, team performance becomes more important than the performance of any one individual.

Boards of directors are just another team. Too much is made in the news of one “star player” joining a board expecting that just through their involvement, the whole company will do better. Experience is important. Judgement even more so. But if that judgement cannot collaborate with fellow board members and with management, then what good is it?

The reason a board of directors has multiple members is for the purposes of collective wisdom, debate and dialogue, and the combination of different perspectives. Don’t just recruit clones of each other. And don’t recruit for talent as much as fit.

Noses in, fingers out (old news, but where is the line?)

This is an old saying for board members: “noses in, fingers out”. What does that mean? Noses are for sensing. Fingers are for manipulating. When the board gets too involved in management decisions, there are several negative consequences. First, the board is just never going to spend the same bandwidth with day to day issues that management will. Even with significant skill, management will be closer to more of the details that matter. They are in a better position to make day to day management decisions, and if knowing that, you still don’t trust them to make the right decision, then maybe it is time to find new management.

Second, management becomes disempowered. If they don’t know where the line between their decisions and the boards’ decisions, they will suffer from indecision, which is not a trait you want your management team to have.

So, the logic is sound. But the hard part is knowing where the line is. To understand key board decisions, to know if your leadership team is steering in the right direction, to know if there are hidden risks, or fraud, or threats, you must delve deep into the salient details. That doesn’t mean you’re making the decisions. But the more you know about the details, the harder it is to let management make the decisions.

This is one reason that former CEOs do not always make good board members of their own companies after they retire. Some learn how to extract themselves; others fail to draw new lines.

Strategy development is contextual

Is it right to have a 1-year strategy or a 5-year plan or a 30-year vision? How much effort do you put into making sure all of the pieces fit together? Should the board be involved in crafting strategy or just approve it? Should strategy development involve multiple layers of management or just the senior team, or just the CEO?

The answers to all of those are: “it depends.” Strategy development is highly contextual, and not just the content of the strategy but the process of development too. Under heavy short-term pressure, fewer people and more board involvement is good. A strategy may only have 2 or 3 points, and may only look out 18 months, with nothing more than a vague awareness that there is a future beyond this. In other circumstances, you look long-term, you look wide, you include many voices, you have elements of strategy that get you through the next 18 months and elements that prepare you for 10 years out.

There is no “right” way to develop and determine the strategy. There is no right form, no right measure of inclusion. It depends on the circumstances. The board’s first role is to make sure that there is a process, whether they have a role in it or not, and then to ensure the process for development fits the circumstances.

Some of the most important board work happens outside of the boardroom

Many people think boards are about holding votes, and Robert’s Rules of Order govern how a board functions. In fact, often the most productive board meetings have no votes except to approve the agenda and adjourn the meeting.

Board members serve their companies both inside and outside the boardroom. They advise CEOs and members of management on specific topics based on specific skill or expertise. They connect to useful resources from their network. They provide accountability to a management team to ensure certain vital but forgotten tasks are complete. They ask tough questions, both one on one and in the boardroom. They coach the CEO, and in some cases, other members of management. We enacted a board mentoring process, meant to assist the CEO (not replace them) in developing key members of management.

Boards are not about the boardroom. They are about the relationship. They are engaged at many levels and provide value in a variety of means.

There is obviously much more, but these few are at least the first that come to mind. In the coming months, you will see me writing more about the board of directors. There is little said, taught, written, or even applied about the relationship between lean and the board of directors, and I hope to shed some light on the role of lean in the boardroom, and the role of the board of directors in lean.

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