Sound-Up Governance

This is our first ever video episode of Sound-Up Governance. Let us know what you think!Upcoming Tour Dates:May 12-13 (Brisbane) - Breaking Boardroom Patterns: Better Decisions, By DesignJune 10-11 (Toronto) - Working Effectively With Your Board: A Program for Senior ExecutivesJune 15-16 (Huntington Beach) - CUES Director Development SeminarTranscriptHi I’m Matt Fullbrook. It’s April 2026 and this is a special episode of Sound-Up Governance, cross posted on One Minute Governance. This is also the first ever video episode, so please check that out at ground up governance dot com and maybe on Spotify if I can figure that out. And the video part isn’t just for fun - I actually really want to show you something. It’s a super early visual sneak peek at my upcoming book with Nate Schmold tentatively titled The Hidden World of Boardrooms. And trust me - you kind of need to see it to believe it. More on that in a sec.FULL TRANSCRIPT AT GROUNDUPGOVERNANCE.COM Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Full transcript at www.groundupgovernance.com Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Intro Transcript:Hi, this is Matt Fullbrook with a bit of a first for this platform. Today, I’m sharing with you a full episode of SOMEONE ELSE’S podcast. It’s called Policy Crimes, and it’s hosted by a dude called Tristan Markle. The first season of Policy Crimes explores the question: what does homelessness cost? Through interviews with some super interesting experts and academics, Tristan discovers that the answer – financially, socially, politically, and more – is waaay more interesting and complex than you might think. But… in my opinion, at least, the complexity points to some important conclusions. I’ll let you explore those for yourself by listening.The reason Policy Crimes is relevant to the Ground-Up Governance world is that homelessness provides a deep and provocative case study for a constellation of decision failures. Failures that happen in the face of decisive data, unnecessary and extravagant spending, and human suffering. Exactly the types of errors that we hope to avoid through good governance in the boardroom. Have a listen through and see what lessons you can take away.I should also say that Tristan and I met, and have been close friends since we were 8 years old. We’ve done so much together and know each other so well that it could fill a whole other podcast. Speaking of which, stay tuned to this space because Tristan and I are going to put out an episode of us interviewing each other which will get posted here soon. In the meantime, you can learn more about the work Tristan and his cool team are doing by heading to srocollaborative.org and even doing a super nerdy technical dive on Google Scholar into his past work on cure and vaccine for HIV/AIDS. For now, check out episode 1 of Policy Crimes where Tristan interviews Professor Dennis Culhane from the University of Pennsylvania. If you enjoy the show, please take a second to subscribe and spread the word.CLICK HERE for a full episode transcript Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

A new long-form scripted podcast episode where Matt Fullbrook discusses the shortcomings of board evaluations and shares some new ideas to improve on the status quo. The argument builds on practical experience, academic research, and an analogy to modern music production.Full transcript available at https://groundupgovernance.substack.com/p/bonus-board-evaluations-dont-workbut Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt Voiceover Welcome back to Sound-Up Governance. My name is Matt Fullbrook and this is the fourth and final episode in this short yet super cool series about the relationship between corporate governance and human-centered design. Once again, the voices you'll hear belong to me. Michael Hartmann, who's the principal of the directors college at McMaster University, Karel Vredenburg, who was global VP of UX research at IBM, and Tara Safaie, who's the executive Director of Health and Organizational Innovation at the design firm IDEO. In this episode, we take some steps to answer the question, "how the heck am I supposed to get anyone in my boardroom to buy into this design thinking stuff?" In the process, we emphasize the importance of the individual - you maybe - in good governance, but we'll get there eventually. Let's start off with a question from Michael.Michael Hartmann One challenge I do find is thinking through. We need to renew our board in terms of bringing in some new energy, particularly in the digital space. So I've seen lots of CIOs, CTOs coming in only to find themselves very isolated. And it's the old adage that you need at least a coalition of three or more. So when you think about changing the profile and getting new energy on the board, you also have to think about how do they feel supported as well. Otherwise you're going to have an isolated voice for change. So just one little thing to put out.Tara Safaie And in that position, Michael, I think it's particularly worth noting we see this often with social movements.Matt Voiceover That's Tara.Tara Safaie And we sometimes talk about cultural change in organizations as they tend to mirror social movements. You do need that first instigator and then the most vulnerable position and the most precarious one is the first, that first follower. So that person that see, you know, we often use that video in Woodstock where there's one person dancing all alone on the field and this one person comes and joins and they're confirming that this person isn't a total weirdo. But it could also go south, right? The whole thing could flop. And then there's just two of them and now they've taken a risk and that risk has failed. But it is once you have that second follower and you support and encourage the vulnerability that that follower should followership takes. It is then that it gives kind of permission and encourages someone to be that third person, which then kind of gets you the critical mass that can kind of turn the tide and cause an upswell. And in the Woodstock image, you see the third person come, come over and the fourth, fifth, sixth and Then, you know, next dozen come so quickly. It's really clear that that's the point that it tips. But that vulnerability that, that first followership takes, it's. It's a really high level of vulnerability. And it's really important to ask if your organization, broadly, but also your board is setting the conditions for that vulnerability to not be punished.Matt I want to reinforce this by saying there's something really powerful in what you're talking about that I think is extremely... I was about to say rare. That's even not... That's not even a big enough word. I think one of the secrets in what you're saying when we look at it in terms of governance or decision making or especially if we're in a boardroom, is good governance can be the job of a person in a moment. Not the job of a system or some shared process or some shared ideas, but a person saying, I'm pretty sure we need A or B or C to happen, and I'm going to be intentional about a thing here and see what happens. And even if it fails, that's still an example, in my opinion, of good governance. So I think what you're saying is a really useful reframing of this as, yeah, sure, it's an us thing, but in any given moment it can be a me thing.Karel Vredenberg Yeah, I like that. I would, I would add one other thought.Matt Voiceover That is KarelKarel Vredenberg How you can even do this organizationally within a board. To Michael, to your point, in terms of now you've got, you know, these experts, but they're now isolated. I mean, the other way to really bolster this is your committee work and what committees? Standing committees, yeah, they're all required. But ad hoc committees, where you say, you know what, we're just going to put this task force together, basically, that one person can amplify their particular perspective by bringing in all kinds of experts. They just go do something for a month, present back with t o the whole board, sort of the next meeting, and you can now have this ground swell of that second person at Woodstock dancing, you know what I mean? So I think you can strengthen your particular perspective by actually using ad hoc committees.Michael Hartmann I know we've come to the final minute, so I'm just going to see Matt, to you and Karel and Tara, any concluding comments to the group.Matt F And I will go first because I'm the least important and I'll be very brief, which is, you know, I think that this is, this is a really useful illustration, having the deep expertise in design in this conversation to say well, it's clear to me now that these are basically the same things, right? Governance and design are the same in some ways, and we just sort of... It's the application that I think is a bit mysterious. And I'm really grateful that we got the chance to talk through it and get some really useful ideas. So thank you, Michael, for having me, and Karel and Tara. This has been hugely insightful for me, so thank you.Karel Vredenberg I love your summary, actually. Yeah, yeah, I love your summary. I would characterize it as product development without design is a disaster. And if you want to really optimize and be really successful, you need to actually use design for product development. I think the same thing with boards, and I really think that it's going to be even more important as we go into the next phases of what's happening in the world. Quite frankly, I think that boards are going to become even more important, and everything we're talking about is going to be more important, too. Over to you, Tara, for your final words.Tara Safaie I really enjoyed this discussion, and I might leave you all with one piece of, I hope, inspiring wisdom, which is that design loves constraints. So all of the challenges that we've talked about today and all of the considerations, all the groups, all the muscle memory, all those things are constraints. And design thrives within constraints. Without them, it would be too overwhelming. And so I encourage you all to adopt a bit of a designer's mindset, to look at some of these very real challenges with the optimism that design offers, and see those constraints as the edges of the sandbox, but with plenty of space in which to play. And that's, I think, what these methods, I hope, inspire you all to do a little bit more. Thank you all for the great discussion. It's been lovely.Matt Voiceover Honestly, listening back through this discussion, I think the most important takeaway for me is that I'm not alone. Yeah, yeah, I'm being dramatic. Still, I sometimes feel like I'm the corporate governance version of Tara's first guy, dancing like a weirdo at Woodstock while most of the rest of the space is watching to see if I'm trustworthy and insightful or if I'm just some obnoxious dork making a fool of himself. Thankfully, I'm pretty shameless and I believe in what I'm doing, and I kind of feel like I've found some important allies in the design thinkers out there. The trick is reconditioning boards, and more importantly, individual directors and CEOs and other executives to understand that they have more tools than they think. Think back to the ideas that have come up in this little series, from low risk prototyping to obsessing over the customer, to having the guts to be the second person who gets up to dance with the trustworthy weirdo. Without all that, progress toward truly good governance will be elusive and slow. Thank you to Tara Safaie, Karel Vredenburg, and especially my friend Michael Hartmann for making all this happen. And thank you for listening. I'll be back eventually with some more episodes on some other fun governance topic. In the meantime, if you're interested to know more about today's music, check out the music notes at the end of the episode post at groundupgovernance.com See you next time.MUSIC NOTES:Most of the time, whether it’s some simple background music like this or a more complete and thoughtful composition, it starts with just some small thing. In this case, I dialed in the vaguely annoying plinky sound on the Teenage Engineering OP-1 Field and just randomly hit a chord voicing that made me go “oh, I guess that’s kinda nice.” Except for the guitar (my Gretsch Sparkle Jet through a whole bunch of effects) all the other sounds are on the OP-1. Funny thing about the chord voicings that I plinked out is that they’re all pretty ambiguous without any other instrumentation for context. At first I thought about making this whole thing a lot more tense and weird, but decided it was good enough when I kept it simple. Still…I have to admit that the plinky sound gets on my nerves after a while 😑. As always this was recorded and mixed on the fly on the TX-6 and TP-7. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. This is the third episode in a short series of highlights from a webinar that I co-hosted last year with my great friend Michael Hartmann. He's the Principal of the Directors College at McMaster University. He invited his friends, Karel Vredenburg, who was Global VP of UX Research at IBM, and Tara Safaie, who's the Executive director of Health and Organizational innovation at the design firm IDEO. The four of us talked through a bunch of interesting questions around the intersection of corporate governance and human-centered design. In today's episode, we look at the general reluctance of boards to do anything that deviates too far from what they're used to. And, to many, design informed approaches will feel pretty foreign. Let's get the conversation started with Michael.Michael HartmannSo what, what can the board do to help create the conditions for, you know, for experimentation? So as opposed to that. That's a question that seems to be a very rare one because it's the opposite we quite often think about. But have you seen examples where that. Air cover has been, has been created or ways that could be created?Matt FWell, may I make a comment before we, before we get the, the answer? Because I want to illustrate some of what's working against us in this, in answering this question, Michael, because it's like the example, the famous one of the firefighters who all died because they wouldn't let go of their tools. Right? Their training is so in ingrained that even in a critical moment they can't let go of it. And every single bit of conditioning that that gets applied to boards causes them to be catastrophe avoiding machines rather than experimenting machines. And so we've got a lot right, I think about and I haven't been through the Directors College course, but I've been through a lot. I've been in a lot of classrooms for directors and I've literally never seen a case study that was about "let us model some great behavior." It's always "let's look at some awful catastrophe and try to learn how not to do that."Tara SafaieAnd can I add one thing there?Matt FYes, please.Tara SafaieLike even I might say that many people find themselves on boards because they were very successful in management careers doing exactly that in a management position and were conditioned in those situations to manage their board to not induce catastrophe and perpetuate that. Sorry, keep going.Matt FRight. No, no, no. So you really, you interrupted at the right moment because the point I think is made, which is the Michael, your question is a really important one and there's a Reason why these examples are scarce. Right? There's literally no, there's no modeling out in the real world of boards that says you know what, you really ought to be doing this. So I'm curious about the answer. I have no answer. I just have more flavor.Tara SafaieSprinkle more flavor on. Yeah, I might, I might offer one example and it's not a traditional board. But Karel, I'm curious about your answers here too. One is that I think family owned and run organizations do sometimes do this well. Sometimes they have professionalized in ways that kind of shove them into the track that you were just talking about, Matt, where they are like we're real, you know, we're real and professional company. We're going to do it like real professional companies do. And they, and that can work, but it also can fall can put them into the traps that you just talked about. But I think the particular mindset difference that I see in family run and owned organizations is that they inherently have a long term view. They are thinking about not how do I even maximize the value of this organization but and for shareholders and whomever. But they're often asking things like am I creating a company that my grandchildren will be proud to inherit? And it they are working towards things like pride and you know, and that type of deep purpose rather than working on kind of the minutiae of the way that an organization runs and then coupled with that. Actually one of our clients at an organization called Orbia is another conglomerate in Mexico. He said something while he was at the helm of this conglomerate. He said I have to make strategic decisions about this company and then I have to see everyone at Christmas. That is very personal. That I think does put that class of organizations kind of separate from the rest and sets them in a slightly different set of conditions that can cultivate that type of, of riskiness. But it can also have, have its, you know, downfalls. We often see that the odd number generations in family run organizations are the most risk taking and the even number ones are more conservative. First one was like the big entrepreneur. The second one doesn't want to lose the farm. The third one's like eh, screw it, the farm's been around for a bit. We can, we can take a big swing or context has changed and so on. And so that I think is a unique example that some folks here might find some inspiration from.Matt VoiceoverIt didn't occur to me in the moment but listening back to Tara's comments here, I realized that this generational shift in risk appetite might Be kind of analogous to system level or macro shifts in risk appetite socially. I mean, that'll unavoidably show up in boardrooms. One example might be generational differences across populations in general, as in, I don't know, what if Gen Z generally wants to take wilder risks than millennials? Or what if changes in political climate or the actual climate cause over shifts in risk tolerance? These may not be conditions that we have much control over, but they are certainly worth examining and acknowledging. We don't want to miss great opportunities just because of our age, right? Karel had some interesting ideas too.Karel VredenbergYeah, I think I, I would just reinforce two things. One is the selection of the chair of a board and if you choose just a really traditional, this is how we're going to run things. And you know, like you said, using the example Matt of the firefighter, these are the tools we're going to use and this is all we're ever going to use. And it doesn't matter what happens, this is what we're going to do versus a leader that can work really collaboratively with the management leader, CEO or ED, where they can really partner and say, you know what, we're going to give it some more thought in the board. You can still keep doing the, the, the, the month to month, but we want to take this different perspective and again bringing it back to design thinking. I think design thinking is that tool set and when I teach this stuff I have lots of follow ups and I'm sure several of you out there have had follow up conversations about how do I actually do this on the board, you know, doing a one day session that I lead, do you have the skills to be able to, to do this? And some people do, it's very natural for them to, to sink into this. And if they are also, if they have the kind of relationship with their board members that they can do the introduction of these kind of methods, that's cool. But some people need a professional to come in and do it and Tara's kind of organization probably would provide that and my old organization at IBM would do that as well. Where you're setting the stage for thinking differently like this and once somebody experiences it, it's the equivalent of your firefighter saying oh my God, there's other tools that I never thought I could use. And especially if you, if you write in a fire, but it's going to be a different type of fire that you've ever dealt with before, which is like what a lot of boards need to deal with. And AI is a good example of that, you need to have a different way of using different tools. And so the tools that I think we should be using are the design thinking ones to bring it back to that again.Matt VoiceoverInteresting, right? I suspect if you've spent any time in a boardroom, you've also spent a lot of time agonizing, or at least listening to others agonize about how to get all the normal work done in all the normal ways. The checklist is long, time is scarce, and the consequences are significant. It takes a meaningful mindset shift to seriously consider veering outside the range of normal behaviors, no matter how painful those normal behaviors might be. Is design thinking the solution for boards? Maybe. It certainly fits well with my vibe, but it might not work for yours. And that'll be the focus of the next and final episode in this little series in which we'll talk about the people part of this whole design and governance thing. Thanks, as always, for listening. If you want to learn more about today's music, check out the music notes at the end of the post at groundupgovernance.com Catch you next time.MUSIC NOTESSo there’s a weird preset on the Teenage Engineering OP-1 Field that does a little drippy synth arpeggio every time you press a key. I’ve always liked when synths have these presets because the harmony of the arpeggio is relative to the note you press rather than being set to a particular key signature. If that makes no sense to you, another way to put it is that it forces you to use kinda gnarly harmony, which is fun.Once again, this was all recorded and mixed using the TX6 and TP7, so there’s some slightly wonky edits and solos/mutes…which I also think is kind of fun.I was paying way more attention to making something cool out of the feel and harmony that I realize in hindsight that I used super cheesy drum sounds (also using the OP-1 Field), but I’ve always had a soft spot for songs like this, for instance, and feel 100% comfortable with cheesy drums. Also, if you haven’t heard what’s happened with T La Rock since 1984, it’s a pretty wild story.The only non OP-1 Field element here is the ultra noisy and slightly spooky guitar sounds. It’s my Gold Foil Jazzmaster through a bunch of weird effects on the Hologram Chroma Console and Chase Bliss Habit, and then into a really noisy/hissy Marshall stack emulation on the Tonex. I liked that hiss almost as much as the guitar part, so you’ll hear just that sound come in/out a couple of times. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. My name is Matt Fullbrook and this is the second episode in a short series of highlights from a webinar that I co hosted a few months ago with my friend Michael Hartmann. He's the Principal of the Directors College at McMaster University, and he invited his friends Karel Vredenburg, who up until recently was the Global VP of UX Research, IBM, and Tara Safaie, who's the Executive Director of Health and Organizational Innovation at the design firm IDEO. All three of Michael, Tara and Karel are experts in human-centered design, which I am decidedly not. Still, I see a clear and important connection between good governance and design. And that connection is what today's conversation is about. Let's get started.MattSo I did just the other day I looked on Amazon and just to see how many book results you get when you search for Beyonce and the number was I think 333. And the number of book results that you get when searching for corporate governance is 10,000. So by one totally unscientific metric, corporate governance is way bigger than Beyonce. I haven't read all those 10,000 books, but I have been over the past few years very obsessed with the like trying to figure out if or where there might be a consensus about what governance is... and there isn't. There's no agreement. There's a million definitions. Most of them aren't helpful, aren't action oriented, don't make a lot of sense. And so to me, when I talk about governance, I talk about it's the decision making part. So that just for clarity, that's what I mean. When I talk about governance, I'm talking about decisions. And when I'm thinking about boards and managers and the way they work together, I reflect on my 20 plus years in the space and realize that all of the complaints that I heard 20 something years ago are the same as the ones I hear now. Right? So the interventions that we've tried have not solved the we're stuck in the weeds or there's people in the room who talk too much or there's people in the room who don't talk enough. We have, we've got information asymmetry problems and time problems and so on. I think now that I'm learning more about design and this is where my question is, I think part of the way that design can be applied in a useful way in boardrooms, I haven't seen yet. I see design experts come into boards and say "let's become human-centered, but we're going to obsess over the customer." And I'm thinking, well, okay, in a, in a sense, the friction here is between board and management because they're creating work product for each other. Not even though the, the ultimate beneficiary of the work is the customer. They've got their own consumer here. If the CEO and management team became obsessed with the board and the board became obsessed with management and they were designing their work for each other, to me, that seems like there might be something there. But I, I would love your reaction to that framing and to either embrace or reject it and tell me why.Karel VredenbergSo I think that you can use design methods to improve anything.Matt VoiceoverThat's Karel Vredenberg.Karel VredenbergAs we do with the Director's College session that I run. We basically take whatever problem, one of the team members and they're all from different boards that are in a team. What are they dealing with right now that they need to fix? Might be, you know, the diversity of the board. It may be the, the relationship between management and the board. Whatever it is, you can use these methods then to hone into doing that. And then you're doing things like using the best ideas from the quietest person in the room. You don't just necessarily have the ones that are all the ideas that we've had in the past. Now you have new ideas to solve that problem as well. So think that we need to think about how to identify what the problems are. You know, at the beginning, beginning of the pandemic, it was like, okay, well how are we going to meet now? How are we going to actually do what we need to do? Well, that's a design problem. Let's actually work that through. And then also even the effectiveness of meetings saying, okay, well, there's different things you do at different parts of a board meeting. Something's just informational, something's just like, well, yes, yes, no and vote on it. There's other things where you need to go solve a strategic direction problem that you probably don't want to sit around a board, boardroom or, or a zoom room just presenting PowerPoint slides. I guarantee you will not be successful at doing really strategically new direction sort of work. You're going to have to do something that is more engaging, that is more design framework led basically to be able to really go a new direction. And, and you need to change the context for doing that. And so you got to not be in the same place. Now that we're not in the pandemic anymore, do it as an off site so nobody is in the place that they're normally in. So there's a whole new environment. I would say that some of that time you want to do it with the board and management together, because that's a big challenge in a lot of boards, is the relationship between the two. You both really have the same objective, but a lot of the time it doesn't feel that way. I think that it can be applied to any of the challenges that you've got.Matt VoiceoverBefore we hear from Tara, I want to drive home a specific piece of what Karel's saying here. As you heard me say a couple minutes ago, I sometimes meet boards that have embraced the notion of human-centered design, but then get conditioned to believe that the only humans who matter are the end user of the organization's products or services. On the other hand, I meet a lot of boards that aren't interested in design thinking at all because to them it evokes images of colorful post-it notes, games, improvisation, and other stuff that to them doesn't feel serious enough to apply in a boardroom setting. I think Karel has made a point here that might help to shift the perspective a bit, specifically that design informed approaches can help to solve any gnarly problem. Trying to be more strategic? Want a better balance of the voices in the room? Can't figure out how to get the board more engaged? Design methodology can help, even if it might feel a little informal. Let's hear from Tara.Tara SafaieThe question that you're asking Matt to me sits on a couple, sits behind a couple of concepts. One is that the interesting thing about this conversation about designing for boards in general is that you're transitioning from using design methods in a very direct way. Like team or product or company designs for user, user uses product. That's it. You're basically saying board like guides and designs for a team who designs product for customer and then customer uses it. And so you've quickly moved from this very kind of linear connection from, you know, the customer's world to a more systems level, you know, interconnected view. And often we find this in healthcare, right? Like many organizations, for example, in pharma, they can't design directly for the patient because the healthcare provider is sitting in the middle and the insurance company is sitting in the middle. And so all of a sudden you're up here and it's no longer one line that's across the system, It's a bunch of different zigzagging lines. I think the mistake that many boards make is that they don't always ask because the answer can sometimes be, scarily, " No." They don't always ask whether their incentives are aligned between the board and the management and ultimately to be in service of the consumer. I think when we say something like we should be human-centered, the underlying thesis of that is that by that organization being human-centered, designing effectively for their customers or patients or whoever's on the end of that, you know, of that line. By being human-centered, there are upstream benefits across the ecosystem. So if you are human-centered, then your organization will thrive, I think when you are operating at that system's level. Maybe my one tweak to your framework there, Matt, is that that design directly for one another might work if you are confident that the context around both of those groups is shared. So, for example, if they both understand that or they both adhere to the thesis that being, let's say, customer centered will yield better outcomes for their organization than not being customer centered, if they don't share that thesis, then this is just going to end up with, you know, a mismatch. They will be, you know, the management will be designing for board members who are trying to, let's say, maximize the output for shareholders, potentially at the expense of the customers. I don't know, in the short term, and the board's trying to get management to do something. And so if you are confident about your shared context, then I think maybe that design system would work. Both boards and management are in the business, if I may be so bold to say, of setting and designing conditions.Matt VoiceoverDid your ears just perk up? Yeah. So did mine.Tara SafaieSo what we often talk about in organizational designs is that one cannot mandate someone's behavior otherwise like. And new information doesn't necessarily always change people's behavior. All of us know alcohol and cake are not great for us, but on our birthdays, we might have a glass of wine and a slice of cake. And if all it took was shaking your finger at someone or giving somebody new information, I'm sure we'd all have six packs and eat only kale. But since that's not the case, what we often look at is what are the conditions around a group, around an organization, around a team that are pushing them or indicating or incentivizing one way of being over another. And because you can't directly mandate behavior, what you need to do instead to get people to behave in different ways is to reset the conditions or to alter the conditions in deliberate ways. So what Karel was saying about getting your board meeting out in a different location changes the conditions in which that conversation is happening, puts you maybe in front of customers where they're looking at you or you know, you're observing something different, or changing the structure of the meeting might change the conditions in which your strategic choices are being evaluated, or something like that. And so I think the key question is whether you all are like yes, boards and management could design for one another if they're operating in the same context, and if those conditions have been designed deliberately to yield, at least to the best of your knowledge, to yield the outcomes you all are after.Matt VoiceoverUnless you're a super newcomer to this Sound-Up Governance show and the rest of my work on the Ground-Up Governance platform or One Minute Governance or whatever, you'll have heard me talk 40 million times about my definition of good governance as intentionally cultivating effective conditions for making decisions. Needless to say, Tara and Karel are just presenting another really convincing argument to me that good governance is a design challenge. Tara's even using the exact same language as me, which I love. And I also love the specificity of some of the examples. Changing the venue can matter a lot, for instance. Or as Tara says, don't just expect providing information will change behaviour or generate any new big ideas. You have lots more conditions to cultivate. Thanks again to Michael Hartmann from McMaster University for putting together this group. We didn't hear his voice during the episode, but he's the reason why the conversation happened in the first place. We have a couple more episodes to go in this series, so stay tuned. If you're enjoying the show, please spread the word. For more info on today's music, check the end of the episode post at groundupgovernance.com and well, thanks for listening.Music NotesThis one, like many recent episodes, I built using the Teenage Engineering TX-6 and TP-7. I must have been watching some moody TV show or playing some moody video game or something because this has that reverb-y, murky thing going on that a lot of maudlin soundtracks use these days. Listening back, I think it’s a bit of a weird fit for this show. Whatever…I remember just playing some chords on my bass - I used a Fender Jazz V Plus for this one - and trying to figure out a way to make it feel good. It ended up in 5/4 time not out of any desire to be weird, but because the pulse of the tune just didn’t feel good in 4 or 3. The little guitar twangs are on my Gretsch Sparkle Jet. All the bass chords and nerdy lead noodling are on the Jazz bass. The percussion was all finger drummed on the MPC Live. I added a bunch of effects after the fact using the TX-6. Maybe I should start scoring TV dramas instead. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. My name is Matt Fullbrook, and today we have the first in a short series of episodes that come from a webinar that I co hosted a few months back with my old friend Michael Hartmann, who's the Principal of the Directors College at McMaster University. He invited a couple of his friends to join us. Karel Vredenburg, who was the global VP of UX Research at IBM, and Tara Safaie, who's the executive Director of Health and Organizational Innovation at the design firm, IDEO. I've become increasingly convinced over the past few years that good governance is a design challenge. If you're familiar with my framing of good governance as intentionally cultivating effective conditions for making decisions and also familiar with design thinking, then you already know what I'm talking about. I honestly had no idea at first that I was talking like a design guy, but now I'm all the way bought in. Tara, Karel and Michael further reinforced this perspective in our discussion. But we'll get to that a bit later. Let's start first with some definitions. The first voice you'll hear is Michael, followed by Karel.Michael HartmannI remember going out trying to introduce companies to this thing called design, and a lot of eyes would be like, blank, saying, what is this? 25 years later, 24 years later, it's ubiquitous. Design is everywhere. But as my colleagues will say, it's everywhere. Not done well. More often than not, we brought it into Directors College and for a couple of reasons. And we're going to explore those reasons. One, if you think about the core roles, responsibilities of board, CEO, selection, talent. Well, of course, strategy is a critical one. You know, setting the lanes for management, sometimes moving the lanes with management as well. But design is a really interesting way to think about strategy development and execution. I wanted Karel to maybe introduce some of the design. What do we mean by design? And for my colleagues around the table here, how can boards leverage design principles for better strategy? So that's a starting point, Karel, and maybe a question over to you.Karel VredenbergYeah, let's let me start. And some of the people that are listening, I'm sure have heard this story. If you were in my. In my session. But I love to share that I talked about design thinking at a university was an interdisciplinary lecture. The Dean of the business school said as a question later, said, we're all learning design thinking now. This is really, really good. Do we still need designers? I said, yeah, there's a difference between design and design thinking. And so the notion of design, that intentional process to research, ideate, and then actually create and then iterate on things that you're creating, whether it's websites, apps, products or services. That's sort of design and design thinking is really the, as it states the thinking, the, the way to actually take a perspective on a particular problem, to solve a problem in a, in a more intentional empathic, looking at all stakeholders and alike, more holistic sort of approach. And so that's how I see them being different. And the way that I've used design thinking in companies, both for typically the C suite I've worked with and, and then with boards, is really to open the aperture in ways that they've never thought before. There were a couple of instances where after I spent like a day and a half with, with them, they came up with a set of directions strategically where they realized that there were things that they came up with through this way of thinking that they realized there were certain things that were on their five year plan that were absolutely things they shouldn't be doing. And there were other things that were really simple to do but they'd never thought of them because they'd never used this design lens that now became their number one priority. So I think it's an incredibly powerful tool to be able to set strategy for an organization.Matt VoiceoverBefore getting to Tara's perspective, you'll hear her and eventually Karel refer to Agile. Now I'm no expert in Agile, so please forgive me if any of you listeners are experts and I'm messing something up. In short, it's a set of frameworks and practices originally designed for project management in software development that are rooted in certain priorities and principles. For example, it's more important to prototype, iterate and respond to change than it is to adhere dogmatically to a preset plan. Anyway, here's Tara's perspective on what human-centered design means for organizations.Tara SafaieMany of these approaches are a combination of pedagogy and methods and you know, certain steps that you're supposed to take. But they also introduce mindsets or ways of looking at and thinking about problems or context in a way that is different from how many organizations traditionally look at problems. So I think what's useful about design as a methodology, and you alluded to it, Karel, is that it often forces many organizations to think about their problems in a more human-centered way because you have to find a case for a desirable solution before you go on to actually making that solution a reality using more agile methods. Agile and design both have as part of their methodology iterative processes. So where you start in lower fidelity and progressively build your fidelity and an investment and things like that as you learn and as you fail and things like that. And so I think it's worth noting that while the methods themselves often yield great results and they are worth in many cases implementing in the right corners of an organization to yield the outcomes and the products that they can yield. And it's also worth noting where those mindsets that they're bringing to the table are most impactful so the two can be treated in conjunction with one another. And then to make them a more sustainable part of an organization's being, to make them really course through the bloodstream of an organization that requires much more kind of long tail change and a different type of approach integrating it into organizations where they're, where it's not present at the moment.Karel VredenbergHey, Tara, I want to just add one other thought to that and that is that of course, yeah, I always imagine it as if you think that you have this big canvas of what the solution was going to end up being. If you just do Agile, you'll start so say on the top right of that campus that solutions space. Right. And yes, you'll be able to iterate, but you're going to be roughly still in that top right quadrant of the canvas. Design thinking right at the front of it may well tell you that you really need to be in the bottom left to really serve the market. And that's whether products or services or work of a board where you want to think more deeply about what's the bigger picture view of where this company should go.Matt VoiceoverSo you'll already see an important intersection here with my framing of corporate governance as people making decisions in corporations, I the first and most important step in effective decision making is a clear definition of the problem we're trying to solve. As Tara and Karel are defining it, that's where design starts too. Okay, so let's start moving into some useful insights for boards. I mean the design world has in my opinion generally done a pretty poor job at helping boards to do their jobs well. With this in mind, Michael prompted our guests with a reminder that boards tend to be, well, risk avoidant. So how do we embrace design when that's our starting point?Michael HartmannBoard directors, when we query about innovation, one of the common feedbacks we get is we wish we could be more open to risk as opposed to de risking embracing innovation design. I also see that it's a really interesting way to kind of, you know, stress test and build a capacity for risk taking. And I don't know Tara, if you've got some thoughts on that.Tara SafaieYeah, absolutely. A couple of anecdotes. One is that I think organizations that have really adopted design in a powerful way in their organization, have adopted the mindset that ideas are disposable.Matt VoiceoverI just want to interject here. Imagine a world where we approached governance ideas as disposable instead of embracing them as orthodoxy. OMG, it's like a dream come true. Sorry Tara, you were saying...Tara SafaieThey have right sized the investment that they put into an idea to the maturity of that idea. So what I see many organizations do, particularly my, my clients in the healthcare space, is that they are very quick to jump on the first couple of ideas that they come up with because they are so deeply expert in the area that they're working in. Like many of them have spent decades learning to be the professional that they are. That expertise gets translated into these ideas that when, when thrown into the thunderdome of the real world or of a patient's world, let's say, just don't survive the key shift that occurs with organizations that are able to adopt design mindsets, you know, kind of deeply in their organization and adopt the level of risk that it requires. Have learned how to test their ideas in low fidelity ways. And so where they are able to identify the most core assumptions that they're holding, maybe because their expertise has kind of put blinders on them, or they only work with a particular type of customer and they want to expand to a new type, they don't know that customer as well, whatever it might be, that they're a western organization designing for a non western customer base or a global south customer base, whatever it might be. And so they're able to understand what the most deeply held assumptions in their solutions are and then design tests to test those assumptions in low fidelity ways. You can't build certainty in any of the paths that you're taking, but you can build confidence. So your goal in any type of design exercise, and again, organizations that have internalized this, know this deeply, your goal is not to be certain. Your goal is to gain confidence. And so organizations that are testing their ideas in low fidelity ways are testing whether their assumptions hold. And as they build confidence, then build the confidence to slowly invest more and more as the stakes get, you know, the stakes get higher. They've invested more in the, in the back as well. And that allows them some of the agility, as we were talking about before, to then respond to a change in market context or a change in the competitive landscape or something else that might shift where those assumptions were tested initially. The risk profile that most organizations have does not necessarily preclude them from having low fidelity and therefore small investment, high risk things on the side. What they are not seasoned in doing is then transversing the space between that low fidelity and very low investment idea to the full fledged one. That's really going to require a lot of money.Karel VredenbergYeah, I would just add, I want to amplify something you said too, like the low fidelity idea. That's really a prototype, right. And what is a prototype precisely? It's, it's really a low risk way of exploring something. So people talk about, oh, you really should be increasing your, your, your failure rate. You learn from failure. And everybody, you know Silicon Valley loves to say that, right? Yeah, they love to say it because 90% of them fail. But in fact, if they did the kind of things that Tara and I are talking about here, doing just a small prototype, it might be a new way of working as a, as a board, let's say. And you want to just try that out? Well, you can just try it out in your meetings. That's a prototype. And then after, let's say you do, you know, sort of an off site or whatever, let's, let's see what that was like, get some feedback on it and the like as well. So it's this whole mindset of, of doing small prototypes that can fail. But you're not failing big, you're testing first, seeing if something's going to work. And then if it's going to work, then you can scale it up and do it across a whole organizational like as well. It's a fantastic, phenomenal way to de risk by taking risks.Matt VoiceoverThat's a wrap on the first episode in this series. Let me just say that this prototyping approach really works in boardrooms. I like to think of it as crafting a 1% intervention rather than a revolution. An intervention designed intentionally and specifically to increase the probability that we'll get a, a better result in some small part of our work together. Maybe it's a change to reporting or a shift in our agendas, or a new conversation prompt after a presentation or a different lunch caterer. Whatever it is, the consequence of failure is essentially zero and the potential for learning is high. Stay tuned for the next episode in the series coming up soon. And drop me a note to let me know what you thought of this episode. If you liked it, please consider spreading the word. Oh, and as usual, I've provided some notes on today's music on the episode post at groundupgovernance.com Catch you next time.MUSIC NOTESAs session file is what we call the computer file for audio recording software - you know, like a recording session? The session file for this song is called “corny 12-string”. I’ve really started to enjoy recording music on the Teenage Engineering TP-7 and TX-6. It’s not very easy to do granular overdubs and basically impossible to do any meaningful editing. Which means you basically have to get the best takes you can in the time you can. In my case, that’s not very much time. So you end with one good thing and one not so good thing: a bit of spontaneous magic, and a heavy dose of sloppiness. Anyway, this one started with my playing some corny chord changes on my dad’s (probably knockoff) Rickenbacker 12-string. Some equally corny slap bass on my Ernie Ball/MusicMan Stingray 5 bass. Some preeeety shaky finger drumming on the MPC Live. A bit of synth that I can’t remember if I played on the Teenage Engineering OP-Z or the Nord Lead A1. And then me kinda messing around in real time with mixing and effects and some silly DJ restarts - which you’ll hear at the very end of the episode. Fun stuff. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt Voiceover: 00:00Welcome back to Sound-Up Governance. My name is Matt Fullbrook, and this is the tenth and final episode in my epic conversation with my brilliant governance friend, Andrew Escobar. Today's episode is a bit longer than the others in this series because were working through some thinking on a really interesting topic. Between the board chair, the CEO, and the rest of the executive team, who should be deciding exactly what we talk about and how deep we dive and when? Is it possible that there ought, in fact, to be no clearly defined distinction between where the board ends and management begins? Andrew kind of makes that point today, and frankly, I'm pretty sure I agree all the way. Have a listen and let me know what you think.Matt F: 01:02It's been really hard for me to convince CEOs to have discipline around deciding specifically what conversations they hope to have at the meeting that's coming up and sharing that hope. What do you think it would take to make it more...to make it easier for boards and managers to feel comfortable saying, "hey, you know what? I really hope to...this is what I really want to talk with the board about at the next meeting, and here's what I'm doing to make that happen?" Or why is it uncomfortable?Andrew Escobar: 01:43Why is it uncomfortable for whom?Matt F: 01:45In my experience, the discomfort is usually on the CEO's part. But boards don't make it any easier.Andrew Escobar: 01:53I wonder if that discomfort is because they think that that time is exclusively or the balance of it is for the board and the directors, as opposed to everyone.Matt F: 02:05Okay.Andrew Escobar: 02:06And I do think it is. That's time for everyone. Even if the decision is. Even if the decisions are the board's, the time leading up to that decision, I think you need to get that balance right. And so I might want to. Of course, I approach regularly scheduled meetings with, a sense of what conversation do I want to have? Or what direction do I want this conversation to go? But I think I'm more interested in hearing from the team, and I do mean the team, maybe not the CEO specifically, the team, what they were hoping to get out of our time together. And you set an agenda and that sort of dictates the conversation, but not always. Can you be a bit explicit about it? I'd like to think that you have the comfort with a management team to say, "we really want you to bring us some direction here as well." Like, where did you want this to go? Like, if we wrapped today and we made a decision, but we hadn't touched on these particular aspects of the decision, would you be disappointed? Would you be, heck, Would you be angry? Would you be bummed out? What, what aspects do you not want us talking about as well? And like, it's not that I'm going to leave it off the table, but it's useful to know. And I think that's a bit of vulnerability. And I don't think that people like to be vulnerable in a, in a board setting.Matt F: 03:41How do you imagine yourself feeling if on the front page of your pre read it says, "here are some conversations we really hope to have at the meeting upcoming. And here's a few questions that might be helpful for you to consider to get yourself in the right headspace to have those conversations. This, of course, doesn't mean you can't ask whatever questions you want. We can still have whatever other conversations you want to have. But this is really what management. These are some of the things management really wants. The board's support, insight, feedback, whatever." How would that feel?Andrew Escobar: 04:16It really depends.Matt F: 04:17Okay.Andrew Escobar: 04:20Am I seeing this for the first time? Do I trust that this has actually come up already and that because we're really putting emphasis on this time together, we're not trying to surprise anyone necessarily. We're actually, I can trust that the chair and the CEO or the committee chair and the cfo, they've already had this discussion together. And what they're bringing me is more of a collective view of the conversations that need to happen. I can place more trust in it if I know that it didn't come from one specific individual and that there was some sort of editing involved that involves the management team, that involved the board. I don't necessarily need to know the full details of how you arrived at it. Because that wasn't the decision. The informal decision around what we're going to talk about or what we hope to talk about. But I do want some trust around it that this is coming from more than one individual at the organization. In what ways has this been edited? So it's not just your individual views. I need it to be more representative of the challenges and opportunities that you're facing. Like then one single person's hope for our meeting time.Matt F: 05:43Right. I'm going to oversimplify, maybe beyond what's reasonable, but for the most part, let's just say this happened. I don't think what you're saying is, oh, I need to know that the CEO has had a conversation with all of the CEO senior, the C suite about this to make sure that everybody wants to have the same conversation. Because it doesn't matter that much necessarily, if everybody wants to have it. But let's say the simplest version of what you're talking about is the chairs, or let's say the CEO really does this. " " Like, I just really...this thing's been keeping me up all night, and I'd really like to have the board's feedback on it." Right? And.Andrew Escobar: 06:23Oh, but then I need. I need to know that, though.Matt F: 06:25Right? Sure.Andrew Escobar: 06:25That's okay, too. And so I don't. Sorry to interrupt. Because, like, that, what you just said, I always wanted to encourage more of, like, if there's just something that you really want to talk about, I want to hear it. And that just might not be the CEO. It might be another member of their team, and it might be someone on the board as well. But t hat's a card you can only play a few times. And it's. This is such an overused word, but it's a bit of a vibe. You can feel it. If it's genuine, you know that this is not just important to the individual. They feel that it's important to all of us that we discuss it. And that can be, you know, when you see it.Matt F: 07:15I find it really helpful in a context of whether it's a board meeting or any other type of thing, where part of the point is to make decisions, to move something forward, to, like, for the person whose job it is, to, like, take the result of the decision and operationalize it. To me, it's the most important thing, not the only important thing, but the most important thing is to make sure that they got what they needed out of the engagement in this meeting to go and do their work the best they can. And any time that they say, whether it's urgent or not, "this is a conversation I really would... I'd feel I'll feel better leaving this room doing this thing as long as I've had this conversation with this group." I think I'd be really receptive to that no matter how many times that happens or no matter who's, like, whether there's a consensus or whatever, like the person who needs to own it, to me, that gets weight.Andrew Escobar: 08:17I'm not sure if we've discussed this, so bear with me if you have.Matt F: 08:21Yeah, sure.Andrew Escobar: 08:24In that delineation between the board's responsibility and management's responsibility that people seem to really want to delineate, I've always struggled with the notion that there is a clear delineation between the board's role and management's role. I don't view that. I feel strongly about it and I think that that is a tough thing to admit as a young corporate director. It scares other directors, it scares management when you don't view a clear delineation. But what I do believe is that it's the board's role to often stay zoomed out on what is happening. And especially on the day to day decisions. You're often zoomed out because you have to be. You are not engaged on a day to day basis. You cannot possibly zoom in on every detail. And so when you think of it like that, the emphasis should be on the person who has to operationalize the decision. Or ideally it's the team that has to operationalize the decision. That their needs are being met. And it's your board, it's your job as a board to figure out how to then meet their needs. I do think of it like that. And when you think like that, you know, being zoomed out and it's, it's that individual's needs. Absolutely. And that's usually how you're operating. I guess I always tend to default, because it's the most enjoyable part about being a director, are those times when by necessity you need to zoom in. And the more you zoom in, the more you are bringing in more people. Right? Now you're zooming in on a specific issue and by necessity you have to bring in other directors. You have to view it as a board. You have to not just take this one team's view of it. You need to get more of an organizational pulse check on how this decision is going to impact, how are we going to operationalize this? And so it isn't about any one person or team's needs on how, how that conversation should be shaped. And it's not even just in this meeting. this is the conversation we're going to have. Over the next year, how are we going to tackle this really big problem? The board wants to be zoomed in on this issue. That's like, that is the toughest part of governance. And when I think like what is good governance, those are the, those are the times that I care about the most.Matt F: 10:48I think maybe in a way what I'm talking about, when I've seen it done, and this is rare, when I've seen it done with not just intent, but like clarity of purpose, it's in response. It's usually me responding to a CEO saying, "man, the board is always in the weeds. And I'll say, okay, well, yeah, that's frustrating. But like, what are we going to do? What are you going to do to make this better for everybody? Right. Because the CEOs got a lot of influence here. I think this is like a tool when done well for management to say, zoom in with me on this. This is where I could really use that. You know what I mean? And it doesn't mean the board can't zoom in on other things, but it's like an invitation. And it's like, because the board obviously wants to zoom in somewhere because it's better, it's more fun and so on.Andrew Escobar: 11:52I actually really like how you have extended this thinking that I have because what you're saying is that the board, a well performing board, when engaged in good governance, they should be zoomed in on the issue like you are zooming in. But there are times when you're being sort of directed or invited by the team, by the CEO to zoom in on a specific issue. And there are other times when you as a board want to zoom in on a specific issue. And maybe that is where the, like the ongoing consternation of some directors and CEOs lies. Right?Matt F: 12:32Yeah.Andrew Escobar: 12:33Who has the right to zoom us in? And are you too fixated on zooming in on the wrong things?Matt F: 12:40And a lot of the time in my experience, to your just to take this and make it slightly more specific. A lot of the time when boards are zooming in in ways that aren't useful, it's not because it's like, oh, I'm dying to do this. It's because that's just where the gravity is for that one person in that moment. And so they'll ask some granular question because it was interesting to them, but it's not because they have this sincere desire to spend lots of time on that. And I think that what I'm when I encourage especially CEOs to have and boards too, but especially CEOs to be like, I want to know or I want to design for myself, you know, even in theory, this is the type of, this is the conversation or one of the conversations I hope to have with the board because they've got insights on these types of things that I don't have. These people especially, I'd really like to get their perspective. Here's a way that I might frame some questions or frame the conversation. Here's some material I might give them in advance to make them more prepared and more comfortable, you know what I mean? Like, that level of. Like, this is the stuff that decreases the probability that the board is just going to be like, all right, we just got fixated on this thing that no one cares about. Right. So I think we're talking about the same thing. Does this resonate?Andrew Escobar: 14:01Yeah, it does, because I think it squares with how I think about where you should be operating as a board member, and that is zoomed out by default. And you do. You do need a CEO or their team to bring you in, and it's so much more important that they have. If they think of it like that, I think that's actually really productive.Matt F: 14:29Yeah.Andrew Escobar: 14:29Right. There are going to be times where they're inviting you in and they need to sort of drive that conversation, and you've got to welcome it. As long as we're still preserving those other opportunities where it's going to be the board inviting themselves in.Matt F: 14:43Yeah. And. And where the board also has the discipline to invite themselves back out if they realize they're not being useful. Right.Andrew Escobar: 14:49Yep.Matt Voiceover: 14:51You see what I mean? By the end of this conversation, I think we'd sketched out a really good concept and vocabulary that both describes why balancing board and management and strategy and operations is so difficult, and also why my whole thing about good governance as intentionally cultivating effective conditions can be so use. Now that we've reached the end of the Andrew Escobar series, I want to thank him so much for being so fun and smart and interesting. If you find him as cool as I do, I happen to know that he's open to new board positions, so drop me a line through groundupgovernance.com if you want an intro. And that's also where you can find a full transcript of today's episode, including some notes on the background music. It may be a few weeks before I'm back with more episodes, which will feature a whole different conversation. In the meantime, stay healthy and happy, and thanks for listening.Music NotesUmm. I guess the expression of the day is “iterate quickly and recklessly!” I randomly chose a drumkit on the MPC Live that was called “dubstep”…as in this. I finger drummed some stuff and then played a simple bassline on my p bass just to sketch something out. Listening back to the bassline, it really sounded more like dub than dubstep. So I decided to lean hard into that. Next step: delete dubstep drums. Now, it’s important to say that I don’t know how to make dub music. That’s fine. I’d been listening to some Scratch Perry lately and also Spotify tells me that this has been one of my favourite songs for the past couple of years (probably due to the fact that it has three of the literal best basslines in history all jammed in one song). So I ignored my lack of skill and understanding and just played some stuff, did some on-the-fly mixing and today’s tune is what you get. Recorded and mixed on the TX6 and TP7, guitar was the Gretsch Roundup, new drum parts were also on the MPC Live, although not using any dubstep sounds. Guitar and drums were processed through the Chroma Console. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt Voiceover: 00:00 Welcome back to Sound-Up Governance. My name is Matt Fullbrook and today we have the ninth installment of my conversation with Andrew Escobar, a corporate director, open finance expert and keen AI tinkerer. Andrew was one of the first people I knew who built their own LLM model. So I was interested to ask him AI related stuff might be on his mind as a director. For reference, this conversation took place in September 2024, which in AI terms is like 500 years ago. Still, in my opinion at least, Andrew's insights are just as relevant as they were a few months back...even if my references to current events are a bit out of date. Let's hear what he had to say.Matt: 00:55 Let's imagine you're joining a new board. And you, more than most, are familiar with what AI is and how it may or may not be useful or relevant or harmful or whatever in general to organizations. So you've started on a board or maybe you're about to start. What's something you actually want to know with respect to a new organization and AI? We could just be generic. If you're a new director, what's something someone actually should want to know?Andrew Escobar: 01:31 To be clear, I am not an expert on an AI.Matt: 01:33 But you know more than most.Andrew Escobar: 01:36 Maybe not. Maybe. Actually I don't know. But you know what? Maybe, maybe more than most directors. Sure. I think few directors have actually tried to build a model themselves. Right. I'd want to know what that organization is doing today. That's a great starting point. I'm sure you've considered. I'm going to assume you've considered how AI is going to impact your business. I think that's a conversation that most boards and management teams have had. But what have you done to actually build and think through this and be more hands on? And are you doing it in a safe way? I'd want to know your comfort level as an organization with what I do think is a pretty big challenge and a big opportunity and a bit of upheaval in the regular course of, honestly, business and society, you know. And if the answer is, well, you know, we haven't done much, I don't know if I'd be concerned or not because again, every organization is different. But I need to know what the starting point is before I do anything next.Matt: 02:48 Are there answers? And maybe you can't get universal on this, but maybe give a shot. Are there answers that you can imagine getting that would automatically make you go, oh, this is bad?Andrew Escobar: 03:01 Yes, yes, I need to be very careful here. I actually don't think this is something that a specific organization did. They were asking, I believe it was chatGPT, a specific question about their specific business. And they got a very specific answer back. And it was revealing of that organization's strategy. That would be concerning to me just to know that that was out there. But that just might be, you know, regular IT practices. Data leak. I don't know what it, what it could have been, but if you were telling me that you were doing something with your data with a very public model where that data is exposed, I would be concerned because I actually don't know how it's being used. I don't know what the impact is to our data and how it's being used because it wasn't being done in house. And that early experimentation can happen very much segregated and separate from the outside world. Like it is absolutely possible for you to even to dip your toe into AI and to do it in a safe and contained way. But if the answer was we were using public models and we gave it a small data set and we wanted to see what it would do, it would cause a red flag because you didn't approach the problem with a lot of intent.Matt: 04:32 This is related, but not in a governance way. I don't even remember where this, the study happened. Did you see, and if you did see, did you believe, that it was like over 40% of new content on the internet is AI generated right now, according to some source. Which means that of course AI is mostly being trained - like the language models especially are being trained on AI generated content. Which, you know, doom loop obviously. But like it just seemed like, it seemed like such an excessive number to me, you know?Andrew Escobar: 05:14 New content. I probably think it's more. Yeah, right. And that's a question of like quality versus not quality. But I almost think that's the wrong metric because like, if I have a question, I might use Perplexity to ask a very particular question and get a really precise answer back. Is that new content? Like that's new content. That's new content that's been written, that's sort of more unique to my situation. And so I don't know, I don't worry about the deluge of what's being called slop on the Internet created by AI. I'm be much more worried about what we're doing to protect ourselves and our data.Matt: 05:58 I can't remember, it was just announced today or yesterday. A reasonably significant news outlet had fired their art critics and replaced them with AI.Andrew Escobar: 06:08 Oh God.Matt: 06:10 Who wants to read AI generated art criticism. Like, who, literally, who in the world would like to read that? And I think the answer is literally nobody.Andrew Escobar: 06:22 Nobody right now, maybe.Matt: 06:25 Yeah. Until... And that what it's going to do is AI will be judging AI generated art for the purpose of AI consuming AI generated art criticism. And then we can just ignore it. Andrew Escobar: 06:39Hopefully.Matt: 06:40 Yeah, right.Matt Voiceover: 06:43 One of the things that's so important about Andrew's perspectives here is that the temperature is low, the future of anything is by definition uncertain. And if you add AI to the mix, well, I challenge you to predict next month, let alone five years down the road. A lot of the dialogue around boards and AI suggests that being behind the curve is basically like having a terminal illness without knowing it. Or they're told that everything's going to be fine as long as AI is at the core of every agenda item. Neither of those extremes is practical for most organizations, nor are they rooted in the reality of this whole uncertainty thing. In hindsight, I wish we'd done a deeper dive here, but so it goes. You could always make an AI generated podcast if you want to hear more. Thanks for listening to Sound-Up Governance. If you enjoy the show, please spread the word.MUSIC NOTES:Today’s music started with me listening to the end of the song Hearts Alive by Mastodon. The end, in this case, means the last three minutes of a roughly 14-minute prog metal journey. It’s one of my favourite rock guitar moments ever. Anyway, the connection between Hearts Alive and this gentle, chill trippy guitar thing will only make sense to anyone who’s got a guitar in their hands and plays both tunes. The lineage will be at least a little clearer. I played this on my Fender gold foil jazzmaster. All the rest of the sounds were done on my Moog Sub 37, which I’m always delighted to have an excuse to bust out. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Matt Voiceover00:09Welcome back to Sound-Up Governance. My name is Matt Fullbrook, and today's the eighth episode from my epic conversation with my friend and trusted governance ally, Andrew Escobar. If you've been listening to this whole season so far, can we just take a second and marvel at how much cool stuff Andrew has to say? And there are still at least three more episodes to go. Today he gives us some advice about how to build confidence as a director that you're being useful to management. After all, management is the consumer of the board's work product. So why wouldn't every director be deeply interested in being useful to them? Let's hear what he has to say. Matt00:53How in your world, your. Your experience as a director, how explicitly do you think about your own work, but also collectively the board's work through the lens of. To what extent is the stuff that I do actually useful to management? Andrew Escobar01:10I think that's a huge amount of my thinking. It really is my evaluation. That's who I actually want to be useful to. And maybe not just like your CEO or the senior leadership team. I think it's a bit more expansive depending on the size of the organization. But I always think about how is this work going to positively or negatively impact the work of the team? How does this cascade throughout the organization? And if it's not going to cascade, that's actually a problem for me. I would want decisions that we're making as a board or my input as individual director to shape a decision that is going to cascade potentially throughout the organization. And that starts with your management or senior leadership team. And so I do think about that a lot. Matt02:05How do you know or to what extent do you try to learn whether it is useful? Andrew Escobar02:13You ask! You can ask, believe it or not, you can just ask if you're being helpful or not helpful, and are you being constructive or not? Because sometimes you're creating work for a team as a board or as a committee. But that might be okay. It's not about making. I've always said it's not about making a CEO or a team's job easier. You might in fact be making their job harder. But it might be useful to you as a board, but. And in your view, useful to the organization as a whole. But it needs to be well received by the management team in some way or another. Right? Andrew Escobar02:56There's a recognition that, yeah, you're asking a lot of questions, or this specific question that's going to be tough for us to get you answers on, or this initiative is Going to be hard for us. But we understand the reasoning behind it. Right? That that decision is clear to us for these reasons, right? It's not about just making decisions. It's about understanding why the decision was made. So it's constantly checking in and making sure that it is being well received or understood. Like, okay, we made a decision. Do you understand that decision? And that seems obvious, right? Well, like, you made a decision. It's, it's clearly minuted. You can walk away from it. It's gonna, it's gonna happen. Maybe not. Sometimes it doesn't. Or sometimes it's not prioritizing the way you thought it would be. Or they're off to the races and prioritizing and you thought, "okay, well, this isn't a... we didn't need this done now, like, let's hold off on this.". And so how do you do the work of a director? How do you aim for good governance if you're not checking in with one, each other on the board, but two, the management team? And how are you going to do that? Because it's maybe not up to me as an individual director to be checking in. Is it the chair, Is it the committee? That is a whole other challenge around good governance. Matt04:10So is that, when you think about this question, the bigger question of like, am I used doing things that are useful to management, or is the board doing things useful to management? Because I agree with you, it's an important question to say, okay, well, who should be asking the question? Who should be interacting with management to figure this out? Let's say that person is not you. Let's say there's, you know, it's clear Andrew's not the guy who's going to have this conversation with management. How do you learn whether you're doing anything that's useful? Andrew Escobar04:43I don't know. Matt04:44Yeah. Andrew Escobar04:44I'm going to tell you, though, maybe it's the opposite. I'm going to actually approach it to the time when I had most clarity around if what I was doing was helpful or not. And that very much was taking it on myself to ask the team, is this helpful? How are we getting in your way? How does that impact you? I want to know what we can be doing different. And I might not agree, but when I did that most clearly every time it was beneficial, I think to me, and I would like to think to the board as a whole. But it wasn't always formal. It wasn't like the reporting structure of the chair will bring this to the CEO in their debrief and then report back. Andrew Escobar05:31Sometimes it's just an informal chat or sitting next to each other at dinner and having that again, that relationship with them where they can be honest with you and you can be honest with them. And that's, you know, thinking back to relationships, I think that is fundamental. Matt Voiceover05:5025ish years ago, at the beginning of my career studying corporate governance, I spent a majority of my time reading granular details in public filings from big Canadian corporations to gather data for a couple of different projects, including one that continues to this day as Board Games in the Globe and Mail newspaper. At the time, there was this conventional thinking that any personal ties among directors and/or executives was worthy of suspicion. Like if we knew that two directors on the same board had worked together before or were members of the same country club, we'd basically think of it as a gotcha moment and assume that they were in cahoots. Andrew's point today, though, is a perfect example of why that thinking is completely wrong. Social ties can lead to trust. Trust can lead to honest conversations, which can lead to valuable feedback, etc. Let's hold onto this message the next time we feel the urge to judge a board through a cynical lens. Next time we take a total left turn and talk about AI. So be sure to subscribe if you want to stay up to date. And if you want to learn more about today's music, check out the notes at the end of the post at groundupgovernance.com. If you enjoyed today's episode, please tell a friend to check out the show. Thanks for listening. Music NotesToday’s music was a total experiment. In my files, the track is called “I’m a DJ”. Not because I’m an actual DJ, but…I pulled out some fun DJ tricks to make it happen. It started with the slightly spooky echo guitar part, which I played on my Fender Gold Foil Jazzmaster using some effects on the Headrush MX5. The drums were a combination of “finger drum” style playing (especially the slightly sloppy hi hat sounds") and sequenced (kick and snare), which led to a bit of a sloppy feel at times. Oh well. The bass is just a sawtooth synth. All of the drums and bass were done on the Teenage Engineering OP-Z. The actual DJ part was knitting the track together “live” using the TX-6 and TP-7. All the jittery re-starts, the muting of the bassline, the little record scratch sound, etc. was me just doing DJ tricks. Again, not perfect. But it has a fun energy, right?PS: Every time I’ve been in a guitar shop with the Gold Foil Jazzmaster, all the guitar nerds act like they’ve seen a celebrity. Not because it’s the best or most sought-after guitar in the world. It’s really just that sexy to look at in person. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMATT VOICEOVERWelcome back to Sound-Up Governance. My name is Matt Fullbrook and I'm back for another episode with governance rogue and open finance expert, Andrew Escobar. We left off the previous episode talking about the potential for informality to enhance decision making in boardroom. Today we build on that and suggest one very specific, highly doable thing that you and your board could try right away. It's easy, it saves time, and it costs nothing. Before we get there, I'm going to drop you into the middle of a point I was making to Andrew about how Nobel laureates in science have something really interesting in common with each other.MATTWhat was that study? What did they find? 22 times more likely than a sort of normal scientist. Nobel laureates are 22 times more likely to be artistic performers of some kind. And, 22x is such a big number that there has to be some causal thing happening in one direction or the other. I don't know what. Like, it's too abstract for me to be able to say what, but it occurs to me that, like, this idea of art enhancing technical skill or the other way around, I'm not sure which, is something that boards probably really want to think about. Right? And if that's true, if it's true that art and science enhance each other in some way - in a person, not in the world, but inside a person - that art probably matters for boards in a way that hasn't been considered. Bringing this up because this... It's not an informality. It's a, like, letting go of the comfort of formality for a moment. It creates an opportunity for us to engage in these things in ways that we would never do with, like in a super structured environment. Then maybe that's part of the art. I don't know.ANDREW ESCOBARThe art versus the science of decision making?MATTYeah. Or of getting together as a group and doing something useful in a boardroom, whatever that is. Right?ANDREW ESCOBARThere's probably something to that, because when you think about what are the times that I've most enjoyed myself in a formal board meeting or in a formal board setting, probably there was a bit of artistry to it in that it was unstructured or there was intentional time for unstructured activity, thought like that... That is a bit of an art. And I don't know how to. You can't quantify it.MATTThere's no mystery that people learn very effectively through play. Right? It doesn't matter if you're 2 years old or 200 years old. Play helps. I'm not saying that we want to make board meetings playtime, but we do want to learn stuff. Right? And I think there's the... We avoid a lot of shortcuts like taking informal moments or introducing play or whatever things that might make our work better and faster. Because as you say, like, it just doesn't feel like what a board is supposed to do. I think it's a really stupid, conventional, constraint.ANDREW ESCOBARThis is one of the things I've always wanted to do and I never have and hope I get to do it in the future. Maybe there's a bit of artistry to this. Like, I've always wanted to take a board decision and instead of delegating it in the early stages to a committee or figuring out how the board is going to tackle it, maybe divide the board into two. And have both groups, like, they're not committees, they're just, t hey're just two groups of the board, approach this in potentially radically different ways. What would happen? Would that get different results? Would that raise different issues? Like, what would happen? And again, like, I don't. I don't know if that'd be a good use of time, but it might be a great use of time.MATTWell, this is. You're leaning into something that I. I mean, it's actually so mysterious to me why boards don't break into small groups during meet. During board meetings ever. Like, literally never. I've never seen it happen except for when I've like, forced them to do it.ANDREW ESCOBARI've never seen it happen in a formal meeting. I've seen it happen in, you know, strategy, strategic planning. We set a day and so, you know, three groups, different rooms, doing, yeah, really great work. But why, why can't you. What's stopping you from doing that in a structured meeting? A lot, but. But I don't know. Figure it out.MATTRight. And when you say a lot, it's mostly none of the... We could make a list of the things, but none of those things is provably good. None of the reasons why we don't do this are like, oh, well, yeah, that's a great reason not to try breaking into groupsANDREW ESCOBARBecause they're solvable. You know, like, oh, well, how would we minute that? I don't know. You would have.MATTAsk your lawyer.ANDREW ESCOBARYeah, ask your lawyer. And maybe they would tell you you can actually just have a section of the meeting that had three separate minutes of those groups. I have no idea. But find a solution.MATT VOICEOVEROh, man. This is why I love Andrew so much. " I have no idea, but find a solution." I might adopt that as my corporate governance mantra. And it's true that many of the organizations I've met over the years feel like the most difficult obstacle to trying new approaches to the way that their board and executives do their work is that it just feels like they don't have permission. On top of that, it's not like there are all kinds of other boards out there doing interesting new stuff that you can learn from. Whether you like the idea of breaking into small groups or not, I bet you can already imagine how it might be helpful to some boards in some circumstances. Anyway, thanks for listening. There's more to come with Andrew, and at the time of recording, I'm not sure what music will go with this episode, so please check the music notes at the end of the episode post at groundupgovernance.com for more info on that. Thanks for listening.MUSIC NOTESThis beat happened because I loaded a really fat sounding sawtooth bass synth sound into my OP-Z and just started mashing a note in particular rhythm that i liked and sequenced a beat over it. I added some kinda spooky percussion that reminded me a bit of Numbers on the Boards by Pusha T (which I LOOOVE). The guitar doodles are on my sparkly Gretsch using some effects on the Headrush MX5. This was all recorded through the TX-6 and TP-7, and then mixed down back through the TX-6, which is also where the stuttery tape effect on the guitar came from. Quick and dirty - nothing fancy. Just caught a vibe and went with it for a sec. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

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

TRANSCRIPTMATT VOICEOVERWelcome back to Sound-Up Governance. My name is Matt Fullbrook and this episode continues my conversation with my great friend, Andrew Escobar, who's a governance nerd, corporate director, open finance expert, and big thinker based, like me, in Toronto. I shared with Andrew an exercise that I've conducted with boards, executives and other curious people in the governance space more than a thousand times over the past 12 plus years. If that sounds like an obsession, it's because it is. I wanted to talk through it with Andrew because I feel like it's a shortcut to having one of the most important and potentially difficult conversations that boards can have. Check it out.MATTDespite the fact that we've known each other for a while and talked about governance a lot, you have not witnessed. The thing that I have done more than any other thing with the groups that I've worked with, which is an exercise that is boringly titled "To Whom do you Owe a Duty?" And what I do is I give them a list in alphabetical order of 10, we can call them generically stakeholders, that range from internal stuff like employees and senior management and the board to like one, circle out like shareholders and customers and community, that kind of thing, maybe a little bit farther out like regulators, and then all the way out to like the planet. And I always put "myself as a director" on the list. And I say, here's 10 stakeholders. You've got a group of, whether it's classmates or fellow directors or whatever, you have 15 minutes to rank them based on, from the perspective of a director, to whom do we owe the greatest duty through to whom do we owe the least duty? The corporation's always on the list too. And I say the only instructions I give beyond that are, I say ties are illegal, so everything has to have its own unique ranking. And I'm not going to define duty for you. If you think that's an important conversation, then you can talk about that in your 15 minutes. How confident are you in your board life that there has been implicit or, even better, explicit alignment among the people in the room when it comes to whom do we owe a duty when we're making, whether it's all decisions or this specific decision or whatever.ANDREW ESCOBARI don't think that's ever been explicit. Can't think of... one, I've never done that exercise formally. But two, even if we had, I think we would have possibly arrived at different answers or some conflict on the top. But I'd like to think that, at least on the one board where I have the most experience or had the most experience, we would have probably arrived at very similar answers for those like maybe one or two spots. Because that speaks to me to purpose of the organization, purpose of the corporation. So I like that way of thinking about it because it speed runs the big question around purpose and framing it in terms of various stakeholders.MATT FULLBROOKWhen someone, and I'm sure you've heard in board contexts or classrooms or whatever, when someone says "we owe our duty to the corporation," which is fundamentally factually correct in Canada, what do you think that means?ANDREW ESCOBARI think that's the correct answer, but it doesn't actually share any useful information. If I tell you that your duty is to the corporation, well then what? What does that actually mean? Alone, It doesn't actually mean much. That is a useful place to start because I think you need to square that with anything that you arrive at, like what is our purpose here? What, what are we doing? What are the decisions that we're here to make? I think it can come back to in the best interest of the corporation that is where your duty lies. But that actually doesn't provide any useful help to a new director, In particular. You've got to explore what that actually means. And it's going to be different to each board, each organization.MATT FULLBROOKOkay, so then the punchline of the exercise is, and they don't usually see this explicitly, but the moment that I describe it they're like, "yeah, right." Is that you can choose any pair of the of stakeholders from the list. And let's say the number one and number two most frequently are the corporation and shareholders or members or whatever, in whatever order. Most commonly those are the top two. And I'll say, "okay, well can we imagine a decision we might have to make in the real world where the long term interests of the corporation and the short term interests of shareholders might be misaligned?" And everyone's like, "yeah, and actually, yeah, we could think of thousands! Almost every time we spend money." And so I say, "great, but you choose literally any pair on the list and think of real world decisions where the interests of these pairs are misaligned with each other. You can't make a decision, there's no such thing as a decision that a board might make where everyone benefits. Right? Someone gets harmed in some way, and I don't mean necessarily like harmed in a way that they care about, But even if it's just an opportunity cost harm, there is harm. In your board experience, are we thinking both about the how do we maximize positive impact but also saying, yeah, by doing that this is the harm we're causing?ANDREW ESCOBARI'm going to guess - this is a guess - that most boards don't like to focus on the harm, or maybe not even the harm, the deprioritization of certain stakeholders. But it's there. I, I don't know if that's a useful way to think about it. Right? The harm? I'd like to think that you focus on the good as opposed to the harm. But they're both like, they're both there, they're both present. With every decision you're going to make, there's going to be consequences that you either can see or not see. They might be short term or long term in nature. And you're making that conscious decision. But that is why, again, I think that for me, it actually comes back to purpose and values and like that. Maybe not full alignment, but that general understanding is important because that's how you're making decision. You actually might be a board that is prioritizing a certain constituency or stakeholder more than others. You might be optimizing for the short term and that guides your decision making. The challenge is how can you be honest about that with yourselves as a board and signal that to others. Right? Because whether that's a for profit listed company or a small, not for profit, if you can signal that, like, that helps other people make decisions, like, do I actually want to be a member of this organization? Because this is how they make decisions, do I actually want to, Should I get out of that stock? I don't like what they're doing. In terms of their short term outlook, their long term outlook. How do you signal that is important? That is your purpose, that is your values. And so there always will be both sides of it. But you're going to prioritize one or the other and it's going to always come back to purpose and values. Or rather it should.MATT VOICEOVERBefore we wrap up, I should explain to anyone who's not familiar with the law in Canada and similar jurisdictions what were talking about here. It's true that our laws tell directors that they owe their primary duty to the corporation. If you look at the language of the laws and how they've been interpreted in the courts, what it really means is that boards need to consider the interests of all the individuals and groups that stand to be affected by the corporation's actions. Not that they must benefit all of those stakeholders, but that they can't neglect them. And that's what we'll talk about more in the next episode. If you want to know more about today's music, which I had exactly 10 minutes to create, have a look at the music notes at the bottom of the post at groundupgovernance.com thanks for listening. There's a reason why every content creator asks you to, like, subscribe and spread the word, and it's because that's what keeps shows like this alive. So what are you waiting for? See you next time.MUSIC NOTESIt’s actually true that I only had 10 minutes to make the music for this episode. I used the PO-12 Rhythm by Teenage Engineering and made a simple beat and that’s all she wrote. If you noticed the copy of MF Doom’s Operation Doomsday on the turntable in the thumbnail photo, it doesn’t have any relevance or meaning to the music or episode. It was just the coolest looking backdrop for the photo I could find with no time to spare (i.e. 1 minute) in my office. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMATT VOICEOVERWelcome back to Sound-Up Governance. My name is Matt Fullbrook. Once again, our guest is my great friend Andrew Escobar, corporate director, open finance advocate, and big thinker. In today's episode, we discuss what it takes for a director to feel empowered to be great and whether it might be a good thing for boards to be friends. Let's dive in.MATTWhat might it look like to empower any person, a person in the room, to behave like a great director instead of a not-so-great director?ANDREW ESCOBARThat's a really tough question. I'm trying to think of. I'm trying to think of not-so-great directors who maybe turned out to be great directors.MATTWhat could others do to make you feel more empowered, to feel like you can be curious and express that curiosity?ANDREW ESCOBARMaybe I don't have another way to phrase this because I'm going back to my previous comment. Sometimes you need to be a really great editor, and sometimes you need a great editor. That, alone, I might come to a decision with all sorts of questions, but I need either a board, a system, a chair who can be a great editor for me. I think that's a, I'd say the fundamental role of a board chair, committee chair, to be a great editor. It's to curate those questions because you're not going to get maybe all the answers. And what is fundamentally the top question that we want answered? And that actually might not resolve within a regular meeting cadence. It might take us a few years to resolve. I know that I always approach board work with a ton of questions that don't go answered. I try to be my own editor, but it's almost so much more useful to rely on others to be your editor. And I think when I think of ok directors that turn out to be great directors, they found a way to be more open with their questions outside of meetings, outside of the regular structure of a board. And that's where, like, the magic happens. That's where the great questions are formulated, not always inside a board meeting.MATTIt's occurring to me. One of the things that - this is unrelated to the actual questions here, but I think it's still worth talking about - one of the things that happened early in my career in the governance space was there was this anxiety around friendship. I'm generalizing, but we don't want directors to be pals. There's this fear that's an independence problem. If people care about each other as human beings, then they're gonna make decisions that are in each other's interests instead of whatever. And I think, first of all, I think that we corrected way too hard on that, and it introduced a level of formality to the world of boards that really worked against what you're talking about. But to what extent do you need to invest in building relationships to get this vibe that you're describing?ANDREW ESCOBARBuilding relationships at work or on a board is not the same thing as building friendships. Those are different things. But I don't see how you can really do great work without great relationships. If that's true... If that's true, 9 to 5, Monday to Friday in your standard work hours, what would make board work or board relationships any different? There is something fundamentally different about a board who is teaming and a team who sees each other on a daily or regular basis. But I don't think that I could be a great director without having great relationships on that board. It would be... I think it's impossible. I really do. Because then what you're doing is you're approaching the problem of governance singularly. It's just you. I'm here to figure out what conditions work for me. I'm here to get answers on what I think is important for this organization, not what you as a board believe are the right questions, the right decisions. The right conditions. Like that is something collective. I don't. How do you do something collective without strong relationships? Do friendships get in the way of that? Maybe. But, I mean, I can sit down with a friend who I've known for a year or 10 years and get into a great debate, even a heated one, and still leave at the end of the night really enjoying their company and enjoying the conversation. Why wouldn't that also be true of board work?MATTYeah, it's interesting. I think there's this, like, misconception, and maybe this is true for a lot of people, because the range of personalities among humankind is pretty vast. But I think we kind of imagine that with friends, it's harder to engage in conflict or call people out or escape groupthink or whatever. And I think for a lot of that range of personalities, it's actually the opposite, where the comfort level goes up to say, "no, that's stupid." Or, "you know, I don't. I really think this might be a bad idea." Or, "that really pissed me off, what you just did." Or whatever. Compared to, say, confronting a stranger like that.MATT VOICEOVERWhat do you think? Board chairs as compassionate editors, Boards as caring friends. I love these ideas, and I think they can help to turn big, complex and technical boardroom concepts and make them a bit more tangible and doable. Thanks for listening. In the next episode, Andrew and I will talk through how a board can consider the interests of all its key stakeholders in a really short time. For notes on today's music, scroll down to the bottom of the episode post at groundupgovernance.com See you next time.MUSIC NOTESEver heard of “finger drumming”? Instead of me describing it, just look it up on YouTube and you’ll understand right away. For this tune I “finger drummed” on my MPC Live instead of programming a beat because I played the guitar part in the air instead of to a click/metronome. Anyway, this one’s just a simple bluesy guitar/bass/drums thing that emerged from the visceral joy of just playing an open E chord. All you guitarists out there know what I’m talking about. I used my Gretsch 6130 “Roundup” and for bass I used my Ernie Ball/Music Man Stingray 5. It was all recorded on the Teenage Engineering TP-7, which is a life-saver for someone like me who does multitrack recording while traveling.Side note on the Roundup guitar - I’ve wanted one of these since I was a teenager. The whole over the top cowboy vibe appeals perfectly to my sense of kitsch and style. Mine was made in 2008 but I found it a couple years ago. It was the first one I’d ever seen in person. Love at first sight/sound. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPT:MATT VOICEOVERWelcome back to Sound-Up Governance. This is the third episode of our new revamped format. My name is Matt Fullbrook, and once again our featured guest is governance nerd, open finance specialist, funky mustache sporting genius, Andrew Escobar. You might notice that the illustration of Andrew in the episode thumbnail does not include include said mustache. Sorry about that. Anyway, board composition might be the most debated topic in corporate governance. What expertise and skills should we have in boardrooms? What about diversity? Board size? independence? To me, though, the most important and underexplored question here is what makes a director truly excellent? So I asked Andrew for his perspective.MATTWhat are one or two or however many you'd like to think of? What are the specific differences between. And this can be behavioral or skill or whatever, between someone who's a freaking amazing director and someone who's just filling a seat.ANDREW ESCOBARIt's never their expertise or their capabilities, their past experiences. It's almost always their curiosity that is the differentiator for me between a great director and an okay director. Curiosity, I think, is fundamentally, to me what drives good governance, great decision making. You're going to approach those conditions that you've talked about with curiosity. You're going to approach purpose with curiosity. And you're not going to get stuck on any one condition or purpose or value. You'll always be questioning it. And that, I think, requires curiosity.MATTSo I just want to make an implicit thing explicit because to some people, I think they feel like as long as they're asking questions or worse, questioning everything - I think you understand the difference - that's a demonstration of curiosity. But that doesn't sound like what you're saying to me.ANDREW ESCOBARCuriosity is not simply coming up with 20 questions or downloading 20 questions. Curiosity is getting answers to those questions, coming up with your own questions, having a conversation completely unrelated to your board, with a colleague or a friend. And then from that conversation, something sparks in you relevant to your board work, and you jot it down and you make sure that you follow up with that. That is curiosity. So it's not simply just having the questions, it's following through on them and getting to the bottom of the answer. Why did we do this 10 years ago? Because it's kind of impacting how we do things today. How does it shape our work now? What can we do different if we did this thing? How would that shape our results? Like, those are the kind of questions you need, but just I like to think myself, I like putting myself in the position sometimes of the receiving end of those questions. Your management team, your senior leaders, your CEO. A thousand questions aren't helpful either. You don't have time for a thousand questions. And so how do you how do you be a great editor to those questions?MATT VOICEOVERIf you're a fan of my One Minute Governance podcast, you'll know that season four, which wrapped up in December, was all about questions that I believe boards should answer. And if you're really sharp, you'll have noticed that the questions I've been asking Andrew so far on this show have been some of the exact same ones I featured on OMG. It goes without saying that I'm delighted by Andrew's thoughts here that a director's job isn't about asking questions. Rather, a director may choose to ask questions in service of moving the board's thinking forward or finding a deeper truth, but not just for the sake of asking. In the next episode, I'll talk with Andrew about what it takes for a board to empower its directors to do the things we talked about today. You may already know that I'm creating some kind of original musical composition for each episode of this show. So as as usual, if you're interested in learning a bit more about today's music, there are some written notes at the end of the post. Thanks for listening. If you're enjoying the show, please spread the word.MUSIC NOTES:I sketched this one out on the Teenage Engineering OP-Z while on the balcony of my hotel room in Cancun during a rainstorm while I was at the America’s Credit Unions Board of Directors Conference. All of the drums and synths are on the OP-Z, which will be obvious to anyone who uses it because I’m using all the OG sounds. I added more bass using my Ernie Ball Music Man Stingray 5 (with rad snake-related artwork by Mathias Chau). There’s one synth lead line that I played on the Nord Lead A1. I forgot to include it in the thumbnail but the guitar is my old Fender Strat that I got as a teenager. For any guitar nerds, it’s a 1997/98 Strat Plus - the ball bearing nut version, not the roller nut - with Texas Special pickups in it. Listening back, I realize this one is funky but probably a bit disorienting. It’b because there’s a pulse, but no real emphasis of the downbeat. If you’re having trouble, the whole thing is in 3/4 (I’m thinking of it as having swung 16th notes), the very first kick drum is “on the one” and the little shaker sound is on every “and”…or eighth note offbeat. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMATT VOICEOVERHi, my name is Matt Fullbrook and this is Sound-Up Governance. The second episode in a brand new format where we zero in for few minutes one expert's perspective on a very specific corporate governance question or topic. Once again, my guest is Andrew Escobar, an experienced corporate director, open banking expert and super thoughtful big thinker on board stuff in general. I've done a lot of reflecting over the past year on whether we might be overdoing it when we look for answers to governance questions by looking at catastrophic failures. Even if there are useful lessons and examples of failure, they won't tell us anything about what it means to do a great job at a normal board meeting. And doing a great job at a normal board meeting is really important. So let's dive right into today's question.MATTOne of the questions that I - and this might be splitting hairs for us, like for Matt and Andrew as the people who we are, but for a lot of people it's not - which is the question is framed as how do we do good governance under normal circumstances? Like, on a regular day where there's not like a crisis or even an important decision to make, it's just a regular ass board meeting. How do we do good governance? I'll just stop. What do you think?ANDREW ESCOBARI think the challenge with that is... how do you do good governance on any random day? The problem with how we approach governance today is that it doesn't feel like an everyday thing, particularly for directors. It's something that you might engage in every couple of months, maybe every couple of weeks. It depends on your cadence. But it, you don't live and breathe it for the most part every day. And we tend to approach it in very segmented ways. Right? Our, our all day board meeting is in three months. Our committee meetings are in a month and a half. And you know when they are and you're sort of working towards those very specific sets of time. And I, I'm not a fan of that. I, I'd love to see how you diffuse decision making so that it is more of a day to day exercise. It might not take up all your time, but I think the best directors are the ones who think about those decisions that they have to make on a regular, if not daily basis.MATTSo I think there's something in what you're saying that I don't know if I've thought about in this exact way before. Are we like artificially inflating the importance of the act of governance, like, because of this occasional nature of it? Where, like, okay, well every meeting has to be a thing. Let's make sure we're...we're increasing the vibe or the feeling of importance of everything that we have to do just because we don't get a lot of chance to do this.ANDREW ESCOBARYeah, we put way too much emphasis on the time that's scheduled as opposed to everything that happens outside of that time, which really matter. That's actually, I think, often more important. If you, if you gave less significance to that structured set time, how else would you arrive at decisions? How else would you shape decisions? Like, because decisions can be shaped within a meeting. It happens all the time. And that. I think if you're going to set specific time for decisions to be made, then you should use that productively. Of course, it should shape the decision in the time, or else why are you meeting to begin with? But that probably isn't the only way to do it. There has to be other ways, because that's not how we work. We don't delegate decision making to a specific scheduled time in our daily lives. In your home life or in your work life, you don't decide these things four weeks from now. You kind of have that conversation at dinner. You have that conversation having coffee with a colleague. That's how you make decisions. And we don't approach that in the same way in board work.MATT VOICEOVEROkay, sure, it's pretty common to think and talk about the work of a board outside of board meetings, and even to emphasize the importance of socializing among directors and executives at board dinners and similar. But do you agree with Andrew that even this might be putting too many constraints on how boards work? Is it conceivable that the very construct of a regular board meeting might be getting in the way of effective decision making. What do you think? I personally think I do agree. Think of all the possibilities that most boards choose not to explore in the ways they work together. Most board meeting agendas are more similar to each other than they need to be. And there's often not much structure around what happens outside of the confines of formal board and committee meetings. What else might we try?In the next episode, Andrew and I will discuss what specifically makes a great director great. A quick note on today's music, which is built around a chopped up sample from the song Grit by my band, KC Roberts and the Live Revolution. If you want to know a bit more, I've left some brief written info at the end of the post. And don't forget, since we're still really new to this format, please boldly reach out and provide me whatever feedback is on your mind. If you're enjoying the show, don't be afraid. Subscribe, like, comment and share with anyone who might be interested. Thanks for listening. See you next time.MUSIC NOTES:First things first, this is based on a chopped up sample of Grit by KC Roberts & the Live Revolution, a song written by amazing friend and bandmate KC Roberts. The drums in the sample are played by Austin Gembora. I’ve been listening to a lot of JPEGMAFIA and so, well, I guess I was in a bit of a chaotic headspace. All of this was programmed on an MPC Live. Other than the Grit sample, there’s a “tambourine” sound that I crafted from the synth engine on a Nord Lead AI synthesizer. I also played a bit of a bassline on the Nord. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPT:MATT VOICEOVERHi everyone, this is Matt Fullbrook. Welcome to a whole new chapter of the Sound-Up Governance podcast where I'll talking to big thinkers in corporate governance and learning from them about the "how" of being a great corporate director or executive. Think of it as an interview show, but broken into really focused chunks. Each episode will zoom in one person's perspective on a very specific topic and will last just a few minutes. If I can keep up the pace, my hope is to also craft original music for every single episode. It might just be a quick, fun loop or maybe something more ambitious. I won't get too hung up on polish or details, so you may have to forgive a bit of, I don't know, unpredictability. Anyway, I'm super stoked to kick off this new version of the show with my great friend, the sincerely inspiring Andrew Escobar. In addition to having some really interesting board experience, Andrew's almost like an obsessive scholar when it comes to good governance. Many of you know that I'm pretty fixated on establishing clear definitions in the corporate governance space. My professional life essentially transformed when I finally had a concrete definition of good governance. So, let's start things off with Andrew's thoughts on whether and why it might be impossible to be a great director if you can't describe what good corporate governance is in the first place.ANDREW ESCOBARI think for yourself. Yeah, you... How do you do your job if you don't know what that job is? And isn't that isn't the job good governance? I'd hope so. And so if you don't know what good governance is, if you don't have that self awareness to know if "Hey, I went to the board meeting today, that was good governance." How do you operate as a board member?MATTOkay, but is it fair to say that you didn't have a confident, specific definition at the beginning of your...ANDREW ESCOBARI probably didn't have a definition of good governance for years.MATTYeah. So does that mean you did a bad job?ANDREW ESCOBARNo. That's interesting. No. Yes and no. There were times without that grounding definition or grounding idea that I was probably lost and other directors were lost and I couldn't ground myself or help them ground themselves.MATTRight. So okay, maybe then, given that, describe, and this is unfair, but try to describe the difference between that and what it's like to have a confident definition.ANDREW ESCOBARIf you have a confident definition of what good governance is to you, it isn't just about your work as a director, but it's about the group's work as a board. And I think it's hard to get to good governance individually. You need others to come along with you on that shared journey towards good governance. And if you don't have a good definition, if you don't have a good understanding, how can you possibly lead others towards that? Or honestly be led by others towards that direction? I think that's important.MATTOkay, so do you want to share your definition?ANDREW ESCOBARI don't have a precise definition, although - I think you know this - I tend to go back to the definition that you struggled with and worked on for a while because it's helpful. But I think I've extended it a little bit more. Intentionally cultivating the effective conditions for decision making. But beyond those those conditions, there was something missing for me. And maybe one of the conditions, it doesn't feel like a condition, one of those conditions for me is shared values. And that's a really touchy feely word, but that is part of it. Right? The values and understanding of your role as a director of the corporation or the not for profit or the cooperative, that's really important. What are we here to do? That almost needs to be the foundation for what comes next? Like, if we don't agree on what we're here to do, then... because it isn't good governance, like, we're not here to do good governance. That's not the end goal. Good governance gets us there. But where are we trying to get to? We're here to - and it might be something that I disagree with. It might be here to solely increase shareholder value. It might be just to make an impact in the world. It might be a mix of the two. But if we agree on that, then we can actually start working on what are those conditions, what do we need to change with how we approach our decision making towards that end goal. And so I tend to think about the end goal a lot more than I do the conditions. Because it's actually, I think, the end goal where you're going to get most disagreement, constructive disagreement with directors. Not on the conditions. Right. Like, you know, should we start a meeting earlier or later, or, you know, how do we, how do we frame this? Or how do we want our minutes to... Like, those are, those are all really interesting. In the end, there's a compounding effect to all those conditions, if you get them right. But without the foundation of what are we here to do, what are our values as we approach it, you can't do much more than that.MATTSo it's interesting you mentioned this, and we don't need to talk about this right now, but one of the challenges that I get a lot is "where does purpose fit?" And I'm just like, well, it's like the most important condition, right? It's still, to me, it's a condition. It's like why we're here to... If the governance part is decision making and we don't know what the decisions are for, then that's an important condition. Right? It's like defining the problem carefully and making sure we all agree on what the, the nature of the problem is and then considering options to approach solving it. And, and, and, and, and. But no, you're right. I'm, I'm trivializing by saying, well, everything's just a condition, you know.ANDREW ESCOBARBut it's useful to frame it as a condition. Maybe to me, it's the most important condition. Yeah, right. And you said. I've said values, you said purpose. I think we're actually talking about the same thing.MATTI think you're right.ANDREW ESCOBARBut it's. There's two layers to that. Like, what's our purpose? Like the organization, the Corporation's purpose. That's 1. 