S2E6 - An easy shortcut to avoiding director liability? (feat. Andrew Escobar)

TRANSCRIPT: MATT VOICEOVERWelcome back to Sound-Up Governance. My name is Matt Fullbrook, and when I left off last time with Andrew Escobar, governance nerd and reliable partner in exploring vaguely countercultural topics, we had talked through an exercise that I conduct with boards and executives on considering the benefits and harms of our decisions on a variety of stakeholders. Andrew had expressed some concern that focusing on harms might be distracting to boards when they're trying to drive toward a positive organizational purpose. And that's where we pick up our conversation here.MATTIf I put this in an overly blunt way, not thinking about the harm is where boards actually get in legal trouble, because the manifestation of the actual liability in the real world - which is rare, we both know that this, especially in Canada, just doesn't really happen - but it's when you harmed somebody and didn't talk about it, where it was thoughtless harm or negligent harm or sabotage. But that basically never happens. But it's like if you say, "no, we're going to benefit these guys, not considering the downside to others," and then those people say, "well, you harmed us. We're going to sue you." As long as you could say, "no, we know and we're sorry, but we did this because of these reasons," then the courts are cool. But if you say, "shit, we didn't think about that!" that's where you're in trouble. Right. So, I agree with everything that you're saying and think that framing it as harm kind of matters. Right. Because if boards - and I know we've conditioned boards to be very sensitive to liability. That's the solution. Right?ANDREW ESCOBARThe challenge with that is that when you're focused on the harm or the downside...When you focus on that fear of doing the wrong thing, of making the wrong decision, then no decisions are ever made or easy decisions are made.MATTYeah. So I wonder if it's the. If you take the combination of all of these things. So, like, we've got a purpose, we've. Got a thing that we're aiming towards. It doesn't mean that we always take the most linear path. No matter what, no matter what damage we cause, the collateral damage we cause. We might deviate a little bit from the straightest path toward the purpose, but at least we know where the gravity is. And we take time to consider the groups and individuals that stand to be affected along the path towards our purpose. Say out loud, of those who are going to be affected, who benefits, who might suffer. Does the gravity of purpose not just still pull us along? Or does fear keep us from doing anything? Do we just sort of stay still as long as we have said that we might harm somebody?ANDREW ESCOBARThis doesn't answer your question, but I just, I couldn't help but think of, for each decision that you make in a boardroom, ranking all of your stakeholders or constituencies and try to figure out that question of harm and benefit. And does that actually fit with our shared understanding of purpose and our way of decision making by values? That's an interesting way to think of it.MATTThis is exactly what... So let me describe though, because I love what you're saying. This is what I try to convince boards to do. I say, hey, we just in 15 minutes heard everybody's voices, built alignment, if not agreement, around how we feel the priority of these important stakeholders should pan out in the context of this decision. The first pushback that I get when I say to them, "I believe you should do this. This is a better way to spend 15 minutes than literally any other thing you might spend 15 minutes on when an important decision is at hand, especially early on in the decision." A lot of them are just like, "we really hear what you're saying. We agree with you. I just can't see us doing that during a board meeting." I'll stop. What do you think?ANDREW ESCOBARI think that where might that pushback come from? It doesn't feel like real, tangible, productive work. Maybe it feels silly to them. I think where the power might come from, it is that it's this, like, loose exercise that you can do, and that might be revealing when you do it. Sometimes when we're making decisions, we put too much structure and process around the decision. And I think that structure is important, intent is important. But if you don't also leave some time for what's unstructured. Right? Be intentional about your unstructured time. That is probably... that cannot get you good decisions.MATT VOICEOVERCould Andrew's instinct be on point here? You can't have good decisions without leaving room for intentionally unstructured exploration? We'll talk about that more next time. For now, reflect on your own experiences as an executive or board member, or even just someone who makes consequential decisions with other people in your life. Of course, planning and structure help, but do you also need a bit of informality to reach the best conclusion? Thanks for listening. And by the way, if you're really listening, you'll hear a bit of jankiness in today's music. If you want to know more about that and some other info on how I made the tune. Check out the notes in the post at groundupgovernance.com. If you haven't already, or even if you have, please take a second to like and subscribe and especially spread the word about the show. See you next time.MUSIC NOTESI mentioned this one is a bit janky. My first problem was that for a few minutes I really liked the sound of maj9 chords - in hindsight, it turned out pretty cheesy. The bigger issue came from me recording the original guitar part to a click track, but then only having time to create drums using a sequencer (no finger drums this time). Sequenced drums are super precise, like a metronome. So, it quickly became obvious that the time feel of my guitar playing was…not awesome. I was running out of time, so I quickly re-recorded the guitar in one take, came up with a bass thing in 2 minutes and recorded that in one take and totally ignored the enduring cheesiness of basically all the sounds in this recording (especially the hilarious drum fill in the middle, which you probably can’t really hear underneath the voiceover in the outro).Anyway, despite all that I think this one is kinda fun. I knew when I started this project that there would be some awkward music moments. The guitar I played is the very sexy Gretsch Limited Edition Sparkle Jet. The bass is just a regular old Fender Precision. For both the bass and guitar I used some presets on the Headrush MX5. The drums are from the Teenage Engineering PO32 Tonic. I recorded and mixed this on the Teenage Engineering TP-7 and TX-6. This whole setup is the epitome of modern, compact, computer-free recording. No mics, no guitar amps, no editing. So fun. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe