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Webinar: Governing for growth
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Why traditional governance does not cut the growth mustard
Do you have the feeling that your board – whether you are in it or not – does not quite fit the aspiration of your company and colleagues? Is there a different way to think about boards and governance?
In this webinar, you will hear a provocative view on why the traditional model for governance is no longer fit for purpose and a discussion on how it can be meaningfully improved.
Our seasoned - and diverse - governance professionals; Serge van Dam, Steven Bowman and Anna Pham will discuss the five tensions of traditional vs growth-oriented governance models.
So, hi everybody, welcome to our Governance Made Easy webinar today, titled Governing for Growth: Why Traditional Governance Just Doesn't Cut the Mustard anymore. Today we're joined by a very special guest, Serge Van Damme. It's his first time with us, so welcome, Serge. And we have Anna Fan from Australia and Stephen Bowman from Australia also. My name is Sean, Sean McDonald, and I shall be your moderator in the background for the next 40 to 45 odd minutes. Firstly, though, thank you for attending today. We always appreciate the effort you make to be here for our live webinar events. During the session, if you have any questions, which of course we hope you will do, please try and use the QA button on the toolbar. It just enables us to keep a track of the questions as they're coming through, and we'll try to get many through as many of those questions as we have time for through the session. And finally, if you stay through till the end, which of course we hope you will do, we have a really short one-minute survey at the end of the webinar, which we would love your feedback on. It just helps us uh bring together the relevant content and presenters for you week after week. So I just draw your attention to that at the end. For those uh not too familiar with Board Pro, we are a board software provider, sometimes called a board portal, and we serve just over 35,000 users around the world, around about 4,500 boards and about 8,500 committees around the world. And we enable organizations to prepare for and run their board meetings more efficiently and effectively and deliver more impact and value for the organization with less time taken to deliver those particular outcomes. And as much as we're a we are a board software provider, part of our wider mission here at BoardPro is to make the fundamentals of governance free and easy to implement for all organizations, but especially those organizations with resource constraints. These free webinars that we put on every week on Thursdays, uh, and the many templates and guides that we have on the resources section of our website are a really good tangible example of how we look to achieve our mission for nonprofits and small to medium businesses around the world. So for the next 40 odd minutes, 45 odd minutes, just sit back and relax and add to the discussion by asking as many questions as you would like in the QA. Uh a full recording of the webinar along with the slide deck and transcript will be available in the community portal later on today for you to download. So let's get into it. Let me uh start by having Serge introduce himself to you all. Over to you, sir.
SPEAKER_03Awesome. Well, thank you for having me and Stephen and Anna as well. Uh, my name is Serge Van Dam. I'm an early stage investor mostly in software companies. So I live and breathe the rough and tumble of high growth governance, I guess, which is very different uh to traditional governance and the nonprofit sector and so on. Um so that's really my background. I am a marketer uh and a salesperson originally, so I come from the growth side of the business as well. So that's me. I'm based in New Zealand, um, but all the companies I work with are global and intent. Fantastic. Stephen, over to you, sir.
SPEAKER_01Hello everyone. Steve Bowman from Conscious Governance. I've been involved with boards and CEOs, either as a CEO director or a chair of boards for close on 35 years, and uh have learnt some of the most amazing techniques from some of the best boards and some salutary lessons and stories from the not so good boards. So I look forward to sharing some of those as we go through today. Anna, to you.
SPEAKER_00Fantastic. Thanks, Stephen. Hi, I'm Anna. I'm a director at Resolve Consulting. So Resolve has been operating uh for 23 years now, and we serve the governance and management needs of for-purpose organizations across the community sector. And so our areas of specialty interest are governance, leadership and people services, as well as financial consulting. So uh similar to Stephen, have uh plenty of war stories to share as well.