2. What's our purpose as a board? That's another one. And then what's my purpose as an individual director? You need. That is a condition that needs to be foundational to your work.MATT VOICEOVERWhat do you think? How important is it for directors and executives to have a clear, specific and confident understanding of what corporate governance is? What good governance is? Something they can express sensibly to their peers. How important is it for the whole board and leadership team to share the same concept? Do you have your own definitions? Do you think your peers agree with you? I think these things matter a lot, and I often wonder why they seem so rare. In the next episode, Andrew and I will talk more about what good governance might look like on a normal day. No crisis or urgency, just doing the normal work of a board, but doing it really, really well. That episode is available right now, and subsequent episodes of the show will come out every week or two. In the meantime, I'd really like to know your first reactions to this concept and format. I could even say that I need to know, because I'm doing this in hopes that you will find it interesting and useful and maybe a bit fun. If you do in fact find it interesting or useful or fun, then please say so by subscribing to Ground Up Governance and clicking the like button and maybe leaving a comment or sending me a private message. And most of all, by letting other people in your community know that you like it so that they might check it out too. Oh, and if you're interested in knowing more about the background music, I'll leave a few brief written notes at the end of each post with a bit of info. Thanks for listening. It's so good to be back.MUSIC NOTES:Just a moody little loop that I built on an MPC Live. It started by strumming some chill guitar chords and ended up being a bit of a raucous, driving…whatever. The bass line is doubled between an Ernie Ball Music Man Stingray 5 bass and a Gretsch Roundup guitar. There’s some additional guitar chords throughout. All of the drums and the stabbing synth shots are on the MPC. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPT:Welcome back to…One Minute Governance? Sound-Up Governance? Kinda depends where you’re listening. I’m posting this everywhere. My name is Matt Fullbrook and this is the first medium- to long-form scripted podcast episode I’ve ever done. It’ll be a bit of a journey. There was just a story that I wanted to tell, and I figured that I’d use these platforms to get it out there. So, well, enjoy the ride.Let me start with an admission. I can’t stand watching panel discussions. I’m pretty sure the *reason I can’t stand watching them is the exact same reason why I like participating in panel discussions. Like, being ON a panel. Being on a panel is fun. You get to meet and hang out with other people who like the same stuff as you and chat with them until time runs out. It’s pretty great. Listening to that happening is…less great. You can double check the stats if you want, but precisely 0.46% of human beings are good at taking the interesting things they know and turning them into interesting words that come out of their mouths. That number is much smaller if you take only the people who can edit themselves on the fly so that they don’t end up talking forever. Or the people who don’t have to read from a script to be interesting, because reading from a script when you’re on a panel is basically like asking the audience to endure something altogether bizarre and painful.I think this is the exact same reason I can’t listen to most podcasts. For my tastes, a great podcast requires the combined talents of having something interesting to talk about, being able to talk about it interestingly, audio engineering aptitude, and the will to edit with a heavy hand. Plus having a tolerable voice. Each of those is rare on its own. Together…basically unheard of.As an aside, this is my first attempt at a medium-length scripted podcast. Probably the only one I’ll ever do. This is *really* hard. Script edits, self-doubt, bad performances. Seriously, what you’re hearing now is my fourth complete re-do of the recording. And it’s *still* not gonna be perfect. I should probably be legally prohibited from even trying.You know what else should be illegal? Panel discussions. Seriously. If you arrange or participate in a panel discussion you should be doing so with the full understanding that you’ll likely go to prison for the rest of your life. Make sure it’s worth it. Make it outstanding.Anyway, I went to a conference this summer organized by the Governance Professionals of Canada. Shout out to the Governance Professionals of Canada. At this conference there was a session that taught me something incredible. Actually lots of incredible things, but unsurprisingly it’s the objectively LEAST important lesson that’s changed me most significantly.The title of the session was Umbay Nagamon – An invitation to action on reconciliation in Canada. Umbay Nagamon translates roughly from Ojibwe as “come sing.” I won’t try to convey the fundamental substance or message of the presenters – there were six of them, presenters, that is – because I just don’t have any words better than what the title of their session already plainly tells us: “an invitation to action on reconciliation in Canada.” As in, each one of the few hundred of us in the room is invited to act – empowered to act, even.What I *do* want to describe is my experience of the session itself, which was the diametric polar antithesis of a panel discussion. There was a cheerful introduction followed by a heartbreaking story – told brilliantly by someone who admitted they had never before told a story in front of a big audience – followed by an informative presentation with powerpoint slides followed by an engaging group activity followed by a cheerful outro…and in between each segment a musical performance, sometimes traditional music, sometimes western music, all amazing. Total run time of the session? I just checked: 77 minutes.A couple weeks ago I was a panelist on some corporate governance topic or other. Me and two other people – both super smart and fun to talk to. Total run time? 90 minutes. No musical performances or group activities or any other remotely cool intervention. Just me and two other people talking. For 90 minutes. In front of an audience. Not outstanding.Right, so I learned a lesson from the six brilliant people on stage for Umbay Nagamon – An invitation to action on reconciliation in Canada. It took me a while – like weeks, probably – to realize that there was a lesson at all, let alone that I’d learned it. But the thing was… I was thinking a little about Umbay Nagamon every day. Not just about the vitally important stuff they talked about, but about the actual experience of sitting in the room consuming their session. That’s weird, right? Like, reflect for a second on what I assume is the approximately six million hours you’ve spent sitting at conferences. Ever find yourself thinking about – feeling, even – the impact of the experience of witnessing a session at a conference for WEEKS afterward?If you *have* experienced this, I think I know why it happened. And this is the lesson I learned. It’s the same reason you can still basically re-experience the best moments of the best concerts you’ve ever been to, even if you’re not 100% sure what year it was or what song or maybe even what band. The message stuck with you, even if the source ended up being lost to time.Sorry, what was the lesson? It’s that making people FEEL stuff matters a lot. In fact, it matters more – I think – than the content of the stuff that’s making them feel. Remember how much stuff was crammed into that 77 minutes? Probably sounds a bit chaotic, right? I think it probably was a bit chaotic in hindsight. I’m pretty sure the *chaos made me feel things, made me pay attention. There was a story that made me feel heartbreak, maybe even a touch of despair. Some data in the powerpoints that made me feel the enormity and urgency of a problem. And the music, which made me feel, well, lots of stuff. The way only music can.Maybe a better way to explain the lesson is this: why bother trying to share information if you’re not also trying to convey a feeling? Without a feeling, there’s nothing enduring for your audience to latch on to. Maybe boredom is an exception. Try to avoid making your audience feel bored, I guess. Other than that, feelings make the information seem more important and more memorable.You know how people who give advice on public speaking always tell you to try using humour? This is why. But the *problem with humour is that most of us are pretty bad comedians, *on top* of not having much useful stuff to say. Even worse are the educators who *are* good comedians but don’t have anything useful to say – which leaves us with a strong memory of bad information that seems important. I guess I’m telling you to beware of teachers who seem too funny. They’re probably hiding something.Twenty four years ago, I was 19 and hanging out in Toronto with some friends. It was already obvious to me that these friends were, like, forever friends. That unmistakable bond. Here’s the story. I’ll let you judge how much to trust my memory of the details here. They don’t matter.The evening kicked off with me and my friends Bryan and Tristan going to a thing at Hart House at the University of Toronto, a more university-y looking building you will never see. Google it: H.A.R.T. house. We walked up a spiral staircase to a little room in a tower where we sat on the floor with a small group of other weirdos and listened to a truly adorable man – a young Buddhist Monk - talk about Buddhism and the movie The Matrix, which had come out earlier that year. Going to this lecture was definitely Tristan’s idea – and it was a very good idea. I remember the experience more clearly than most things from that era – than most things in my entire life, really. And even more impressively Bryan ended up dedicating the remainder of his tragically short life to Buddhism. Inspired by this one weird dorky lecture. Facts!And that’s just the beginning of the story! I grew up in a neighbourhood with an epic ice cream shop called Dutch Dreams. Dutch Dreams is the kind of place where everything is extra. The flavours were extra – not just in variety but also in innovation. When I was a young kid of I dunno let’s say 6 years old I don’t recall any other place anywhere that had anything other than obvious ice cream flavours. Obvious ice cream flavours are *incredible*, but they aren’t extra. Dutch Dreams would have some flavour that would be like chocolate AND vanilla AND peanut butter with peanut butter cups AND Reese’s Pieces AND a shot of bourbon or something. And it would be called Royal Supreme or some otherwise extra name. And a sundae would have a scoop of Royal Supreme and two other sincerely rad flavours plus chocolate sauce and peanut butter sauce and marshmallow sauce and a huge pile of whipped cream and like 8 types of fresh fruit on top. Extra.Dutch Dreams still exists, although I haven’t been for many years. It’s at 36 Vaughan Road in Toronto, which is not the original location from my childhood. It’s only like a block away, but it still feels a bit strange to me that they moved. Not quite accurate or something.So, after the lecture Tristan peels off to do something else, while Bryan and I walk up to meet another friend, Misha, at Dutch Dreams. Epic sundaes in hand, Misha, Bryan and I start walking to Misha’s mom’s place, where Misha still lived at the time.As a side note, in my memory we were all entirely sober despite the hippie lecture and giant sundaes maybe suggesting otherwise.To get to Misha’s mom’s place required a cut through the parking lot of a supermarket, and during this cut a police cruiser speeds up from behind us, screeching dramatically to cut us off. Impressively, we all held on to our ice cream. I, for one, found myself feeling much more curious than scared, which tells you all there is to know about growing up white and male in Toronto. Two police officers emerge from the car to question us.Question 1: Where are you coming from?Response 1: We just got some ice cream at Dutch Dreams, obvi. Hence the sundaes!Question 2: Where were you before that?Response 2: Ooh we went and saw an adorable Buddhist monk do a lecture about The Matrix! Thanks for asking.Question 3: So you didn’t just beat up an old man?At this point it is *very* obvious to the police officers that we three dorks did not beat up an old man.Response 3: OMG someone beat up an old man? Is he OK? I wish we could help, but, y’know, sundaes…Or something to that effect. Then we went on our way.Anyway, here’s the thing: doesn’t it seem like that night had some magic in it? Almost like it was destined to be an enduring memory. Strangely, Bryan, to me and many others, figured prominently in the magic moments of our lives. Like he was part wizard or something. I haven’t met many other people like that.There was another part-wizard in my life named Gregory. I’m going to tell a story about Gregory that’s shorter and slightly more tragic, but that finally veers whatever this podcast is into our shared world of corporate governance.In the early days of 2021 I announced my resignation from the University of Toronto after having worked there in some capacity since the year 2000. For most of that run, I worked at the Rotman School of Management. I got my first office at Rotman in 2002 or 2003 while I was a child and still completing my undergrad in literature and philosophy. I am confident that there are a couple of people from Rotman listening to this and I assure you I had absolutely no idea how weird it was for a literature and philosophy undergrad student on a casual part-time contract to have an office. With a window. All to myself. At the Rotman School of Management. With my name on the door: Matt Fullbrook, as if I had EARNED that s**t.I remember once after some random philosophy class, a classmate asked for some notes or a copy of a book or something and I said, “sure, let’s go grab it from my office.” And we walked to my office. At the Rotman School of Management. I opened the door with my name on it, and we went inside to pick up the book or whatever. And although I don’t remember this guy’s name or what he looked like, I do remember he was essentially speechless, which is totally fair.Anyway, after I resigned from the University I had an important question to explore: “do I even care at all about corporate governance?” It really wasn’t very obvious to me – I sort of felt like I *really* cared, and *really* didn’t care simultaneously. Actually, the real question I wanted to answer was slightly different: “is now the time to do something completely different with my life?” So, what else do to than pick up and go to the desert with my boo, Dana, to sort myself out.There’s an amazing song on Jeff Rosenstock’s killer new Hellmode album called Life Admin in which he sings: “Might go to the desert cuz I make enough to f**k off to the desert if I want to. I haven’t decided yet. Got a sweet new pedal and I don’t pay rent.” Am I allowed to sing someone else’s song in a podcast? Probably not. Sorry in advance if this gets taken down. And honestly, you should be listening to Jeff Rosenstock’s recording anyway. It’s truly excellent.But that was the headspace: we went to the desert because we make enough to f**k of to the desert if we want to. Before going to the desert, we visited some old friends in LA and ate and drank and went to the beach and whatever. It was dope. But it was time for the desert.Bags packed and ready to leave the adorable B&B where we stayed in LA. We’re walking out the door to hop in the car and drive to the desert when I get a call from a friend to tell me that the great part-wizard, Gregory, had died. This was…ugh. It was really very bad.These things transform you in ways big and small, transient and permanent, immediate and eventual. The transformation relevant to *our journey here on this podcast was big, transient, and immediate. I stopped caring about the stated mission for my desert adventure. You’ll recall from a few seconds ago that I was seeking an answer to the question: “is now the time to do something completely different with my life?” I mean, it really seemed important before. Urgent and elemental. And let’s be clear here: this was not one of those “death makes you realize what really matters in life” things. Because we all know that what really matters in life is snacks. It was just suddenly obvious that *that* question didn’t matter like I thought it did.In case you were wondering and maybe even a bit worried: yes, we made it to the desert. We saw tarantula hawks, scorpions, a tarantula, and the greatest find of all…an adorable little blind snake. It was like meeting a celebrity. Truly amazing.But that’s beside the point.  I started focusing on unfinished business. And, honestly, unfinished business is still basically the core premise of my work in corporate governance today. The first bit of unfinished business really startled me. I had no idea what good corporate governance was. Now remember, this was 20 frickin 22. Twenty years after I settled into my well-deserved office at the Rotman School of Management to run a research centre that studied and provided insights to the world on the topic of good corporate governance.You might be thinking one or both of two things. Both fair things. The first being “pfft, stop playing, Matt. Of course you knew what good corporate governance was.” And the second being, “Oh snap! That’s kinda embarrassing. You must’ve felt dumb, huh? Or at least some regret that you’d messed up so bad.”On the first thing, I assure you if I *had* had a clear idea of what good corporate governance was, this would not have been a transformation. It was an…acute? Poignant? feeling. As for the second thing, you’d be wrong on that one, too. One of the tremendous benefits of privilege (of which I have roughly infinity percent) is a near-immunity to shame. And so, I felt none: no regret, no dumbness, no embarrassment. Only a new flavour of privilege-fueled purpose and ambition.See, the thing is, none of my peers or colleagues or associates or mentors or any of the respected experts out there really seemed to know what good governance was , either. Sure, there’s the Mad Libs style definition that goes something like Good corporate governance involves the implementation of robust processes, rules and structures to foster sustainable growth and a healthy workplace environment. Or whatever. This is the type of definition where you can replace most of the words with other words and it will always basically sound right enough to pass. But it doesn’t tell you what the processes and structures and rules should look like. It’s basically telling you “you’ll know when you have good processes and structures and rules if you’re getting the result you want.” Sustainable growth or some such nonsense.Here’s the thing about results: sometimes good results come from bad inputs, and sometimes bad results come from good inputs. You know like when you’re first learning to cook or bake or drink cocktails or whatever? Like you’re a little kid and your parents let you experiment with making food. They give you some benign ingredients to work with and pre-heat the oven. Ready to bake whatever nonsense you conjure up. And so you mix flour and sugar and salt and eggs and hot sauce and chocolate chips and put it in the oven and there’s a 99% chance it turns out inedible? But you and I can both imagine that if you get the ratios of those ingredients *just right* it’s conceivable that you get something kinda OK.Why? Because results are always, at least partly, influenced by luck. And I don’t know about you, but I can’t stomach the idea that good governance boils down to good luck.And that was my first realization: results are results. Good governance is something different. It’s also something more than rule following. Rule following is just another way of saying you’re playing the game, or at least that you’re not cheating while playing the game. I can’t stomach the idea that good governance is the same as not cheating while playing the game. Rule following is rule following. It’s compliance. Good governance is something different.I wanted to believe that good governance is something that actually matters. Anyway, I pulled on that thread long enough to eventually land on my current definition – which, if you’re listening you’ve probably already heard me say a million times –My current definition goes like this: Good corporate governance is intentionally cultivating effective conditions for making decisions.There’s like 100 podcast episodes and 50 interviews and six million linkedin posts that’ll tell you more about me and that definition of good governance so let’s not waste any more time right here on THAT.OK, let’s waste a *little* more time. I’ve only recently understood the real magic of this definition. And I’m at the beginning of a journey to learn to wield that magic. I’m gonna stop with the magic metaphor because I don’t have a very good grasp on the relevant vocabulary. I don’t want to conjure me up some governance spells or whatever. Sorry I’ll stop.I’ve only recently understood the vast POTENTIAL of my definition of good governance. It’s three things:First, framed this way, good governance is so tangibly DO-able. Pick a condition that might affect decision-making. Let’s say, the presence or absence of the delicious aroma of a freshly-baked pie or cookies. Because, as we know, snacks are what really matter in life. We can easily grasp the potential for such an aroma to be distracting, or maybe inspiring, or maybe just fun. More importantly, we can be intentional about it. Even just by thinking “hmm…should we bake a pie in the boardroom? Eh. Maybe not.” There you go! Good governance!Second, because good governance is so DO-able, literally anyone can do it. That pie and cookies thing? All of that can just happen in a single person’s head. It could be YOUR head. And even if the answer had been “heck yes! Let’s bake a pie in the boardroom!” I bet you’d have a pretty good idea what steps you could take to try to make it happen. Holy smokes! Look at you. You’re doing good governance all by yourself.The third thing is pretty fresh for me, and takes us mostly to the end of our journey here because the rest of the story has yet to be written. Ugh, sorry that was corny as hell. Whatever. I had *always* thought I was fighting a fight to change systems. Big systems like regulations and laws and stuff, medium systems like the influence of consultants and educators on corporate governance, and smaller systems like a single boardroom during a single meeting. No matter the size of the system, you gotta get buy-in. If we think of it that way, doing good governance requires everyone to be on board and push in the same direction. But I was wrong. Good governance can belong to a single person in the system, and for only a fleeting moment. Noticing in that moment that the system isn’t working right – or not as right as it could – and an intentional cultivation of a condition in the system to get it sorted out…even for just a few seconds. It can matter *so* much. Just think: in those few seconds, the right person might now be inspired and empowered to say or do something that shifts the way everyone in the room thinks and behaves. Maybe forever. Or maybe just enough that we see a problem or solution or opportunity that we’d never seen. Or that we generate an idea that’s slightly cooler than what we WOULD have come up with. Or we just like and trust each other a bit more.I guess what I was trying to say in the 3600-odd scripted words you’ve heard so far is this: making people feel things matters. Good corporate governance is science married to art. The power and potential of good governance might only manifest for a second at a time and you may not even notice. But it’s not abstract. It’s so do-able. You don’t need permission. It costs zero dollars. You don’t need others to care or even pay attention. It’s you. Inspired by the part-wizards in your life. Being intentional.That was supposed to be the end. And I need you to suspend your disbelief for a second. I know *I* would be suspicious of what I’m about to say… skeptical of anything that seems so contrived. The best I can do is admit that DOES seem contrived and hope that you’ll trust me for no reason. Here’s the thing: there’s an extra connection, a thread even, between the beginning of my story and the end. It’s a second lesson from Umbay Nagamon that I overlooked. I wrote, edited, and sat on the script for a few hours didn’t see it until I was sitting with my boo, Dana, watching TV with a cocktail. She can vouch for me! And it’s one of those things that’s so crystal clear and makes this whole journey feel and sound like I’m a million times smarter than I am. I told you before that I don’t feel shame. That was true until now.Let me read back to you something that I said a while back. Direct quote:I won’t try to convey the fundamental substance or message of the presenters – there were six of them, presenters, that is – because I just don’t have any words better than what the title of their session already plainly tells us: “an invitation to action on reconciliation in Canada.” As in, each one of the few hundred of us in the room is invited to act – empowered to act, even.If you see the connection already, you are SO far ahead of me. If not, trust me, I feel you. Let me read back what was supposed to be, and will be again, the very end of my story: The power and potential of good governance might only manifest for a second at a time and you may not even notice. But it’s not abstract. It’s so do-able. You don’t need permission. It costs zero dollars. You don’t need others to care or even pay attention. It’s you. Inspired by the part-wizards in your life. Being intentional.It's the same message. I learned it from Umbay Nagamon and am grateful for it.Thanks for listening. I don’t know exactly what I hope to achieve by sharing this other than some information transmitted on some feelings. Beyond this, I’m working hard on creating a new…something… to make good governance easy – or easier – so that you don’t have to come up with all the ideas on your own. But that’s a story for another day, pretty soon. I’ll probably never do another podcast episode in this format again. But let me know if you loved or hated it. If you learned anything, or if you think there’s something more I need to learn. My name is Matt Fullbrook. Until next time… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. I think it's fair to say that the best part of my profession, if you can call it that, is the privileged access I have to a huge variety of super smart, super interesting and super influential people. Confronted with an endless menu of awesomeness, one has to use some kind of criteria to determine who, exactly, to hang out with, since everyone's at least a little great. I like to look for the folks with a spark of, I don't know... counter culture. Like, the people who you'd really like to glom onto and drink with at a party because you just know you're gonna learn something and have tons of fun. So who am I talking to today? Reanna Dorscher and Ciara Wakita. Respectively, a Partner and Principal at Hugessen Consulting, one of the serious major players in executive compensation and governance in Canada. Part of their awesomeness is reflected in the fact that they're decidedly different than most of the influential folks in this space for lots of reasons, not the least of which is that they're less male and less... old than the status quo.Reanna Dorscher It's great to work in this space, because we are considered young,Matt VoiceoverThat's Reanna Dorscher.Reanna Dorscher There's very few professions where we would be the young up and comers. You know, I certainly do think impostor syndrome is a real thing, particularly for me. And it's funny how it can swing from day to day, from mandate to mandate. To me the imposter syndrome settles when you take the time to build the relationship, understand the individual, how they like to work, what your business does, I understand what's top of mind for you, I really want to listen to what's keeping you up at night, and you kind of build that trust. I find the relationship gets strengthened, and it helps my imposter syndrome fade. I have a lot of great mentors in this business as well. They have, you know, put me front and center in front of groups, they've given me so much confidence, because they show they had confidence in me and they've passed the reins on a number of really big client files. And so having those kinds of people in your corner and having them even in my corner today still makes a big difference.Ciara Wakita When I first came into the governance space, you know, I think we need to acknowledge that boards are a very mysterious place to most early and mid stage professionals.Matt VoiceoverThat's Ciara WakitaCiara Wakita Yeah, it doesn't quite have the same cachet as going into finance or going into strategy or into marketing. Like you're going into governance is a little bit different. And, and it's not taught in business schools and that sort of thing, either. And so it's very mysterious, I think, until you know, people reach sort of senior executive stages of their career. And so coming into this industry as a service provider, and I came from management consulting, where all you do in management consulting is reimagine the art of possible, right? And you're always thinking about a new way to do something or a different way to approach a problem. And there's a lot of space for that, I think, in governance, because we have benefited, I think, from a steady, predictable set of boards in Canada for a really long time. And I think that is something that does offer some value, right? But there is, like I said, opportunity to innovate, to rethink how we do that. And rethink what levers are available to offer more value or to really lean into their role as a strategic asset of the organization.Matt So, there's something in what each of you said that I really want to pick up on. The mentorship thing, Reanna, that you talked about, I find really interesting, too. Because I think this is a space, where we may be, from our perspective, we get this access to mentors in a way that for instance, like... Board's have to, like a director has to be forced to have a mentor, like there's not a lot of people who are in the board world who are like, sufficiently self aware to say, "you know what? I really wish I had someone on my side who was helping me to see the things in myself that I don't see, and unlock that value and so on." So, you know, I I've had some mentors in my life that have been really amazing. I've just my statement here is, I think, I think maybe we should be like champions of have a greater like, acceptance, or maybe giving permission for these super like influential, high powered people to also want mentors. I mean, does that make sense?Reanna Dorscher It does and I think for me, the best mentorship I've had has always been natural. It wasn't like me asking someone to be a mentor. Right? And something with that Ciara mentioned is boards are such a mystery, and we need to find a way to break down that mystery and help people see how they can add value and why it matters. And then I think that natural learning Curiosity will will come about or I would hope that it would.Ciara Wakita I think there's this concept, some people call it reverse mentoring. I, for many years, I used to have a cool coach because as I started to get older, I realized I started to become less cool. And I, I didn't think I knew all of the new lingo. So there was this like young, brilliant consultant that came out of out of undergrad. So I mentored her professionally and she mentored me to be cool.Matt Did it work?Ciara Wakita It did it did. I'm pretty cool. I'm pretty cool, Matt.Matt I think maybe these this like mystery factor. Do you think maybe boards or senior corporate leaders kind of want the mystery to be there? As not on not intentional gatekeeping, but to make themselves feel special? I mean, I'm being a little bit nonsense, but but I think here's what I'm getting at. I remember having a conversation with some faculty when I was at Rotman trying to make a case to them as as I was trying to, as I was understanding boards and governance more intimately. I was like, "Wait, why aren't we being, like more intentional and active about teaching this to the MBAs? like, I think that really enjoy it. And it would help." And the answers that I would get would always fall somewhere along the line of "Yeah, well, they're too young to really get it. So, no." I was like, they're only too young, because you're not teaching it to them. You know what I mean? So is this is there maybe a little bit of either intentional or unintentional gatekeeping going on that perpetuates both the mystery, and the lack of access to like early resources and mentorship?Ciara Wakita I think it's less gatekeeping. And more about relevance, because like, rightly or wrongly, I think that people associate governance with process. And that's ultimately what it is right? Like, like governance in itself is not a business outcome. It's a means to a business outcome. And because governance is connected to process, it's a very unsexy term. And it doesn't spark a whole lot of curiosity or inspiration amongst professionals, early and mid stage, you know, as they grow their careers.Reanna Dorscher Yeah, I would agree with that. I think, if you ask most people that don't work in this space, and that don't work with boards, what they think of when they think of governance, they probably say bylaws, and no one wants to sign up for a course where they learn about bylaws, right? They think of it as being a purely legal process function. And so it's, I think that's probably one of the barriers is just the barriers of interest, because nobody really understands how impactful and interesting it can be, and that it's not bylaws.Ciara Wakita And I think that's exactly where the governance community is going. Like, I think that there's an opportunity to connect governance to business outcomes and connect it to purpose, right? I truly believe that every organization is different, therefore, every strategy is different. And therefore every board should be approaching their role differently. I think once we can connect governance to something more intrinsic, once we can connect it to purpose, that's a lot more inspiring in terms of something that I want to do. Right? And when I'm teaching directors, you know, one of the first things we ask is, "why do you serve on a board?" And we'll get all kinds of things I'm I want to give back, I want to serve my community, like it takes five or six answers before somebody says they're doing it to get paid. Right? And so money is not the motivator of, you know, joining the governance community, particularly in Canada. And so I think that we have to find a way to connect to purpose and I think we have a generation that's actually willing to do that now more than it ever has.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.Matt VoiceoverIt won't surprise any listeners that I like this idea of corporate governance having the potential to really matter and not just be some boring, bureaucratic necessity. Throughout our conversation, both Reanna and Ciara made a point of saying that the work of consultants in the governance space helps people. I happen to agree, but I sometimes have a hard time explaining it to folks who might see me and others like me as just another cog in the vast capitalist machine. Here's their take, starting with Ciara.Ciara Wakita I think what connects me to this work most, Matt, is that I'm truly convinced that boards, like industry corporate boards, can influence the fabric of our country. Can influence the fabric of our societies, how we govern ourselves, what our beliefs are, whether we're inclusive, whether we're not. And the work that we do in board effectiveness, you know, our role is to help boards better their odds of making good choices. It's to better their odds of making choices that are meaningful to the communities in which they operate, to the people in which they employ, to serve the whole realm that works around the organization. And I think if we can influence who's at those tables, how they think through their problems, and help them get to outcomes that are inclusive of all of those perspectives, then I think we're doing our part.Reanna Dorscher And I would think, you know, in helping and adding a lot of value is just taking the time to really understand the priorities, the issues at hand, the challenges, the opportunities, and offering an external perspective and asking the right questions. I think it helps just make boards make better decisions when they have an external perspective, asking... an informed external perspective, asking the right questions and kind of pushing their thoughts a bit, because you don't bring about change by doing the status quo. And unless you bring in an external perspective, I'm not sure how you, you push meaningful change.Matt VoiceoverI have a pretty strong, maybe strident, opinion that organizations in general are making a big mistake by not working hard to bring young people onto boards and other positions of influence. I was curious for Ciara and Reanna's as perspectives on how to get some movement here.Reanna Dorscher You know, when we think about, like, diversity of thoughts and perspectives, I also think of diversity of knowledge base, right? And so what are the few subject matters or the few topics that we think that traditional boards don't pay enough attention to, or they don't necessarily naturally have the knowledge from their years of service, both at either the management team level or the board level? And so then how do we identify those individuals that possess those unique knowledge bits, right? And try to share with them like, "Hey, by the way, it would be great for boards to understand better, what you understand or what you know," and kind of try to create that connection between the mystery of a board and the value creation of advising, if that makes sense. Like, how do you kind of show people what the value is of what they know that others don't? And how can we be impactful?Matt Yeah, and like without it being this, sometimes there's this tendency to tokenize young people and bring them in boardrooms and just be like, "tell us about the youth!" And like, Well, no, there's to you than just that, right?Reanna Dorscher I think it's also making sure that you're bringing people into the conversation, because you're genuinely interested in hearing from them. And you feel like you have something you you can learn and your open minded to their contributions. I think to a certain extent, I mean, chang is constant, right, and appeals like the board. I think everyone has good intentions, they want to do things better, they want to change everyone who says, "well, the status quo could be pushed, we could think about things differently. We should be making more time for this." But then other priorities getting away. Right? And so I think there's just that lack of taking the time to take a step back and say, "what have we been doing forever, or spending time on forever, that we are just spending time on because we've been doing it forever, not because of value add? And can we take it away to make space to do these other activities or think differently?" And it's just the world changes so quick, businesses change so fast, priorities change so fast. I really think boards don't necessarily get that time to have that conversation about what can come off the agenda to make space to do things different.Ciara Wakita Yeah. Change resistance, I think is such a natural human behavior. And of course, we see it in boardrooms, we see it in every aspect of human life. And I think, especially like in business, one of the ways that we get change is because we have leadership, or we have hierarchies, or we have some sort of power force that actually really enforces change in organizations. Boards are unique, because there's nobody more senior than the board telling them to change or change their behaviors and the way they do things or, or their processes. And so it takes a really strong chair, there's a huge role for leadership on boards. And to some degree, a chair is also a first among peers, too, right? And it takes everybody on the board to be on board with change. And so that's actually I think, a force that works against change in this space. Because simply of how they're structured and there's nobody truly saying okay, you must make change.Matt VoiceoverI had to take advantage of the fact that I had two people with me who kind of eat sleep and breathe listed company governance stuff. Some of you may know that for more than 20 years, I ran the data collection efforts for two sets of what we called board ratings, including for a project called Board Games that gets run in Canada's national newspaper, The Globe and Mail. We vacuumed up countless thousands of data points every year and spat out scores that claimed to measure good governance. But really were just metrics of very specific types of public disclosure. They were useful, for sure, but it was a bit of false advertising. Anyway, I was curious about the state of affairs in the way listed companies think about and work on disclosure in the years since I've been out of that racket.Reanna Dorscher Yeah, so I will say, and if you go back to, you brought up Board Games, I do think and we saw it with many clients, people take their Board Games, and it would be a bit of a check the box activity.Reanna Dorscher I'm gonna put this in my proxy, because it's gonna get me two more points in Board Games. It's not necessarily that we we feel that this is, you know, a meaningful change, but it's gonna get us two more points. And in my mind, anytime you're doing a check the box, it's goes against creating value and good governance. And it just, it inherently doesn't line up to me doing check the box activities in the governance world. So in terms of what we've seen, from a trend, I do think we're seeing more transparency in the terms of plain language like proxies used to be very legalese. They used to be very, you know, you'd have to really understand either like the specific technical aspects of the business, or the securities requirements that drive the form requirements, to actually get any value from it. So, you know, I always tell my clients, if you, if you want someone to pay attention to your proxy, you have to know they're gonna look at two places: the letter to shareholders at the front of the CD&A and the summary compensation table that shows how much you paid and the year over year changes, right? And so those are your two places to share any key messages and ones just numeric. So if you really want to tell a story, put it in that letter to shareholders. And I think it's become a great opportunity for the committee chair and the board chair to pen a letter that talks about key performance highlights for both the corporation and the executive team. What were some of the pay decisions that were made. What are some of the things that the board plans to change to be better or to do better. And as well, letter to shareholders also include, "if you don't like something, here's how you can get a hold of us, here's how you can engage the board directly." Which I think is a change. So I mean, big picture, plain English, lots of pictures and charts. And just kind of a let's take the mystery away from this. Here's how it's structured. And here's the decision we made as a result of this performance.Matt Totally!Matt So first of all, this is a great trend. Second of all, I wonder if like if maybe they could also add like a selfie video from the CEO, just be like "Hey, guys!" this is like just, you know, make it give us as many different media so like, you know, people like me, who decided I never want to read a proxy again, I would watch a video, I might listen to a podcast. You know what I mean?Reanna Dorscher I think that's an interesting evolution out of COVID that when AGMs went to virtual Right? And you actually did have a CEO doing like a webcast AGM corporate presentation. I mean, not really as much about the proxy, but as much as the business how the business is doing. But that is kind of interesting thing now that most websites, you can actually watch the webcast of an AGM as opposed to, you know, read the proxy and attend in person.Matt On the flip side, Is there stuff here that you you feel like boards are really spending a lot of time on just like, dudes, like, this is not worth the time.Reanna Dorscher It's not so much that it's not worth the time. But I feel like we should be at the point now where ESG doesn't need to be this big mystery pillar, but it's just kind of something that's a part of the way we do business and making good strategic business decisions, right? And so sometimes I think boards can spend a little bit too much time speculating what ESG is and what it means for their business without just taking the concept and breaking it down to what are the environmental, social and governance things we are already doing in our business, and where do we want to go on each of these pillars? So you know, I'm hesitant in saying ESG is taking up too much time, because I do think it's important strategic conversations. But I think sometimes we're missing the practicality of the conversation and just breaking it down into what are we already doing? And what do we want to do better?Matt Yeah, it's one of those situations, I think, where there's the way they talk about it is worse, in some cases, I will exaggerate a little bit. It's worse in some cases than virtue signaling. It's just signal with no virtue, you know whatI mean? Where we could be like, talking about, "okay, well, like you said, what do we actually want to be in the world?"Reanna Dorscher Yeah. And, you know, I want to go back to the Board Games thing for a minute because it's interesting, you know, I said people were doing it for a check the box to get extra points. But for boards that really didn't know where to go to make their disclosure better, it was a good starting space, right? And so if we think about how we can make boards better how we can make disclosure more useful, what are the resources other than a Board Games that someone can go to and say, "I want to do better with my proxy, but I have no idea where to start?" Right? And I will give Board Games credit that it gave people some ideas that if you wanted to build on your disclosure, here's how you might be able to start.Matt I agree. I think the mistake wasn't caring about disclosure, it was making it gamified. Right? Making it a ranking, implying that that there's winners and losers. And if you're at the bottom of the list, there's something wrong with you, which, frankly, it's really stupid. You know...It is what it is for now. Ciara, what about, are you seeing stuff where you find yourself witnessing things you wish, you could just be like, can we move, Can we like, just move on to something better?Ciara Wakita Yeah, I do. I mean, I spend probably two thirds of my time helping boards with their board evaluations. And first and foremost, we have to stop calling them board evaluations. I think the word evaluations just doesn't set anybody up for candor, and trust and transparency. And so I think we need some, some different nomenclature around that. But what I often see is very like routine, truly check the box exercises. We're going to do the exact same survey, and we're going to ask the exact same questions that we did last year. And you know, we're going to maybe find different outcomes, which you're probably not going to. And so one of the things that I hope starts to shift is that we actually take all of the energy that goes into board evaluations, and it's a lot, it's a lot of precious Director time that goes into this every year. And we can actually reframe it and think about this, rather, as an alignment exercise. And so think of if we think about it like, okay, a board has a purpose, an organization has a purpose, a board has a purpose, then we can start to think of like, what are all the things and levers that are available to us to make that come true? Right? And are we are all of those dimensions, balanced and in harmony? Because what's happening right now is we're saying, we're asking questions like, "do we meet enough?" You know, "are our materials good? Are we getting them on time? Is the quality good enough?" But really, unless you're connecting that to something else, all of those responses are a matter of opinion. They're not actually connected to an outcome that the board is trying to generate. And so I think we can start thinking about it more holistically, and really generate things that can offer structural shifts in how boards operate, as opposed to tinkering with processes or, you know, trying to shift director behaviors.Matt VoiceoverSee what I mean? These two are the true embodiment of the cool kids when it comes to governance consulting. Embedded right in the heart of influence in the Canadian system, questioning status quo, coming up with big ideas. This is the rising generation of governance expertise. Thanks again for tuning in. And sticking with me on this nerdy adventure. Shoot me your cocktail bar recommendations or cocktail recipe recommendations at that, plus any compliments and complaints to [email protected]. For those of you in temperate regions, make the most of the seasonal changes by wearing your coolest jacket as much as possible. Catch you next time.Ciara Wakita I'm a figure skater on a synchronized skating team. Our role is to represent Canada internationally. Synchronized skating is kind of like ice dance with 16 people. We all look alike, and then we make shapes and squares and stuff on the ice.Matt And frankly, I've never heard of it until you talked about it. And so I immediately that night after we partied, I looked it up and it's like, it's really cool!Ciara Wakita It's pretty cool. The view from the top is pretty awesome, right?Reanna Dorscher And she's gonna be representing Canada in Italy.Ciara Wakita It's true. Next year. Yeah.Matt That's really it's very cool.