"There is a temptation for boards to meddle in management, because managing is more engaging than governing." Sir Adrian Cadbury
"Management is doing things right; leadership is doing the right things," Peter Drucker.
Ignorance about the role of the board is commonplace, not least amongst board members. However, the terms, manager, director, leader, executive and board member, have different meanings in different cultures. In this post, manager and board member are used with the following definitions.
Manager describes roles that involve decisions about defined spheres of operation and organisation. It covers levels from the leader of a project team or functional group, to general management of a function and even describes main board members whose activities are essentially about stability and optimisation. Managers’ time horizons are usually five years or less.
Board member is used for those in senior leadership with an increased share of accountability for monitoring the overall environment, internal, external, political, commercial, technical and cultural, and for directing changes to the structure of the organisation, to its position in its operating environment and for the identification of opportunities outside the normal scope of its operations.
Awareness of Environments
Experience of a single function does not equip a manager to understand differences between work environments. In former times, large companies moved potential leaders quickly in order to give them this experience. Those unfamiliar or uncomfortable with cultural differences do not recognise the varieties of culture that exist, still less the importance of variety itself. They think that one type of culture is best and can somehow be managed into existence. One manager, tasked to set up a new office and frustrated by requests from the board about cultural requirements, asked, “What type of culture do you want, exactly?”. The word ‘exactly’ betrayed his narrow understanding of culture.
Culture and environment are closely connected. Culture is part of the environment.
Critical Thinking
Companies, corporations and institutions are essentially autocratic and do not always encourage independent critical thinking. It is easy to fall in with this and receive promotions based on performance in line with targets. When Helmuth von Moltke (the elder) said he would never engage an officer who had not disobeyed an order, he referred to their ability to think clearly in the heat of battle, maintain a clear view of the purpose of the action, and be able to change their plans with the circumstances. He recognised that Critical Thinking is not bloody-minded cynicism; it is a cluster of Analytical Thinking, Conceptual Thinking, Information Seeking:and Organizational Awareness. It might be called Situational Awareness.
Systems Thinking
There is a risk when talking about Systems Thinking, that the listener hears engineering systems and imagines flow-charts, discrete components, defined operations, inputs & outputs and efficiency. Systems Thinking is close to the opposite. It is about setting boundaries within open, complex, unpredictable, ecological, evolving and often conflicting concepts. It is not an area that invites study by those who want quick outcomes, clear actions, and tools they can sell to clients. Although managers, consultants and business academics may talk about systems thinking, few have a way to engage with it practically. In order to meet business and personal targets, their approach is essentially reductionist project management with some inbuilt flexibility and review points. This works reasonably well for modest projects which can be discretely amended in response to a changing environment or requirements, but it fails when the commitment of capital and resources is great enough to demand multiple approvals, cash-flow commitments, milestones and performance guarantees. Leaders who have been trained in modest projects are immediately out of their depth if they try to scale up their learning to large programs and the result is the legacy of mega-failures everyone is familiar with.
Sense-Making
As one moves away from operations, “data” becomes too voluminous to manage. Leadership in directorial roles requires Sense-making—the ability to weave disparate signals (market shifts, social trends, internal morale) into a coherent narrative that gives the organization purpose. Sense-making has also been called narrative intelligence. If a manager manages workflows, a board member manages meaning.
Ambiguity Acceptance
Managers are trained to resolve ambiguity quickly. Board members must often sit with it, resisting the urge to force a premature (and likely wrong) conclusion just to demonstrate “control.” John Keats, the poet, called this Negative Capability, saying it is “when a man is capable of being in uncertainties, mysteries, doubts, without any irritable reaching after fact and reason”. It is a state of receptive passiveness that allows space for intellectual and emotional depth. F Scott Fitzgeral was close to the same thing with “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”
Acceptance of ambiguity is a long way from standard management thinking. Operational management is about “Either/Or“ (Cost vs. Quality). Board members are about “Both/And.” They must maintain high-level strategic flexibility while demanding operational discipline; they must be empathetic yet capable of clinical detachment. The ability to hold two opposing requirements in tension without collapsing into one is a hallmark of board-level maturity.
Time Scale & Scope of Liability
Five years is around the cut-off point when board members’ accountabilities take over from managers’.
A manager is responsible for errors of commission (doing the task wrong). A director is primarily liable for errors of omission (failing to see the change in the environment). This psychological shift—from fearing the “wrong move“ to fearing the “missed horizon“—is the core of the transition from manager to board member.
Personal Courage
On top of the thinking competencies is personal courage. Personal courage, particularly the ability to speak up clearly when convinced of flaws in a plan, is composed of a combination of internal convictions, emotional regulation, and strategic communication skills. It is not the absence of fear, but the ability to act in spite of it, and not to be paralysed into indecision.
Collegiality
Inside an operational function of a company or institution, norms are about protecting and growing the function. At top-leadership level the interests of the company or institution become prime even if they are against the interests of the function for which the director retains some form of accountability. Some fail to make this transition and act as if their seat on the board is representative, not collegial. This failure to transition to board-level culture may have become more pronounced during decades of relative stability. Companies and institutions increasingly lack the ability to gather and process information on markets, politics, social trends and technology; to analyse their own organisation in critical terms; and to foresee their prospects in the evolving scenarios. It is frequently argued that they have become increasingly reliant on third party consultants for this role.
Psychological Traits
Promotion to a high-stress, high-reward environment selects for a range of psychological traits. In making the transition from Manager to Director, individuals either have these traits or must learn to work with them.
It is increasingly difficult for someone who has risen through operational roles in a functional to comprehend, still less deal with, some of these psychologies. In the mid 1970s the pay of top leaders was 25 times that of the average worker in the organisation and it is now 300. With wealth comes power and the gap has increased the difference in the psychological profiles.
Working with this group requires the ability to build coalitions, manage stakeholders with competing interests (who do not report to you), and appear to navigate power without being corrupted by it. This need is frequently understated. It is not on a continuum of normal employee interactions. Top bosses exhibit four times the level of the ‘dark triad’ traits (narcissism, Machiavellianism, and subclinical psychopathy) than the normal population.
Image Creation
Directors create vivid images that build stories in the heads of the audience. “We are in the midst of a rupture, not a transition” projects two images. One is a comfortable transition, possibly involving personal opportunity (expressed with a soft sibilant word); the other a sudden, high-stakes crisis (in a hard plosive word). The contrast does the work of story-telling without Mark Carney even naming the players.
A Seat at the Table
We should stop viewing board membership as a representative right and start viewing it as a cognitive discipline. The table is not for those who have mastered the rules of the past, but for those who can navigate the ambiguities of the future.
Sadly Jim Brown’s plea, “Noses in, fingers out” in his book, ‘The Imperfect Board Member’ is unheard by many. It means that board members must know what is going on but should resist the temptation to meddle.
If a board seat is merely a prize for operational loyalty, the organization is already in decay. True board membership demands a “Both/And” maturity that few possess and even fewer are trained for. It requires the capacity to live with uncertainty whilst navigating the “dark triad” of power. The seat is available; the question is who has the psychological stamina and courage to occupy it.