SPEAKER_03Take it away, Sidge. Let's get on with it. All right. So look, uh, every time you shop to an AGM or you read uh prospectus or an annual report or watch an investor presentation, and I'm talking mostly in the private sector, obviously, slightly differently in the nonprofit or government or government proxies, they say we're here to grow shareholder value. Um, and then you look at the composition, and I just did a quick uh Chat GPT search a couple of weeks ago for the NZX50, New Zealand's 50 largest uh listed companies. And of the directors of those companies, 43% are in the finance and accounting function, 20% legal, but in each of sales and marketing, it's less than 5%. Well, if you're serious about growth, why don't you have growth people at the board table? And I was reminded of this uh probably eight years ago. I was dragged into a technology board. It was two accountants and a lawyer, and they said to me, Look, we're having a lot of growth problems. We think it's the CEO. He's not really fit for purpose. And I'm like, could be. But uh there's two of you guys who are accountants, one of you guys who's a lawyer, you know, who's the growth person at the table? And you know, they thought I was a an alien, a weirdo, asking them this question, as if growth-oriented people belonged at the board table. So, you know, this is today's really a provocation. We welcome your really challenging questions. Uh, we're gonna go through five tensions that exist in uh high growth businesses versus traditional boards. Uh, but please uh you know put your questions in the chat. We really want to get as much interaction as possible. Anna, Steve?
SPEAKER_01Yeah, look, I think the the the whole issue behind here is we often have boards that are made up of people, for example, in the not-for-profit sector from the same sector, from the same uh profession, from the same trade, whatever it might be. They don't look outside for that growth mentality. And growth isn't just about dollars, it's it could be about services, services, could be about influence, it could be about, you know, how do we make sure that we are uh growing the sector so that everyone in it has a future, uh, which is not a bad way of looking at it. So this notion of having people around your board table who have that growth mindset and the track record of actually helping make it work, I think is well worthwhile for the board to consider when they're looking at board makeup and succession planning. Anna?
SPEAKER_00Yeah, no, absolutely I agree. And I think that one of the things is it's actually a bit of a misnomer. So the the not-for-profit sector, I think often does itself a disservice in terms of thinking, well, all we need to do is just continue to exist. And I think that when you take a lot of the boards that we work with will come at it from the perspective of stewardship. So how are they stewarding their resources? And so they're monitoring, you know, finances, they're managing compliance, they're reviewing risk, etc. But actually to your point, Stephen, around it's around increasing impact. So it's around, you know, are we reaching more people? Are we having a greater impact with those communities? Are we being more inclusive, reaching people who are currently underserved or excluded? Are we having a stronger influence from an advocacy perspective? Um, are we growing capability? There's all of these ways to reframe growth from a purely commercial perspective and actually considering, well, this is about furthering our purpose. It's about having impact of our mission.
SPEAKER_01And there's absolutely no reason, Furge, they can't have both, increasing revenue and increasing impact.
SPEAKER_03For sure. Yeah, and when we talk and when we talk about growth and value creation, as you guys have said, in the nonprofit sector, it is about delivering more services, better services, more impact, more people affected, more inclusion, all of that stuff. I think that's uh that's a great shout. And it leads us well into the first of our five tensions that we're going to discuss. Many boards believe their job is to protect status quo or protect the existing assets of the business. And that's true, there's a fiduciary duty to do that. But actually, uh stakeholders and shareholders care a lot more about value creation. And so I think this is sort of a misnomer, it's a misunderstanding in them in the role of boards. And I think about me personally, I've only been asked once to uh consider joining a public listed board, and I asked them to send me the last the agenda for the last three board meetings redacted for any confidential stuff. And it was all backwards looking preservation compliance stuff. It was very, very little, almost nothing, about how do we create incremental value, what are the options, what are the, yeah, what are the strategies we might employ. And so I I think there's a sort of misunderstanding about what the goal of the board is. And my view is that it's about value creation, and that comes with taking some level of risk, and we're going to talk a little bit more about risk later, but actually, again, just creating more value for stakeholders and not necessarily protecting status quo. If your board is there to protect status quo, it's probably doing the wrong things.