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.TRANSCRIPTMatt VoiceoverWelcome to a special mini episode of Sound-Up Governance. I'm in the middle of a travel whirlwind and trying to make sure I have cool stuff to share with you. So here's a chunk of my conversation with Eric Wetlaufer that didn't fit into the previous episode. If you haven't heard that one yet, please pause this now and go back to listen, it'll get you primed for Eric's vibe and perspectives. Here, we learn a little bit more about impact investing and about Eric's experience in an institutional investing environment during an era of significant emergence for environmental and social awareness in the institutional community. I mean, let's dive right in.Matt Define impact investing.Eric Wetlaufer Yeah. So this is another area, right? Where, you know, you just have to question what our industry does. And you have to question whether it makes sense for the client or not. And I always try to put the client, myself in the in the clients shoes. And doesn't make sense from from their standpoint. This is an incredibly lucrative business, the investment business, if it's done at scale, and done well. But it's not always in the best interest of the clients, the products are developed, etc. So we went through a period of time where, you know, I think it started more in Europe. Leadership around ESG, environmental, social, and governance concerns. The material risks that a business can be exposed to, through their different practices, their environmental footprint, or social footprint. And the Europeans were, you know, ahead of the North Americans, I think, in being sensitive to that, and recognizing that, if they are not investing in companies that are hurting the world, then maybe they're helping the world. If they have a broader, more holistic responsibility for the world that their retirees are retiring into, it's great if they have a great pension to spend. But if it's in a world that's, you know, sort of post apocalyptic, then, you know, what good is that? So, you know, I got involved more in the ESG space, thinking these non financial factors were important, and that we should consider those as part of our investment process. And this wave of ESG investing came along, and I was responsible here in Canada, at the pension plan that I worked for, for the sustainable investments team. And we were signatories to the PRI. We were founding signatories to the PRI, which is the United Nations backed Principles for Responsible Investing. And getting involved in that organization is sitting on the board of that organization, I really looked at our industry, and how many people were jumping on this bandwagon. But in word more than deed with so many people, right? They were relabeling what they were doing as ESG. Or they were making believe that sort of their process had always been ESG centered, they were always taking these things into consideration. And when you look under the hood, at what they own, you know, look at look at the top holdings. And it's companies like, you know, Coke and Pepsi that are producing sugar and plastic and trucking around water. And it's like, wait, that's not I think what people think they're getting. So from the clients' perspective, you're putting yourself in the client's shoes, what what does client really want? What do they value from an investment product? What should we deliver? It became apparent to me that it wasn't ESG, as ESG is being done at a lot of places. There's some great ESG. And so that's wonderful. But it's being it's being practiced poorly, practiced badly in a lot of places. And I learned more about impact investing, which is really about the products and the services and the positive impact that and the outcomes that the products and services of companies make when they are sold out to the out into the world. And that to me made a lot more sense. It resonated with me as much more of what the clients probably want when they're getting when they're getting their values associated with their investment dollars. These are people's hard earned savings, right? And they've earned they've worked hard, they want to invest, they want their values associated with those investments, similar to how they would buy, you know, free trade coffee or, or take an eco vacation, they want to make economic decisions that are more aligned with who they are and what their values are. And we as an investment or as investment industry really should think harder about meeting them where they are, as opposed to a lot of the ESG which is kind of just scoring companies; practices on water use...Matt All signal, no virtue.Eric Wetlaufer Yeah, exactly. Exactly. All signals no virtue. Exactly.Matt So I'm curious in this impact investing space. Is there room in there for... and I might be asking a deliberately naive question because I sincerely don't know, but how much room is there in this space for, let's go back to the Coke and Pepsi thing. For, let's say, using an investment in Coke and Pepsi to help them improve like an activist position kind of thing rather than just allocating our capital into, you know, companies that we believe in and not allocating it in companies we don't.Eric Wetlaufer I think there is room for that. 100%. The question is, is that what your clients want? Are you being transparent that that is your strategy, where we want to be, we want to take a most improved, greatest, greatest reduction of harm and greatest improvement in impact approach. And so we will find companies that are poor actors, and we will help them transition to become better actors. Either in a friendly way, or sometimes in a less than friendly way, through kicking out the bums on the board and putting new people in place, a more activist approach. You know, I think there's nothing wrong with short term activism, it's like, if your, if your relative is sick with, you know, something, and they need surgery, like, is there a problem that the surgery only takes two hours to, you know, between when they go in the room and come back out of the room? You know, "well, it's too short term!" I don't think there's a problem with that. Right? If that's the cure, then that's the cure, right? Sometimes these things go on for way too long. I think that's, that's fine. It's not our approach, but I have I have nothing against it. The question is, does what does the client want? Does the client sleep better at night, knowing that their dollars are going to improve companies that are not great behavors? Or are there is there a dollars...or are  they gonna sleep better at night knowing that their dollars are in companies that are doing really great things already? Or would they like their dollars to be invested in both? Right? That's fine, too. You don't have to choose between? Either orMatt I like this, this distinction that you're making, and maybe I'm asking for an opinion more than what do you guys do kind of thing. Is, to what extent can you - and maybe should you if you feel like going there - or I don't even have to put you... to what extent should and can impact investing outfits help to bring their clients along? Instead of just hoping that their clients can articulate what they want clearly.Eric Wetlaufer Yeah. There's an education challenge that we have to demonstrate to people, to illustrate for people, what impact with their investment dollars can look like. It just doesn't exist. I think, you know, the investment industry does a poor job of illustrating just how regular financial products, return only products, work. We do a poor job of that. You know, we have these, you know, risk ribbons, where, you know, we sort of tried to do it, this is more risky fund, this is a less risky fund. And yeah, but we get people into things where it's like, "Don't worry, that's all AAA." And then what we realized in the financial crisis is that all the people writing things AAA were, were not doing the work. And they were, they were paid to label things AAA that really weren't. Right. And so we've done it, we have a poor track record, at educating people to the real features, the real characteristics, the real risks and attributes of financial products. You know, it is it is a challenge for us but I think as as we get bigger and better with impact, I think we'll have more stories to tell we'll get bigger broader audiences and and and we'll we'll make our way.Matt What do you guys do to cut through the noise of misinformed clickbait-y kind of stuff that will really attract the attention of investors, right.? And I don't mean just mean like, you know, Joe Blow on the street. I'm talking about, you know, I sometimes meet funds that have bought into stuff that's clearly like, "Wait, you're gonna buy that cryptocurrency?" And that's where you're at? Right? So to what extent do you guys have to work to kind of pay close attention to misinformation or anything similar to that?Eric Wetlaufer I don't have a good answer for that question. It's persistence, like the the logic argument, the coherent "that's clickbait. That's misinformation." Like I can't get on Twitter and counter stuff. I'm not even on Twitter. I don't want to engage in that conversation. I really want to provide product that not speaks for itself. I mean, I want to be out there promoting and marketing and telling our story and telling the story of impact investing. But yeah, I think I think I would just be an emotional mess if I tried to take on all the misinformation that's out there.Matt Yeah. And I suppose if I'm reading between the lines of what you're saying, I think I'm interpreting that - let's say you were getting pressure from clients to go down a road that was clearly misinformed -  that what you're saying doesn't preclude you as a firm from being able to say, "Guys, let's, let's be a little bit cautious here, or there some things that you probably should know before we"Eric Wetlaufer Yeah, yeah.Matt Okay. So there's an there's an interesting aspect of your timeline professionally, that overlaps with an interesting aspect of my timeline professionally, which is you being involved in the Canadian institutional space at a really transformative time around the dialogue of boards and corporate governance and so on. And being at a very powerful institution in terms of potential influence on that and around the the narrative and around behavior, and around certainly around disclosure. I don't even know exactly what question I want to ask because I don't want to lead you too hard. But maybe you can just sort of tell me like in that stretch, when you were in the space, what are some of the things that changed that you thought mattered for better or for worse? And then I can kind of latch on to them?Eric Wetlaufer Yeah, I mean, I think when I first arrived in Canada, and and started at the pension plan, it was the pension fund, it was 2011. And I think most of the pension industry in Canada was focused on the G in ESG. It was, are we are we holding management accountable to good governance? Do we better define what good governance looks like through some of the places where we see really bad governance, and we want to, we want to really change things, right? So there are these events now  where the this is so far out on the tail, that we have to step up and challenge this behavior, right, even though we may not own a ton of the stock. This is just, you know, we have, we have a role to play a leadership role to play in governance that we want to call this out. So when I, when I got into the role, it was really, that was the kind of activity in ESG that we were doing. There was some work on the environmental on the E side, where if we were making an investment in the natural resource play, we might, you know, fly out to some of their operations and really see whether what they said they were doing was what they were doing with respect to mitigating any environmental risks that might be apparent. So it was pretty nascent, right, as far as understanding the broader environmental risks that the overall fund might have, pretty nascent with respect to, you know, holding everybody to governance standards, not just the worst offenders. But, for example, we had we farmed money out to external managers, How are they doing their job with respect to their governance practices and how they vote proxies? Right? That's a that's a really interesting question. And can we, and we can get, can we get them to up their game with respect to holding, holding their investor their investments to the standards that we hold ours to? Right, so we can keep pressure them as big clients to do the same that we do? So there's that question. And then there's the whole, you know, the S in the ESG, which is the one that I think that's been the most challenging to make progress on. Because there's so you know, there's misinformation, there's pushback, there's, there's a lot of, you know, what does it look like?Matt It's very emotional.Eric Wetlaufer It's very emotional. So, you know, I think with respect to DEI, diversity, equity and inclusion. You know, I was very involved in these efforts at the firm that I was working at, for our own entity, for our own enterprise. It's one of the few places where I felt like, okay, you know, if you're having problems, you just push harder. Well, this is a space where you can push too hard. And but but you're not going to make any progress if you don't start pushing harder. So how hard is too hard? And where's the right, where's the right middle ground where you push hard enough that you're gonna make some progress, but you don't push so hard that there's backlash, and you sort of killed the whole effort? Right. So it's more difficult. It's more difficult. There's certainly places where it's easy, like human rights in the supply chain, like, that's cut and dried. Like we have to know it for companies that we invest in that they know that they've interrogated their supply chain. And they're they have audits and ways to find out whether human rights are being violated at the companies that are upstream in their supply chain that's cut and dried. Right. So there are places where it's easier,Matt No one will push back against that too hard.Eric Wetlaufer Exactly. But that doesn't mean that it's that you won't find problems. And there are there are certainly instances that are they're pretty disturbing in that in that spaceMatt Some some Canadian ones, at that..Eric Wetlaufer So I think by the time I left, which was seven years later, you know, we had beefed up that team, we probably tripled the size of the team, we really have had a commitment to understand the overall fund's environmental footprint, the carbon carbon footprint of the of the fund and all of its holdings and really make progress against sort of trying to manage that and improve that over time. So, it certainly had evolved quite a bit in that period of time. Yeah, there was there was a waking up.Matt VoiceoverI'm so spoiled, right? What a privilege to have kind of lived and worked through the exact same period as Eric, interested in the same topics but sitting at completely different ends of the table. A table so big that neither of us even knew the other existed until much later. But his experience, through the eyes of an institutional investor, of the last dozen years or so of corporate governance and ESG stuff is a missing puzzle piece for me. A really useful one, at that, like one of those ones where you immediately know where four other pieces go, too. Thanks for listening to Sound-Up Governance and for permitting me a bit of a break. Let me know what's on your mind, share your travel itineraries or wax nostalgic about bygone eras in corporate governance by shooting me an email or voice memo at [email protected]. See you next time.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. I'm grateful to you as someone who listens to this admittedly esoteric show for letting me head out on my journey without much complaint. I've chosen to interpret that as enthusiastic approval of what you've been hearing, until I learn otherwise. Still, among the super rare questions I've received has been whether I'll have more of what I'd call mainstream guests, like CEOs and directors from big listed companies. I usually just say, "Can't you listen to like 3000 other podcasts if that's what you want to hear?" And I stand by my position, with a few notable exceptions, like today's guest, Eric Wetlaufer. He's the managing partner of Twin River Capital, an impact investment firm with the dual mission of advancing positive environmental and social impact globally, and delivering financial returns. On the surface, Eric is about as establishment as they come. He spent most of his career in the institutional investment space, most notably with the Canada Pension Plan Investment Board. He sits on the board of TMX Group, which among many other things runs the Toronto Stock Exchange. So, here you go, folks: the mainstream guest you've always wanted. Except you're getting what I'd call the punk version. Let's start with Eric's professional story, because it's pretty rad. You'll soon see why he's a great fit for the show.Eric Wetlaufer I'm an American. Grew up in Minnesota. My father's a biochemist, my mom was a stay at home mom. It was kind of more traditional, you know, kind of Midwestern upbringing, right? And I was studying glaciers, I was studying to be a geologist, then I got engaged to get married to a woman who already had a job and she was in Boston. And you're not, you're not going to study a lot of glaciers, you're not going to search for minerals or, or, or remediate after people been searching for minerals or oil in Boston. So I just needed a job, because I was getting married, and I bumped into a person on the street who already had a job. And, and she told me that there might be an opening in a training program in a bank,Matt Is this a literal, like, you just ran into someone on the street?Eric Wetlaufer I literally ran into a person on the, on this sidewalk. And, and struck up a conversation with her. And she said, You should apply. Somebody had left. So there's an opening. So I did. And I got the job. I kind of talked my way into a bank training program with a degree in geology. And I quickly sort of discovered that most of banking was not interesting at all.Matt You don’t say...Eric Wetlaufer But there was one floor. Yeah, there was one floor. Yeah, most of banking didn't look interesting to me. But there was one floor where there were lights flashing, and people sometimes swearing into the phone and getting sworn back at through the phone. And I thought well, that that's not the banking on the rest of the floors. Let me go find out what they do. And sure enough, that was the investment group and the trading floor. And then I looked for an opening there. And there was one and that's how I got into the business. I talked my way into a job as an assistant portfolio manager after all of a year in a management training program.Matt  Did you have at that point, any specialty in terms of what you were trading?Eric Wetlaufer Yeah, I mean, that's how I kind of started out was super specialized. Money Market preferred stocks,Matt Okay.Matt VoiceoverOkay, money market just means buying or selling highly liquid, short term, low risk stuff compared to say capital markets where you generally buy and sell longer term assets with greater potential for gain or loss. Preferred stock, in its most usual form is a class of share that gets priority in the payout of dividends compared to the common stock that people like you and I would usually own. Money market preferred stock is even more nerdy, where the dividend rate is determined by a special kind of auction. Anyway, that was Eric's thing.Eric Wetlaufer So this crazy little niche, which you know, existed for tax benefit purposes. And so corporate buyers of money market instruments could buy these money market preferred stocks and get a bit of a tax benefit from owning them. And so yeah, I played with those for a while ran a portfolio of that and then kind of went up the risk curve, like started trading more risky, preferred stocks, adjustable rate preferred, and then I started trading bonds and, and junk and junk bonds and then moved over to common stocks and then was running stock portfolios, and then teams of stock portfolio managers and sort of as I kind of moved into management ultimately after, you know, maybe 15 years in the business. Started managing people who manage money instead of managing money myself.Matt And so what happened between there and here because you're still not even in the right country yet.Eric Wetlaufer Yeah, I mean, what happened between there and here was after building a big group at my last job in the US, I'm really more I discovered I'm more of a builder and a fixer. And then once things are going well and kind of working, I get bored and I maybe get into trouble I start trying to fix other people's problems and companies and they don't necessarily like that. And so you know, or or I just get, I get depressed, because there's nothing to kind of really dig my teeth into so much anymore. I found a job in Canada. The big national pension plan in Canada was looking for somebody to run their public markets group. It was pretty immature as an organization and the benefit for me was that there was no commercial element to it. You could be a long term investor you didn't have product to sell. You know, the marketing people weren't banging on my door telling me that I'm not keeping up with this fund or if I lost a star or if I'm doing really well they're telling me you got to go on the road and sell sell sell because your numbers are are hot, you know, now's the time where you got to leave the office. So I could be a pure investor, run teams of people who really managing money for the right reasons for the long term. And I thought this is be refreshing a be a change of pace, and fun. And you know, Canada sounds like a fun place. I was from Minnesota, which is partly Canada. The way I looked at at least the the beer and the hockey are CanadianMatt The weatherEric Wetlaufer Yeah, the weather. Certainly cold. So I thought it'd be fun to come up and try my hand here in Canada.Matt Do you still have roots in Minnesota?Eric Wetlaufer No, not anymore. Yeah. Yeah.Matt It's a pretty funky place.Eric Wetlaufer It's a great place. Minnesota you know, when I when I was there, it was very liberal state. You know, Prince. He's from Minnesota. I certainly had a big Prince thing.Matt You have a big Prince thing?Eric Wetlaufer Yeah. Big love for Prince.Matt Okay, well, maybe we can talk about that sometime too, because, you know, it's Prince.Matt VoiceoverAt this point, I was tempted to just talk about last year's rerelease of the Prince and the Revolution live in Syracuse 1985. Seriously, if you haven't listened and or watched, you may want to pause this show now and indulge yourself. And on top of Prince fandom, Eric's also got a burgeoning interest in entomology. He's basically the character my imagination would come up with if I wrote a nerdy corporate governance novel. Still, so far, he may seem to you like just another business guy with a bit of a quirky background. Let's explore further.Eric Wetlaufer Yeah, I mean, growing up in an academic family, and in a family, which didn't have a big social community, like I didn't hang around with grownups. The few grownups that I did hang around with were not business people. So I just didn't really know what business people did. And the stereotype of that they're greedy, and that they're, you know, putting other people down was one that, you know, I didn't necessarily strongly believe in, but I didn't necessarily disbelieve it, either. I was cynical. And I was a little bit worried putting on my own suit for the first time, at my own first job, you know, wearing the same, you know, coming out with, I think my bank balance was between minus $10 and plus $10 for the first six months of my work, which is better than it was my last year of school. But not by much. And wearing just the same suit every single day. Sure, like, I was just skeptical what this world was all about. And then you get to know people one on one, and you see that these are good people, and they're trying to serve their clients and do good work. And, and there's a utility to that, to that world, the business world. And as a utility to the banking function, and the investment function. So I kind of started to understand and appreciate, you know, the service that that I could provide, and that it could be a profession, not just a business. You know, similar to doctors and lawyers, that investment management, it's not a business, it's a profession. And you have a code of conduct, and you have a duty of fiduciary care that you have to, that you have to adhere to. And that you should want to adhere to, and that there's a tradition of that. And to me, that felt better than just putting on a suit and trying to make money selling whatever is easiest to sell. Right?Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.Matt Right. Okay, so I can imagine a person, this is clearly not you, but I can imagine a person coming from where you just described, going into a bank and spending a bunch of years and then going into an institutional investor and spending a bunch of years and coming out of it with a bit of a, you know, "the business of businesses is business," shareholder centric, grow, grow, grow kind of mentality. And that doesn't really strike me as a good description of you.Eric Wetlaufer No.Matt So what was it about you that resisted that, but also like, how, how are you able to express that kind of countercultural position from inside the very status quo world?Eric Wetlaufer Yeah, I think there's I mean, there's there's a couple of... I think you're right, it was a bit just part of my DNA. But then there were some reinforcing events, I think, along the way. One would be a proxy battle at Marriott in the late 80s. was undergoing a lot of labor strike Florida labor issues and pressures. And we were, at the investment firm I worked at, we were at sort of both sides of the table. We were managing money for the union community, not necessarily that union community, but they all look out for each other. And so we were getting a lot of calls and a lot of pressure in the proxy vote to vote with the proposals to support the union. At the same time, we had kind of a vote with management back in the day, you kind of voted with management, right? Because of the economics that you were presented with. It was just better. Better in the shareholder only world, in the shareholder primacy world. To vote with management, right? And so I was the portfolio manager, kind of getting both of these arguments. Management's calling me and wanting to discuss my vote. And then coincidentally, the lawyer for the union was, was a personal friend of mine from high school, who figured out that I was the one who was going to determine the vote from my investment firm. We owned a lot of these shares. And so I was getting pressure from both sides and kind of understanding, "wait a minute, you know, there's two good answers here. We have to figure out what the right way to go is." And so I think that there were there were incidents like that in my earlier years in the business where I recognized that there's, it's not black or white, it's not shareholder first, it's not a short term time horizon. We certainly went through a time with the dot-com bubble, where, you know, all we cared about was how much were you gonna beat earnings by, and how, how much explosive growth could you potentially weave a story around to get people excited and drive stock prices even higher? I mean, that was clearly not in the best interests of the longer term shareholders of the mutual funds and the institutional clients that I had, yet you were, the marketing people were winding you up, saying, "you got to keep up with this fund or that fund's performance that you're competing against." So there were a lot of places earlier on in my career where, you know, it was clear that, you know, the status quo or following the herd, or that idea that well, "if you don't like what's going on, just sell the stock!" You know, it's like, wait a minute, you know, that is a story that's told to you by brokers, who every time they, you trade, they make money. So yeah, if you don't like how a company is governing itself, if you don't like their practices in this, sell it, of course, that's their advice, they're gonna make money off of that advice. So, you know, there was a takeover battle between Bank of New York and Irving, where I owned a preferred stock that was a blocking stock. So that was a situation where I was getting calls from the bankers, you know, yelling at me, beating me up, pressuring me to vote to, to assert my block of the takeover, when, in fact, it was in my economic best interest to go with the takeover. So you're getting to these situations where, where it's not so simple. And you realize that you have to have some principles, and you have to bring your values to the table. And you have to think about what's the right thing to do not just what's the expedient thing to do or what other people are doing, or what are the short term way to make money.Matt VoiceoverMan, this is all just super cool to me. The adventure of growing up in an institutional world during an era of significant turbulence and having never been fully indoctrinated into the depth and weight of old school Friedman, blah, blah, Chicago, blah, blah, nonsense. But honestly, that's not the main reason I wanted to talk with Eric for the show. The most important element of his radical governance persona is that he's a bit of a quitter. Anyone who's spent any time in the world of boards and executives knows how normal it is for people to overstay their welcome and for those around them to just let it happen. Eric is different.Eric Wetlaufer So I mean, I've been I've been on nine boards over the past three decades. So it's about, you know, three a decade, I guess. There are boards that I've been interested in, that I haven't gone on. There have been occasions where that's my choice. Learning more about the board, I recognize this is not a good fit for me, even though I've been asked to be on the board. There have been cases where where I thought I was going on the board, and I've been asked not to come on. So that's, that's fine, too. If it's not a good fit, who cares who comes to that conclusion first? There are leadership positions on boards that I've been asked to play where I have accepted. There's leadership positions on board, whether it's committee chairs, or whether it's the overall chair I've been, I've been a chair of the overall board. I've been a committee chair. And then there are times when I've been asked to chair a board and I've decided no, I don't want to. And there's times where I've been in the running to be chair and I've been told no, you're not going to be the chair. Right? And so I have that personal, I have that personal experience. But I also have watched a lot of this happen with other people as well on the boards that I've been on and on people that I know who have been on boards. So have a lot of personall experience, and I've seen it a lot. Where the fit's not there either for a particular role on the board, or even to be on the board. And maybe you've been on the board for a little while. You know, maybe coming in to that position on the board, while you're on the board, you've been asked to be on this board, because of your experience. You know, you're, you're a lawyer. And we there's a lot of legal regulatory stuff, and we need somebody with legal regulatory experience. That's your role. That's why you're coming on the board. There are cases like that, where you know what it is going in. And there to cases where you don't find out until after you've been on the board, it could be for several years, "oh, this is why on the board." Like, here, we have this crisis. And we need to address this crisis. And it's clearly I need to be a leader on this, maybe not the only leader, but I need to, you know, it's obvious I this is why I was on the board. Fate played a role here, I'm on the board for a reason. Here it is sitting in front of me. We need to work nights and weekends until we get this resolved. And then, you know, I've done my job. And maybe there's a continued role for me to play on the board. Or maybe now I can go. So I've been on boards where that's the case where you get on the board, I thought this was just gonna be a normal board position. Now we've got a ton of work to do. And after that work is done, I think, "you know, it's only been three years, I could go for another three year term if I wanted to. But I think my seat is really important. It's, it's a rare seat. And it should be held by somebody who is more passionate, who's more knowledgeable about the content that now we need to take on as a board. I'll step off the board."Matt Okay, I'm gonna pause you there for a second, that is not a normal attitude.Eric Wetlaufer Yeah.Matt First of all, do you agree with me? And second of all, to the extent that you do agree with me, where do you find that in yourself as well? I've got a lot of different theories, but I think it's mostly just that you've got a good personality.Eric Wetlaufer No, I... maybe I do or don't I don't know. But I think to me, it's like, you know, the question I would ask every board is, are we as good as we can be? Like, what would this board look like if it was the absolute best it could be? And that's kind of the question I would ask, you know, if I'm a leader in a company. Like, what would my team look like if it were the best it could be? Like, what what's the gap between where we are today? What are the problems we need to solve? And what do we need to do to be the best that we can be? And as a fiduciary, particularly, I have a duty to ask that question, I think. What's the opportunity cost of not being as good as we can be? And how can I fix that? And if that involves me stepping off like that, it's a big world, there's a lot of stuff to do. Like it's a big planet. And there's a lot of problems out there. There's a lot of roles that that might be a better fit for me if if my seat is better taken on by somebody else. So I feel like it's not just I'm sort of inclined to ask those questions, I almost feel a duty to ask those questions.Matt Okay, well, I'm going to I'm going to express a theory here. And you can tell me if it makes any sense to you. I would argue that if what you're saying is, in fact, the right approach - and I agree with you that it is - if it's the if it makes a board or leadership team better to wonder, "what could be better than me sitting in this chair? Oh, we thought of something. Okay, well, we should probably go get that instead." If that's if that's a good approach, we should be agonizing a little bit over selecting people for the willingness to be self aware and the willingness to relinquish a position, and so on. I don't think we do that. I think we maybe do the opposite, where we reward... I'll exaggerate for the sake of making a point, we reward arrogance. We reward self importance. Because those are the people who make themselves the most visible.Eric Wetlaufer Yeah, I think it's, you know, the boards that I've been on, they have governance committees, those governance committees are responsible for selecting new board members. They hire, you know, search firms to go find the candidates that fill the gaps on the skills matrix of the board. And, and I think it's up to the board to and the Governance Committee and the Board to select people who are the right fit. And I think there's all these biases in hiring, whether it's for boards or otherwise. You want to hire people that look like you, think like you, laugh at the same jokes that you laugh at, went to the same schools, you know, that you're comfortable with, right? You don't wanna hire people, that are gonna make you uncomfortable. But we all know that differences and diversity and challenging and critical thinking and, you know, being a devil's advocate at the table, improves outcomes. So how are we going to get over those things? And I think it is by being it is by being a bit humble. It is seek seeking out people who provide the ingredients that you want, but in a way that is you can challenge yourself and challenge each other and, and are challenging to you. And so, yeah, I think it's not a topic that's talked a lot about in board governance and board education courses and board practice best practices on boards. But it is talked about with respect to just, you know, how do you create a good team?Matt Yeah!Eric Wetlaufer You know, if you if you look at, you know, all these all these books about teams and team leadership that have been written by, you know, the, the generals of armies that have done really amazing things and great corporate captains, it is, it is a valuable practice. But at board's it's not discussed a lot, I don't think. I think if the effort is to be the best you can be, and you want different results, markedly different results, then you have to think about doing things differently. You have to challenge constraints. And you have to think about, you know, what the art of the possible is to get there, you know? If we're going to have 15 days a year of board meetings, maybe we should have eight of them all at once, you know>Matt Sure!Eric Wetlaufer You know, away from the boardroom, and we really focus without any distractions, you know, cell phones not allowed... I don't know, has anybody ever tried that? I don't know, maybe, maybe somebody has. But the point being, the constraints that we put on ourselves are so often self imposed. And we really, we should free ourselves of that and have more imagination and have more wine soaked dinners, where we, where we think about really, you know, let's, let's get crazy, and then we can come back from crazy. But at least let's start at crazy, what we could label as crazy. And maybe maybe we come to the conclusion as a board that some of this crazy stuff's not so crazy. It's worth a shot.Matt I mean...it won't surprise you that I completely agree with all this. And I really think that if there's a movement to be had in governance, it's what you're describing. And that's not a big movement. It's amazing how hard it is to get the momentum started. But the movement is revealing to corporate leaders, especially those that touch boardrooms, that they have permission to do whatever. Right, not like within the confines of the law, and regulation. Everything else is choose your own adventure.Eric Wetlaufer Yeah.Matt And that there's a story to be told for just about any approach that's not reckless. That can, that would be convincing to any stakeholder that "yeah, you know, what, that probably is worth a shot."Eric Wetlaufer Yeah.Matt And I wonder if you have a sense of where the, I don't know if it's the individual level fear or the organizational level fear? Or maybe it's both? Like, where's this fear come from? Because it really does feel like "I don't even want to think about it."Eric Wetlaufer Yeah, I, I think there is that fear of being perceived as different or odd by peers that you've sort of worked hard to be perceived as one of the club. I mean, you wear those clothes, the suits, the ties, the scarves, the whatever, jewelry every day. I think there's the, "ugh, that sounds like a lot of work. And I don't even know if it's gonna pay off. And, you know, I just, I don't have the energy. You know, that's for younger people to to be experimental and to, you know, go down dark alleys and see what they find."Matt Yeah.Eric Wetlaufer But you know, we're a board and we have responsibility to make sure that we tick all these boxes, and let's just get that done. And then whatever other time we have, we can think about the art of the possible maybe. Sure, sounds great. But let's do that next year, easy to kick the can down the road, maybe? Trying to define in your own mind, what your role is on the board, what your real contribution is. Trying to understand if it's been maxed out, and if your seat was taken by somebody else, would that help the company more than you're helping it? And that's fine, because everything comes to an end, you're gonna not you're gonna leave the board, you're gonna leave this planet. Like, everything comes to an end. So what's a good ending? And we see it with politicians, we see it with sports, you know, with athletes. There's bad endings all over the place, people overstay their welcome all the time. You know, we'll just we'll just work harder. We'll gut it out. You know, we don't want to face that, the end. You know, we don't think about and we try to avoid the topic. But the end of one thing is at the start of another. And you only have so many hours in the day, and you might as well feel good. Some of my ends, you know, they've been the good and the bad and the ugly sometimes it's been my choice. Sometimes it hasn't been. But they've all led to new things. And so I think well, why not engineer an elegant, properly timed exit to all the things you do? Except for the things you don't want to exit. Right? Like your home and your family.Matt VoiceoverThis. This is what I'm talking about. This is what's different about Eric. It feels normal to him to wonder why, and to ask the curious question, and to understand when the fit isn't great and to move on when the time is right. Thanks again for tuning into Sound-Up Governance. We actually have a bit of a bonus episode with Eric coming up next week too. As usual, my inbox at [email protected] is open for any cool pictures of bugs or any other arthropods you happen to encounter in your life, as well as comments, questions, praise and complaints. Until next time.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.Matt refers to an old paper he wrote in 2013 - check it out hereThe Larcker/Tayan ECGI paper is hereTRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. Today we have another episode that's just me. But wait! Before you shut off your computer or phone or whatever, I want to talk through a super important topic that I honestly believe is completely broken: executive compensation. Especially CEO compensation. I might be wrong, but if I am, then I'm wrong in a pretty well informed way. In other words, you might find yourself disagreeing with me and learning something. I'll give away the headlines now. First, I don't think anyone anywhere has any idea what good CEO compensation looks like. Second, as a result of the first point, all the complexity we've built around CEO pay is basically lipstick on a actually, I've never really liked the lipstick on a pig expression. Pigs are already very adorable. What's an objectively ugly critter? I honestly don't know. But my handsome tarantula, Lumpy, would look pretty weird with lipstick on so let's go with him. Third, I think part of this whole CEO pay nonsense could be solved if we completely redesigned the role of executive compensation consultants. Anyway, let's start at the beginning.Matt I'm actually kind of excited to talk about this. So believe it or not, there was a time not that long ago where there weren't a lot of people or a lot of firms or organizations that had good data on executive compensation. And way back in the early chunk of my career at the University of Toronto, I ran a research centre called the Clarkson Centre for Board Effectiveness. And we kept on we spent a lot of our time looking through public filings, proxy statements, or what we call in in Canada Management Information Circulars and looking at executive compensation and looking at all that sort of hand wringing in the news, especially around the alignment or misalignment between pay and performance. And we thought, Well, why don't we gather some data and see what we can find? Because there weren't a lot of organizations or any that we knew of at the time, especially in Canada that we're doing that. So we built this really amazing, really, very unusual data set, where we took all of the CEO pay data that we could find, and normalized it so that it was all comparable from company to company. So for instance, we valued the options ourselves so that we weren't reliant on the issuers' valuations, and we valued the sort of medium and long term compensation the best we could so that we weren't reliant on their valuations just so that we could have an apples to apples comparison year over year and company to company. So it was a really cool, very robust data set. I think, by the time we stopped gathering this data, we had something like 20 years of historical stuff. It was super cool. And so what did we do with it? We did a couple of interesting things. One was we examined this pay/performance length that everybody was so concerned about. What we tried to understand was over which time horizons, or over multiple time horizons, to what extent was CEO pay aligned with specifically return to shareholders. So what we looked at was percent change in CEO pay over time, versus increase or decrease in total shareholder return. And so we wrote a few papers we looked at at firm level stuff we looked at at index or system level stuff. Our Rotman colleagues, Alexander Dyke and Craig Doidge and Hamed Mahmudi and Aazam Virani wrote some really cool papers on it. And so you can look those up. They're kind of interesting about like shareholder activism and CEO pay and that kind of stuff. So ultimately, I mean, who cares about any of this except for wondering, what did we even learn? Well, what we learned and there's a I'll put a link to a paper that I wrote. This was literally 10 years ago, I think it was 2013. And really, what we found was pay and performance, for the most part, are aligned over time. Why? Because they both go up all the time. I mean, there of course, are going to be weird years where you have outliers in terms of CEO pay because of unusually big event driven grants or you have a really strange year in terms of performance. But when you look at it over three, five, ten, or more years, it all smooths out and CEO pay and return to shareholders just kind of always go up. It's not that interesting.Matt VoiceoverSo that's where things started for me on this topic, I should admit here that I've always been mostly ambivalent about the question of the right amount of pay a CEO should get. Don't get me wrong, I think income and wealth disparity are a significant driver of a lot of economic and social issues. When I say ambivalent, I mean I have no idea what the right amount is to pay a CEO. And I suspect we could be making a compelling argument for just about any amount we could put on the table. But I got a whole new context and vibe around this ambivalence in a single moment, some 10 odd years ago.Matt Back in the day, some of my colleagues at the Rotman School of Management, the folks who were working on corporate governance research and education and so on, would invite a group of professors from Stanford, because Stanford had, at the time, probably North America's most interesting group of researchers looking at corporate governance. And so they'd invite the Stanford guys to Toronto to hang out. And there would be this event where the Stanford guys would kind of run sessions and have panels of CEOs and corporate directors from Canada, and lead conversations that were kind of rooted in the research that they were doing. And I remember, I didn't know much about David Larcker. At the time, this probably would have been 10 years ago, I have become much more familiar with his work and really like him. He's just recently retired. But I'll talk a little bit more specifically about his work in a second. But I remember at one of these Stanford/Rotman days, he was doing a short presentation on some of his work. And he made a comment that I think he just intended as a bit of a throwaway. But it made a really big impression on me, he said, "you know, no one's ever studied how low CEO compensation can go before a CEO will quit. And so because we don't have that floor, the variable of the floor, we don't really know anything about what amounts are right." And I thought, this is a really important comment, because at the time, I was, you know, spending a lot of time gathering data and looking at trying to figure out what the right questions were to ask of the data. And we were really interested in pay performance alignment. But I started, it sort of planted a seed of skepticism in me about how I should be doing this type of work, or whether I should be doing it. And by this type of work, I mean, even examining CEO pay in the first place, because if we don't even know what good looks like, or have the opportunity to study it, then who cares? But anyway, fast forward to 2023. David Larcker has done this he put out as part of his wrapping up his amazing career, he put out a paper, the name of which I'm blanking on, give me a moment, I'm going to find out. [Intermission chimes] Okay, this, I found it, it's great. It's, it was published by the European Corporate Governance Institute, ECGI, May 2023. And it's David Larcker and Brian Tayan, sorry, Brian, I don't know how to pronounce your name. And the title is "Seven gaping holes in our knowledge of corporate governance," and they're all really good. And they're all they all should plant a seed of skepticism in anyone who read them. In fact, the first one is, "number one, effective boards," and they basically say that we don't know what characteristics make a board effective, despite all the research and dialogue and, and barrels and barrels of ink and millions of dollars that have been spent on education and research, and so on. So it's a really great point. But more relevant to what we're talking about, is there's there's a few different points here about executive compensation, but and one of them, he says, "despite the very large amounts paid to the CEOs of the largest US companies, we simply do not know the value of the CEO to an organization and what pay levels are appropriate for this employee." And I think this is a really, really cool and important point, because we talk a lot. And I mean, I know a lot of really, really smart people who do executive compensation consulting or sit on compensation committees. And we talk a lot about the amounts and benchmarking and making sure that it's well positioned in our peer group and making sure that we've got a good mix of short and medium and long term incentives and metrics and pay categories and making sure that the amounts are right, and shareholder alignment is robust, and that we've got internal and external goals and ESG and, and, and, and, and... But turns out, we don't actually know. And there's no research that supports any position on what amounts are actually right. And I'm gonna make an argument here, and I know that this is a bit half baked. ached and stupid, but hear me out. I just did a rough calculation before sitting down to record this and the average S&P 500 CEO is paid roughly 278 times the average US worker's pay per year. So if we can agree that short term short term share price hiccups aren't really the same as the value of an employee. So for example, like if a CEO just disappeared, yeah it might have a short term impact on the share price. So if we can agree that that isn't the same as the value of a CEO, I think it's hard to argue that a CEO adds more value to a firm than 278 other employees. Right? So for example, if a CEO did just magically disappear, the firm still goes. In fact, there's people like that it barely would matter. Not to say that CEOs don't matter. But everything would keep on happening. If 278 employees disappeared from, let's say, a factory, that factory stops working, right? So I think that there's this, there's an important thing here to realize that CEOs are super replaceable. They're almost as replaceable as anybody else, especially because there's lots of other people around who are interested in doing that job. I think. Although Larcker made another point in this, this amazing parting paper, that in a... sorry, I'm ignoring Brian Tayan here. Larcker made this great point about CEO market inefficiency, meaning CEOs... we have no idea how replaceable they are. We're making an assumption that the supply and demand for CEOs is roughly equal, like there's an efficient market. And we just don't know, right? We don't know the nature of the quality of the applicants or their potential impact, we don't know... we don't have any visibility into the access to internal and external candidates for any given firm. So we just really have no idea, it could be that every single CEO is easily replaceable. We do know that that - and Larcker makes this great point and it's been studied - we do know that firms are way too slow to get rid of underperforming CEOs. We do know that they're way too slow at getting on effective succession planning and so on. The system is really, really kind of messed up. So I guess my argument here is, we really don't know anything. So trying to pretend like we can optimize CEO pay through some combination of tax optimization and benchmarking and so on. It's just a fantasy. It's really completely made up. Sorry.Matt VoiceoverOkay, so whether this is all resonating with you or not, I've recently had a thought about the executive compensation consulting industry. Let me just say that I'm probably wrong. And there are so many super smart executive compensation consultants out there, some of whom are among my favorite people in the governance space. And they're probably more right than me. But, and it's a big but, I think they might be missing their biggest chance to have an impact. Let me explain.Matt I think boards, first of all, should be wondering if they should be taking a completely different and new approach, right? Because the status quo is based on nothing, there's no evidence that we have it anywhere close to right, or that it's working the way that it should. So let's start by, and I want to reflect on this industry that's grown over the past 20 years especially around executive compensation consultants. So what in theory is an executive compensation consultant for? right? So I guess the high level thing is they're supposed to be helping to design incentives that help to ensure that the CEO's behavior is in line with the desired performance of the corporation and the interests of specifically shareholders, which is what where most of the alignment happens. And they do that by collecting data and generating benchmarks and crafting peer groups and perpetuating this philosophy of attract, retain and motivate, which we know as we've already discussed, is mostly just based on nothing. Right back to the sort of inefficient market or the assumption of the efficient market thing. And they're also the executive compensation... Executive compensation consultants are also there to help boards to make decisions about CEO pay. And those decisions are more complex, especially now than the boards can completely understand on their own. So it helps to have someone giving some advice on that. And the consultants are also there to help organizations, especially boards, to signal to investors that the boards have independent advice so that they can disclose in their proxies "Hey, we hired so and so consultant. And that means that we approached executive compensation in an independent and hopefully non conflicted way." So what's the result of all this? Is, as I found in my original work that I discussed before, pay and performance, just both go up and up and up and up and up and up forever. But we still don't know what the floor is, or the value that a CEO creates for a firm. So we've got this pay that just goes up and up and up. But we actually have no idea if that's the direction it should go. Plus perpetuation of wealth and income disparity, which as I've mentioned before, I kind of feel are big deals, both economically and socially. Big negative deals. So if I have all these problems with the sort of status quo of executive compensation consultants, and boards and the decisions they make together, I can't just complain about it. I should put an idea on the table. So here's my idea. I've got an idea of what executive compensation consultants could be instead. I heard actually just yesterday an example of a CEO, who just really wanted to spend more time with his son who had special needs. So what if the point of an executive compensation consultant is to find that? So that's just one example. Like, what if we find out... the job of the consultant is get to know the CEO so well and intimately that we know exactly what's going to eject them out of bed every day excited, and happy to do a great job and to empower others to do a great job. And also to understand what makes them go, "Ugh, I don't want to do this job." So that we can avoid that. And what if it is that they just want to spend more time with their family or with a particular set of personal situations, and we could find a way to make that dream come true. And to find the set of metrics and objectives over whatever appropriate timeframes that would be good for the organization and exciting for the CEO to achieve and aligned with the interests of shareholders and other stakeholders. To figure out what achievements we need to have to make that dream come true. Or any other dream. What if they want to play at Wembley Stadium with Slash in front of 100,000 people, or have a year to micro dose and explore their essence in the rainforest or whatever? What if that were the executive compensation consultant's job, right? And the other thing is that we've never really explored any counterfactuals. Like, we have so many 1000s of examples of firm years, where there's a single, super well paid CEO. And some of those firm years were amazing. Some of them were meh. Some of them were awful, right? So we don't really know if that model of a single super well paid CEO is good, or meh or awful. And we have no examples of, for example, I don't know, a firm with 10 CEOs all paid 1/10, the amount. Or no CEO, but we distributed the savings to other low level employees or whatever, right? So if the executive compensation consultant's job was not benchmarking and tax optimization and peer group measurement and stuff, but instead to identify the thing that will, the set of conditions that will get amazing performance, high energy, happy, joyful performance out of the CEO. And identify the incentives to get them there. And the metrics to make sure that they're behaving well. And to use that and advise the board on it to help them understand here's who we hire, here's how to activate them, and here's how it's going to benefit the organization. And here's how we tie that to incentives, and so on, so on. The other benefit of this is it sounds like a really fun job. I don't know, what do you think?Matt VoiceoverThanks for listening. Just to be transparent, part of my hope with this episode is that one or more of the executive compensation experts in my community will hear this and want to have a conversation about it. Not in the juvenile “debate me” sense, but more in the “what can we do together to make a positive difference in the world” sense. I suspect they’ll have a lot of insight as to why I’m kinda full of it, which would be helpful. It’s always good to find out that you’re wrong, so that you can be more right going forward. Still, if I'm being naive here or otherwise making mistakes, I think it's important to appreciate that none of our current executive compensation approaches are rooted in evidence. We have no idea if they work better than some completely different approach. To me, that means we have an amazing opportunity to experiment. If you're listening to this or reading the transcript and you have an opinion, please let me know you can email me at [email protected]. Let's see if together we can sort this out. Thanks again for tuning in to sound up governance. See you next time.