SPEAKER_00And I think that ties in, Serge, with the reality is that any not-for-profit, and you're coming at the not-for-profit lens again, but any not-for-profit that's been formed has a charitable purpose. And so that's actually, you know, it's part of the constitution. It's the reason the organization actually was commenced and started in the first place. And so you're really wanting to have, when you're considering the creation of value, um, are we furthering our purposes? Are our resources delivering meaningful outcomes? Are we, you know, um, if if the organization disappeared, what value would be lost to society? And it's reorienting the conversations around that, I think, is really important.
SPEAKER_03All right, well, let's talk about tension too. Uh what are you optimizing for? Right? So you're aiming your organization at some form of value creation, and back to Anna's point, including the nonprofit sector. Uh and predictability feels like the most uh valued attribute of the optimization. We want predictable dividends, we want predictable outcomes, we want status quo, we want to serve 10,000 patients, 10,000 students, whatever it happens to be, right? So it's this focus on predictability, which for some reason public markets actually do value and boards seem to value a lot. But actually that doesn't give you any strategic options, right? It doesn't actually allow you to get liftoff and have transformational impact, whether that's economic impact on the form of market cap capitalization or dollars in revenue, or how many students or patients or people you're affecting, right? It doesn't give you the choice. And again, my view is often these boards are optimizing for the wrong thing, right, in order to maximize their shareholder stakeholder impact. And I think if you can reframe your board to think, how do we optimize for learning and accelerating so that we can have more impact into the future, whether that's economic or not, right? That allows you to take a different set of decisions, be more effective, and it's actually more interesting. I can say that as a director of a whole lot of companies, right? My job is much more interesting because I spend my time on this than creating predictability. Stephen, have you got any different viewpoint there?
SPEAKER_01No, well, I'm gonna reframe it a little bit too, because um, what boards seem to value the most is the predictability of their budget. So the the the the reporting seems to be how are we going? You know, are we above? Are we below? You know, how good is the budget rather than this learning and acceleration mindset, which would be look, let's understand within our budget, we have some things that might fail. We don't know, but we're going to give it a try anyway. We've got an exit scheme if we need to. But the really good organizations these days, particularly in the sectors that I work in, are those that are willing to trial something out and learn from it and trial it again and get a contract with another type of organization and trial that out. And at the same time, they're actually building up the resilience of the staff, the ability to cross-fertilize between various departments. The most boring boards are those that are so focused on the finances that they're not looking at the finances, they are actually an indication of what we're doing or not doing. You know, by themselves, the dollars mean nothing. What we need to be looking at is what are they actually telling us that might be happening into the future? And how can we leverage off that in advance of needing to? I know.
SPEAKER_00Yeah, no, I think that is such a great point. And um, we try to bring, so when we're doing uh strategic planning support for the organizations we work with, we really encourage them into that more agile strategic planning space for this reason. Because Stephen, what you're talking about there is essentially the key concept that underpins agile, which is safe to fail. Like let's give things a go. Um, you know, I'm reminded of only fools and horses and Delboy is saying, you know, he who dares, Rodders, he who dares. It's that sense of actually we need to give things a go. We need to try things, we need to uh consider the opportunity, and what's more, um, the communities that we're serving will change. And so, therefore, changing our approach is necessary to maintain relevance.
SPEAKER_03Great. I did not expect an only fools and horses quote on this uh session, but uh I'm surprised already. Excellent. All right, well, then the third tension is really around time horizons. Um and obviously, you know, board does function to some extent as an audit, uh, have an auditing perspective and responsibility, and again, a fiduciary duty around that, whether it's a commercial or non-profit. But it's very retrospective, uh, most of the time, has a quarterly mindset, right? Versus what could be true in the future. And I think a really easy test uh to see how high caliber your board is what share of the time are you looking backwards versus looking forwards? Uh and when you're looking forwards, are you looking forward to the rest of the financial year or fiscal year or the rest of the quarter or whatever, right? And how much of the time are you spending thinking about the long term? And my view is really effective boards absolutely uh spend you know as much time as they can thinking about the long term, and again goes back to the innovation reinvention of yourself, right? If you want to maximize your impact, doing what you've always done is unlikely to be the best course of that. Um, one of the tools I found really effective uh when thinking about uh becoming more prospective in your time horizons is this uh the notion, I don't know if people are familiar with the sort of maxi-max, mini min, mini max, and mini-max regret, but to think about what's the best possible scenario for us in the long term, what's the best risk management model that we could do, what's the one that's likely to lead us to the least regret in the long term? And to build multiple models rather than to which serve to will help you avoid uh being scared of different uh scenarios in the long term. So quite often if you ask a traditional board, you know, where do you see your organization in 10 years' time, they'll typically say basically more of the same, slightly bigger, slightly more efficient, slightly more something. Right. And then you ask them what scenarios have you considered? Um and quite often you get very blank stairs. So again, I just think really effective boards, it doesn't really matter if you're in a small uh nonprofit or if you're in a large organization or you've got a you know you're own small business, is to have scenarios with different time horizons and think about what might be possible. And so I really encourage you guys to think to just evaluate yourself, ask yourself, are we spending the right amount of time thinking about the past and taking a core-led perspective versus the long term?
SPEAKER_01The issue of scenario and scenario planning, I think, is is really undervalued by boards. Um, I've seen, I've come across many boards, we do a lot of governance reviews, and probably every single one of them, with one exception that I've come across, have never heard of scenario planning, let alone used it. And if they have heard of it, then it's typically, oh, we need to come up with three scenarios and choose one. And that's absolutely not the purpose of scenarios. A scenario is to say, what are these possible futures? What might they look like? What would we need to put in place to prepare for any one of these futures and which ones are worthy of us doing, whether or not this particular future comes about or not? And the purpose of scenario planning is to get you into a five or a 10-year time horizon without having to try and guess what things might be, but look to see what possibilities are and what might make sense for us to put in place despite whether that scenario occurs or not. And that by its very definition leads to greater innovation and therefore value creation.
SPEAKER_00I think it's a great point, Stephen. One of um Resolve's major client bases is independent schools. And we're definitely seeing this at the moment in the independent schooling sector, particularly around that. What are the scenarios that we're looking at in relation to funding? So independent schooling and government funding in Australia is a very hot topic. And having that perspective of, okay, as this changes, what do we need to put in place now so that we are prepared for the future? And I was chatting to a school business manager and he was talking about he's very, very entrepreneurial. He'd come from running his own businesses to being a school business manager. And he was just saying about, you know, there's all of these different ways that we can actually create value, but moreover, secure um fiscal stability and financial stability into the future. But we need to be making these plans now because if we wait until we're up against the wall, um, the it's a significant risk to the organization. So I think looking forward and considering those scenarios is absolutely vital.
SPEAKER_01Bird, can I just address uh An's comment or question that he's got in there, which is in membership-based organization, how much should the board communicate with the membership, report to them, and include them in deliberations? Um with membership organizations, and this could also be with stakeholders, it doesn't have to just be membership organizations. It can be very useful to have them included in developing up some various scenarios. So I know of one organization, for example, where they've got thousands and thousands of members and they ran some town hall meetings and developed up some particular scenarios from that. And the key thing that came about from that was the increasing um need for connection. Uh, and that was then used to build in strategy and then tested against it. So uh you're not asking member permission for stuff like this. What you are is asking for their involvement and their contribution, but there's different ways of doing it than the old traditional strap planning or or uh or just holding general meetings about things. So I would recommend to all organizations look to see how you can get your stakeholders or your members involved in what might things like be in be like in 30 years? What would you like to see in 30 years? Not the process, but what's the outcome? What would society look like if we were to do this really well? Very powerful techniques to use. Surge.
SPEAKER_03Yeah, um, and actually um that's a great question because I I it reminded me of my uh first AGM I ever attended, a commercial AGM for a public listed company. I expected them, you know, the CEO and the chairman to show here's the five scenarios or here's the options we've considered, here's what we're doing. And it just wasn't there. So there's obviously the benefit of engagement that you've mentioned, Steve. But actually, you're much more likely to have uh support from your membership base if you've at least considered options and alternatives. Right? If you've just considered more of the same, you're not a very credible intellectual, in my view. Uh you've just done the easiest possible job, which is replicate this year's budget, this year's outcomes, add a bit of inflation, whatever it happens to be, and then present that as the plan. I just think that's actually it doesn't make you look smart either.
SPEAKER_00It's almost using it like an advisory council, I think is what you're saying there, Surgeon, in that sense of at scale. Yeah, exactly. There is a lot of collective wisdom here that we can garner. Um, I think that it is important from a governance perspective, though, to understand the limits of um responsibility in that as well. And so recognizing that you can often have members who would really like to have more of a voice. And um I would encourage them in that instance to join the board rather than trying to run the board from externally.
SPEAKER_03Yeah, good shout. Uh Grant asked the question, what's the percentage of forward-looking versus retrospective? I mean, to some extent it does depend on the growth posture and the space you play in. You know, I work in AI companies. Uh, you know, we have to think a lot more about the future because our, you know, there is no steady state versus if you're delivering medical services in your local community, you know, there's an element to which service delivery management is really, really important. So I don't want to say you should not even think about that. Um so it's hard to say. But look, I think if you're not spending Spending a quarter of your time as a board thinking about the future, you're probably doing your stakeholders a disservice. And that includes your customers and your members and your users, because they don't want, you know, they want presumably they want something better, right? If I fly in an aeroplane or get a medical service, I'd like my hospital to be thinking about how they could do it better in the future. And I know they're not.
SPEAKER_01One of the techniques that can be quite useful is in any board, and they can use this, is when someone comes up with something that is essentially looking backwards or is just a report on status quo. A great question any director can ask is what's a strategic issue in this for us? And that very, very simple question actually almost every time will raise the level of conversation to something that's much more forward-looking than just the event that was reported on. So we've done we've had a really good conference. Okay, well, what's a strategic issue for us in that? Well, if we are going to grow, we probably need to put in place uh the ability to do that. What are the different ways that we could look at that? Is that worthy of having a task force look at how we could actually grow this in ways we'd never considered before? It's a very simple question. But what it does is almost every time it will elevate the conversation towards a longer timeframe rather than just more of the same.
SPEAKER_00And tied in with that, uh, I think that one thing that we encourage our clients to do is to incorporate a purpose on a page or strategic overview into the board papers. And so what that's doing is if at the very beginning of your board papers, you're orienting the director's view towards the strategic direction of the organization, but also the purpose, those questions will be more front of mind. So that's the lens that we're encouraging the directors to bring as they navigate the board papers, as they're reading the board papers, and then their posture as they come into the board meeting itself. Having space on the agenda, uh not just allowing it to be dominated by uh retrospective uh compliance-related activities can be incredibly important to actually allow and facilitate these conversations to take place.
SPEAKER_03Yeah, great call. All right, tension four. Uh this probably for me is the most uh triggering, so to speak, is the weird attitudes towards failure, in my view. Um, and we can use different euphemistic language, but really a lot of boards spend a lot of energy and a lot of the company's resources or the entities' resources figuring out how to minimize or avoid viability altogether. Right. It's quite an holistic attitude towards failure. Failure is the principal source of learning, right? And actually over time, your competitive advantage as an organization, right? If you want to be best at delivering, you know, maths tutoring to 14-year-olds or medical services to an underrepresented uh part of your society, or build a great coffee shop chain or whatever it happens to be, right? Optimizing for learning, right, or seeing failure as a source of learning is where your competitive advantage will come from. It will be where your unique insights that the rest of the market doesn't have come out of. And so avoiding liability as a principle is actually a polar opposite and a very unhelpful thing. And so again, if your board is spending a lot of time about uh discussing how to minimize and mitigate liability, which again appreciate there's a fiduciary duty, appreciate there's gonna be lots of regulatory and legislative uh things in your face, right? But they come at the direct cost of learning and having a point of difference in your competitive positioning. So I think this attitude towards failure. Yeah, so you guys take care of that.