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. My guest today is the next and last in a little miniseries featuring people in the startup and tech environments. Also, she's up to some amazingly cool stuff. Rose Genele is the CEO of The Opening Door, a revenue operations consultancy. But that's not how we met. A mutual friend introduced us because Rose was starting something called the New Face of Inclusion Summit, an awesome event for leaders in the tech space which Rose will describe to us in a sec. Not insignificantly Rose is also a serious musician: a singer and woodwind player. And as you'll soon come to realize, has a creative spark that gives all the things she does a little extra... I don't know, spirit, maybe. Anyway, let's let Rose tell us about the New Face of Inclusion Summit 2023.Rose Genele It's all about giving leaders the skills they need to be inclusive leaders and build inclusive companies. And so we're looking at fundamental skills for leadership where, you know, we used to see companies really invest in their leaders invest in leadership training and management training. And since pandemic and, and many other socio economic things, we've seen that a lot less. And so it's an opportunity for people to brush up on their leadership skills in the sense of fundamentals, but also to understand inclusive leadership, to get introduced the idea, to pick up the skills that they need to be inclusive leaders. How we use culture, to create a space of psychological safety, which means that people don't fear making mistakes or asking questions, or trying new things. And those pieces are so critical to building an organization, to driving towards goals, to innovating. That's a little bit about the summit, what we're trying to achieve. And it's virtual. It's going to be hosted on Zoom events. We have some incredible speakers, we have about 15 speakers, four content tracks, and just one day of learning about all things leadership and inclusion, and specifically inclusive leadership.Matt So just to make sure that, and I think you've already described this connection, but let's really zero in on it. Why does this matter so much for the tech world?Rose Genele Yes. I think that we know historically that tech has been largely male dominated, you know, not a lot of diversity in in many other respects. Certainly race, sexual orientation, disability, every category we can think about when we're when we're looking at DEI. And so it's especially important because of the lack of representation that we see in tech. I think a couple years ago, we might have said that it might be a pipeline problem, or you know, there's there's a lack of, of talent, but we now know that is not true. That's really just an excuse. And so I'm focused on tech, because that's my that's the industry that I work in, but also because I think there's a lot of room for growth.Matt So I had the last actually, I of course, I'm revealing that I don't remember the sequencing of my own podcast, but I think my last two guests were both women from startup lives or in one on the fund side, one on the entrepreneurial side, one of the founder side, telling stories about the various flavors of awful difficulties that that founders face in general. And my last guest, Soodeh Farokhi, telling the story of her coming to Canada following some money to get her pretty cool tech company started and then finding herself, as many founders would be, vulnerable to bad advice from from a funder. That, I suspect, is you know that vulnerability is multiplied by the fact that she's a woman and a woman of color and non-Canadian, and even that she has an accent and and and, and, and. Maybe I don't want to put you on the spot. But maybe I'll just pause and get you to react for a second we can go down this this sort of path of the tech space and founders and women and people of color and so on and so on. And their vulnerability.Rose Genele Yeah, For sure. I think it's something that people maybe know in passing or are aware of, but don't truly understand the impact of moving through the world as you are. Being at a disadvantage in so many ways. It's really challenging, and I think it's, it's certainly very easy to maybe think about it one day, or to be aware of it in a conversation or after a presentation, but then you go on about your life and you don't really think about it. But for the people who are, who are immigrants, who are women, who are of color, it's an everyday reality. And so sometimes when people say, I'm tired of hearing about this, or oh, you know, we've been talking about this forever, and it's like, we have not found a better solution. And we're still facing this discrimination, this unfairness, and sometimes this suffering. Daily. So it's not surprising to me, and it's saddening, but yes to to be afforded resources, or to be given, to have the carrot put out in front of you. And then just as you have it within your reach, you are not able to truly make use of it. It's disappointing. And I want to take this opportunity to say there is still so much funding in tech, going to people that are not women, people that are not of color, people that are not disabled, people that are not Indigenous, and the numbers reflect it. And I want us to do something about it. It's not acceptable. We need to create more space for trans people. We need to amplify their voices. And we need to create and build with trans people, you know, not just in mind, but as part of the actual building and informing what we're doing. I think it's so important to advocate for trans people. And I want to get better at you know, making sure it it's incorporated in all things that I do, but I think it's very important to raise that.Matt Yeah, if we, just to... and I don't need the last word on this, obviously. But thinking about some of the themes that we've already reflected on a lot of this has to do with the vulnerability of people who are, well, basically anything like me anything other than like me. The vulnerability of people, and their this vulnerability, extending to the fact that they won't have access to capital, they won't have access to talent, they won't have access to community or resources in this sort of tech startup space.Rose Genele Yes, yes.Matt And the more marginalized you get, the more vulnerable you become to being starved of all of this stuff. And I suspect there's virtually nobody more marginalized than trans people.Rose Genele Yes, and especially, you know, trans people of color, trans people of color who are disabled, you know, you when you layer on those intersectionalities, you start to understand, we need to focus on the least of us to benefit the rest of us, you know?Matt VoiceoverThese are all critical messages when it comes to economic empowerment in general and Rose is starting to touch here on something really important to explore a bit more, especially for people like me: white, hetero, able bodied dudes with secure economic status, etc. Namely, it can feel super overwhelming to think of inclusion and equity at the system level. And imagine a role we might play in improving anything. It's just too big. And I like that her Summit focuses on you, as a leader, by positioning it at the level of an organization and individual, something more tangible emerges.Rose Genele Yes, I think that when we're looking at an organization, of course, it exists within our society. And so there's those systemic things that we have to tend with. The reason why I'm such a big fan of inclusive leadership is because it's this idea that leaders really influence and impact an organization and the culture and the environment. And so if we can focus on the leaders, that is a step in the right direction, and helps us contend with the pieces that we can't so readily change, such as those systemic barriers, right? And that's why it's all the more important that we understand what inclusive leadership is, we tap into it, and we really make an effort to lead in an inclusive way. We can really only control ourselves as human beings and so I think that's why it's so important not just for leaders but for every person to take the time to, you know, look inward and think about what does inclusion mean to them? You know, what does it mean for their leadership style? What does it mean for their team members, people that they work with? What does it mean for their their lives, their family outside of work? You know, what does it mean when you're at the dinner table and somebody says something inappropriate? What does it mean then? When it's not easy?Matt Yeah, okay. I love it and I love it for a lot of reasons. Not the least of which is the fact that this it makes it... it empowers a person to do something useful. It's saying, no, look, you got stuff you can do. If you're interested in doing something here as a leader. You don't you you are empowered to be important. In the solution of not the system level problem, but In doing something useful in your own organization and your life and your family, and your community, and so on. So, let's, let's dive into inclusion. I have a perspective of what it means and feels like to me and which I'm not, I will gladly share. But I'd love to, why don't you start us off? Because you've got inclusion in the title of your event? What does it mean? Or how do we, whether if it's if it's unfair to ask for a definition, tell me what it feels like, or what's missing? Or whatever it is?Rose Genele For sure. I like this question. Because inclusion is so important. I do think that we need more than just inclusion, I do think that we need the D, E, and I and the B and the J and all that right? And so inclusion by virtue of the word itself, is to include that diverse representation, people with various backgrounds, various characteristics, they're a part of what is happening, they're being pulled in, they're being invited to the dance, so to speak, right? Like people like to say. You know, it can't stop there. To be included, like, oh, you know, "Rose, this thing is happening, and you can come, like you're allowed to show up." That's fine. But it would be even better would be, "Hey, Rose, we're thinking of doing this thing. What are your thoughts? What would make this great for you? Or how can we make sure that it's going to be fun for you, or that you can attend or your team or these group of people, and we are creating this together?"Matt Okay, so this, I think you've illustrated something that I this is one of the things that I find so important, in my understanding of inclusion is, to pick up your metaphor. so if we if there's a dance, and the people putting on the dance, are really interested in inclusion, and they approach Rose, and they approach Matt, and they want to know what does it take to help you show up and feel like you belong? And what you want and what I want are opposite from each other. I think some people - because that's a real thing. Nobody, nobody gets optimized by exactly the same stuff or gets excited by exactly the same stuff - I think that's one of the challenges that makes leaders look at this and say, "inclusion is impossible." I don't I don't believe that inclusion is impossible, but I think they'll look at it and say everyone's their own idiosyncratic person, how can I be inclusive of all of it? I again, I'm happy to share my my perspective in a second. But what what's your response?Rose Genele Yeah, I think that sounds like an excuse. And it sounds a little lazy. In my opinion, I think that by human nature, and the way that we exist is we look for patterns. Humans like to look for patterns and recognize patterns. And so when people are telling you or giving you information about their preferences, or otherwise, that's really data. And I'm a data driven person. And so you need to sort that data. You need to organize it, and you need to find a pattern or find the patterns. And that's how you can lean into using that information to find a consensus for everybody. Putting something together that's going to work for many different types of people. That's the nicest way I can, I can put that together.Matt Okay, I might be a little snarkier. So I think that a lot of the time when I meet leaders that are interested in doing inclusion, and they run into this problem of oh, shoot, you know, they've got this huge variance of what people are going to feel comfortable with, the first instinct is to find a compromise. What's the one solution I can come up with and apply across the board that ultimately just makes everybody equally unhappy, I guess? And I think this is an area where compromise is not appropriate. I think, if we have variance, and we've got people across the if we have a spectrum or continuum of what people want, and there's no agreement whatsoever, or no perfect agreement, why aren't we trying to sometimes give each of these people the thing that they need? And say to him, look, we know you hate..."Rose, we know you hate what Matt wants, and Matt, we know you hate what Rose wants, you're both gonna get a chance to shine at some point. And you're both gonna have to kind of put up with each other's nonsense a little bit, but don't worry, we care about you." I mean, I'm exaggerating for the sake of making a point a little bit, but I think the default is looking for a compromise, and then we end up kind of equally excluding everybody. Right. Does that map onto your experience to?Rose Genele Yes, yeah, that that does make sense. And I think we people might default to that because it seems like an easier solution. And so I That might even suggest that when we go into doing some of this work, we need to be aware that it's not necessarily going to be easy. And we got to be okay with that and prepared mentally. And so, you know, once we face the first not easy, you know, situation, we're not looking for an immediate compromise, right?Matt Yeah. Yeah, I think that there's maybe a false sense of, "you know, what? There's gotta be some one set of conditions where everybody's gonna feel included." But it's, it's just not real. Right? It can't be done. So let's, let me put you on the spot and ask you like if I'm, if I'm, I've heard about your event and all of it sounds really interesting to me. What is inclusive leadership, right? Beyond being an inclusive, like a leader who cares about inclusion? What is it? Can you describe what are some of the characteristics that if I walk into the room, I want to be an inclusive leader, what does that mean? Like, how do you empower me to be that?Rose Genele Inclusive leadership, it actually means taking time to know and to learn about the people that you're working with, so that you can, you can better meet their needs, you can better support them individually. In work instances, we group and organize people for the purposes of, you know, carrying out the work. So we have teams, departments. But as a leader, it's really important for us to also spend time and focus on the individual. Supporting them in ways that are best for that individual. Being empathetic as a leader is really important. Cultural awareness is very important as an inclusive leader. Creating that psychological safety and creating that environment and that sense of belonging. That's really important, because that's how each individual is going to have the space that they need to do their greatest work, and to be as vulnerable as they can, which is important, again, for that creativity for that team building for that innovation.Matt I'm bringing this up because I've I've encountered this type of challenge before and I find it lazy like some of the other ones. But I do also find it a little bit more complex to manage. Which is this sense that if I'm in a psychologically safe environment, that must mean that I always feel good and safe and comfortable, like there's no space for discomfort. The moment I feel discomfort, that means that this is not a psychologically safe environment. And I don't believe that's true.Rose Genele I don't either.Matt OK, so tell me more.Rose Genele Yeah. Psychological safety is, you know, it's not a one place in time, you know. It's if something bad happens, or you feel discomfort, being able to feel that discomfort means you're in a safe place. I think if you can sit in that discomfort, you can acknowledge and recognize that discomfort, then you may actually be in a space where you're... where there is that psychological safety, because you you have the freedom to feel that feeling. If you're in a space that's not psychologically safe, you may not even have the ability to feel discomfort. Maybe you're just immediately, you know, afraid, or you immediately shut down, or you're completely in panic. I think discomfort is an emotion, but it's not a bad emotion. As humans and as people, we owe it to ourselves to let us experience the full range of emotions in life. So that discomfort is part of your learning and growing as a human. And if you're feeling that discomfort at work, I would like to posit that it may be a good thing. It could be a good thing.Matt Yeah, I really like what you're describing. It, it makes me think of, because my my work and a lot of my life is spent in boardrooms with boards, which is, you know, there's so many conventions, so much sticky status quo in that space. That originated kind of nowhere, right? It was not an intentional thing where we said, hey, let's design a board room in this way that is very conducive to anything in particular, just a bunch of conventions that built on each other and perpetuated forever, for no reason. And what we end up with, just as an example of what you're talking about, is we end up with this sense that well, you don't belong if you're not really willing to challenge people within this environment or if you're not really willing to speak up on your own. There's no sort of mutual ownership of saying, "You know what? Rose hasn't really been saying much lately. What can we do to find out what's going on and give her some space to feel good about participating, right?" That just doesn't happen in these environments. And I suspect in the tech world, there's a bit of a system level thing going on there too, where there's kind of a an industry level culture that works really well for some people, and really doesn't work well for a lot of other people and is sticky. So first of all, is that fair? And second of all, what are, could you maybe describe the characteristics of that vibe and and how it impacts people?Rose Genele Yeah, I totally agree that there is kind of that convention. And, you know, while it does work for some, I'm not sure who! I'm you know, I'm not sure who it's really working for. I think, like I mentioned before, it's the tech world is largely still very male dominated, very white male dominated, you know, cisgender, hetero, you know, all those things. And if I think about it, it makes sense in terms of our world and other industries and historically where most power has has, you know, been and where it's held. I would obviously like to see that change. I don't think that it's really even serving the people who it was created by or, you know, the folks who have codified this type of way of being I don't think it's even benefiting them. It's not. So we've done this for a while, and it hasn't been working. So when are we going to change? Like, when are we going to try something new, I think the time is now. Hence, the Summit.Matt VoiceoverI imagined myself in the position of an early stage entrepreneur and potentially wondering, "I'm 1,000% on board with putting inclusion near the top of my priority list, except all I care about right now is survival." I asked Rose if she has any advice for the founders, especially in the tech space, who want to be inclusive leaders, but feel too much of a burden from the day to day stress of the startup life.Rose Genele I work with founders. So I'll say one of the most important things for a founder to focus on is 1) not run out of money. And 2) is to build a team. To build a great team. To take the vision forward, you need to be able to articulate and communicate the vision get people excited and fired up. And so when you think about those two things that are extremely critical for your success: not running out of money and building a great team. Building that team is arguably one of the hardest things to do. You have to find the right people, you have to keep them motivated, you have to keep them driving towards a goal. And so that is really where thinking about your leadership style and thinking about inclusive leadership really comes into play and starts to be an advantage for you. If you can start thinking about that early, before you've even begun to build your team or at the time where you're starting to build your team. You can make better decisions, more informed decisions about who you're bringing on, knowing that you are trying to create a culture of you know, inclusion, psychological safety and belonging. Because you know that it leads to high performing teams that then provide the best business outcomes. And so if you're thinking about the long game, which you need to be thinking about, it's a little bit a little bit of an investment, a little bit of investment, you know, upfront that will serve you so well the whole way through.Matt VoiceoverHonestly, Rose's message here couldn't resonate with me more. Raising money, keeping control, early stage growth, it's all easier with an amazing team. And inclusion is the special sauce that activates an amazing team's superpowers and makes the whole greater than the sum of its parts. Anyway, it's never my intention to use Sound-Up Governance to promote anything other than interesting and inspiring perspectives. Whether you're interested in the New Face of Inclusion Summit or not, you do you. But please take Rose's messages to heart. If you are or might be a leader in any kind of organization, you can be the key to inclusion and inclusion can be the key to success. As always my inbox at [email protected] is open for compliments, complaints, rants, recommendations, and thank you notes. In the meantime, thanks for tuning in. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. I've been trying to get today's guest on the show for months and we finally found the time to get together what a treat to chat with Soodeh Farokhi, Chief Product Officer for Nakisa, which is a software company in Montreal. Soodeh has been a founder in the VC world, a board member an advocate for equity, diversity and inclusion. She's got a PhD in computer science, and she's a rock star at everything she does. We talked about the awkward and sometimes inappropriate situations that founders and funders find themselves in. And through Soodeh, I learned some important lessons that are, or should be, applicable to anyone finding themselves under equipped or under confident on their journey to build and grow their companies. I don't always give space on this show for people to tell their stories. But Soodeh's is too interesting to skip.Soodeh Farokhi I'm an Iranian Canadian product executive based in Montreal, Canada, a working mom of two little ones, and a diversity and inclusion advocate. I'm a tech entrepreneur by heart. I built my first company when I was 27. And it was automating business processes as I was very passionate about. The reason that I came to Canada was actually I found an investor who was willing to put money on my idea. And I launched a company in 2016. AI video analytics software company that was actually considered to be Google Analytics, for physical space, leveraging security camera. So is the way that Google Analytics analyze the e commerce website, we were -  in a GDPR compliant manner - we were analyzing anonymously behavior of people in any physical space, like retails or retail stores or shopping centers to understand the pattern for the shopping and if the advertisements, let's say in physical world working or not, right? I kind of built the company from from scratch, I actually had board experience in that company for three years as a as a board director. And then the rest of that three years I have the observer seat. I built a strategic partnership with big players in the market, kinda past the product market fit the stage, that is a very critical stage for a software startup. Kinda two years ago, I decided to step out from my own company, which was also very challenging, I would say, because it was like a, like a baby for me. I have built communities in the past as a as a diversity and inclusion advocate. I am the founder and former executive member of a community of women of MENA in technology at the Montreal chapter, we established that community and is a global community. So it just I enjoy being with people who share the same challenges, righr? And minorities that can, I know, brainstorm and address difficulties, and, and maybe, again, concerns and challenges altogether.Matt So I'm just really curious, because I don't think I'd heard about this, the women, MENA, like it. So tell me a little bit more specifically. So this is all women from Middle East, North Africa, in tech in Montreal?Soodeh Farokhi Exactly. So it's a global community. And it has different chapters in different places in the world. Originally, it started from Persian women in tech. So it was just Iranian people who are in tech. The founder is from California, she actually felt that there are so many female in tech from from Iran. And it's rightly so because I mean, I'm not bragging about that, because comes with the fact that is not very fortunate. Like in cultures like Middle East, you define the success in a different way. Your parents will call you a successful individual if either you are a doctor, or if you're an engineer. To survive in that economy and, and society to stay in a in a level that you have a good life. So you need to go to either of this path. So then there were a lot of women that go, girls that go to physics and math at high school, and then it led to engineering. So in my engineering school, we were like 70% girls actually, and the minority were male. But it's very different, you know, when I go, when I went to Vienna for my PhD, I think there were 60 people in a classroom for cloud computing discipline. That was my PhD. I was the only girl in that 60-person class. So it was like, oh, this is this is Europe. And it's like why it's very different from my own country, right? Because we were a majority. So that mean that they are a lot of female that you see out of Middle East - I think the same also goes to India as well - that they are all engineers and they are all in STEM. So when when you consider that population, you want to start building a community around them, because you're, you know, they are kind of changing that percentage of female in tech industry.Matt VoiceoverPretty amazing stuff, right? To further emphasize how much of an outlier Soodeh is we met a few years back pre COVID, in an offering of the Board Dynamics Program course that I teach for the Rotman School of Management and Institute of Corporate Directors. In itself, that's not all that special. What stood out was the fact that, let's be frank, startup founders just don't generally take formal courses on corporate governance in the first place, let alone young women of color. Before we get back to Soodeh's journey, one of the reasons why it took us so long to set up our interview was that she was a bit reluctant. And her reluctance ties in to some of the broader issues in the startup space.Soodeh Farokhi The first time that you invited me, very kindly, I kind of pushed back and said, "Matt, like I'm not a board person. I'm not." Like I it's like, if you want to put all the things that I have achieved, a board is like very thin part of it. And also, to be very honest, I started to read your, your mission on the Ground-Up Governance, and I loved it. I love the fact that you're looking at it really, from a different perspective, like, what would be the future of the governance, not what it is today. And in an unconventional way, how we want, right, the governance to be. And to me, unfortunately, it's like, considered to be like your retirement job, right? Like, whoever it is, is more experienced, not for you, you're pretty young, and you're like the rocking the governance, but usually, it's like, whoever that is a CEO or an executive, if you ask them. Okay, what do you want to do? Let's say, you know, what, if you get a time to retire, you're gonna go to some boards, and kind of it's like this is that is the typical type of probably people sitting at the table at the boardrooms, right? And that is all probably also the challenges that I faced, it was because of that very big gap between me as a, you know, a woman of color, minority person who has accent, young female, right, in the tech space, and also maybe my first kind of experience with a board. And actually, when I left my own company, I resigned from from the observer status that I had as well, because I say, well, even on the, as a board of director, I didn't have that much impact, let alone as an observer, why I should keep kind of going to those meetings, right?Matt You made a comment about your reluctance to, to have this conversation. And one of the things that you mentioned was, you you talked about the lack of, or your own perception that you have a lack of expertise, or, or experience in the governance space. I know this might sound like a bit of an obnoxious question, but what would expertise even look like in this space? And I mean, that sincerely. I'm not trying to be annoying. I just my own perception of this has really changed. And I don't have a lot of confidence anymore, that I know what an expert even is anymore. So like, what, what, what does that mean to you?Soodeh Farokhi Yeah, so let me tell you why I'm why I was I am or I was biased around that. So I incorporated my company in an incubator. And that incubator had a very smart businessman as the as the CEO, a founder with multiple exits and very successful. He was actually very against founders to be at the board. And, and the perception for that model not working was that when you are raising external money from VCs, they actually don't like to sit at the same table with the same level of kind of authority and control with a very young person. I mean, very young means like, the first time, the first time founder. The model on that, and that incubator was saying that you're gonna have observer seat and you're gonna report to report to that, but that board actually you, first of all, you have to hire a seasoned CEO. You can't be the CEO of your own company, either. And then you can't be the board director of your own company either. And because you haven't been in the board because you don't understand what is fiduciary duty. What are the kind of financial obligations that you need to monitor? What are the governance structures? Do you know the cap tables? Do you know this kind of terms in a term sheet? If you want to review them? Well, like, of course I don't! Of course I don't! Well, not right now. I didn't know at that time, right? And, and then kind of you doubt about it. And every year they incubated like 10 companies and nobody was like objecting. It was "of course, that's it. So we don't understand that this is not our side, this is not our level." And I was actually the one that was very much kind of against it. And I was saying, "Look isn't chicken and egg problem? This is, this is my own company for God's sake. And if I can be at the Board of my own company, then which board I can be part of it?" So then always, I will be the first time find the board member anywhere I want to go. And then because I was changing the model, it was not actually appealing to them.Matt VoiceoverJust a quick pause here for emphasis, if you or anyone around you is one of those people who says to leaders, any of them really, but especially young ones, that there's a single right way to do corporate governance, you're basically the definition of the problem. And I think Soodeh very compellingly described the nonsense of the position that her former incubator took, as well as the negative impact on her and potentially her company, too. Back to her story.Soodeh Farokhi So I was very high performing in terms of an entrepreneur, but I was also very much kind of shaking that model. Because if I get that, then there are a lot of other founders that might question that for them, right? So I had to give up a big portion of my stock option. And I traded with a board seat for two years. And then that maternity leave and then I kind of lost it because I was off for six months, I was connected, but it will I wasn't kind of have that much of leverage at that time. So I'm saying that the perception was that there are a lot of things, especially at the startup level, I would say around the more financial part of the company. I know it now. But I didn't know at that time. The better way to engage and kind of sit on the other side is that if I were that person, I would say "yes, you don't know it, but come here, so that I teach you." Because that's such an important piece, "come to the board, and I will mentor you on the fact that yes, these are the gaps, go and read that right?" We are building a company, that's not an easy job to do. But learning to sit at the table in a board seat is a is a very hard and difficult thing to learn? No! So it's just to me, it's just that feeling of what is that position? Like, What is this board seat for? Who is this kind who needs to sit at this seat? That are certain age, certain criteria, I mean, mainly men, unfortunately. But now it's kind of getting a little bit better. But that kind of age, I would say age difference was a big thing. And I had issues with other board members just for the fact that I'm a young female. And it's very unfortunate, right? But that's, that's happening. So you want diversity. But if you don't let the person to talk, I had notes before the board board meeting is like, "Soodeh, don't mention those yourself. Like, if you want to mention this, like, kind of tell me about that." And like, Yes, we had such conversations before some board meetings, right? Because I we knew that perception of perception of some of our board members around young, especially female in the board.Matt Okay, so you've you've described what's kind of a fascinating situation, you've described what you wished had been different. Maybe I'll ask you a slightly different question. And even if you feel like you've covered this already, I think the perspective change will be helpful for me at least. Because there's a lot of other people who will find themselves sitting in the position where you were. If you I mean, what, what do you wish you had done? Or what advice do you wish you could give your former self who's being given this these conditions? Like what do you wish you'd done differently? Or said differently? Or whatever? Maybe everything went exactly as it should?Soodeh Farokhi Yeah, that's a very good question. So I would educate myself much more from the first. So I will I actually gonna repeat my path, I will fight for that board seat, because that was an experience for me that I could probably never have it on any other company. Right? So my only advice for founders is actually educate yourself and and leverage the mentors that you have, maybe not directly from the other board members. Maybe you can't get it but if you have advisors and mentors, leverage them not just for how to just build the company. No, how to be a good board member as well. And also how to report to the board of course, but like as a board, like long term vision is one of the very key areas of the board. Usually founders also consider that, okay, you know, we know this area much better than our board members, why we should discuss it? We just update them, right? No, if you bring the right people, first of all bring right people at the table. In my view, money is expensive if you bring people who are not the right fit with your company, right? And then you give them board seats because they invest in your company, and this is probably a given. They sit at that table, and the damage that they make to your own to your company is actually very long term damage. The company might not recover, because they have their own agenda, right, they put some certain money, and they want to maybe make you 10 times a year at certain period of time, because their fund has this period that they need to operate, right? So there are a lot of kind of behind the scenes criteria that you don't see. And then they come with different agenda, they sit at the table. And then they discuss things that you feel that is like, "what, where'd this come from?" But then they are pushing you towards a certain situation, either an exit, or they want you to raise more money, because they have extra money that they need to kind of give up to a company. So to me, first of all, I think one of the very good advice I got from my advisor was that understand the venture deals. Because if you are a startup that you don't want to go to the bootstrap path, you have to raise money. And you really need to understand their game. So educate yourself initially for startups, I would say it just maybe all around a lot around the initial raise that you have pre-seed, seed, series A, etc. Try to find mentors, and try to find you know, such courses so that you understand from a very neutral person. It's very important that your mentor is neutral. Because also it's a very, the network of board is not that huge, right? Board members talk to each other. So if you are a certain company in Montreal, Canada, they know each other, so you can't go and find a mentor, that might be biased. So try to find them very neutral mentor to mentor you on, on how to be a good CEO, serving a board or being in a board, etc. And try to learn and other things that I would tell myself is that listen well to the comments. Accept feedback that are constructive, because as a founder, you're usually you're very stubborn. And I think that is that is fine. Because you need to be stubborn around your vision, and then you pivot and then you need to be stubborn around the second one, right? But we had four pivots, or 3-4 pivots on the path of my company for the for the kind of six years that I was there. And every time, especially the early, early stage, when they are the board or other investors were telling us that the market is limited, or we are ahead of the market in terms of tech, or different, like very long term feedback. I was not hearing them out. And then we're kind of hitting the wall. Of course, listen to all the feedback, you don't need to react to all of them. But be fair. And and you know, accept the ones that are fair feedback. Honestly, a very important advice is that pick various strong independent board members that are truly independent. I think independent board members can bring the level of the board composition to really defendable, because again, everybody else has an agenda. They are coming, they have a skin in the game big time. And they are just optimizing their path. And while there might be some exceptions, I'm not talking about those, but the majority is like the business is crucial. But then you bring independent board members to kind of change that dynamic, and bring that operational conversation into a strategic conversation. So if I return back, I would actually pick very right independent board members. I didn't pick them. I picked the board members that the other VCs were recommending, which was a very wrong, very wrong composition, right?Matt VoiceoverOMG. It's so fun to listen to a founder reflect with such clarity on her experiences to the point where she can spontaneously generate some really actionable advice for those following in her footsteps. And it's true that founders are often more vulnerable than most to being guided along a path that works against their own interests, or at least to buying into a set of beliefs and values around governance without realizing that they have the power to choose their own adventure instead. Before we wrap up with Soodeh, I wanted to hear more about her work as a community builder and how that serves her in her roles.Soodeh Farokhi I think I owe always believe that you need to surround yourself with people who, first of all are much better than you at so many aspects that so that you can kinda learn from them. And also the ones that cheer for your success. I think that that's also an important piece. Because they are the one giving you positive energy, they are the one empowering you, they are the one giving you confidence in the challenges that you have. Right? So any any new area I go, for instance, right now in my role as a CPO, I try to find people, majority maybe women, because they might have the same challenges as me, and then I understand, "okay, how do you do this?" Like kinda trying to share journeys and stories and learn from each other. I think it's very similar to the governance as well, right? So how many companies do we have in Canada, and then each company, how many board seats they have maybe up to 10. Like, if it goes to the, you know, big, big part of it, right? And then some of the majority of that can be the management and then some VCs, etc, then it comes with maybe a few seats per company that is for, let's say, independent board members, right? So yes, it's a very competing market, and then you compete with all other ones. And then you have now here, you need to see if you are inclusive, you have an inclusive culture or not right? Then that is the reason that I would say, I'd like to build that community of minorities around governance, to to hear their story. The challenges, but then how they overcome it. What was the reasons that they could be a very successful board member? But it's very rare. It's like finding those people is not easy on its own. So to me, that is an empowerment, networking, connection, sharing challenges and learning from each other. And that 2-3 steps on the ladder that nobody is kind of taking your hands, you can have a community who are empowering you and you are empowering them. So you learn from each other. One other area that on that community, I'm also envisioning to see, they come with expertise that... so, me as a let's say product executive, I have certain expertise in a b2b product space. There needs to be those expertise in the board as well. Because if you just rely on your management and executive to have maybe the best product strategy and vision, and then you have very generic board composition, that they are all mainly CFO, CEO types, right? Maybe sales driven mainly and one optimize the financial number. Then who gonna kind of challenge the product strategy and vision for the company, if you're building a product company? So I wish I had board members that I could brainstorm with them on the product vision, and product strategy. And then we were avoiding the pitfalls, right? So I'm right now I'm not serving that many boards, but I'm serving as advisory, in advisory board of a lot of startups. And I love to share all my experience, including that board, whoever I advise, the first thing is that do you have a board? Make sure that who you actually ask to sit at that table, right?Matt VoicoeverIt's so rare to find people in the startup space who think about governance as anything more than a necessary bureaucratic, evil thrust on them by their funders. And sure, maybe Soodeh kind of started there. But before long, she became what she is: someone willing not only to see the flaws in the conventional system, but also to see opportunities for entrepreneurs to use governance as something that empowers them instead of just being a burden. I'm so glad Soodeh finally joined me on Sound-Up Governance, and also grateful that you're here to listen. As always, shoot me an email or voice memo to [email protected] if you want to connect whether you're an entrepreneur, a director, a funder, or some other variety of nerdy governance person. Until next time. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a paid subscriber.TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. Back in episode three, I introduced you to my good friend Lisa Oldridge, who suggested this time that I introduce her as a strategy and governance and whatever seems interesting advisor, which pretty much sums it up. Her firm is called Fulcrum Advisors. Lisa has a depth of knowledge and expertise in strategy, operations, investing, research, startups, et cetera, et cetera, and it's a really good thing that instead of being an arrogant jerk about how great she is, instead, she's got this super fun and adventurous rogue spirit. I wanted to reconnect with Lisa because a lot has changed in my own perspectives about corporate governance over the past year or so since we recorded episode three, I just needed a valued ally's perspective to make sure I haven't gone too far off the beaten path. So I started by asking Lisa for some guidance on how not to mess up too badly when giving advice on governance stuff.Lisa Oldridge So part of the work that I did with Fulcrum was to I got really involved in this movement 51. And moving 51 is the sister organization of The51.Matt VoiceoverThe51, with which Lisa has been involved for years is super cool. Here's how they describe themselves. "The 51 is a financial feminist platform where current and aspiring investors, particularly women, and gender diverse individuals come together to democratize access to capital for women, and gender diverse founders."Lisa Oldridge And it was this amazing project where there was a cohort of 20 founders, seed pre-seed founders, all women, and there was a curriculum that I got to get really in the weeds with it. So developing a curriculum for founders sort of soup to nuts assume that they're gonna go into their first raise. And so what is it that you need to do in terms of, you know, figuring out what your structure is going to be, figuring out what your strategy is going to be. And this, you know, when you, when you when you think about those terms, and you bring it down to seed and pre-seed level, it's like whack a mole, right? Everything sort of gets cooked up into this pitch deck. So anyway, over the course of the 19, sessions, we have these amazing other sort of experts come in and act as sort of mentors within the within the sessions, and there would be like a lecture, and then there'd be like a lab where they actually tried it out. And the word that keeps coming to mind, and I did the governance piece, the word that keeps coming to mind is the idea that we were giving these people permission. Right? So if you think about, if you think about governance, from the perspective of pre-seed, or a seed, or someone going into their series, A, it's kind of like the last thing on their mind. And it's the thing that it's like, you know, it's almost like looking forward to your first colonoscopy, you're going to do your, you're going to do your Series A round, and you're gonna have somebody waving a checkbook and going  "I want a board seat." That's the time where you start to worry about the sorts of Big G governance things, right, it's the stuff that the lawyers wants is this, it's the stuff that your accountant wants to see. And right and the data room, and then you ended up getting this investor director that gets plugged into the organization, whether or not the right fit. So whether it was, here's how you can role play with a super crappy term sheet - had a lot of fun with that, right? Here's how you can also think about your talent strategy, which includes ad hoc advisors, which includes maybe more formal advisors, and then ultimately, thinking about the posture that you might have with governance. Yes, the supply chain is important. And yes, you're constantly you know, your cash fundraise gonna peter out. And yes, you want to write, make sure that like, there's all these other things that these these founders wanted, but it was like, permission to go, "you know what? You don't actually have to take what you're given in terms of the individual, because half the time, they don't know what their role is." And in some cases, it was kind of transformational. It was like, okay, so you can drive a truck for your strat strategy, but you kind of know you're going in this direction, and you kind of know what you do know. And you kind of know where your gaps are. And so you can go to this VC going, "it's fabulous that you want to invest. Here's where we think we're going, here are our gaps. This is the skills matrix, these are the attributes that we're looking for. This is where my weakness is, this is where we need sort of help in different things, be it you know, accessing international markets, or understanding how SAS ramps up, etc, etc. So if you've got someone in your organization, right, that fills that persona, bring it on!" And it was even just having that, "you mean you can ask?" Damn right! Which is kind of why I've joked with you before, like when I do the when I when I do my governance for one on one, because I think it's super sexy, and I think it's like an enabler, instead of something that makes your life more miserable. I start with a picture of Mon Mothma because she's the coolest, right? The word permission, I think is something that doesn't get talked about in terms of enabling the individual. Like, you can kind no refund this, the idea is that you're making good decisions. And there's so many people that mean well. But, you know, there's so much bad performance. The positive skew to performance among all companies, not just teeny tiny venture capital companies, but all the way up to the biggest organizations. The positive skew that we portfolio managers see to be completely normal, whereby, you know, don't time the market, don't try and pick stocks, etc, etc. because by and large, your return is going to come from a very small proportion, right. And that's just that's a foundational tenet of portfolio management. But if you think about it, every single one of those stocks that underperformed has a bunch of directors at the helm thinking that they're doing the right thing, overseeing it. They're actually overseeing underperformance.Matt VoiceoverOkay, that was a fun adventure. Let me just take a sec to re emphasize some of what Lisa has just told us. What's missing from the world of corporate governance is the feeling of permission to, well, do stuff. Anything, really, that's different from the status quo, or what's thrust on you, whether you're a founder trying to negotiate with early stage funders, or whether you're a big listed company trying to satisfy the proxy advisors, you have permission to try unconventional stuff to make the decisions you need to make, just like Mon Mothma would do. Speaking of rebellion, part of why I wanted to talk with Lisa is that there's this weird, so called anti-woke capitalism thing happening in a segment of our little governance community. What's Lisa's reaction?Lisa Oldridge First of all, I think this reluctance to kind of catch up with where things are going is probably fear based. And, you know, there's, there's the super obvious, and I'm not going to get, I'm going to resist the temptation to get all kind of soapbox-y about it. But there's, you know, there's, there's a demographic in business that has, you know, grown up in a world where value was largely tangible. And whether because of moves in diversity, or moves in that shift, which is gargantuan, to intangible asset value, that demographic, like the whole kind of "business of business is business," was losing power, right. And there's a shift like, things that were taken for granted that if you take care of business, and you take care of shareholders, and, and so on, then things will work out and there's almost like this. It's more than a false dichotomy. It's more like a false topology.Matt VoiceoverI'm just going to interject here for a second to say that I love, "it's more than a false dichotomy. It's a false topology." It's a brilliant expression that I'll now commandeer whenever I can. It's also perfectly applied in this case. Sorry, back to Lisa.Lisa Oldridge I've been accused of being both too much of a capitalist and too woke. Right? So I can take the side of this. You know, you can you can come from the like "the world is FUBARed If we don't sort a whole bunch of stuff out, be it, you know, climate and supply chain and so many other things, right?" And so the more kind of stakeholder capitalist perspective would be, the place where you have the big lever is in business, because it's the allocators of capital, that if you really sort of, that's, that's where you can kind of shift the needle, you know, shift the needle or move things to where you're optimizing for societal things as well. But But that's also a bit of a that's also taking the perspective, I think, that there's this sort of like this sum zero continuum, right? It's not it's actually, you know, if you look at if you look at material and decision useful sustainability metrics, and you can hear that you can hear I'm a fan of, of what's going on with the ISSB and SASB and that kind of thing, like finally, we're starting to get stuff that actually is relevant, I think, to disclosure on the bottom line, I have a tough time with all of the metrics, you also I think, share my perspective on how governance ratings aren't greatMatt Sorry, yeah, my bad,Lisa Oldridge Your bad. It's okay. I forgive you.Matt Let me react for a second to something here that the this fallacy that it's a zero sum system. Because it is... This is I think the piece that I find the most obnoxious about the whole thing is this strident position taking, right? So I'm going to give I just did an obnoxious little rant that I posted a video up on LinkedIn, like just before we talked. Because I've been thinking I've been thinking about the industry around arts and, and sort of amplified by the artist and or the actor and writer strikes and imagining myself on the other side of the table, thinking somehow it makes sense for me to try to extract more short term money out of art at the expense of the creation of art, when my entire business is art, right? The only thing that I exist to do is cultivate art. But no, you know what, let's stop that. Because I'm not extracting enough money out of it. And even the idea that we might replace art with AI is nonsense, because AI needs art to create art. You know what I mean? Like, none of it makes any sense. And the fact that people can sit back and say, "You know what? This makes sense to me. It's about return to shareholders." And you're like, "Are you sure, like, really? If you take five seconds and think about this, it still makes sense to you?"Lisa Oldridge Even if you even if... I agree with you, there's actually this, there's, I'm going to share it with you later. But there's my one of my favorite New Yorker cartoons from years and years ago, like I literally think it was in like 19...it was when I was working in a wine store and some guy came in with a T shirt on. And it was a picture of like a stickman business guy. And then there was a stickman artist, and the stickman, artists had a canvas and the stickman artist had half painted the stickman business guy. And the caption was, "will you give me a grant so I can finish my art?" And then on the canvas of the half finished businessman, it said "f*****g assho." You gotta think you need this up. I found it again. Gotta love the web. I found it again. You can you can even take like, if you even wanted to take the capitalist like the full on like, the non inclusive role of capitalism perspective. It doesn't hang together. Right? Like, if you look, I did a little prep to make sure I have my facts right. But if you think about like, if you put your accounting hat on, right? Because we both have accounting hats...not. But if you think, okay, enterprise value is book value, plus the book value of the debt. Right? And if you track over the course of time, the the way the relationship between enterprise value and book value over time, there's always been a gap, right? Like market value has always been more enterprise value has always been more. It's completely blown out in the last 15 years, right in that book value is significantly smaller than enterprise value. And I think if you look at the most valuable companies out there, it's like there's 75%, or more intangible assets. Think about Apple think about Amazon, for example, Amazon is not the value of the stuff that they have in inventory in their warehouses and the bricks and mortar and the right? And so if you think about it, and I think I think at last, the last time they did, it was like 16 point 2 trillion of intangible assets have been disclosed. Only a third of that is actual value on the books. And so if you think about what all the other stuff is, like, what else creates value? You've got things like, Okay, well, what's the, what's the organization's customer relationship? Obviously, their brand? What is their reputation like? What is their trust among their suppliers, and so on and so forth? Right? And remember, this is how this is how the shareholders are, like, this is what they're seeing to be the value of this organization. What is their innovation culture like? What is what is their IP perceived to be in their ability to continue to write to generate this IP? These are non financial metrics, right? That are that are causing it anyway. And so if you take it back to this idea that, well, we need to also take care of the stakeholders, as if it were a sort of a trade off. It's a false dichotomy, like the topology has shifted, and the trade offs are not where they used to be. And if you're not worried about what your brand value is, or what your stakeholders are seeing, because now guess what the externalities are priced and every single shareholder stakeholder rather has in their hand, and ability to affect it. So you can you can be the most hard nosed, "I'm all about shareholder value, be it long term, short term, etc." Well, if you're not taking care of all of those heretofore unpriced, externalities, and also influencers of your market value, you're gonna drive the stock into the ground, and that's a genie that's out of the bottle, right? Whereas before, I mean, you can be cynical and say that, while some of those externalities, be it, you know, polluting or creating emissions or not treating a community well, I mean, it didn't really get into the, like, if you were only focused on profits, it didn't really affect your access to capital.Matt I wonder how much we should even be paying attention or just ignoring because what we're partly talking about or what we were inspired to talk about this by is a reaction to work that was put out by the basically the highest profile organization that that represents or should represent the interests of Corporate Directors. And they're out there saying, we need to care about climate change. And we need to be socially responsible. And we need to care about Indigenous reconciliation, and we need to care about, you know, and, and, and, and. Right? So it's not like the mainstream hasn't caught on to this stuff. There's just this weird voice from very powerful, or potentially influential, certainly very... voices people are used to hearing from and taking seriously. Should we just ignore it? Is that the solution?Lisa Oldridge Yeah, it's very tempting. I mean, to be to be super cynical, demographically. It's a problem it takes care of itself. Sorry. That's, you know, I think that's the I think that the you know, the I know what report you're talking about. I think it's a shame that the, the the argument for why you would take care of the lead all of these things, doesn't connect back to the business case when it's so clearly does, right? Like, if you start talking about the concept of shared value, you're automatically going to incent like,Matt This is not the business case they're interested in. The shared...they're not interested in that business case. I don't thinkLisa Oldridge As soon, as you say, Yeah, soon as you will use, what I'm doing is I'm saying that I'm Yes. It's it's very tempting to just, you know, not dignify with a response, some of this like, right? But I think it's actually a shame that the conversation is around this, again, this, you know, the concept of sharing value or thinking about other stakeholders, it sort of presumes there's this finite amount of value that has to be divvied up among more, right? And as the numerator goes up, then the, then the answer goes down, whereas it doesn't accurately account for the dependencies, right, like, right, the interdependencies in a complex system. And I'm not always trying to bring things back to the business case.Matt Kelly Shue is a researcher at Yale. Finance professor. And she did this very recent, she did this great research, where she basically found that, like her, she, I heard an interview with her where she said, You know, when, when someone described to me what people were trying to accomplish by divesting from what they call brown firms or polluting firms. I thought about as like, well, from everything we know about finance research, it should have the opposite impact of what people think it will. So I'm going to study it. And that's exactly what happened is if you starve them of cheap capital, they pollute more. And so then,Lisa Oldridge Or if you start that you starve the system, you starve the system of capital then any of the innovation. And the market signals to improve. Because unfortunately, I mean, if you're talking specifically about energy, this is not this is not a it's a gigantic sector, but it's not a sector that exists primarily in you know, market answerable, democratic sort of, yeah, so there'll be a vacuum, it's gonna go elsewhere. Anyway. Divestment. I mean, I think some people see divestment as a way to sort of, you know, I'm going to take my ball and play elsewhere, because you just don't get it is super naive,Matt Right. And even if it's even if it's just intended as a virtue signal by a fund or something, it's  if there's only signal and no virtue, then it's a problem.Lisa Oldridge Well your ratings are all really good.Matt Right! Exactly!Lisa Oldridge There therein lies the whole problem with like, I don't know, I think I think you and I've joked about this before, like with the whole ESG frameworks and ratings and that sort of thing, like the next time. Every single time you hear someone talk about it, it's like, "it's such an alphabet soup." And what we've done then is decided to come up with this framework to simplify it. It's more soup letters. Anyway.Matt VoiceoverDon’t you love when you get to chat with someone whose cynicism is so well aligned with your own? OK that’s not fair, Lisa’s not being cynical but rather very thoughtful and compelling. Still, I think an important part of what Lisa and I are talking about here is just more of that “permission” thing. We have permission to ignore the cranky folks who can’t see that it’s not a zero-sum game and permission to try new ways of adding value to our companies and the world. And so on. Then we got to talking about my old nemesis of thinking of corporate governance as an exercise in box-ticking compliance. Lisa had this interesting idea of intentionally de-emphasizing the compliance-y status quo so that it becomes just a starting point. I’ll let her explain.Lisa Oldridge Maybe the place where you get the most alignment if you wanted to sort of go along with the momentum is to to relegate it. The body of knowledge that exists, relegate it to its proper position of these are the basic skills that you need to practice that have nothing to do with...Matt Doing it well,Lisa Oldridge Right? Nothing to do with doing it well, and by the way, you may not be using all of those. I think that that's so that would be a way to sort of, yeah, I use the word relegate deliberately. You know, there's a ton of it, but really shrinking it down, and putting it where it belongs in its box of like, you need to know how to do this stuff. But the... sorry, the other thing that I was gonna say, too, and I think the place that gets really ignored is the power of the leadership on the board. So not the verb that is the board exercising its duties and...right? I think that there's so little done on board chairs, because they do whether deliberately un-deliberate or non deliberately, subconsciously, they design the board. I'm being mentored because I'm a board member on a right, and I've got a mentor, and like, speaking with this person about some of the things that they have done in the past, where it's like, "you know, I figured that in the next six months, there was going to be this big, horrible situation, and it was going to be very polarizing on so on. And so what I needed to come up with in the meantime, was like a practice thing, for example, just so that I could observe the board, get their teeth into it and kind of come out on both sides and then work through it."Matt That's radical.Lisa Oldridge That kind of that kind of wisdom to say, predicting that this is going to be a gong show, and it's going to be really important that we get it right. But I'm not sure if I've got that culture at the moment, right? Like that kind of foresight.Matt But that's also a radical thing, the idea of, because I try to it's, I try this the same language, which I love is "practice." Right. But we don't think of if I take the practice as a, you know, sports metaphor, we think of the boardroom as always game time. Never practice time.Lisa Oldridge Yeah, yeah, yeah.Matt And but in between, it's not like we've got all this time together, where we can practice, you know what I mean? So like, you have to, you have to try to use some of your board time as practice time. Or else how do you get good? So, I love that.Lisa Oldridge This is a late stage director who's moving out because they want to spend more time with their, their grandchildren. I was just like [mind blown sound], right? like, that, in one conversation has given me I think a lot about going from being a director to you know, what skills and blind spots do I have? You know, even just personally because you know, me I'm like an idea bazooka, don't...not a lot of follow through with it. You know, how do I how do I, because I almost feel like on some level, there's a maturation that happens in a director and I don't mean time-based or anything somewhere like this. There's a there's transcendental kind of movement that has to happen, where you become aware of all of these things, or you start to be able to and, and the cool thing is, those chairs are not the ones leading the conversation, right? Like you're supposed to be the one that sits back and they're, they're doing a mind meld on different... Anyway, whatever. It's yeah, so cool. That's that's what gets missed, because it's not up to it's not up to the corporate secretary to make sure that the directors are functioning well. And it's not up to the and the self awareness that you would need in a board that's a disaster, to hire someone to help them be not a disaster like that doesn't. That doesn't work.Matt Yeah, it's, again, I think that this is going back to the, well everybody takes every part of it way too seriously, while also not 100% knowing what doing a good job means. So we're taking nothing seriously. We're taking "insert, you know, who knows what, here" seriouslyLisa Oldridge Yes, yes, yes. They take the Yeah, it's like they go through the they go through the motions and take it. I'm really over overly stereotyping or painting too broad a brush, though, they take it all very seriously. Or we take it all very seriously, except the thing that you should be taking seriously. And that is, how am I conducting myself? How am I interacting with people? And how am I surfacing the optimal outcome for these decisions?Matt VoiceoverThis just felt like the right way to wrap up this episode. It's a reminder that we all evolve as people, as leaders, as directors, and that as we evolve, there's kind of one fundamental thing that's an overlay on the impact we have, or don't. What am I, the individual human being in the boardroom doing, on purpose, to empower the group and it's decision making? It's a completely different question, than "how am I going to deploy my knowledge and expertise?" or "how am I going to make sure we follow all the rules?" Thanks to Lisa Oldridge for being super fun and smart and for, "it's more than a false dichotomy. It's a false topology." And thanks to you for listening. Send me a voice memo or email to [email protected] if you have any ideas or comments or complaints or questions. Oh, and we're now releasing the archives of Sound-Up Governance on mainstream podcast platforms if you prefer to listen that way. If you do, please don't hesitate to leave a review and spread the word. It really does help. Catch you next time. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. This week's episode features my inspiring friend Aida Sijamic Wahid, who's an Associate Professor of Accounting at the University of Toronto. That might not sound very corporate governance-y, until you check out Aida's research including papers titled, "Professional directors and governance quality," or "The effects and mechanisms of board gender diversity: evidence from financial manipulation," or "Director tenure and board monitoring mistakes." I remember the very first time I met Aida, probably right around when she started at the Rotman School of Management back in 2012. And how clear it was from the start that she's one of those really fun academics who cares a lot about the practical value of her work. She was gracious enough to come by my office to chat about her work and have a fun and deeply nerdy conversation about governance research, and whether auditors might be a secret weapon for boards. Incidentally, Aida was an auditor in a previous life. How did she get from there to academia and corporate governance?Aida Sijamic Wahid I always wanted to research I just didn't know, I was thinking that I want to do a PhD in economics that was kind of like what I did for my undergrad. But after working in audit, I said, Okay, you know it'd be really interesting to do actually PhD in accounting, because a lot of things that I see here in auditing are making me question how these markets work, and what's happening. And I would like to know answers to these questions. And so when I applied to PhD programs, my idea was to actually study auditing for the most part. But when I was at Harvard, Harvard is known not for auditing at all. So I went there, and really, there was nobody actually actually doing auditing research at that time. But what Harvard is really known for is corporate governance, a lot of other stuff, there are some amazing faculty in different areas. And, you know, a lot of these questions about board failures kept coming up. And diversity kept coming up as one of the things, you know, the groups thinking alike, and the group think and all these things. And so I started thinking about doing thesis in this area, exploring whether there's any connection between diversity and corporate governance outcomes. So I didn't look at the financial performance outcome, but I was looking at whether diverse boards are more likely to replace a CEO when things are not going well. And also, the compensation side of things. And you know whether firms are more likely, less likely to have fraud if they are less diverse and more diverse. So I was looking at this, and I was looking at diversity through multiple lenses. And so I did that. And the funny thing is that other than my advisor, who's a great guy, you know, a lot of people really didn't believe this research and a sense that they said, well, first, first thing that I kept hearing is, this is really not accounting, you shouldn't be an accounting researcher, because this is corporate governance, and corporate governance is not accounting. And diversity is definitely not accounting. I mean, luckily, I had a great advisor who said, you just do whatever interests you, it doesn't really matter where it belongs.Matt VoiceoverSo I'm sure you can already tell that Aida's got a bit of a funky approach to the governance stuff here. Notice that her focus on diversity isn't just that same old nonsense of looking for a connection to financial performance? Let's hear more about that.Aida Sijamic Wahid Well, people want to, they want to think about diversity as something that's no pun intended black or white, and you either diversify or you don't, and you're on the right track, if you diversify, and you're really doing a bad thing if you don't. But things are a little bit more complex than that, right? So there is a group of people that just want to think of diversity as something that's good for the business, and they try to make a business case for it. And when you do that, then you have to show all the proof and burden is on you to show to prove that that's really the case. And so then you have to go a step further and find a good way to measure, you know, what is good for business? And we don't really know how to measure these things, right? Is diversity on a board good if we see performance going up? Or if the investors appreciated to voting directors in? Or is it good if we see that in long term we're not seeing as many scandals and big issues? Or is it good because we're seeing less turnover in a long term because employees are happy and the company's doing well? We haven't really figured out how to measure it well, because when we look at these things, what happens is we want to look at performance, and we want to look at diversity and we want to see clear kind of causation. And a lot of the times studies do not do a very good job at that. So if we don't do a great job at this, then the question becomes, is diversity then bad or is it, you know, not useful? And the answer is not necessarily! Just because we didn't prove one thing, it doesn't mean that the other one is true either. Sometimes it's about looking at things and outcomes in a more broader way, and what is the outcome that you're trying to achieve? If the outcome is not short term financial gain, if it's something else, then maybe we can think of diversity as potentially helping the firms on these other dimensions that we're not even measuring, or we're not sure how to measure. And then the onus doesn't really become on these diverse candidates to prove that they're better than the rest of the board that's not diverse.Matt Okay, so there's a bunch of things in here, there's a bunch of threads that I want to pull on. And I'll probably forget some of them before before I actually get to them. And I think it's really important to just sort of de emphasize the business case piece, because, and I think that's gotten a lot better. I don't get as many people just straight up saying, "what's the business case for diversity?" And I got to the point where I would say to them, "what's the business case for you?"Aida Sijamic Wahid Well, that's exactly right. So business case for diversity means that you're trying to prove that these people are better than you, essentially. So what are you saying about yourself, if you're not diverse? That it's okay for you to be mediocre? And somebody else who's diverse needs to be better than you to have that seat? Right? So it doesn't make sense. The whole business case doesn't make sense. Unless diversity leads to worse outcome. And we don't really have any evidence on that, then we really don't need to be talking about business case, we like at least not the way we think about business case.Matt Right. Okay. So the other underlying piece here is one that it took a really long time for me to understand, but would be more obvious to you, because this is a world you live in as an academic, but I, it seems to me almost like it's impossible to do a real study on corporate governance. Like, by real study, I'm being mean. For instance, how could you do a corporate governance experiment?Aida Sijamic Wahid Well, you cannot do experiments. So it's interesting, you ask that question, because, you know, on one hand, on the one hand, you're right, like we can't do things that medical sciences can do, we can't put firms in little experiments and kind of randomly assign them to groups and treat them. It'd be great if it could. But it's not problem that's unique to corporate governance, like all the social sciences have same problems, right? So what we do is hopefully, we have a setting where we can apply some statistical methods, that allows us to get slightly more comfortable with defining, so it's not purely just a correlation we're finding, but we can at least partially infer that there is some causation. Now, it's complicated in lot of instances because a lot of things happen at the same time, usually, especially in corporate governance. Usually firms don't change one thing, they change a lot of different things at the same time. So how do you attribute the impact of one versus the other change on the outcome? That's always difficult. But corporate governance is not unique in that sense. All social sciences have the same problem. So you'll never be necessarily 100% in terms of finding a perfect setting to test it. But with some statistical methods, we can get a little bit more comfortable with some of our findings.Matt VoiceoverAt this point, I somewhat annoyingly kept harping on my distaste for the quest to connect governance with financial performance. Aida, being less annoying than me has a more nuanced perspective.Aida Sijamic Wahid In terms of the studies that look purely at financial performance, I think the idea behind some of these studies - and I'm with you, I think it's not always easy to see the connection -  is that at the end of the day, if you do all of these things, right: you get the right CEO, and you compensate them right, you motivate them, and you make sure they're not doing anything fishy, that should show up in performance and the bottom line, eventually. The key word here being "eventually." And a lot of the studies are looking at performance that may be shorter term in nature than that eventually is. So if you're looking at corporate governance now and eventually in a year, well then may not show up. That may show up five years from now or 10 years from now in performance. So even if performance is the right measure, financial performance, how long ahead do we have to look? What complicates this even further is that, you know, boards turn over. Corporate governance things change. And do you attribute that financial performance to the board that was there in place seven years ago? Five years ago? Three years ago? Who's responsible for that? Right? So this is where it becomes a lot more difficult, even if you look at long term to kind of disentangle you know, who actually contributed to that good performance. So I'm with you that financial performance becomes kind of the most noisy measure. To actually see impact of governance in my opinion.Matt Yeah, I'm gonna add one more flavor to this too, which is, yeah, I think the time horizon there's no way for you to know. What about, you never know what the financial performance would have been if they'd done some other thing. So, even if the financial performance performance stays flat for all we know they would have done a nosedive.Aida Sijamic Wahid There's no counterfactual so you only observe what you observe. And you're absolutely right.Matt If we think about even the question of a potential impact of the change of, let's say, a board member. What would you want to look for? Right? If you were going to if we wanted to do some kind of study that tried to assess the potential difference that a board member could make, what would you even look for?Aida Sijamic Wahid It's a great question, I can tell you what I would look for and what the studies right now do. And what I've done my studies as well, because we don't have a good way of looking at it. Ideally, what we would be able to do is observe what happens when a new board member joins in terms of the change in board dynamics. So to be able to observe that we would actually need to have either access to the boardroom itself and observe the interactions and how much that particular board member contributes to discussions. Or we would have to have at least the minutes of the meetings, and those are not really available. There's one exception, there was a study that was done in Israel few years ago, it's really cool. And they had access to board minutes of corporations and North American setting, we really don't have access to anything like that. So what do we do in research a lot of times is that we can't look at it. So we presume that markets are fully efficient. And I know you're laughing at this, but we do. And so we kind of look at how the market reacts to appointment of a new board member. If the market is pretty positive, then we say it must be that this board member is thought to bring something good to the table or has some good reputation or goodwill. And so the market is reacting to that. And perhaps they are going to have good impact on the firm. At the end of the day, if you observe a good impact, it may or may not be due to that board member. It could be that he or she actually added something to the boardroom. It could also be that, you know, maybe whoever left that spot before was a really difficult person. And that person leaving is what's causing those positive things. Or it could be that it changed dynamics, and anybody joining new person would have made things better. Or could it be that has nothing to do with any of these things? Right? It's just coincidence. That's all we have right now, unfortunately, given the data.Matt VoiceoverOkay, this might seem like a bit of a left turn, but I promise it goes somewhere. I remember Aida telling me a story about having to literally count rats when she was an auditor. I asked her to share that story here.Aida Sijamic Wahid Yeah, well, I knew that I didn't want to stay in auditing. So I started in auditing. I was kind of open minded about being in auditing. But what happens a lot of times when you join audit firms, you have put on the easiest tasks, right? It's considered it kind of like a learning experience. And then as you get more senior, you get more complex accounts to kind of validate. And so what's considered one of the easiest accounts to validate is inventory. Because it's easy to count inventory. And you can the company says this is how much they have an inventory value you go, you kind of do some samples, take some samples count. And you see that it matches what company is saying, and it's validated. Well, I had a client where they had rats as part of the inventory, because they were doing some testing. And so I remember being part of that. And that's when I knew that I would not be auditor for the rest of my life, because it's not what I kind of saw myself doing.Matt So here's where I want to connect the dots. Because, first of all, it's a hilarious story. Second of all, I want to make the... put out the hypothesis that auditors are a deeply underutilized corporate governance resource. So if we take your rat counting story as a really extreme example of how much knowledge your auditor has about what's happening in your organization, right? And sure, that doesn't mean the board can't know how many rats there are, or what's in inventory. But the auditor is actually tangibly figuring this out, you know, they're living it. And they're also, they've got relationships with the executive team and with the audit committee and so on. And, and they mostly, I'm going to generalize, mostly get used by boards and executives as just that. Okay, well, let's prepare and validate the financial statements and make sure that everybody understands them and buys into them and get the approval. And that's that. My hypothesis is that they could be a lot more valuable than that. To everybody involved.Aida Sijamic Wahid Yeah, I mean, auditors can certainly be part of the governance process, right? I think at the minimum, you know, boards have access to auditors. So you're right auditors probably have a lot more information about what goes on in the business, at least at the ground level than a lot of directors. We know that directors spend what, you know, maybe 200 hours at board meetings, but none of these hours are spent on the ground actually looking at what happens with operations and what happens you know, in certain processes, business processes. All they do is they say, in the boardroom, and they talk to people and they get filtered information, right? Auditors actually go much to a much lower level transactional level information. And they talk to people in all levels of organization. So, I would actually argue that, that auditors have probably much better pulse on the corporate culture, too. And how employees and others within the firm feel about what's happening than the boardroom has, because boardroom gets filtered information. And so I think that, you know, where boards can do a better job is probably actually talk to the auditors more outside of just the audit process, outside of just having them be part of, you know, a meeting once once a year where they kind of report on their information and get out. But think of your auditors as a additional resource that you can actually tap into whenever you have questions, or maybe complex problems. And you know, they're already there, they're already getting paid. So you might as well ask them, you know, they can actually help you with some of these things and help you understand things that maybe you yourself cannot see. And the management may not be willing to share or may not even think to share with you. Right? And so, I think it's just that a lot of boards don't really see it as their job to connect with auditor outside of that, you know, one time one one time a year audit process.Matt Yeah. Okay. I'm gonna make two comments about this one, one being, obviously, when you were counting rats, that was not you were not the person who is getting in front of the board, right?Aida Sijamic Wahid Definitely not. Definitely not. Althought, I did go to a couple of board meetings. I was brought in.Matt So, let's imagine for a moment that, that the board knew that you were the person that was working on inventory, and they knew their inventory included rats. I mean, it might have occurred to them, or it could occur to them, if they think of the auditors as a different thing than they do, to ask, tell me what the lab is like, or tell me what those conditions are like, you know? I know you were counting them. But you also were a human being in that environment. What was that like for you? I mean, these these types of questions, it doesn't, I've never experienced a board that it would never occur to them that that's a conversation that could have.Aida Sijamic Wahid So for the most part, the junior people in audit teams are not brought on board meetings, right? So you never really have access to people who are fully on the ground. You talk to the partner and senior manager on the engagement. So that's who the board has access to. But you know, most of the managers, if they're good managers, they will actually know what their staff is doing when they actually go to these warehouses, or they go to actually the sites. And to the extent that they don't know that maybe your auditor is not doing the right job if they don't know what their staff is doing. But asking these questions, it's fair, right? To ask your auditor "Hey, you observed this. So tell me a little bit more, how was it when you went there?" You know, or if it wasn't you, it was your staff? What did your staff report? How did you think of these things? You can ask any of these questions as a board to your auditor, and they should be able to give you some insights. Hopefully...Matt VoiceoverAida shared one of the boardroom hacks that she uses to help shake up the status quo a bit. I think you'll like it too. And it also opened a door to the idea of corporate governance field research, which, as you might imagine, would be tough to conduct. But still, follow us down the rabbit hole, and then I have a request for you.Aida Sijamic Wahid One of the tricks or tips may be that you know, one way to dealing with I guess both sides of things boardrooms that are maybe a little bit too quiet. And they're not enough people asking questions that are provocative, because sometimes you need that. And maybe also to deal with directors who are feeling that they always have to be the one to challenge and - even on small things, when they don't matter - is to actually establish a bit of a guideline, so to speak, and say, "Okay, well, you know, maybe today, every meeting, we're going to have a different person who is a devil's advocate, right? And that person is going to be in charge of asking the difficult questions." And by doing that, what you're saying, is that, okay, everybody can actually contribute and have discussion. But I want today, Matt, to be that person so that Sally is not always the one asking 100 questions, because it's Matt's job today. And so what that does is two things. It kind of, you know, take some of that speak time away from Sally so that other people can also have a floor and raise their questions and have a discussion. But also, it essentially normalizes this culture of asking questions, and puts everybody in a position where they have to think of things that possibly are counterintuitive, or things that you wouldn't think of asking a normal setting, right? So not necessarily the only way to do things. There are a lot of different ways, but that could be like a one one way to kind of, you know, spread the question asking joy among board members as opposed to having one person dominate the floor, so to speak.Matt Yeah, and this is one of the things that I wish we you know, if I if I'm thinking about what you just described, I kind of wish it was easier to study that kind of thing to be like, Okay, look. You know, I think if I haven't said this out loud, it won't surprise you that one of my great pet peeves around governance is how everyone does most things the same for no reason. Right? That most of the corporate governance conventions aren't, no one's ever tested whether they're any good or not. We're just... we do it because that's what everybody does. And this kind of thing, wouldn't it be great to be able to see, not whether it's better or worse, but understand what does it actually do to the boardroom when we have this type of rotating devil's advocate? What changes? So that we can know when is the right time to deploy this? Or how do we use it to the best effect? And this is the kind of thing that I, well, maybe you can if you have an understanding of like, how could we explore these types of things? In a way where we could prove that it actually does something?Aida Sijamic Wahid Well, I think it's difficult, right? Because, again, we don't have access to... we don't we can just take firms, put them in experiment and say, "Okay, you are the group that's going to try this method and this tool, and there's another group that's going to try different tool and see what works out."Matt And even random assignment is kind of nonsense in groups where you've got, you know, the board members aren't randomly assigned to...Aida Sijamic Wahid Well they're not, right? So yeah, and even if you could, some kind of like, you know, randomize the firms hoping that you're gonna get some balance of board members, among them. It's just practically fairly hard to to actually do. But you know, some of this stuff can be done better. And not in kind of rigorous academic setting, but more kind of using anecdotal exploration or field studies. And even maybe doing more field studies research in governance, which is not very common, right? So in other areas of business, we have a lot of field studies. And even in accounting, we do field studies, when it comes to, you know, employee retention, compensation, incentives. So we go into firm, and we talk to a firm and say, "Okay, let's try these different things and see how they work out." And you know, what we get out of it as a study and what you get out of it is something new to try, right? And maybe it's gonna work out really well. Now, if we could actually go do some of these field studies in governance space and go into boardrooms and say, "Hey, let's try this, this thing and see how your board meetings work out when we do it this way and and record it. And then let's try some different methods and see how that works out". Even that's actually research. It's just a type of research that we don't really do much in corporate governance, the field studies, I think it'd be great actually to do some of that.Matt Me too....like I really do. In fact, this is I don't gather data, because I think it freaks people out. But this is kind of what I'm doing.Aida Sijamic Wahid So this is exactly what's difficult, right? Is that a lot of times the conversations that go on in the boardroom are confidential. And if you approach companies, they're very, very cautious when it comes to actually having anybody be part of the boardroom who might be observing or listening, because they're worried about the privacy, I think this kind of stuff would be actually better implemented in a not for profit setting, or where people actually a little bit less worried and more eager to learn best practices, without worrying about that confidentiality of information. And actually a lot of not for profits, I'm more often open to be honest to some of these things. It doesn't mean that if we do non for profit, and we find certain things, that those things are not applicable to other firms, too. I mean, if it works in one group of people, why wouldn't it work another group of people? So maybe we just need to be a little bit more innovative as to, you know, what kind of organizations we approach with this stuff. I mean, you almost kind of need organizations that are dysfunctional in a way. But trying to learn how to be better functional and try different things different kind of, you know, treatments, different interventions, and see which intervention works.Matt Right. Although that this is one of the things that I get worried about is that we look at governance as a solution to crises or whatever, right? And I'm, I'm far more interested in knowing the, what are the different variants of normal, right? Like, not how do we solve a problem, but how many different ways could we approach the normal course of business? And what what are the advantages to each of these different, different approaches?Aida Sijamic Wahid This is such a tricky thing, because I'm totally with you, I think, you know, we only look at governance when there's a failure of some sort. And we ask ourselves, where were the directors? What they were doing? Were they paying attention? Were they present? Were they informed? What didn't they see? What didn't they do? Of course, perfectly easy to do with the benefit of hindsight, right? But we never look at firms that do it right. And part of it is because, one, when you see something is right, you're not likely to attribute that to a director. You're going to attribute that to, "oh, executive team is doing great job and you know, CEO." So you don't see board as being there to provide value, I think we've been conditioned to kind of think of board, as you'd mentioned earlier as an oversight body that's there to ensure that management doesn't really screw it up. And the reality is that boards do much more than that, or they shouldn't be doing much more than that. They should be actually providing strategic valuable guidance to the management and taking the organization to a better place. And if you really think of boards that way, then we probably will be focused a little bit less on the crises and failures, and more on that 80% or 90% of the time when things are going right. And, you know, within that, what are the best practices of the good things or non crisis situations? Which outcomes were the best? And what differentiated the way that these boards worked, as opposed to somebody else? Was it really the board was or the CEO and which instances does board provide value? You know, a little bit harder to again, observe because, you know, when we look at the data, it's much easier to see crisis and failures. It's much harder to identify events that are successes, right? And so we, we kind of, you know, in research, we tend to gravitate towards things that are easy to measure, but that doesn't mean that they give us a full picture of what's happening.Matt VoiceoverI think you can see where Aida's going with all this. And upon reflection, the challenges of field research in boardrooms might actually be less challenging in good times than bad. Just maybe. So here's my call to action: Any listeners who are even vaguely interested in the idea of your board being a subject of some cool research, not to find anything wrong, but instead to find what's right. Even if you're not exactly sure how to make it work or are a little bit worried about the confidentiality stuff, shoot me a note at [email protected]. I have a feeling that, with Aida's help, you might just be able to play a role in improving corporate governance for everyone. Thanks, Aida for being a governance hero. I learned so much from her in this conversation, as I have so many times in the years we've been friends. And thanks to all of you for tuning in and listening. Until next time. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a paid subscriber.TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. I have another repeat guest this week: my old friend ChatGPT is back on the show to share some ideas and wisdom around corporate governance as it is and how it could/should be. Back in episode 12 when ChatGPT was first on the show, the conversation was literally the very first interaction I had ever had with a large language model AI. I was so surprised and charmed. Funny thing is that the more I use ChatGPT, despite the fact that its limitations become more obvious, I still find it almost irreplaceable as a tool to generate ideas, to test arguments, and to have fun just shooting the breeze about corporate governance (or anything else) in a way that no flesh and blood human being can. People just have too much, well, personality. I tried inviting fake Snoop Dogg back to play the role of ChatGPT and…HE AGREED! So, SnoopGPT, welcome back to the show. Let’s get started with a juicy one. I have a hypothesis: good corporate governance has nothing to do with performance outputs like financial metrics. In other words, good performance can come from bad governance and bad performance can come from good governance. What do you think?ChatGPTYour hypothesis suggests a decoupling of good corporate governance from performance outputs, indicating that good governance does not necessarily guarantee positive financial outcomes, and conversely, bad governance does not preclude good performance. While there can be instances where performance and governance outcomes do not align perfectly, it is important to consider the broader perspective.Good corporate governance is intended to establish a framework and practices that promote transparency, accountability, and the protection of stakeholders' interests. It encompasses ethical conduct, effective decision-making, risk management, and long-term value creation. While financial metrics are important indicators of performance, they may not capture all aspects of governance effectiveness.Here are a few considerations to explore the relationship between governance and performance:Long-term value creation: Good governance aims to create sustainable long-term value for the organization and its stakeholders. It involves strategic decision-making, risk management, and ethical behavior, which can contribute to long-term performance outcomes. While short-term financial metrics may not always reflect the full impact of good governance, a focus on long-term value creation aligns with sustainable performance.Risk management and resilience: Effective governance includes robust risk management practices, internal controls, and oversight mechanisms. These elements help identify and mitigate risks that can impact performance. By effectively managing risks, organizations can enhance their ability to weather challenges and sustain performance over time.Stakeholder trust and reputation: Good governance fosters stakeholder trust and confidence in the organization. Trust is a valuable intangible asset that can positively influence customer loyalty, employee engagement, investor confidence, and overall reputation. Strong stakeholder relationships and a positive reputation can contribute to long-term performance.While it is true that instances of misalignment between governance and performance can occur, the overall relationship between them is often intertwined. Sound governance practices, when effectively implemented, can provide a foundation for improved decision-making, risk management, and stakeholder engagement—all of which can contribute to better performance outcomes over the long run.It is important to take a holistic view, considering both financial and non-financial dimensions, to evaluate the impact of governance on performance.MattI don't think I agree. For example, I think it's possible for good long term performance to come from good luck or good habits or simply continuing with the status quo. None of those things has anything to do with good governance.ChatGPTYou make a valid point that factors like luck, established habits, or maintaining the status quo can contribute to good long-term performance, regardless of the presence or absence of good governance practices. It is true that organizations can experience success through various factors that may not be directly related to governance.However, it is important to distinguish between short-term performance and sustainable long-term performance. While short-term success can sometimes be attributed to external factors or incidental circumstances, sustainable long-term performance often requires effective governance practices.While luck and other factors can influence short-term performance, good governance practices provide a solid foundation for organizations to navigate challenges, manage risks, adapt to change, and maintain stakeholder trust over the long term. Sustainable success often requires the integration of effective governance practices with other contributing factors.It's worth noting that the impact of governance on performance can vary across organizations and industries, and individual cases may exhibit different dynamics.MattCan you define good corporate governance in one or two simple sentences?ChatGPTGood corporate governance refers to the system of principles, practices, and processes that guide and control the direction, decision-making, and accountability of an organization to ensure transparency, fairness, and the protection of stakeholders' interests.MattOK thanks. You didn't mention sustainable long-term performance in your definition. Was that intentional?ChatGPTI apologize for the omission. Sustainable long-term performance is indeed an important aspect of good corporate governance. It encompasses the ability of an organization to create value over an extended period while considering the interests of various stakeholders, managing risks effectively, and making decisions that align with long-term objectives. Including sustainable long-term performance in the definition highlights the connection between governance and the organization's ability to thrive and create value over time.Matt VoiceoverOK here we’ve clearly run into one of the pretty common shortcomings of ChatGPT’s lack of personality. First off, it doesn’t have any actual opinions. I just think it’s fun to ask for it’s perspectives. But the moment you push back on anything it says it tends to just kinda cave. That means that you can’t really use it to fact check or prove anything. I remember once it quoted some 50 Cent lyrics to me saying they were by Vanilla Ice. When I corrected it, it just apologized and said I was right but wasn’t able to explain where the discrepancy came from in the first place. And this is SNOOP GPT we’re talking about. Anyway, that wasn’t the end of my latest chat.MattWhy do boards of directors always say they want to be "more strategic"?ChatGPTBoards of directors often express a desire to be "more strategic" due to:Long-term sustainability: Boards want to ensure the company's long-term success by focusing on strategic decision-making that anticipates and addresses future challenges and opportunities.Value creation: Being more strategic allows boards to prioritize initiatives that maximize shareholder value, such as exploring new markets, investing in research and development, or pursuing strategic partnerships.Risk management: By adopting a strategic mindset, boards can proactively identify and mitigate risks, making informed decisions that safeguard the company's reputation and financial well-being.MattOK that makes sense, but if boards are still saying they want to be "more strategic" does it mean that they aren't doing the things you listed above?ChatGPTNo, it does not necessarily mean that boards are not already engaged in strategic activities or fulfilling their responsibilities. The desire to be "more strategic" typically reflects a continuous effort to enhance strategic focus, even if the board is already actively involved in strategic decision-making. Boards may express this desire to:Strengthen strategic planning processes: They may seek to refine and improve their approach to strategic planning, ensuring it aligns with long-term objectives and incorporates relevant market trends, competitive dynamics, and emerging risks.Broaden strategic discussions: Boards can actively encourage more in-depth strategic discussions during board meetings, enabling thorough analysis of strategic initiatives, performance, and risk management strategies. This helps them stay informed, ask critical questions, and provide valuable insights.Enhance oversight of strategic execution: Boards may emphasize the need for better monitoring and evaluation of the execution of strategic initiatives, assessing progress, and providing guidance and support to management when necessary. Regular review of key performance indicators and financial results tied to strategic objectives is a part of this process.Therefore, the desire to be "more strategic" serves as a commitment to adapt and optimize their strategic focus rather than an indication that boards are neglecting their strategic responsibilities. It demonstrates a recognition of the evolving business landscape and a dedication to continuous improvement.MattOK let me ask the same question with a more negative framing. Why do most boards complain that they are "in the weeds" or being "too operational"?ChatGPTWhen boards complain about being "in the weeds" or being "too operational," it can stem from a few underlying issues:Micromanagement tendencies: Boards should primarily focus on strategic oversight, providing guidance to the management team rather than involving themselves excessively in day-to-day operational matters. If board members find themselves overly immersed in operational details, it may indicate a lack of trust in management or a tendency to micromanage, which can hinder effective strategic decision-making.Lack of role clarity: In some cases, there may be confusion or overlap in the roles and responsibilities of the board and management. When the lines between governance and management become blurred, board members may feel compelled to involve themselves in operational matters, leading to frustration and inefficiency.Insufficient delegation: If the board has not effectively delegated operational responsibilities to the management team, board members may feel compelled to delve into operational details by default. This can occur when there is a lack of confidence in management's ability to handle day-to-day operations, which prevents the board from focusing on strategic matters.It's important for boards to address these issues to strike the right balance between strategic oversight and operational involvement. Clear communication, well-defined roles and responsibilities, effective delegation, and trust in the management team's capabilities are essential in ensuring that boards can fulfill their strategic responsibilities without getting caught up in operational intricacies.MattIn your opinion, is the word "oversight" past-oriented, present-oriented, or future-oriented?ChatGPTThe verb "oversight" is primarily present-oriented, referring to the act of supervising, monitoring, and providing guidance in the present. It implies ongoing attention and vigilance to ensure that activities and processes are carried out correctly, efficiently, and in line with established standards.While oversight is primarily focused on the present, it often has future-oriented implications. Effective oversight helps identify potential risks and issues that could impact future outcomes. By monitoring and making informed decisions in the present, oversight aims to shape and influence future results positively.Additionally, oversight may involve reflecting on past events or actions to learn from them and improve future performance. Past experiences and lessons can inform present oversight activities and guide decision-making to prevent similar mistakes or to capitalize on successful strategies.Overall, while the core focus of oversight is present-oriented, it plays a crucial role in shaping future outcomes and can benefit from past experiences.MattYou have referred a few times to "strategic oversight". What does that mean to you?ChatGPT"Strategic oversight" refers to the responsibility and role of a governing body, such as a board of directors, in providing guidance, monitoring, and making informed decisions related to the long-term strategic direction and objectives of an organization. It involves actively overseeing the organization's strategic initiatives, performance, and risk management in alignment with its mission and vision.Here are key aspects of strategic oversight:Setting strategic direction: The governing body, such as a board of directors, plays a vital role in setting the organization's strategic direction. They actively contribute to defining the organization's mission, vision, and strategic objectives, ensuring they align with long-term goals and stakeholder expectations.Monitoring strategic initiatives: Strategic oversight involves closely monitoring and evaluating the progress and outcomes of strategic initiatives. The governing body assesses whether these initiatives are aligned with the organization's strategic objectives and reviews key performance indicators to track performance against strategic goals.Risk management: Strategic oversight includes actively identifying and managing risks that may impact the organization's ability to achieve its strategic objectives. The governing body oversees risk management practices, ensuring appropriate measures are in place to mitigate risks and address emerging threats to the organization's long-term success.In summary, strategic oversight encompasses setting the strategic direction, monitoring initiatives, and managing risks to ensure the organization is on track to achieve its long-term objectives.MattHere's a hypothesis: part of the reason why boards  of directors often feel like they are "in the weeds" is because they have been taught that their job is about "oversight," which is oriented on the present, when what boards really want to do is focus on the future. Does that make sense to you?ChatGPTYes, your hypothesis makes sense. The emphasis on "oversight," which is primarily present-oriented, may contribute to boards feeling caught up in operational details and hinder their ability to focus on future-oriented strategic discussions. Boards often aspire to play a more active role in shaping the organization's future direction rather than being solely focused on monitoring current activities.Boards of directors have a responsibility to balance oversight with forward-thinking strategic decision-making. While oversight is necessary for effective governance, boards also need to allocate sufficient time and attention to discussing and planning for the future. This includes exploring long-term strategies, evaluating market trends, identifying emerging opportunities and risks, and engaging in strategic conversations that shape the organization's trajectory.By recognizing the importance of strategic foresight and allocating appropriate resources and attention to future-oriented discussions, boards can better align their roles and activities with their aspirations for proactive, forward-thinking leadership. This shift can help boards move away from feeling entrenched in day-to-day operations and enable them to focus on shaping the organization's future direction and maximizing its long-term success.Matt VoiceoverI skipped a chunk of our conversation here because Snoop GPT kinda kept going in circles. What I wanted to get at was how to solve this issue of oversight vs. foresight, and get over the tendency to talk about weird things like “strategic oversight” that end up taking something useful and turning it into a box-ticking exercise. Trust me when I say that we kinda got nowhere. One of the things that stood out to me though was ChatGPT kept referring to a lack of role clarity between board and management as a barrier to good governance, especially when it comes to future-oriented stuff. I questioned it a bit on the role of the board and it kinda went nowhere, too. Then I decided to take a different approach.MattI bet your knowledge base has lots of different and potentially conflicting definitions of "good corporate governance." Is that a fair assumption?ChatGPTYes, your assumption is fair. The concept of "good corporate governance" encompasses various principles, practices, and frameworks that have evolved over time. There are multiple definitions and perspectives on what constitutes good corporate governance, and different stakeholders may prioritize different aspects of governance based on their interests and experiences.While there are overarching principles that are widely accepted as contributing to good corporate governance, specific details and emphasis may vary. Different countries, industries, regulatory bodies, and governance frameworks may have their own specific guidelines and recommendations.While there may be differences in specific definitions and emphasis, the underlying goal of good corporate governance is to promote transparency, accountability, fairness, and long-term value creation for all stakeholders involved in an organization.MattIn my experience, even different experts in the same industry, company, or regulatory body will have diverging perspectives on what good governance is. Why wouldn't there be more agreement or alignment?ChatGPTThe divergence in perspectives on what constitutes good corporate governance can stem from several factors:Contextual differences: Governance practices can vary based on the specific industry, country, regulatory framework, or organizational structure. Different contexts can give rise to varying governance expectations and priorities. For example, governance practices in heavily regulated industries like finance or healthcare may differ from those in technology or manufacturing sectors.Stakeholder interests and priorities: Stakeholders, such as shareholders, employees, customers, regulators, and communities, have different perspectives and priorities when it comes to governance. Shareholders may emphasize financial performance and returns, while employees may focus on fair treatment and workplace policies. Balancing these diverse interests can result in varying perspectives on what constitutes good governance.Evolving standards and best practices: Governance frameworks, guidelines, and best practices evolve over time in response to changing legal, regulatory, and societal expectations. This evolution can result in differences in interpretations and approaches to governance. Moreover, different regulatory bodies or industry associations may develop their own governance frameworks, leading to varying expectations and guidance.Organizational size and complexity: The size, structure, and complexity of organizations can influence the governance requirements and practices. Large multinational corporations may have different governance needs compared to small and medium-sized enterprises (SMEs) or startups. The diversity of organizations across sectors and sizes contributes to a range of perspectives on governance.Cultural and regional differences: Cultural norms, societal values, and regional practices can influence governance expectations and approaches. Different regions may have distinct governance traditions, legal frameworks, or expectations regarding board structures, director responsibilities, or stakeholder engagement.It is important to recognize that the concept of good corporate governance is not static and can evolve based on new insights, experiences, and changing business environments. While there may be differences in perspectives, ongoing dialogue, collaboration, and learning from diverse perspectives can help foster greater alignment and convergence towards effective governance practices.Matt VoiceoverIt’s at this point that I became 100% convinced that I have a fundamental disagreement with all of the information that SnoopGPT has available to it. I *do* think that the concept of good governance is static, even if the practice of it isn’t. I don’t think that it should evolve based on diverse perspectives or ongoing dialogue. In fact, I think those things kinda *are* good governance. But still, I learned a lot again and I’m grateful to Snoop GPT for being an awesome guest. Thanks for tuning in to Sound-Up Governance. My name is Matt Fullbrook and I have the most fun of anyone I know in the governance space. Please check in with me at [email protected] any time. Even just to say hi. Catch you next time. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a paid subscriber.TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. My name is Matt Fullbrook. And this is the first episode I've ever done where there's no guest. Just me. I've had a busy month of governance stuff, and I'm learning a lot and my perspectives on trendy topics like ESG and AI are evolving fast. And I just kind of feel like expressing myself. So here you have it, a bit of a Matt fest. We'll get back to more normal programming soon, though, I promise. Here we go.Matt I feel like I should start this by saying that I don't usually talk to myself like this, it feels a little self indulgent. And I'm going to do it anyway. But there's a reason... there's a couple of different reasons. One, if I'm being completely candid with you guys, it's a weird part of the year to do a sort of production schedule for an interview based podcast. I've got some really cool stuff happening in the summer, but there was a bit of a lull and so you've got me instead of me plus some other people. But there's another reason which is that I keep on coming across stuff out in the governance world and the governance adjacent world that is making me feel stuff. And well, I guess that is kind of self indulgent, I wanted to tell you all how I'm feeling. And I'm curious the extent to which this is making you guys feel the same way. I'm going to start with the broad headline of ESG. I've mentioned before on Sound-Up Governance, I think way back at the beginning when I was talking with Lisa Oldridge that was like episode number three, I think. Where I thought at the beginning, when I first heard the term ESG however many millions of years ago, I thought it meant the governance of environmental and social stuff. So like the G of E and S. And that kind of made a lot of sense to me. And now though, I've got a increasingly clear sense that ESG is something a lot less useful than any of that. Even less useful than just a catch all for non financial stuff. I think it's a type of disclosure. So like a series of things that people on the outside, whether they be consultants or institutional investors or regulators, it's the collection of disclosures that they expect from organizations around the broad sense of whether it's non financial stuff generally, or environmental and social stuff specifically. So disclosure on the one hand. But on the other hand, something even, at least to me, slightly more annoying than that, which is some kind of investment philosophy. I was listening recently to the Freakonomics Radio Podcast, which I actually really, really like. And they had an episode about ESG. And they talked to a researcher, the name of which I'm not remembering at the moment. So I'm going to pause my recording and find her name and come back. Stand by. Okay, her name is Kelly Shue. She's a professor of finance at Yale. And this is episode 546 of Freakonomics Radio. It's called "Are ESG investors actually helping the environment?" So you should check it out. Just really briefly, but I'll tell you guys what I think I learned from that episode, and then react to it a little bit. So what I think I learned was that, first of all, the E part of ESG is what matters to most investors. And that wielding ESG as an attack against polluting firms is probably not smart. And that's what most institutional investors, for example are doing is they the if they embrace an ESG based investment philosophy, they're divesting from polluting firms, and re emphasizing their investment on green quote, unquote, firms. And so what Kelly Shue found in her research is that divestment from polluting firms, makes them potentially react by cutting their own investment into becoming more green or cutting pollution. And making matters more silly is when you invest into companies that are already not polluting, it doesn't change anything because they're already not polluting right.Matt VoiceoverJust let me interject here to say that the reason why non polluting firms don't pollute is because they tend to be in businesses and industries where polluting isn't really a thing. So it's not like they've done some special thing to make the world better. It's just part of how they do business. It's like the difference between a financial services firm and an oil and gas firm.Matt So we're we're missing an opportunity to provide an incentive to polluting firms to stop polluting because we're starving them of capital or increasing the cost of capital. So they have to become, they do in fact react by by polluting more.Matt VoiceoverYes, I'm interrupting myself again and with a bit of a sloppy edit. But what's happening here really is short termism, right? It's not that the polluting firms couldn't, in theory, invest in to making themselves greener, it's that they don't, because the increased cost of capital and the pressures of short term financial performance make it more useful to them to pollute a little bit more, because it's cheaper and easier.Matt The other piece that I think was in this episode, and that really brought me back to my very beginning of my idea around ESG, is that it turns out that in the successful cases, where investment can be used to enforce sort of, or to promote actual improvement around environmental and social stuff. It's the G part that's the answer, right? It's by investors, especially activists engaging with boards to help to make sure the right people are in the room and help to make sure that the right decisions are made, and so on, and so on. So the question I left with is "Wait, is ESG really the G of E and S after all?" And so here's how I feel about all that. First of all, listen to the episode because great and I learned a lot, and it made me think. But second of all, this just really feels to me like yet another illustration of a misinformed or at least not very useful concept of governance. I think this this idea of ESG as an investment philosophy, and some kind of disclosure or compliance around disclosure, it frames the governance of environmental and social stuff in a really box tick-y awful, useless kind of way. It becomes as a result of an incentive for boards to focus on more on compliance, even if they want to be focusing on something that's more actual value creating, they're focusing on compliance because the pressure from the outside whether it be from investors, or regulators or talking heads or whomever, they they focus on compliance because that's where the pressure is, instead of doing something actually useful. And the other piece that I really came away with is from his I feel like it's super freakin exciting to have some real research and a significant platform being Freakonomics Radio amplifying that work. So here we are, with a good and credible researcher doing work to try to see what actually helps, right, if we're thinking about environmental and social stuff, and we now have some, at least preliminary evidence, some really good preliminary evidence that this investment philosophy approach of divestment from polluting firms and reemphasizing green firms isn't actually working, it's not having the impact that we want, you would hope that now investors and boards and executives will change their behavior, or at least start asking better questions and say, Hmm, what could work better than this? The problem is, as we all know, about the world of corporate governance, there's no reason to be optimistic that these facts or this research will influence behavior in that way, or at least not very quickly. And so I would like to leave you guys with this sense that look, we have this new way, or this new set of ideas and this new set of research that we can use as investors, as executives, as board members, as advisors, and so on. And I know there's this great influential world of ESG advice going around. That thinking about ESG as a disclosure exercise, a compliance exercise, a divestment from polluting firms exercise is not likely to have the impact that we want, which is the decarbonisation of the industries that matter. Well, they're not going to act that way. So what's a new approach that we can take? And I think that's a much more interesting set of questions than wondering how we can tick the compliance boxes a little bit better than we did before.Matt VoiceoverOkay, I commend myself on being kind of polite there, let me be a little bit less polite. There may be some of you out there who are corporate directors and senior executives and ESG advisors and so on, who already know this stuff, right? Who already realized that there's a high potential for divestment from polluting firms to have the opposite result that you think it will, but for those of us who are out there trying to push divestment and trying to think of ESG as a compliance exercise instead of actually being curious about the impact of our decisions. You're doing it wrong. So please listen to that podcast episode or read Kelly Shue's research. And I'm not saying that they're 100% right, and you're 100% wrong, but it seems like that might be the case.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a paid subscriber.Matt So the other piece that has been on my mind, to I'm sure, nobody's surprise, has been AI and boardrooms and have had an opportunity over the past month or so to be a part of a few conversations and roundtables and conferences and so on, about people talking about AI and boards and organizations, and governance, and so on. And you'll remember back, I think it was episode 12 of Sound-Up Governance, where I'd had chatGPT as a guest, quote, unquote, interviewed chatGPT and used the fake Snoop Dogg voice. And it was, it was a really fun and very kind of inspiring conversation. And that was my sort of trigger or spark to become inspired by what I thought that type of have it's not the large language model AI that I'm interested in as much as the interface, right? The fact that you can have a conversation with a large language model AI, and use it to spark creativity, and it works really, really fast. And the more creative you are, the more creative it will be.Matt VoiceoverI should add here that the other amazing thing about using chatGPT and Bard and other stuff is that it requires absolutely no experience or training. I mean, you don't even really have to be able to spell very well, and you can use it and it's amazing.Matt So it's it's kind of a shortcut to breaking down barriers of how we might usually talk about governance, because you can ask it a silly question and it will generate a thoughtful, if not entirely fact based answer. So that was my introduction to it. And there's a couple of things have occurred to me, especially over the past few weeks, where I've been having conversations and listening to presentations on the intersection of AI and governance. One is, there's still - and if this is you, fair enough, that's fine, but I'm just gonna say I see you, and I hope that you'll rethink your position - I've met more people than I expected to, who have very strong opinions about for instance, chatGPT - especially chatGPT, and how it might be used in boardrooms - who have never used chat GPT. And so I think the first thing if this is you, if you have a strong opinion about chatGPT or Bard or whichever other platform, yet you've never used it, I encourage you to just sort of pause this podcast right now and go and play with chatGPT for like an hour, just play with it. And then get to know it a little bit and see what it is and what it isn't. And then come back and and listen to more of what's up because I kind of honestly find it a bit obnoxious that there's people out there talking in the real world about AI and boardrooms - and talking specifically about chatGPT and boardrooms - who haven't even touched the thing. So stop being obnoxious, go and use it. I've seen a couple of conversations or heard or been a part of a couple of conversations where I think we're at risk of missing the point a little bit here. Which is, yeah, you know what, of course, we need to be concerned about privacy. And of course, we don't want to reveal anything to chatGPT that that would be confidential and so on. Right? So we've got to we don't want to be negligent, or, or stupid here. But chatGPT, for example, is such a useful tool to break down stubborn barriers really fast. So I had this great exercise. And I gotta give a shout out to my friend, Paul Smith from Future Directors Institute, who he's been on the podcast before you'll all recognize him. If you don't look him up. Don't you can't just google "Paul Smith," you have to google "Paul Smith future" or else you get a bunch of sexy clothes. So Paul put together this roundtable and I went down to DC and hung out with him. It was great. He lives in Australia. So this was it was a real treat for me to not have to go very far to see him. And we broke into these pairs, and I sat down with Erin Essenmacher, who used to be at the NACD and now she's at the Athena Alliance. Erin, I'm sorry if I got that wrong. But what she's up to his amazingMatt VoiceoverHey, I didn't get it wrong! Athena alliance is an online platform for women in leadership. They describe themselves as quote, activating the connections, knowledge and opportunities executive leaders need to break through the barriers that line the last mile of their career to the C suite, boardroom, or the world of entrepreneurship and investing.Matt This is the first time Erin and I had met face to face. And we just sat and kind of let ourselves be silly for a minute with chatGPT in service of solving a problem, a real world problem. So we didn't tell, chatGPT "here's my problem, here's the organization." We didn't reveal anything confidential to it, we had the confidential conversation among the two of us. And then we prompted chatGPT to, I think the first thing that we asked it was, "hey, could you help to maybe create a game that we could play in the boardroom that would address a problem like so and so?" which we articulated quite vaguely, and it came up with a cool idea. And we said, "oh, this is something that we really like about your idea, and maybe a little bit, we like this other piece a little bit less, could you come up with something else?" And it did. And then we just sort of kept on prompting it to come up with new interesting stuff. I think the last prompt we gave it was, "what are the top three reasons why it would be better to have 100 board meetings per year instead of four?" And it's just a really fun way to instead of having a bunch of opinionated conversations about these types of things that go nowhere, we can generate some ideas, friction free really quickly, that that we can then have a conversation about. And all of this happened in 10 minutes, maybe, maybe less. And we ended up with a bunch of interesting stuff that Erin and I, I think, both felt pretty inspired by. And finding a way to create or, or grasp some inspiration on a difficult piece within 10 minutes, and we just did this in pairs with a laptop in front of us. That's a result that I've never seen, or rarely seen, never is an exaggeration, I've rarely seen in a real boardroom context. And yes, we have to be careful about what we feed into these things. And yes, we don't want to get distracted and go off into directions in our board meeting that don't generate any value or waste time or whatever. But we also, and this is no surprise to any of you if you're familiar with my stuff, we also have to give ourselves time and room to experiment or else all we end up being is oversight bodies, which is basically obsessing over the present and the past. And then everyone complains afterwards that we don't spend enough time on the future. chatGPT, Bard, anything like it, can be - if we use them thoughtfully and carefully, and maybe even playfully - can be tools to help us to open our minds very quickly and come up with cool ideas and have some fun and generate inspiration. And I think those are all things that are way too scarce in boardrooms. The other piece that I've noticed is that a lot of the conversations and presentations and resources that are available to boards around AI and governance are from the perspective of really well resourced organizations. I went to a panel, for example, where one of the panelists talked about "oh, well, you know, my organization bought a big AI firm." And the next person said, "Yeah, my organization is an AI firm." And this is one. And those are great, it's cool stories. But the room had about 100 directors from all kinds of different organizations in it. And their questions were more like, "tell me more about what AI is." Not how can I buy AI? Or how can I build AI? So I think, what I'm hoping for is there's a bit of a call to action here, which is, maybe let's collectively share our experiences any of you who are using AI, again, I know that chatGPT and Bard and that that sort of interface is just one really idiosyncratic illustration of AI. There's so many other ways to use it and deploy it and much more sophisticated than that. They just happen to be really accessible. So it to the extent that you have in your boardroom or in your organization embraced or deployed AI, let's start sharing those stories a little bit more liberally, to the extent that it's practical. Because the rest of us are out here just trying to learn, right? And the resources that are available to us are dominated by players that are already all the way in, or by people who have strong opinions but absolutely no experience. So if you have a story to tell, especially if it's about how AI has improved the way that your organization has functioned, and even more especially if it's about how you've deployed AI in whatever form in service of good governance. These are the stories I want to hear. Please put them out there. I'll do anything I tend to amplify them because I think they're sorely needed. And everybody really wants them. With all this stuff said, you know, I think it's worth sharing and worth really emphasizing that I'm feeling actually really positive about corporate governance lately. And maybe that's a little delusional. But it's true. I mean, I had a great time, for example, a couple of weeks ago at the Institute of Corporate Directors conference, where I was just surrounded by so many amazing brilliant friends who are corporate directors and senior executives and professionals in and around governance. And everybody is so interested in doing things a little bit better tomorrow than they did yesterday. And it's really inspiring to be in that space with that energy. And, you know, yeah, there's a lot to improve, and to the extent that you buy into my framing of good governance as intentionally cultivating effective conditions for making decisions, there's a lot that can and probably should change to reorient what boards and executives do, right? Cultivating effective conditions for making decisions is something really different from what the work of a board of directors and senior executives has typically been thought of. So I know I slag a lot on the status quo. And, yeah, the status quo is really both sub optimal and really sticky, but better is close at hand. I mean, just remember that the board's most useful role isn't oversight, as much as we like to use that word. The board's most useful role isn't in catastrophe, avoidance. But, instead, it's in bringing many perspectives to the table in service of making decisions about a better future for your organization. And also try to remember that a spirit of experimentation will serve you well, because that's the way you start doing new stuff. So experiment in moderation. And also remember that the headline of good governance is decision making, not financial performance, not compliance, not duty, not policy, not any of that stuff. And there's so much good science and really fun writing out there to guide you along the way. And I guess, remember to stay tuned to Sound-Up Governance, because we've got a great lineup of guests throughout the summer, and maybe a little bit more of me, too, if you enjoyed this at all. So let me pass you over to myself to wrap up the episode.Matt VoiceoverWell, that was a thing. Something really different for me at least. And I'm really curious the extent to which you found it interesting and useful, and especially if it's something that you'd like to hear more of in the future. I know it's really different from a typical interview style episode of Sound-Up Governance, but I hope you got something out of it. And thanks, as always, for tuning in. If you have any questions or complaints or comments or anything, shoot me a voice memo or an email to [email protected]. And thanks again. Until next time.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, consider becoming a paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Wanna see a fish turn into good governance (don’t worry, this will make sense once you’ve listened to the episode)Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, please consider becoming a paid subscriber.TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. This week we have part two of my latest conversation with Andrew Escobar. Andrew, you may remember, prefers no title at the moment as he's in a bit of an uncertain place in his governance career now that he's about to wrap up a 12 year tenure on the board of the Canadian Internet Registration Authority, or CIRA. Today, we pick up and add on to some of last week's themes like focusing on foresight in the boardroom and what it really means for directors and boards to add value. Let's start with Andrew's reflection on how we can better help new directors to be useful if you need a refresher on Andrew's own path to the boardroom have listened back to Episode Five.Andrew Escobar I think when I first started to serve as a corporate director, I didn't have any idea what my role should be. I was learning on the job. And that's not an ideal spot to be in. Right? I was in a very unique circumstance that afforded me that opportunity. I wouldn't wish that upon anyone, right? You should, you should have more comfort around what you're there to do. And be given that opportunity to explore that your role as a director, and as an individual on a board. For me, though, getting started in corporate governance, it was all so new to me. I just accepted the way things were for many years. Because that's the way they should be. Because that's what you're taught in many ways. You're taught it by your fellow directors, it's learned by your engagement with management. It wasn't until many years later that I questioned my own role, and what we as a board could do. And that was really an important moment for me to just really question like, hey, like, why am I doing this? Does this matter? What value do I bring to this organization? And that's when you start to actually question how you how you do what you do, how you approach your work as a board member. I'm not sure if I would have arrived at this kind of thinking. If I began my hate, call it a career, but a career as a as a board member. With a full understanding of what board work is, I think, not knowing at the start maybe helped me more along in the latter years to really question what I was doing, how I was doing it, and the role that boards play.Matt VoiceoverIt's almost like there's a blessing and curse here in what Andrew's describing. Coming into the boardroom without an understanding of the role of a director made it hard to make an impact and especially to challenge the status quo. But it also afforded Andrew the opportunity to embark on a journey, an exploration of what's possible. That journey has led him to being a super interesting thinker in the governance space at a remarkably young age. One of the things I was interested in exploring further, building on our conversation last week, was how to actually unlock a board's potential to add future oriented value. A lot of boards I know are concerned that they don't spend enough time on foresight or strategy. But I wondered if just spending time on it is what really matters.Andrew Escobar Yeah, I I'm using the words, hindsight, oversight, foresight, and that maybe is the academic me, I would never use those words in a board meetingMatt Right.Andrew Escobar Because talking, you know, "Hey, guys, we're going to sit down in two months and have a day dedicated to foresight." You've lost the room. But I do think that time is important to that balance. Because I can think of specific times, specific days, specific afternoons where we've devoted time to the future, and setting ourselves up for success. And the reason that they work though, because we put a lot of time in advance to structure what it was going to look like, what will this day look likeMatt Yeah.Andrew Escobar We're going to dedicate an afternoon or a day to this. What is the structure around this day or this afternoon? How are we going to frame this problem? And how are we going to tackle it? And I think that is the biggest challenge. We have specific structures or processes that we know how to follow for all these aspects of board work that everyone would agree is important to a board. For example, the annual audit, there is a clear process to follow or your annual budget. And that might, that process might be different in each boardroom, But it's still understood and you're comfortable with it. You don't need to put too much rigor behind it, because you've done it already. When you start getting into processes that try to deal with the future, that structure is really hard to establish, because you don't want to put too much structure. You're talking about the future, how do you structure a day around something that you want the board to be open to big bold ideas, to taking on a heck of a lot of risk, to managing systemic risks? That is hard to put structure around. But it's also necessary.Matt There it is!Andrew Escobar And so if you don't put the work in, you fail. And so you really do need, you need a chair who cares about this deeply. You need a management team, or are individual members of management who care on the specific issue. And again, it may not be your CEO, it may not need to be your CEO, but you need to have a willing accomplice on the other side and get structure around how you're going to use that time. So I do think devoting time is really important. But time isn't just saying "well, we've devoted an hour at the end of every board meeting to thinking about the future." That doesn't work.Matt Yeah. And then one of the things I really like about the the buy in, or it's probably much more than that, from a person in management is when I've seen this type of thing work really well, like generate something exciting, it's because the thing it generated is something that that manager wants, right? The board helped to give them something that they wouldn't have gotten on their own. Maybe it's a set of questions, maybe it's some ideas to think about, maybe it's some prompts, maybe it's just inspiration, it doesn't really matter. But it should serve the manager who's going to leave the room and use it right?Andrew Escobar It has to, because they're the ones who are going to ultimately put in the work, or their team,Matt Or they won't. And then why did we bother?Andrew Escobar Exactly. And that's what I'm always looking for. What is... sometimes it's a spark in the eye of the CEO and you want to understand why is that spark there? Why are they so passionate about this? Why does this matter? Let's dig in. And it might not always be the CEO, it might be your CFO, it might be the chief marketing officer. And they have a reason for why this is important. And they want to structure time around something to dig in deep. That is the best kind of work that you can do as a board.Matt And there they, I think, if I could go back to a comment that I made earlier, I think that we've kind of conditioned or allowed a set of habits to perpetuate where those senior managers might have the potential to feel excited about something, but they just don't believe the board can help. And so they don't try to to share that excitement or to provoke the types of conversations that they want to have. Because they just sort of imagine that it's either not possible or that that's not their job, right? I hear sometimes from managers, "the board should be able to show up and do this." And I sort of say, "Well, why would they be able to do that?" You know what I mean? Where would they get that? So I think that there's, this is the mindset shift that I'm really interested in. I liked what you described in terms of your behavior change. And I think it's more substantial than you seem to believe, which is, you know, yeah, sure, wouldn't it be great for you to be able to walk away and have revolutionized the way that meetings happen, that kind of thing. But I think it's more important to be interested in how you are able to engage yourself and others in work that actually matters. That's way more important than any of the sort of like, you know, let's have 1000 meetings instead of 10, or whatever. Right? Like I think I think that's really substantial work. But I'm, so let me let me go back to where I wanted to go earlier, which is, I think I understand why you would maybe not be the perfect person to turn things upside down because you'd be creating something that other people need to live with and you don't have to live with. That's fair enough. I don't think that new people coming into boardrooms are empowered to do that anyway, right? So we're not empowering them and the people who are on their way out are too nervous to leave other people with a mess or whatever. Like who's, whose job is it to deal with this?Andrew Escobar I don't think I have a good answer for you. I only have my view of my time on one board for 12 years. To assess how I felt about it, and how I might feel differently about it. Coming in into it a bit differently. I didn't enter my time on on a new board, my first board with the understanding and the competence, I needed to have. I needed to have confidence in my ability to move the board in a meaningful way. I do think that the people best placed to do this work are not necessarily existing ones. But I don't know if my view on that is clouded based on my experience with boards, right?Matt Can I share something quick with you and get a reaction? Which is, I'd been asked by a good friend of mine, I was basically a substitute teacher a couple of weeks ago for a little portion of a course on the importance of creativity in business. And he said, "Look, I need someone to come in and help. But you're the only person who's going to be in the class who's got access to CEOs and boards and that kind of thing." And he just, he was curious if I had a perspective on the need for creativity in that world. And every for all the reasons we're talking about, I really do believe there's a need for creativity, it can take a lot of different forms. But you know, the biggest problem in the space is status quo. And creativity is kind of the opposite of that. And we pushed and pulled in a lot of different directions. I provided a lot of stories and silly ideas, but one of the students had a really smart question at the end, which is "this all sounds great, but am I just gonna walk into a room someday and get shut down?" And my response was, "maybe, yeah. But my impression is that even if they're trying to shut you down, they want to be you more than you want to be them. So keep trying." Is that fair?Andrew Escobar I think that's fair. And that goes back to confidence, confidence of being shut down, but being okay with it. And I don't think we have enough of that in our boardrooms. That we don't want to ask that difficult question. We don't want to make waves. We don't want to seem too radical even. And that's always been my challenge. I don't want to seem too radical. And I think sometimes the way I think about governance might be viewed by some as being really radical, where I view it as simple. It's just good governance. We just don't agree on what good governance is.Matt Right?Matt VoiceoverI just want to interject here, and then we'll pick it up exactly where we left off. listening back to Andrew's comment here, I actually find it pretty disheartening. Or maybe it's actually kind of validating. Disheartening, because Andrew is one of the only directors I know who has a clear and confident understanding of what they think good governance is and how to do it. And he's cautious about pushing too hard toward good governance, because it might be seen as too radical. The reason this is also validating is that it's a perfect illustration of the problem with the status quo. I know we have a serious selection bias happening with our listener base here, but I bet everyone who hears this will be saying to themselves, "man, I sure could use a bit more Andrew on my board." If so first off, you should pick up the phone and call him right now. And secondly, what are you going to do the next time you walk into your boardroom to make sure that the Andrews in the room are empowered to affect change? Anyway, I was saying...Matt Okay, yeah. And now you're getting back to the whole origin of a lot of the work that I've been doing over the past couple of years, which is I don't... people might disagree on what good governance is, but it's usually that they're disagreeing, but don't have a clear idea of what they actually do think it means. They might say, "I don't think it's that, Andrew, whatever you think it is, I don't think it's that." And you might say, "Cool, well, what do you think it is?" And they don't really know. And that vacuum is a really significant problem. When people very confidently will go out in the world and behave a certain way, with a very shaky or maybe even non existent foundation. Part of the reason why I prompted you to come back and chat with me is because you'd heard something out in the world that that sounded similar to some of the vocabulary that you and I use, and I'm starting to hear more of that too. Is there something more systemic happening here? Is this just coincidence? Like I start to feel it too, but I doubt myself.Andrew Escobar in many ways. It's still a small community. I don't know if you have a good handle on the amount of directors and I use that term broadly. Directors there are in Canada.MattOh, yeah. Tens of thousands.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, please consider becoming a paid subscriber.Andrew Escobar Yeah, tens of thousands. But there's a smaller community of engaged directors. People who really care about the work that they do. And I think within that community of engaged directors who want to improve not only themselves but their boards, this is just a start. Right? The seeds have been planted, and some of the work that you've talked about around good governance and that I've, I think, fully embraced, and sort of came to the conclusion that I've been sort of practicing for many years.Matt Yeah.Andrew Escobar I do think that is beginning to take hold. But we're just at a start. And it's how do you cultivate this notion? For me, having a shared understanding around good governance is really, really important. I'm gonna see if I can do your current definition, justice. It's always evolving. I think that you define, Matt, good governance as the act of actively cultivating the conditions, the effective conditions for decision making.Matt This is really silly. Some of you who watch any of my stuff will know that I have this thing called a Vestaboard in my office, I want to put something on the Vestaboard for Andrew.Andrew Escobar I kind of want to wait and see.Matt I'm signed out standby, this will be the more boring pause, that I can't fit the entire thing on here. But there's most of it.Andrew Escobar Wow.Matt There's the imperative version.Andrew Escobar Intentionally cultivating effective conditions for decision makingMatt That's the act. Right? So the the decision making thing is the is the the, the object, the subject is us being intentional about the conditions.Andrew Escobar What I like about those four words, is that actually it does remove decisions out of it. Because decisions can come later. You can still be engaged in good governance without ever arriving at any one decision. As long as you're putting the work in around those effective conditions, you're engaged in the work of good governance,Matt Right!Andrew Escobar So what I was talking earlier about, the most exciting work for me wasn't around decisions, it was setting yourself up for future success. Another way to say that is we're cultivating the conditions today to serve us later on. That, to me is really important work. And, again, sometimes it might be, the end result might be really structured. And that doesn't sound like it's the effective conditions you need. Like, to me, one of my favorite ways of approaching future looking work is around strategic risk. And strategic risk, and get super academic super bullet points and graphs and all that kind of stuff. But that, to me, is working on the conditions for decision making. I'm trying to actively cultivate those conditions today, to serve us tomorrow. And the decision itself isn't a part of the work. That doesn't mean it isn't good governance, that doesn't mean that we aren't doing good work here.Matt One of the bits of conventional wisdom that I hear frequently and get challenged on frequently, and it's a completely fair challenge is about results. And I'm not trying to trivialize the importance of results. I mean, whether you're whether you measure your performance by profitability, or share price or impact or whatever, you're going to die without results. And I'd like to argue that the fact is, yeah, you know, you might die. And that's not bad governance. That's bad results. And good governance can lead to bad results the same way bad governance can lead to good results. It's not about that, right? For all the reasons you've just described. I'd like to think that it increases the probability that you'll have good results, but it's hard to know, right? Like, there's a lot of reckless, awful, stupid behavior that gets good results. And maybe reckless, awful, stupid behavior can be good governance, but I doubt it.Andrew Escobar The reason I don't fully leave the decisions themselves off the table is because I need to understand how the conditions that we set up affected that decision. And so revisiting that decision in the future is very, very important. to my work.Matt Yeah. I agree.Andrew Escobar And that's almost antithetical to board work, revisiting decisions that the board has already decided on. It's not reopening those decisions. It's not re litigating them. It's understanding the decision you made on that day. And why, what were the outcomes you were hoping for? What actually happened? How are we going to assess this decision? I think that's part of the process that we don't do enough of. We make a decision and then we forget about it. As opposed to thinking "okay, we are about to make a decision. How are we going to evaluate this decision that we as a board are making or as an organization?"Matt Right, and whether the decision had good results or not, we still have more decisions to makeAndrew Escobar ExactlyMatt So the cultivation never ends, right?Andrew Escobar And so what you're doing is you're not, you're not re-litigating that decision, but you're improving upon your process. So how do you evaluate the decisions to improve upon your decision making process? Again that but that is tough work. And it's not viewed as critical to the work of a board member or a board. But it is the way you succeed.Matt I had a conversation recently with a friend of mine whom I won't name just in case - I don't think he'd mind but I don't know - who used to play a role of some kind in the evaluation or the the exam process at the end of the Directors Education Program. And I don't know if this is reflective of the process that you went through, but we had a conversation about something or other I can't even remember what and he said, "you know what? I'm rethinking one of the things that we used to do in the exam, which was, we'd give someone a very difficult set of circumstances, I don't know what they were and incomplete information, and not allow them to abstain from a decision. We forced them down, they had to choose one path or another. And well, to us, it was you weren't doing your job if you weren't willing to take a stand and go one direction or another." And I thought that was a really unusual, maybe I don't know how I feel about it from an ethical perspective, but it seems unusual to me that we would say, "you know what your job as a director is always to take a stand in one direction or another." Didn't feel right to me. First of all, you don't have to reflect on your experience on the DEP exam. But how do you feel about that? I'd love if I, if I were, if I put myself in a position of a director and something where I felt like I could just absolutely not take a stand in one direction or another. I think it's completely appropriate to say "I have no idea."Andrew Escobar Those final exams are interesting.Matt Okay.Andrew Escobar And I'll get into it really quickly. I think that there's a multiple choice component to the exam, you're either right or you're wrong. And I get that totally. But there's the in person component where you're around the table with two experienced directors and maybe four other directors who went through the program. So it's like a mock boardroom.Matt Yeah. A simulation of some kind.Andrew Escobar There's some simulation, there's a decision at the end of it. But you also have a one on one time afterwards, with one of the individual experienced directors. And I remember going through my answer, I arrived at an answer. And they said, "Well, you were right on these three aspects. And you were wrong on this fourth one." And I thought that was the strangest thing.Matt Yeah, it does sound strange.Andrew Escobar Because it says if you go into a board meeting, and make a right or wrong decision, and know it right away. You don't! I didn't push on at that point. I didn't think I was wrong. And I didn't need to get into it. But when we think about decisions in such a simplistic way, in right or wrong, and having to make a decision to begin with, I think we do a disservice to the actual value a board can bring within a meeting. Sometimes the right decision is no decision. And that is probably very frustrating.Matt Especially for CEOs.Andrew Escobar Yeah, for CEOs. Maybe it is for, you know, the minority the board, who was hoping it was going to resolve. But that's the right decision at some points. And I know that I've experienced that myself over the past 12 years. There are times when the board says "we are not ready to decide on this. We don't even want to say no, we're asking you to come back to us." That to me sounds like a great thing.Matt AgreeAndrew Escobar that we would, because what then happens if you're trying to drive your decision, you're driven to the safest decision. And sometimes the safest decision is "no." Sometimes the decision that driving to is the reckless one. We have to leave room to make the right call, which might be no call.Matt Yeah. Right. And I think that I'd like to say that that's on the level that you're talking about, but also inside an individual. Even if their abstinence from the decision...Even if they're absent is from the decision doesn't affect anything, at least they should feel like ...Andrew Escobar Here's why that matters to me. Yeah. And I would still, I'd be totally comfortable with a board member doing that. Because if the rest of us are saying we're ready to make a decision and we want to vote on this. But you don't feel like you have enough information or you feel uncomfortable with something. And so you're abstaining. I'm sure there's all sorts of ramifications that are more academic in terms of your responsibility, and if you should have done that. And I care less about that than I do about you signaling that you were uncomfortable with the process.Matt 100%Andrew Escobar You want better conditions? Great. Let's work on it.Matt Yeah, even if it doesn't happen this time, it might in the future. So with the last couple of minutes we have, there's, and this is we've, we've tangentially touched on this a bunch of times. But it's the it's the sort of community aspect of this. And we've got a very, very good, very fruitful but very compliant to the status quo community everywhere. Which, and I adore them. They're great. And I think the one of the things that has been a real and continue will continue for a while to be an obstacle to more systemic shifts is that this minority, or these sort of outliers like you and me, we we like each other, we know each other, but it's really hard to find and build a community around this. Right now. It's not maybe not impossible, but maybe the questions are to what extent does this matter? And what what would you be excited to do in service of community building around this?Andrew Escobar One thing I do now is I share with everyone my view on what good governance is, I love talking about the conditions, and how they impact good governance. Because the more I can share with a community of engaged directors, the more I can find either like minded individuals, who we can build upon this idea with, or find the contrarians to test the ideas to work through their views. Like I think getting both perspectives are really, really helpful. I've only to date have found those who are really excited and interested in exploring it. I would love to find more who hear this, this notion of what good governance is and disagree. But I would, I would love to get in the room with more engaged directors who want to explore what good governance means to them individually, to their board, and how to apply it in a meaningful way. And I think it will look different from board to board. Publicly listed company, to small arts not not for profit. It's different, it's going to be different. But I think the idea around the conditions is actually the sameMatt It's universal.Andrew Escobar Yeah, it's universal.Matt VoiceoverI mean, maybe Andrew and I are just confirming our own beliefs here. You might remember that Paul Smith and I reached a similar conclusion back in episodes 18, 19 and 20. But the thing is, I've been working with boards and executives over the past year or so through the lens of good governance as intentionally cultivating effective conditions. And honestly, it's the first time in my 20 plus years in this space that I feel like positive change is easy, inexpensive, and high impact. I really hope Andrew's board journey continues and that he gets an opportunity to be the new guy over and over so that he can add a bit of disruptive boardroom magic everywhere he goes. And I hope you enjoyed this conversation. Thanks for tuning in to Sound-Up Governance. If you have a disruptive governance streak of your own or even just some bad dad jokes or something, send them to [email protected] Thanks for listening.Ground-Up Governance is a reader-supported publication. To receive new posts and support our work, please consider becoming a paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To support our work, please consider becoming a paid subscriber.TRANSCRIPTMatt VoiceoverWelcome back to Sound-Up Governance. This week we have Part One of another two-parter and with a returning guest no less. Here on episode 34 We have episode five's Andrew Escobar back on the show. Andrew's LinkedIn profile reads "Fintech explorer and open banking advocate at MX." A highlight of his professional experience is that for 12 years, he's been on the board of the Canadian Internet Registration Authority or CIRA, although his tenure is coming to an end this fall. I always think of him as one of the most curious governance minds in my community, which I guess is also something. But when I asked Andrew how he'd like me to describe them, for the purposes of this episode, he said, "I wouldn't use a title, you can just say Andrew Escobar," which perfectly captures the experience of a 30-something with 12 years of board experience, and with his governance future a giant question mark, being invited to talk about governance on a governance themed podcast. He and I think of good governance in really similar ways. And I wanted to bring him back to talk about a whole bunch of stuff, but let's start at the beginning. Sure, we think that corporate governance needs to change, but I wondered if Andrew had a clear idea of what problem we're even trying to solve.Andrew Escobar I think the problem is that directors and boards began to question the value they bring to the organizations they serve. And while let's say 20 years ago that there was this awakening of okay, well, we need to take this compliance work more seriously. We're gonna make sure that bad things don't happen, and that we exercise our oversight role in the best way possible. And there was a lot of attention played to that aspect of corporate governance. But I think what directors are now starting to consider more is, what is good governance? What is the value that I bring as an individual to this team? And what do we, as a board, what's the value that we deliver to the organization? And when you start framing the problem like that, you then begin to question the way that you do your work, the way that you approach problems, and the way that you commit as a group to solve them.Matt VoiceoverMy first reaction to Andrew's comment was to reflect on something my friend, Professor Aida Sijamic Wahid, who I really need to get on this podcast... Anyway, Aida said something to me a couple of weeks ago that I couldn't believe I'd never thought about before. Boards and executives are conditioned so that the first word they think of when they think of corporate governance is "oversight." But - and here was the light bulb that Aida caused to go off - oversight is inherently backward oriented. Maybe a little bit about the present, but certainly not about the future. Seriously, ask 10 directors what they think their job is, and nine of them will use the word "oversight" in the first sentence. So we - and by we, I mean, the whole world of governance experts, from directors, to executives, to consultants to educators - have conditioned boards almost to do the opposite of the thing they really think they should be doing, which is orienting themselves toward the future. Maybe that's part of the problem Andrew's getting at.Andrew Escobar And I wonder if that's what's changing. That view that your work as a board member is simply to focus on hindsight, and oversight, right? What happened last year? What's happening today? As opposed to spending more time on what's happening tomorrow? What type of organization will we be a year from now? 5-10 years from now? What are the problems we're going to encounter? How do we begin to maybe not solve them today, but start planning against them today? Because it's a process. And how do you improve upon that process? I think that that is the, I hope, the awakening that we're seeing within boards and their directors. For me, one of the lightbulb moments that I had, it was 2018, and it was the first day of my I was completing the Institute of Corporate Directors' Director Education Program. And it was day one and I won't name the two directors. But these two senior directors on meaningful, challenging boards pose a very difficult question. Does the work that we do matter to the organization? And they meant it. And they didn't mean it to demean their work or all of our work. But that is the way they wanted to approach the 12 days that we had together. They want to understand what's the value that they were trying to achieve as directors, and as a board. They got me thinking about, Okay, well, what am I, what am I here to do as a director, as a board member? And it became getting that balance, right. To be less focused and fixated almost on the compliance aspects of my work, which is all hindsight and oversight oriented, and to think more about the future. And if you simply view the board's job as compliance, hindsight, oversight, you miss out on the real value that I think boards deliver today, which is foresight, thinking about the future. And that's a lot harder to do than the hindsight and oversight work that everyone would say is their job as a board member, right? That fiduciary duty that you have to the board, to the corporation. That's that's the problem. Not to say that that isn't necessary work, of course it's necessary. But finding the right balance is key to your work as a boardMatt This question, which I really like of, do I even matter? And I don't know if those directors meant it as a provocation to the room to say, "let's prove to ourselves that we matter, because you do matter." Or if it was maybe more sincere, like, "I actually don't know if I matter or how to matter." Either way, I don't think it's a framing that most executives or directors are too concerned about the moment they walk into a boardroom for the first time, they're not really wondering to themselves, "how do I come into this room and actually do something great?" And if they did, it might be of interest to more people to actually figure out what great means. And let me give an example that's related to what you're talking about. So if, if we talk about foresight, which I like in theory, but I don't think is sufficiently specific for us to know how to walk into a room and do it. The other term that's very common is we need to, quote unquote, be more strategic, which I think also isn't sufficiently specific for people to know how to walk into a room and do it. Because if it were, then they would just do it. Right? If we could say, "we need to do foresight," and everyone agrees, you'd just start doing it. If you said if you wanted to be more strategic, and everybody agrees, and you knew what that looked like, you'd just start doing it. Right? There wouldn't be anything in your way. Okay, let's maybe I'll ask a silly question. What does it feel like to you, or how do you know when you're quote unquote, being strategic or doing foresight?Andrew Escobar It's moments when I'm not specifically working on a problem at hand that we have today. When we're thinking about problems, or opportunities that we anticipate coming down the line in the future. When you start setting yourself up for success in that way, and think about those, that future state, future risks, future problems, future opportunities that you can capitalize on. When you put yourself in that place, that to me is the foresight work. That to me, is the strategy work. Thinking about a strategic problem and saying yes or no to it in the moment, that actually, to me strikes me more like oversight work. That's passing a really substantial budget, or a corporate restructuring, or changing your capital structure like that might might be present day problems, as opposed to future problems. And so the less definition there is around what you're trying to solve, I think is actually where the most value is. And that and that's exactly why it's difficult. Because the problem isn't perfectly defined. It's not placed right in front of you in a binary way. You are tasked as a board or hopefully tasked as a board to think about the problems in a more open, constructive way. Even saying that out loud, that doesn't sound like much that's it sounds like you're not approaching the problem with rigor or intent. But I actually do think that that is the most impactful work that I've done on a board. It's the stuff that is not perfectly defined, but setting us up for the future. I love that work.Ground-Up Governance is a reader-supported publication. To support our work, consider becoming a paid subscriber.Matt So it almost sounds like part of what's missing in that more oversight-y version of this is that - and this is a normal behavior in boardrooms in general - is we're expecting management to process and digest whatever kind of stuff comes into the room, maybe even all the way down to a recommendation by the time it gets into the boardroom, right? So any opportunity for foresight has basically been synthesized out of the process by the time the board gets to even look at it, or at least to have a conversation about it. And so basically, the conversation that happens is a conversation about "okay, well, what do we need to consider before we approve this?" Instead of "how do we co create our co define the problem at hand before we even imagine what paths we might travel and, and, and?" Right? Is that a fair? I'm giving an extreme example to illustrate a point.Andrew Escobar It is. It's a good example, because most of the decisions that arrive in a board package or in a boardroom are binary decisions. And I understand that that's ultimately the outcome, like you want a binary decision in front of a board that they can say yes or no to. But that a board would accept a process that only includes a binary decision that arises at the table, to me is wrong. You need to have a process in place that allows for some give and take, some feedback into the process. And understanding how the decision can change. What are the options on the table? So that it isn't a binary decision. And what you want to try to avoid is, of course, figuring out what those alternatives are in the boardroom. And I know we want to put everything into a board meeting. But if you think of all the other work that we do in our lives, we're moving away from meetings. But then how do you... I mean, this is sounds awful, but how do you get more meetings? Right? How do you structure more? Everything if needs to happen in a meeting, how do you structure more meetings that are respectful of people's time, but actually let you arrive at decisions that that are ultimately not binary? They were decided on bits and pieces, and there was room to adapt and understand the problem and really arrive at something that that's better for everyone. Where the board is actually contributing, and management has the room to deliver something not that's simply going to pass the board's approval, but really is like ambitious, manages risk, grows the company, grows the bottom line, grows the mission impact. I think that you need a more dynamic process in place if that's what your end goal is. And simply arriving at binary decisions that have passed committee, passed the board and then you move on, that doesn't work.Matt So would it be a fair concern to you if a manager, especially a CEO, countered this concept by saying, I just feel like the board's not trusting my judgment.Andrew Escobar Trust goes both ways. It's not a lack of trust in judgment, I need to understand the decision we're going to make as a board. And it's that shared understanding of the decision and the outcome. That's what, to me good governance is. A shared understanding of what the problem is, and the different ways that we can solve it. And simply arriving at the one solution to me isn't good enough. And, of course, much of the work, the majority work is not going to happen in a board meeting, or in in committees or the the regular board process. So much of that work happens within the organization, it feeds its way up to the board. But it means that our boards need to shift the way that we work. And that management needs to be willing to shift, as well, the way they work with boards. And I guess that's the challenge. You're not trying to just move boards in one direction, you're actually trying to move senior management teams and leaders in that direction as well.Matt There's not a lot of, of current board members anywhere who would out loud, say, that's the definition of my job. And that's what I expect to be doing when I get in the room. I mean, should we be recruiting different directors?Andrew Escobar The easy answer there is yes.Matt Okay.Andrew Escobar I think the more nuanced answer is... actually, probably still yes, actually. I do think there's something to say with the current pool of directors that we have today. That's what we have today. And it's important that we work on, maybe not the skills that those directors bring to the table. I don't think that needs to change. It's more their view of their role.Matt Right.Andrew Escobar But I think it's fairly cemented in their minds what their role isMatt for sure.Andrew Escobar And isn't. And it's fairly cemented in the role of management teams what the role of the board is and isn't. So simply saying we need to bring on new directors who have a fresh perspective on governance, or their role as directors, hat isn't sufficient. Because you don't, you don't, you haven't solved the problem yet. And so as you slowly bring on new directors, as you slowly increase your applicant pool and bring in new people into the process, you fail them, and you fail at your intents of actually making the boardroom more dynamic.Matt VoiceoverSo I asked Andrew, if as a board member with 12 years of experience in the CIRA boardroom, and also as a person with super big thinking and countercultural ideas about governance, maybe he and people like him are the ones best positioned to be change agents in their boardrooms. His answer surprised me a bit.Andrew Escobar I think it's really challenging to do something for so many years in the same way, and then try to do something different, or to be the one to propose something different. Because you've already done it, and it works. And you know, it works, because you part of it. My biggest challenge is that, you know, six years into my journey, I definitely wanted to approach my work in a different way. And I wanted our board to approach work in a different way. But I think I knew that I wasn't the change agent that our board needed. And that most boards need. At that time. It was very much for me important to have new individuals come in and lead that change. I think that's what I've been most successful at is supporting those individuals. My current chair is fantastic. Absolutely love working with her and supporting her in her role. I'm now the Vice Chair