SPEAKER_01That that that very point um really should be highlighted and hammered home during the induction of new directors coming on. Um the the issue often is that the culture of a board can often be about the avoiding liability uh mindset. And the reason for that is because it's always been that way. And the best way to change that is not only with the existing board, but looking at new directors coming on as well, too, because I've seen in too many cases a new director comes on and they think their role is to put the blowtorch to the staff and to and to point out where they're failing and to show them that they're not doing it the right way, as opposed to, okay, well, this was different than what we thought. What did we learn from that? How can we leverage this? And if you look at risk management, for example, risk management is never about um mitigating risk. What it is is about understanding the risk, managing the heck out of it, leveraging it, and looking to see where you can earn revenue from it. And that's true risk management, as opposed to the compliance mindset that uh that a uh risk register shows. So one of the simple techniques that you can use is on your risk register, have two extra columns, one that says strategic advantage from managing this risk well and income possibilities that you could actually see where you could uh generate some revenue, contracts or money or whatever it might be. And it starts to change the culture. So, Serge, I think you've nailed it here with this avoiding liability versus source of learning. Too often the culture of a board of a board does not support a source of learning mindset. And I think that needs to change.
SPEAKER_00And I think that having that um the boundaries around that as well. So having good risk appetite statements, getting the board to actually wrestle with this well, so that there are those guardrails in place so that you can have the rapid feedback and the honest learning along the process, um, but not because of course, like you say, I mean, I um spend a lot of time working in the early learning sector with the early learning sector. And the the reality is that what they're even learning in that space is that the complete reduction of any risk of harm to children. So for instance, in the outdoor learning environment, um has meant that the learning uh experiences of the children is actually undermined. And so it's the same thing that, you know, from a from a board perspective, of course, you're saying, look, we want to keep everyone really safe. We don't, we have zero appetite for any harm to children. Um, but then recognizing that if you do that, then you're getting rid of all the play equipment. There's no fun. Everybody just gets to sit in a circle and sit still all day. So, in the same way, you don't want to have organizations that sit still and sit in a circle all day because you're wanting to have that furtherance of the purpose, the missional impact, and connecting and serving the communities that we're called to.
SPEAKER_03Great. And I mean, we you've guys both touched on culture of boards. Any other tips on, like, you know, if you if you're coming in, there's probably going to be a handful of people here at least who are going into a new board or an existing board, and it has its own habits, traditions, cultural elements. Any thoughts on um how you might impact or change the culture of the board beyond some of the things we've talked about already? Interested in your experience and that.
SPEAKER_01You want to start, Anna, because this is a soapbox for me.
SPEAKER_00Yeah, I think that um I have found that the uh the provocation, the question in the space. So if there is an established um belief around the board table, speaking into that and just noticing it and going, I uh, you know, I'm aware that we're not talking about this, or we seem to have shut down that topic very quickly, um, would there be worth an opening that back up? Um, being quite, especially because so the example you used is for a new board director as well. Um, and so I would always counsel new board directors to get the lay of the land, not to be, of course, they need to be courageous, um, but to understand and opening up conversation to understand the mindset that sits behind the uh the or yeah, the the beliefs that sit behind the mindset can be really helpful to then be able to come alongside an established and entrenched board to facilitate that cultural change.
SPEAKER_01A couple of tricks of the trade, Serge, um, that boards have found really useful. Number one is structure your agenda to support this source of learning. So if you've got an agenda, then make sure that all the big ticket items are right up front. And then as part of that, you have uh sections that deal with, you know, here are the questions be asking here. Uh, another heading might be what have we learned from other like experiences. So you can start to structure it through the way the agenda's structured. The second part is through using the board, uh, through the reports that come up to the board or the discussion papers to the board. There should be a section in there that says what are the strategic implications of this for us, what have we learnt from past experiences and what have we built into this so that we can learn learn more going forward. So you can actually start to change the culture of the board through both the agenda and the way the reports are written. And then the last thing is to help new directors coming onto the board understand the culture that we want, not necessarily what we've got at the moment, but the culture that we want going forward. Um, because often new directors just don't know and they come in with their own points of view about it. So there's some simple things that you can do that can actually change the culture through the use of the agenda, the use of how we actually structure our board reports and also the induction.
SPEAKER_03Great. All right. So tension five. Um, I guess this is sort of a you know level up or meta perspective, which is what is the role of the board? And uh again, we can we've got different legislation in New Zealand, Australia that defines that. Uh, there's you know dozens or hundreds of books written about it. But you know, and my summary on it is the perspective of most boards is to be a judge and an auditor, so to evaluate whether the CEO and the leadership team have done a good job, and then to, you know, to assess in a relatively stringent and often narrow way, you know, whether the things you've been told are true, and they could be financial, could be impact, could be other things. Uh and those things are important uh to do, but I don't see those as the principal role of the board when you've got a growth mindset. If you actually are trying to maximize the impact for shareholders or stakeholders or users or customers or members or whatever it happens to be, there's a whole lot of incremental value that an effective board can have as a coach to the CEO and the leadership team and a connector. A connector, I don't just mean introductions, but a connector to ideas, new ways of thinking, the sort of things that Stephen and Anna have been sharing. Um and so again, my in my experience, this judge and auditor thing just feels really, really narrow. And I'd encourage those of you who are on the call at the moment on the board again to think of your own participation and how much of your time and energy when you're on a board are you spending as a coach to the leaders of that business versus a judge or an auditor? And that's often quite revealing. And I, you know, I see myself as a board member primarily as a friend, actually, uh, which is kind of a bit of you know, sort of a cheat on coach and connector. And a lot of people say, Oh, well, you know, that blurs the boundaries, and you know, um, you know, what about your fiducial duties? But I just don't see those things as independent, right? If I want the organization to succeed, which is my job, right, I can the best thing I could do is influence those leading it in the right direction. Again, which doesn't absolve me of my fiducial duties, it doesn't absolve me being a judge and auditor, but it does change my mindset and is a massive uh contributor to creating a more growth-oriented posture for the organization.
SPEAKER_00I think that's that I think sorry, go on, Anna. Um I think that there it's such an important point as well that you're talking about. Um, you know, that that idea of friend, we will often talk about being a critical friend, which you know potentially um names the tension a little bit more uh more clearly. But I think that uh one of the things that I think boards I really encourage, if you're wanting your organization to feel safe to fail, that concept of foundational friendship, that that expectation of general positive regard between the board and the executive. Um, and particularly for the CEO, I think that a CEO who's feeling harassed and harangued and unsupported is not going to be stepping into a growth space because it's going to feel like survival for them. So everything, every decision that they make, every mistake that they make is going to feel like a survival topic. And so that's going to inherently cause them to shut down that higher level thinking that's needed for that growth uh perspective.
SPEAKER_01Surge, there's a couple of really good questions in here. Rebecca said if you're on boards that you as a board member are inherently governing for asset protection, far more than governing for growth, what's the best way to start instigating for change? Over to you, Surge.
SPEAKER_03Yeah, well, well, I think the first thing is uh, well, there's a couple of things. One is to use scenario planning to say, you know, if we take out a five, 10-year view, what do we think this thing could be, this organization? And that very clearly will surface that you're managing for status quoism. I don't know what you know, we can give it different labels. So that's really, really easy to surface. But I think you have to explicitly surface it. Um, and then the other thing I've done, and this stuff's getting easier with tools like you know, being able to share documents is put in a document, everyone put in a document what they think they're there to do and how much of their attend, you know, what proportion of their time they're there to do, how will they evaluate their own performance? And very often you'll see people will just say, Well, I'm here to make sure nothing gets screwed up, right? That's big, they'll say some version of that, and you're like, Well, is that the you know, and we could agree that that's what we're doing, but it becomes explicit and pretty obviously very narrow. So I'd say the two things, yeah. One is to declare what you think you're there to do, and to do that not as a group, but individually in a shared document or a similar process, or you know, post-it notes, choose your method, and that will surface it really quickly. And then these scenarios which tell you if you think that the future, you know, five, ten years out is going to be exactly the same as today, that's a massive clue that you're only thinking about preserving status quo. That's for me what I've experienced. I don't know about you guys.