of the Board. And she's the kind of change agent that I think our board needed. But we have other individual directors who have joined us over the last few years who are also change agents, and figuring out a way to include them in our process and to be heard, that's how change will continue to happen long after I'm gone. I wasn't I wasn't the one to change our board. It is these new individuals who have come on, who have really changed the way that we think about our future and the way that we solve problems today. That's not to say that I haven't contributed in my own way. But I couldn't have done it with a board that, I think this is the heart of it, with a board that has constant membership. One of the benefits of our board - I've been on that board for 12 years, but there is a healthy rotation of board members. I think I've seen the board now completely flip, maybe twice. And it's difficult to manage that change at times. But it's also incredibly healthy. And so while I was the one to do it, supporting others to bring that change is I think the value that I brought to that board.Matt VoiceoverThat brings us to the end of part one of my recent chat with Andrew Escobar. Can you believe there's even more? In next week's episode we talk about making sure that a board's future oriented work actually ends up being useful to management, and also about how important it can be to have creativity in the boardroom. In the meantime, reach out to me anytime at [email protected] if you have any ideas for future guests or topics or any of your own ideas about how to nudge boards and executives toward being more like what they say they want to be. Catch you next time.Ground-Up Governance is a reader-supported publication. To support our work, consider becoming a paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.TRANSCRIPTJenn Fong Okay, so did you hear that thing where it's like, if you're in a room with higher ceilings, groups tend to think more ambitiously or like they have bigger ideas than if they were in like a very claustrophobic space?Matt No, I didn't hear that. And so that's, as you might imagine, I'm so interested in Okay, was there any more to the story?Jenn Fong That's all I got, and I'm gonna cite the source which is TikTok. So you should definitely look into that.Matt VOWelcome back to Sound-Up Governance. In keeping with my habit of bringing people I barely know on the show, just because they challenge me or say really interesting stuff. I'm super grateful to have had the chance to chat with Vancouver's Jenn Fong, a consultant at Realize Strategies who specializes in governance. In fact, Jenn was formerly with WATSON Advisors, which is probably Canada's most prominent governance, consulting specialty shop. So despite being very young, Jenn seen a lot of governance-y stuff. Most importantly, she's deeply nerdy about it, and occasionally reaches out to me with the most delightful and skeptical questions. And it just became clear that she'd be a perfect guest for the show. So let's hear more about Jenn.Jenn Fong Basically, I did my science degree at UBC. I did it in behavioral neuroscience, which dealt in sort of the combination of physiology and psychology. So what happens in your brain when you sleep? What happens to your brain when you feel motivated? What does motivation look like? And you took science courses, and you also took - I'm using quotes here - arts courses, where you learned about like, human dynamics and more what people think of as psychology. Anyways, did my degree realized I wasn't suited for the practice of science, because I found it taxing, and I saw that I was most curious about how big important groups make decisions and how interconnected things like the government was to the economy, to people's welfare, to people's need for social services for, for all these different aspects of our lives, which led me to wonder like, how do we, how do these groups of people make the right decision and use their resources in the right ways to better the lives of their citizens? Right? All said and done, I landed at UofT for a master's of Public Policy and Governance.Matt VOU of T is Canadian for the University of TorontoJenn Fong Which was probably the two most difficult educational, like years of my life, I was just so unused to that sort of learning style. In science, you know, it's like, here are the facts, learn them and then put them on a piece of paper for a test. It was more of a discussion like what are you actually thinking about this? Like, what are the relationships you're seeing? Like, explain it. And I just was not used to that and the amount of reading oh my... not used to that. But I ended up working in at the Ontario Public Service for a little while, then moving back to Vancouver without a job. And WATSON was hiring at that time. And applied, got in, actually didn't know anything about board governance at all. Like it wasn't even a topic that I governance itself, not, yes, a topic but in terms of government, but not boards or any other sort of groups of people that do any kind of governing. And it was just, it felt like my professional growth just like fast tracked the moment I stepped into WATSON. Like really deep dive into this concept that I never knew anything about really high performing people that made me perform better. Like I learned so much about just everything consulting, like, how to think about things like how to think and systems like how to... it was just a really good time. Really interesting. So that's how I ended up in governance like accident.Matt VOJenn's path to the corporate governance world is so typical in its, I guess serendipity is the word I'm looking for. Like almost everyone I know in this space, including me, we got here entirely by accident. Anyway, one great example of Jenn reaching out to me with a really provocative nugget was that she just heard a speaker describe the role of boards of directors as risk mitigation, which gave me pretty strong feelings and reactions. Beyond wanting to provoke me. What did Jenn find interesting about the notion of boards as risk reducing machines?Jenn Fong It was just so different than how I viewed governance that I felt, and I posed this question to my other governance colleagues, too. I just felt it needed to get a sense check on whether or not I was drinking some kind of juice. That wasn't the thing, you know? I'm like, I believe governance is not that. I think it is so much more around, actually I really enjoy, like the way you see it, like the conditions we need, right? There's this design piece. It's, it's, like I said, process dynamics, like design all these things together. And often people do think of it as only compliance-y, or risk mitigation or like structures and check things they need to do, but then set aside because there's other important work that needs to be done. But all that other important work that needs to be done is part of governance, too. So I just needed I, you know, when I heard that, I was like, really, is that still the thing? I'm thinking, am I crazy for not thinking this way? You know, how do we get to that place that I'm imagining that we can all get to?Matt I'm going to share one of the the things that I think has gotten, has forced some people into that line of thinking that you're suspicious of, which is: perhaps the most influential stuff that happens around corporate governance is the reactions to catastrophes, right? So the like, Enrons and the financial crises and, and all the regulations that come out of those things that are reacting to a catastrophe. And so then educators like me and my peers decide we want to start using case studies that use examples like the Challenger Space Shuttle explosion, or like other really dramatic, awful things. Like, why are we using the catastrophes to define corporate governance? You know what I mean?Jenn Fong Yeah I know what you mean. That's yeah, that's really interesting. I think it's I think it's a couple of things. I think people in leadership positions and any person, right, like, we aren't good at all things, there's going to be some areas that we're better at, some skills and tasks we're better at. And in order to think about governance in this like, wholesome way, you need to think about it in terms of like a system. And then also the input and output, of which there are many inputs, right, and many potential outputs. And that kind of thinking, takes a lot of work and time. And if you're just in the day to day of doing the governance stuff, right, because it's necessary, and you do logistically need to get it done. Then taking that step back, and really seeing the whole picture, and really planning out the best picture that you could have his time you don't have maybe interest you didn't have or like, ability that you didn't have, because some people, I think it's this kind of a skill, and not everyone can have that integrated sort of thinking. So...MattFor sure.  Yeah, I think that's 100% true. And I, I think there's also there's another thing that we and this is, you're now in a position to do this, too. And I hope that you you're you're more careful than I was for the first 20 years of my career. Which is... and you'll this, this might sound a little bit hypocritical, too, because I'm in the process of kind of disseminating content. Anyway, I'll make my point. We feel like it's important to boil really big, big governance concepts down into catchphrases. And it's not that we don't explain the substance behind the catchphrases, but the catchphrases are so much stickier and so much more memorable than the substance is that the consumer of the catchphrase leaves without the substance, right? So we end up with stuff like "noses in fingers out."Jenn Fong Right. Oh god.Jenn Fong RightMatt Or "you have a duty to the corporation,"Matt Or, or whatever it is, where, where, which is, they're all kind of vaguely okay.Jenn Fong Yeah vaguely okayMatt Yeah, if you ask somebody, "okay, but what does noses in, fingers out mean?"Jenn Fong Right! Yes, exactly. What does it mean? How do we do this in practice? What do we agree as a group that means for us in relation to all the other parts of our governance network? Like have we thought about how if it's a not for profit, like how the members take part in governance? What do we have to do to prepare them to do their role? What do we like it's all this, like I said, this system. And to be fair, I think, you know, insofar as we think governance has like a marketing problem, I think all other professions have a marketing problem too, because like my partner is in is in comms. And some leaders, you know, CEOs or whatever they know they need a marketing or PR or comms team, but they don't understand the full potential of that team or like, right. So I don't know any person that can, that can carry all those different ideas about the fullness of like each task or each area to and really, like get it all together. So maybe that's where like having, knowing at least you don't know, knowing that, at least there's more to know and like, getting in touch with the people who could possibly know would be beneficial. But it's then maybe the knowing that you don't know part.Matt There's another thing and just sort of taking all of what we've talked about so far and thinking about it. There's another thing, an element of something you asked me that I I've been kind of obsessed with for a long time, and I have specific strong opinions about it. But they're the strong opinions weakly held, as they say. Which is you ask something about the, like trying to seek a causal relationship between, I'm going to paraphrase, good governance and good performance. Which, you know, rather than me react, I mean, what is what, tell me where this is coming from, what's interesting to you, and what you think.Jenn Fong I heard someone say that governance is a method you use to not fail, versus a method you use to succeed and had lots of thoughts around that. You know, we reached out to you, we had a chat about it. The question then is if we want to remarket governance, I feel some people would want that evidence to say, "show me that then governance is a method for success, that there's this direct link." Right? Between what we do in terms of governance, which is broad, to success, however we define it or how someone would objectively define it don't know that that's possible. But so yeah, what would that what would that entail? I don't think you could. Because you know, the way I see governance, it's a whole bunch of different stuff, and a whole bunch of different areas that all add together in mysterious ways. And then bam, either something great comes of it, or you try again and then something great comes out of it. Right? So like, how do you how do you say, performance evaluation of your CEO? That's governance. Thinking about organizational culture, that's part of governance. Like, it's all these different little pieces that people don't think, collectively is governance. So...Matt So I tell you that the challenge that the way that I get challenged on this now, now that I'm framing good governance, very specifically as being intentional about the conditions around decision making. And I'm just basically saying, as long as you're intentional, that's good. If you're not intentional, that's bad. And someone will say to me, "what if the result is bad?" And I'll say, well, there's lots of awful decisions that have good results. Right? So if we're, if all we're concerned about is the result, it's, I used, someone asked me this question in a class this morning, and I just said, okay, well, you know, you could just say, "Hey, I've decided never to wear my seatbelt and always speed and not only am I getting everywhere faster, but I don't have the I find seatbelts really uncomfortable. So like, clearly, I've done something really smart and good." And you and I might look at it and say, that's actually really stupid. And they'd say, "Well, you can't argue with results." And I'll say, "yeah, you can!"  Like, you're being stupid.Jenn Fong Not with that person because unfortunately they're...Matt And, and what I'm saying is, you know, if we're if we're looking for a connection to performance, that's going to elude us, because the fact is, there's a there's a probability that no matter how well we, how good the inputs are into the decision, which is all we can control, it's possible that is going to turn out shitty. And then all we can do is approach the next decision really well, too.Jenn Fong Yeah. I think that's, at least for me, that's more acceptable than bumbling into something, the outcome turning out well and thinking you did a good job. Matt I agree.Jenn Fong And I think that you're not being intentional about governance just to be intentional about governance. Like, there's a point to this, which I think is whether or not you're helping your organization achieve its purpose. I don't think it's about, I mean you can link performance to that, like how well we are achieving our purpose, and measure that and view that as the performance. But I think people see performance in other discrete ways, like, the efficiency of our programs or productivity of our employees, or... like, I think the end goal is always have we met, what we set out to achieve, like this vision that we're, we set for ourselves. And if you can be intentional about how you do that, then everything else, I'm like, fine. It's all... there are going to be some bad years, right? Like, who knows? Bad decisions were made maybe the economy was bad, like, we can never control for these things. But if we're always at least heading like that upwards, then I will accept that, rather than just like this bumbling like and years, we're just taking forever, and we're not getting anywhere and we're not clear on our purpose, and we're not getting anywhere near to meeting it, then I'm just like, what are we doing?Matt Right, okay, can I challenge you just a little and this may be a misinterpretation of what you're saying? Does that imply that failure is always a result of bad governance? So if we ultimately if our if our organization fails, is that always a governance failure?Jenn Fong I don't think so. Because I don't think even despite best efforts, we could possibly know how... we couldn't possibly know everything, you know? But then, you know, if I'm being really strict about it, like, but maybe I could say, well, like, you know, maybe some organizations could have survived COVID if they had done enough scenario planning. But honestly, is that fair? Like could we possibly have known that it would have been to this extent, et cetera, et cetera, right? Like, there's only so much scenario planning you could possibly imagine, like, we're not imagining the situation where, like, aliens take over the world and we need to pivot our industries to meet the needs of our alien overlords. Like, that's not the scenarios we think about, you know?Matt It's really good examples. It's, you know, COVID is a great example, because how many organizations looked like geniuses for building shiny new buildings until the moment that nobody was in them, right? And now, and we can look at them now and say "what idiots!" It's like, well, they were brilliant two days ago. What, which one is it?Jenn Fong Yeah, so I don't think that just, ya know, if you tried your your damnedest, like, I think you deserve a, you know, a pass.Matt Right. And, and again, I think you you've made a really good point, having clarity of purpose, being intentional, on a lot of different fronts. So, yeah, this is basically a long way, and I don't know if you've, if your you've hit the same point that I'm at, I don't really believe that it's all that important to look for a direct causal relationship between good governance and good, let's say financial performance, or even good organizational performance. I think good governance can be measured by experiencing it. But it's hard to measure in other ways. And we can measure compliance, we can measure operations, governance is something different. Sadly.Jenn Fong I think that in the practicalities of it, it is not important. But in the terms of everyone understanding it, people not in the field understanding it and viewing it as important enough to consider, or like to think about things that way, then I think sadly, that could be one piece of evidence that they need. For some people. Different people need different, you know, reasoning to compel them to change their minds or to think about things differently or whatever. But like, I bet there's probably some subgroup that's like, show me how this is related. Show me why should I bother. Show me why I should put some energy time resources towards thinking this way.Matt Yeah, this is one of the things that I like about framing governance around decision making is that there's a lot of really good science about, we talked about this up front, right? I don't know if the TikTok thing has science behind it, but let's say it does. Certainly the temperature and lighting do. Certainly there's a lot of stuff about people making decisions with incomplete information and all that stuff. And so we can say with confidence, "yes, these conditions do affect our ability to engage effectively in decision making as individuals and groups." And someone might say, "Well, how do decisions affect, you know, the performance." And you'd just say, "don't be an a*****e!"Jenn Fong Tell me why we need a decision for success!Ground-Up Governance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.Matt VOYou just heard a great example of why Jenn really stands out to me, especially as a consultant. There's a compulsion to walk into a room as a paid advisor and start by taking a strong stand about what's right and wrong, good and bad. And to impose that on your client from the start. Jenn's already got this sense of yes/and that I think, is critically important to actually make a useful difference in corporate governance. Another great example of her cool combination of curiosity and willingness to change her mind came when I was about to wrap up our interview, and she asked if we could talk about one more thing.Jenn Fong Like, for example, I was thinking, I think all chairs should be trained, for one.Matt I'm very interested in this. Okay, just say more, because I'm actually a little confused right now. And I'd love some clarity about what training actually helps a chair be good.Jenn Fong Right, I know. Even as I say that, it's like in this ideal world, there would be a chair of school, and then... No, no, like, what kind of world am I living in? If governance is going to be a tool for helping organizations succeed, then it feels like we need to change a lot of minds about what governance is and how it works, et cetera, et cetera. So how do we get there? And what is an efficient way of getting there? And I think one way would be, if at least the leaders on the board are using that mindset, then they could guide the other x number of people on the board towards that. So then, if that's if we think that's true, how do we get leaders to think that way? Would it be something? and my first thought was like, I don't know, maybe there should be a course. But not that, you know, I know, like, theoretical in class learning is not how practical applied, like things happen in real world. But...Matt I don't have I don't have a problem with that. I don't think that's... but I think what's unclear to me... Well, I have I have internal clarity and confidence in my own opinions, but they but at the same time, it's just my own clarity. And my own opinions. It's one jerk's opinion. And I could with a lot of, with overconfidence go out into the world and say "every chair should come and spend a day with me, and I'll teach you how to be a great chair, because I know what that looks like." But that's really just my opinion of what it looks like.Jenn Fong Yes, I understand. Yeah.Matt And there's, there's, you know, I've seen a lot of very well educated board chairs and directors who've taken lots of courses and consumed all of the intellectual property that exists in the world about corporate governance, and I don't know that it helps the behave any better.Jenn Fong Yeah. I think maybe it starts with at least helping chairs see the fullness of their role. Because if they could see themselves past just being a meeting implementer, at like the most basic level, like you started the meeting, and you sent the agenda yesterday. And into you are kind of strategically leading this group of people to think about things over the long term and meeting the purpose, and fulfill your duties as a board. That's like a mind shift for a lot of chairs, because I don't think many know that that's within their purview. You know?MattI do know! And I think I'm going to give a specific example of another thing that I that I think chairs kind of, it's not that they mess it up, they do mess it up, but it's not their fault. It's that there's not the it's not obvious, or why would it be obvious to them that they could do something better. Which is: I've got some people on my board who are so smart, and every time they speak, they add a lot of value, but they're just like, always so quiet no matter how many times I point my finger at them and say "talk now!" And so I've given them opportunities to speak and they never do. And there's where this this sort of really much more aware intentional social and inclusion aptitude matters a lot. And I think there's this tendency to think that that's like beneath a board. Right? "We shouldn't have to do that! Everyone should show up ready to participate!"Jenn Fong Right? Yeah, I know. So part of the... I told you I did that like governance 101 or whatever. And I spent a little bit of time on the importance of culture. And I gave some ideas. And hopefully this was helpful to talk to them. But I think this could be used in other places too. Where, like, there's different ways for conversations to be held, you can do that round the table, where sequentially each person must state something. It puts a lot of pressure on people. And it seems very like contrived. You can do the, like, whoever speaks up first, whatever. We'll point at you you go. You can do Robert's Rules, where it's like the listing, and then you only get a second chance, you know. Lots of different ways. But I think one thing that people could do is to ask the question, and say, I'll give you a minute to think about it. Because some people, myself included, I need that moment to just process and then formulate what I'm going to share and then share it. I can't. I feel less comfortable just being like, here's the question. Okay, now go! I'm probably going to be like, okay, I'll just let everyone else go first. And if I really feel like I really want to say something, maybe I will.Matt Right. I like that idea a lot. I you've actually I take it probably irrationally, I take it even farther, where I usually try to give people like a week to think about it.Jenn Fong Yeah. Yeah, whatever it is, like, I know that's like the ideal where you're like, here's the agenda. Here's the questions. Here are the thought starters. But then sometimes I wonder if they actually anyways, that's an aside. But there's like the, what is it? The 4321 method that I just saw. This wouldn't be maybe useful for boardrooms, but maybe in facilitated, like, workshops, or whatever. You pose the question. You think about it, you talk about it in a group of four, so it's like a smaller, less intimidating group than like a group of 12. And then you break off into groups of two. And then... or is it like 1234? Whichever. Like, you break up into separate groups until you can all collect together, but by then you've already shared your thought with at least two other people in like a... And so you're less, and everyone's already kind of heard it. So we can all just like, get together and share all the interesting ones. And someone's probably going vouch for your idea, because they've heard it.Matt Oh, I love it. And I also think that that's, it's perfect for a board meeting in the sense that, you know, usually we avoid this type of less formal seeming exercise in board meetings, because we believe that it's taking up valuable time.Jenn Fong Yes, yes, exactly.Matt And I look at I'm just like, well, in a small group, for example, we're much it's much faster to process 12 ideas down into two or three ideas. We could do it in, you know, 15 minutes, instead of trying to do that all in one big group. And so it's actually a time saving exercise in a lot of ways.Jenn Fong Yeah it could be. I don't know. throw that into your next client board meeting. Let me know how it goes.Matt VOOne of the most fun parts of having a conversation on the record with a near stranger is that you can almost hear the two of us pushing and pulling against each other's opinions and experiences as we get to know each other and learn. I'm really grateful to Jenn for bringing an adventurous spirit to her governance work. Her clients are more lucky to have her than they likely realize. Once again, thank you for tuning in to Sound-Up Governance and being part of my journey. Please send any feedback, suggestions, vacation tips, cute pet photos or whatever to [email protected] Catch you next time.Ground-Up Governance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Ground-Up Governance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. Continuing the recent theme where my guests have been young people with remarkable paths through and perspectives on corporate governance. This week we have Karim Morgan. Today, Karim calls himself a fixer and a challenge seeker, which having known him for years and years, I can verify it's a perfect description. Although I think it's also fair to say that the challenges find Karim because he's such an effective fixer. In any case we met when he was the board chair at b current, an amazing theatre company in Toronto, about which Karim will tell us more in a second. We talked about his amazing path to the boardroom, the quirks of governance in the arts and a bunch more interesting stuff. Starting with Karim's origin story, which goes like this.Karim Morgan My origin story. Born and raised in Jamaica. My family emigrated to Canada when I was 11 years old. Grew up in the burbs, grew up in Brampton. Went to university, downtown Toronto, and was a professional actor for close to 20 years. Moved to the UK for a couple of years. And I would I tend to say, born and raised in Jamaica, grew up in Canada, came into my own as an adult as a man in the UK. And I've been evolving since then.Matt So can you remind me if I'm, if I dreamt this or if it's real, that there exists a photo of you with Bob Marley?Karim Morgan Oh my gosh, so my father...Matt I didn't dream it!Karim Morgan You didn't dream it. No, no, at one point, my father in Jamaica, worked for the Jamaica Defence Force. And that was brief from what I understand. Out of university he worked for, I think Ministry of Health and then did a stint with in the army. But I don't know if he was an actual soldier, to be honest. Because he was in telecommunications. So he might have been there in that capacity. But I'm not too sure. At one point when Bob Marley was, I guess, I don't know if he was touring or whatnot. But going across the country, his detail was people from the army. So my father got to be part of that. They're going to rural areas. And they pass the district where my mother's family is, is from and I was a baby at the house and we're passing back, they're passing the house. And my father offered, hey, do you want to stop? Do you want some coconut whatever it is. And so from there, it was all contrived on my father's part. And he's like, "Here hold a baby!" Snap.Matt We don't have to tell the whole story of how our paths crossed. Because it's not that's not the important part of your journey. But how the heck tell me how you took from you got from that origin story to being the chair of a board.Karim Morgan Holy crow. I had moved to UK. When I decided to come back to Canada, I realized that perhaps I couldn't pursue acting in the same capacity as before. I was doing okay, but I wasn't doing well, in terms of where I wanted to be monetarily. It dawned on me that if anything were to happen to myself, or like, God forbid, my mom, I wouldn't be able to support us. And it was a wake up call for me. And I don't ever want to be in a situation where I can't do for my mom or for myself. And that meant, you know, some financial stability. Not that acting was frivolous or anything like that, because it really did feed my soul a big part of who I am. But I realized, yeah, I needed that sort of assurance. Stuff that actors don't really want to talk about or want. So when I came back, I was trying to discover what that would be here. And in the meantime, I was getting some offers and one of them was from the artistic director of b current who I admire so much. And she had asked if I was interested in collaborating on something I was like, "not really," because timewise and monetarily, what does it mean? And I think I was also trying to unpack all the stuff that I'd experienced in London, because it was a lot. There was some issues. I think I might have mentioned that one incident with a skinhead. There was just a lot that I didn't anticipate and so coming back, I think I was a little traumatized. And I think I you know, I needed the time to sort of breathe and get my footing. In retrospect, I felt reverse culture shock coming back. I remember walking on Queen Street one time and thinking, "why does this feel so foreign and weird? I know Queen Street!" But feeling you know, like an outsider. Anyway, She asked again and again. And then finally she asked if I would be willing to come and sit on the board to observe at first. So I was like, "You know what? That I can do!" That I'm interested. So okay, sure, it's not going to hurt. Let me come to your board meeting and see what it's all about. And plus, I just sort of discovered what b current was really about and thought, "Wow, if I knew about this company when I was in theater school, or just left theater school, my career would have gone in a different direction." I think I would have taken more ownership as an artist and created more work, felt empowered, you know, to do for myself, instead of asking,Matt Right. Let's pause, then, your story. Tell me about b current.Karim Morgan it started out. The artistic director, founder and artistic director, Ahdri Zhina Mandiela, as a lot of people call it feminist theater. From what I understand the current came from the necessity for Black female artists to have the opportunity to work to, you know, be seen, heard and have their work showcased. And it was a place where they could come, they could create and they could produce. And then that evolved over the years into facilitating other people from marginalized communities, and just people who weren't given the opportunity, who weren't taken seriously. I think now we say that it serves artists from the Black and Brown diaspora. Those who know about it can cultivate whatever they imagine. It's opened so many doors, to, for some of the top Black artists or Black actors, I should say, in the country, have all somehow been a part of b current. It's the home for every artist who feels unheard, unseen, to have a professional setting, and do the work that they know they can do and should be seen. I'm probably not doing it justice right now, but...Matt No, this, I mean, even just that is powerful. And if you don't mind pick up the story where where I paused because you described that point of connection to b current and with Ahdri. What happened next?Karim Morgan So, I showed up to the meeting. And I guess from my experience, like I've sat on different organizations as an advisor, so I sort of expected this formality. And I got to the studio, and it was Ahdri and two other people, and myself. And that was it. So, I was like, "where's everybody else?" And she kind of explained, "Well, we're sort of in a situation where people have great intentions, you know, when people start off, and then just kind of fizzle out." And so the board has diminished and dwindled. And I was like, "oh, but the work, the company does the significance, people should be lining up to be part of this organization to make sure that it doesn't dissipate." And she's like, "Absolutely. I knew you'd get that." I'm like, "okay, so what do we do to make it better?" So we started having conversations about, you know, making sure that the board was healthy. You need that foundation to support all these, the community and also the vision of the company, like, what happens if the three people something happense to them, what happens to the organization, you know? It needs some knees a little bit more formality. And then after a little while, I was sort of appointed as the chair. And I tried to do you know, the traditional thing. You go out, and you talk to the lawyers to see if they, anyone would be interested in being a member of the board, and you talk to accountants and all that. And what I realized is the people who fit that profile weren't necessarily people who understood the art, understood the importance of supporting artists. And it wasn't necessarily people who not to be hokey, but had a respect for the spirit of the thing, right? And so I went to Ahdri because she asked how it was going, I'm like, "Well, I've talked to friends who are lawyers, and they're interested, but I think they just want to have another checkmark on their resume. So I don't know. It's just just doesn't feel right." And she's like, "so what feels right?" And this is why she's such a great teacher in such a great mentor, because she asks the questions that provoke, you know, thought and then and then action. I said, "Well, honestly, I think I should go talk to people who I know I can depend on. People who get it and people who I know will stick around even if I'm not there." She's like, "well then go do it." And that's what I did. I started talking to friends who had a certain level of notoriety, respect, and friends who I knew were intelligent. into a reliable, dependable and had either a direct link to the arts or an understanding and appreciation of the arts. And in so doing, I had, I think initially four people come on. And then after that it sort of evolved and over the years, of course, people life, life dictates this, people came, people went. And then people came who had more experience and great ideas. And it's always been, I would say, an evolution. It's always been an improvement as the years went on. So when somebody decide decided at some point, you know, okay, it's, I think it's time for me to leave, it was never a total disappointment. It was like, Okay, this is an opportunity now to grow. And it's been that ever, it's always been that and that I think, was one of the most rewarding things is to see how it just organically got better and better.Matt So okay, just for context, and you don't have to reveal your age directly if you don't want to, but roughly how old were you when you became a board chair?Karim Morgan Holy crow. I was early 30s.Matt I don't know if I ever met everybody in the same place at the same time. But I think I ultimately met most, if not all of your board members. The average age of board members would be what roughly let's ballpark it.Karim Morgan Around that. And I think we were all in our 30s.Matt That's weird.Karim Morgan Yeah.Matt Right? So what is that just a product of the process that you described? Or was it intentional? What happened?Karim Morgan It was not intentional. And in fact, now that you say it, our Vice Chair at one point, his parents were in town, and they're from out west, and both very active in multiple boards, international boards, in fact. And they came into town, and they were kind enough to kind of sit with us, and give us almost a masterclass. And they were so reassuring. And they said, "What you guys are doing, you don't even realize the level that you are at, most boards, people twice your age aren't even at that level." And we're like, "oh, we're just doing what we think needs to get done and trying to make sure we do it correctly."Matt And they said "exactly!"Karim Morgan Exactly. And they said and all the challenges and concerns that we voiced they said, "Oh, bless your hearts, you think it's unique to you. No, that's universal. The challenges you're facing? It's universal with every board. So you guys are actually in a good place." But yeah, I think nobody was in their 40s at the time.Matt Yeah. And let's be clear, we're not talking about just sort of some random motley crew of young people we're talking about, like, you know, if you made a checklist of the things that an arts world board would want, you kind of had that, right? You had people of and from and for the community, you had legal expertise, you had fundraising expertise, you had all these things,Karim Morgan It all came! It all came because we didn't have it all at first, you know, people were wearing multiple hats, and, you know, seeking assistance and advice from friends and family members, until ultimately, people with their own with those credentials, became part of the organization.Matt This wasn't a flash in the pan for you. You were there for how long?Karim Morgan Ten yearsMatt Yeah, that's a long time to be, and you were board chair for 10 years.Karim Morgan Yeah.Matt So I mean, what happened? That's a long time. Why were you there for so long? What what caused you to decide it was time to go? I mean, that's, that's a pretty big deal, both the duration and the ending of it.Karim Morgan I hope it doesn't sound flippant, but I know what needed to get done. And until it was at a place where I knew it was stable enough, I wasn't going to leave. And not that I kind of got there and sat there and said, "I'm not leaving until..." Because I was appointed year after year. There was a casualness about it, as well, like a there was, we never got too caught up in all the formalities.Matt No, there was a spirit of experimentation almost, right?Karim Morgan Absolutely! We were all learning. And, you know, there was some forgiveness there as well. Like, we knew we're never going to get everything right. But, you know, we also try not to mess things up too badly, which we never really did, which is, you know, fortunate. If I knew about the company at that specific time in my life, I know what it could have done for me. And I wanted to make sure the company would always be in a position where it could offer that to somebody fresh out of school, or somebody in the community who heard about the company, got introduced to the company, to realize that there was that support, there was that organization that would help them, that would cultivate the best part of themselves. And that to me, I couldn't give up on. So when it got to a point where I realized that I didn't have to wear the hat of HR or I didn't have to wear the hat of CFO or you know, and we had people more than capable of doing that, I kind of became redundant. It was a good thing. I remember sitting in one meeting, and I realized, "Oh, I hardly said anything in this meeting, I literally only chaired the meeting." And then I was like, oh, oh, it's that time.Matt VOWe've been talking a lot on the show lately about the reasons why it seems so hard for organizations to embrace the extraordinary potential of young people in the boardroom. I suppose a short answer to that question is that there aren't more organizations like b current and more board chairs like Karim. Sure, he was given significant leeway to build an approach to governance that suited him as board chair and served the company as a whole. But not everybody would have approached the situation with such freedom and joy. One of the first times I hung out with the b current board, we did a session that felt like a delightful gathering of friends. Potluck dinner, comfy furniture, space for bonding and casual conversation, but also a deep willingness to get to work, to challenge each other, to dream about the future. Sounds almost like board paradise, right? But it's not without its challenges, big and small, some of which are almost baked into the DNA of artistic organizations.Matt A typical theatre organization - by typical I mean, sort of generically typical - has a managing director and an artistic director who both report to the board. And the relationship between those two roles is, as a result of them both reporting to the board, a little bit strange. Not bad. Strange. It's unusual in most other types of organizations to have two people at the top of the organization reporting to the board and having really mutually dependent roles, but an unusual hierarchy. So I'm going to put, I'm just going to say that's weird. It presents some unusual challenges, in my opinion. And I'm curious how, to the extent that you're willing to share, how did that manifest, in your experience as board chair, having two people report to you basically, at the top of the organization?Karim Morgan We played around with the organizational structure quite a bit. At one point, we even had Co-Artistic DirectorsMatt That's even more complicated!Karim Morgan Right? But to your point, it was weird. And we accepted it, because that seemed to be the norm everywhere else. So we thought this must be the way it works. But it wasn't quite working. So I put forward the notion that perhaps we could have an Executive Director who both Artistic Director, and General Manager or Managing Director, we changed the title so many times, that they could report to that person, that person reports to the board. And in theory, it sounds great. But some people were a little bit hesitant. It didn't materialize during my tenure. But to my understanding, it's since materialized with this specific company. It did pose a challenge when we had both Artistic Director and Managing Director reporting to the board, reporting to me, because there's always going to be a human element.Matt Especially in the arts, come on.Karim Morgan Yeah. Right?Matt That's mean. But there's a different. There's a different flavor of ego in the arts.Karim Morgan There's a sensibility that you need to have, when you're dealing with artists. There is a certain respect, a certain understanding. And sometimes when I say that, people think I'm saying that artists are temperamental or whatnot. It's like it's, oh, no, it's just who we love art, we... we're dramatic. But there were times where the issues that I was having to deal with wasn't necessarily the work, it would come up in the context of the work, but the root of it wasn't the work. And so it became challenging because it was counseling. And this being a volunteer position, you know, it became a bit taxing. And you want to be sensitive to people, but you also have a company to run, you have that accountability. You've got artists to pay and all that. And so sometimes you want to say, "grow up." But you're not going to say it, right? So you got to be diplomatic and professional and all that sort of stuff. So it was this really tricky balancing act.Matt One of the things that I find about that Managing Director, Artistic Director separation and both reporting to the board I feel like it's an almost unfair burden on the board to try to manage the interests of those two things. Especially given that arts organizations, typically are volunteer boards, and the interests of the Managing Director and the interests of the Artistic Director are going to inherently be divergent from each other. Especially if you hire correctly, you want an Artistic Director who didn't really care about the success financially of the organization and has big ideas, big, provocative, audacious stuff that they want to do. And the Managing Director is responsible for, you know, getting stuff done.Karim Morgan Absolutely.Matt But how is a board supposed to balance that?Karim Morgan Because they're accountabilities are different yet the board's saying "work together and make it, you know, make it wonderful." And there were times where the Artistic Director would say, "Well, why is why are they being so difficult? Like, well, are they being difficult? Or are they informing you of the challenges that they're facing to, you know, sort of, I don't know, make your dream a reality or you know, your vision come to life? There's, there's certain checks and balances that they have to take into account? So it's not just a yes or no, it's not that they're trying to sabotage your idea. But trying to communicate that right, or trying to get that understanding is challenging sometimes. And likewise, you know, if the Managing Director said, "well, the contracts seem a little bit odd, and or I wasn't really looped into this conversation," and then you find out that oh, oh, it was just that, you know, just that. A conversation. like, oh, well, it has to be formalized in a contract, which the Managing Director, that's their role, so you kind of have to follow suit.Matt It's this like, you know, very complex tension between, you don't want the the administration of organization to stifle an artistic vision. And you don't, you can't enable every element of an artistic vision, no matter what the cost or whatever, no matter what the trade offs. And having no buffer between that and the board is it's just a lot to ask.Matt VOSo after spending 10 years as a board chair with all the messiness you just heard about, I was curious to know what, if any, ambitions Karim has to get back into the boardroom in some capacity. I mean, it's been two years, so I figured he'd either be itching to get back or too traumatized to even think about it. So does he want to give it another shot?Karim Morgan Absolutely. But I think I definitely need to try something else. A different discipline, a different field, a different perspective altogether. I think I'll always have the connection to the arts. But...been there done that. So yeah, yeah. Ready for another challenge,Matt I'm gonna oversimplify for the sake of making a point. But you know exactly what I mean. One of the ways that Karim and I bonded was we like nice things across many different intersecting axes, including that we've got a nice bottle of bourbon on the table between us right now. And you're, you're on to a new interesting thing that is all about keeping people in fancy stuff. So tell us about that.Karim Morgan Yet another challenge, something I've never done. Launching a new venture with my former boss, we're both launching what we term experiential retail. So we're merging two things that we like a lot. Which is, whenever we, you know, went on trips, we always made sure that our executive team not only did their work, but they also enjoy themselves. So we'd always choose somewhere nice. And we'd also curate the experiences while we were away. So whether it be dinners or an experience or taking in the arts or something like that, there was always something unique and something great. One of the things that we would do is we would go a few days before everyone else. So we would check out all the restaurants, find all the nice things. The nice shops and whatnot. So we've combined both of those. We're calling it Catherine's Chateau and it's going to be launched in Collingwood this summer. And it's two things in one: it's a retail store, and it's just going to be homewear nothing major, nicer things for the house. And we're coupling it with a champagne cafe. And so you'll have the opportunity to come and try different champagnes. What we're planning to do is cycled six champagnes at a time and just a limited menu to not make it too overwhelming for us. So you can come you can shop you can drink, you can drink you can shop and just have a great time. So of course, like I said, it's a great challenge for both of us because neither Catherine or I have experience in you know, food and beverage, but it's been going well, so far. Some challenges, but nothing that you know, insurmountable. So yeah, pretty good.Matt This is a really good example of you not being afraid of the stuff that would make us mortals overwhelmed. And we when when we met downstairs, we're at my office right now. And when I met Karim on the main floor today, he was in the middle of a phone call, and it's a phone call or conversation.... I've been on the other end of with you before, and I've heard you deploy this type of guidance to other people before. It's, I mean, if I was going to be really mundane about it, it's your natural coaching tendency. The management of of intense personalities or the deployment of good advice in the in service of managing difficult personalities, and giving people new vocabulary to use to help people feel included and comfortable, even if they're kind of jerks. Like, is it as obvious to you how good you are at this as it is to me?Karim Morgan No. But I've heard it from other people. So I guess I have to accept that it's one of my strengths.Matt Yeah. I mean, it's almost like you dispense this type of guidance effortlessly, which is probably how you ended up a board chair without even realizing it.Karim Morgan Probably. Me and my big mouth.Matt Yeah, right.Matt VOWhat an amazing privilege to know and chat with Karim, and to have had the chance to see him in action as a board chair. For the past year or so, I've been comparing great board chairs to great dinner hosts. And it never occurred to me until editing this podcast that Karim and his work at b current may have, not so subtly planted that seed. And how amazing is it to think of this amazing group of young professionals dedicating their time and talent to govern this cool organization? Not because it was easy - it wasn't - or because it's lucrative or glorious - definitely isn't that either. Or even because they're hoping to pad their resumes with board experience. No, they believe in the purpose and impact of the organization and are eager to bring a spirit of experimentation. To take chances, to make mistakes, to grow and to learn. Thanks to Karim, for cultivating that environment, and for taking time to chat with me. And thank you for listening to Sound-Up Governance. As always, please send your questions, ideas, restaurant recommendations, cocktail recipes, and anything else to [email protected]. Until next time. Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

If you want to watch a VIDEO version of this episode, click here.TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. It's episode 31, which is part two of a two part conversation where Nate Schmold, my Ground-Up Governance partner, interviews me about the corporate governance stuff that he's interested in. And it's really cool to understand what's int… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. Once again, my guests this episode are Alexander Sinora and Perry Chuinkam. See, I told you I'd have them back. When they joined me a few weeks back for Episode 25, we learned about the Black Wealth Club and the work that it's doing to elevate Black Canadians... and everyone else as a result. What we… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance and to part two of my inspiring conversation with Chih-Ting Lo. If you haven't listened to part one yet, trust me just pause this right now and scroll back a few posts and check it out. You'll meet a young corporate director and entrepreneur whose work is at the intersection of mining and decarbonisat… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. This week's episode is part one of a super fun conversation with Chih-Ting Lo, President of EELO Solutions, who -  and I know I say this a lot -  is an absolute superstar. It's barely worth me describing her journey or credentials, because she's a great storyteller and it's way better to hear it in h… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. I'm increasingly grateful to Sound-Up listeners for your willingness to follow me on what really has been a bit of a meandering journey so far. A lot of what happens on the show is at least a little bit spontaneous, and it's been so fun to have an excuse to get to know my friends a bit better while a… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. This episode ended up being a bit less polished than normal. It was super early in the morning, and I didn't have most of my typical recording setup, which is all good because I was so excited to talk to my guests that I wasn't going to let any small obstacles get in our way...even if the flow and au… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VO Welcome back to Sound-Up Governance. Unless you're brand new to the Ground-Up Governance platform, you already know that this whole thing is basically an equal creative partnership between me and Nate Schmold, who does all of the illustrations and other brilliant visual goodies. But you know what? As much work as Nate and I have done t… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Matt Welcome back to Sound-Up Governance. My guest for this episode is Nancy Whipp. Nancy has worked all across Canada and Europe. She's been an athletic therapist, an accountant, a senior executive and now a corporate director for a bunch of different cool organizations in New Brunswick, Canada, including being the chair of the board of the Greater Mon… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt Welcome back to Sound-Up Governance. We've talked a lot on the show lately about education for corporate directors. Well, today's guest Beverly Topping is one of the OGs of Canadian director education. She was the CEO of the Institute of Corporate Directors when it launched the Directors Education Program back in 2003. Today, there have b… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. This is Matt Fullbrook. And honestly, I continue to be kind of stunned by the brilliance of the people who are just, you know, around...everywhere, like one of my oldest friends in the world Sander Trestain. The headline here is that once upon a time Sander moved to the United Arab Emirates with two … Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt Welcome back to Sound-Up Governance. Last week we ended on a cliffhanger.Paul Smith Okay, so given, let's let's assume that is the case, then how and what should we be educating our boards on?Matt That's my buddy Paul Smith from the Future Directors Institute in Australia. In the first two installments of our chat, we've talked about the … Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. This episode is part two of what it turns out will be a three-part adventure featuring Paul Smith of the Future Directors Institute in Australia. Paul came by my office in December 2022 to chat about, well, literally anything that crossed our minds over the course of a couple of hours. Last time, we … Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPTMatt VOWelcome back to Sound-Up Governance. I'm Matt Fullbrook. And as much as we all like to imagine that we're one of a kind, it turns out there's someone who's basically 99% the same as me when it comes to corporate governance stuff. His name is Paul Smith, and he calls himself a "boardroom futurist." Not coincidentally, he's also the found… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Link to OSC’s definition of SROLink to cover of Led Zeppelin’s Ramble On by KC Roberts & the Live RevolutionTRANSCRIPTMatt (VO)Welcome back to Sound-Up Governance. Today's episode is part two of my hang with my great friend and the new chair of the Ontario Securities Commission, Kevan Cowan. If you haven't listened to part one, what you missed was an aw… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

TRANSCRIPT:Matt (VO)Welcome back to a regular old episode of Sound-Up Governance...Not! You guessed it, this is the second episode of... ArguMatt(?) where, as promised, I'm trolling myself. There's a lot of juicy stuff to choose from considering how much corporate governance content I put out there before even having a confident understanding of what go… Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe

Thanks again to Jamahl Evans, Tiziana Casciaro, Judith Athaide, Andrew Escobar, Lisa Oldridge, and the Dumpling Gang for their willingness to take this journey with me.TRANSCRIPTMatt (Voice-over)Welcome back to Sound-Up Governance. Heading into the end of 2022. I realized that I have so much cool and unused material from the … Get full access to Ground-Up Governance at groundupgovernance.substack.com/subscribe