SPEAKER_00I saw a really interesting sorry, Stephen. I saw a fascinating uh statistic. Um, I was at a governance conference this last weekend, and uh there was a statistic that was raised that was essentially talking about how the fact that there will be one divergent voice at the board table. And that a key role for, so in the example of this person who is wanting to see a greater growth orientation, um, if I would encourage them to hear for those threads, to hear when people start, if anyone makes any kind of a comment that's about growth or a future orientation, I would be doubling down on that and raising that back up and saying, you know, I think that's a great point that Serge raises there. Maybe we can open that up in a bit more detail. Because as soon as that if there is one voice that raises an opposing view and no one comes alongside that, it's very difficult to bring about that change in the board table. And so there's part of um A, having the, you know, the voice yourself, but B, strengthening the voice of others is really powerful to create that change.
SPEAKER_01Andrew and David have just made a comment on the QA there, which is sort of extending the theme on it, not questions so much as commentary that um I think we've covered. Serge, back to you.
SPEAKER_03Cool. Um, all right. I mean, one of the terrifying things I encounter still on a day-to-day basis when I meet people who direct as trustees or similar sort of things, I kind of ask them what they think their job is. And they waffle around for a bit and then sooner or later they say, Oh, yeah, our job's to you know, minimize the risks of this organization. In other words, to write down the risk register to zero so there's nothing on it. And of course, you know, what happens when your risks are exactly zero is you're doing nothing. The easiest way to have no risks is to do nothing. Um, and so you know, provocation here for those who are either directors or want to be directors is um I guess you've touched on it already, uh Stephen, which is how do you think about risk as a lever, right? Um, whether you do that practically through adding a couple of columns, you know, like what's the strategic advantage of embracing this risk, um, not necessarily managing it down, but actually saying actually as a risk we are prepared to take because it gives us competitive advantage or a future opportunity, right? So it's sort of changing that mindset around risk. And um unfortunately with all the compliance stuff, um uh that's kind of arisen, certainly in New Zealand, I don't know, as well in the Australian market. Um but you know, the sort of risk management minimization, risk register driven governance approach uh is really poor. And it's not just poor for boards and it's boring as well, but it's actually it doesn't help you achieve more for your shareholders, your customers, your stakeholders, your users. Um, I don't know what else you guys might have to add to that.
SPEAKER_01I'm I'm looking at Peggy's questions, she's got there, um, might have a look at that. Beyond increasing efficiency and exploring diverse income sources, any advice for boards who do not have significant issues with these tensions, but are limited by increased costs and no increases to funding? And then she says, thank you. Okay, so you may not like what I'm about to say. However, I'm going to say it anyway. How much money is out there in the world? Now, when you think about that, the only answer that makes sense is that there is an infinite supply of money out there. Now, why is not more of that money in our bank account? And the only answer to that that makes any sense is it's because we've already decided how that money should look. It can only come from contracts, it can only come from these services, it can only come from X, Y, and Z. If we start to question that thinking, then we start to say, well, there's plenty of money out there. Who's got it? There's plenty of money out there. What does it look like? There's plenty of money out there. What if it was totally different than what we thought it would look like? It doesn't come in this form. What other forms does it come in? You know, simple little things like every single government department in New Zealand, Australia, and I guarantee every other country, every single government department at state and federal level has level has an innovation fund. Their biggest problem is spending it because people aren't coming to them with what they would regard as innovation ideas. It's out there, it's just not being used. So the point of view that we take about where our revenue should come from, it can only come from these contracts, or it can only come from uh money being in the bank account. If we start to change our thinking about that, then you start to look at what the other possibilities are out there, because it is absolutely infinite. The only thing that's making it finite for us is our point of view about where it should be and what it should look like.
SPEAKER_00That ties in a little bit, um, Stephen, with the concept that I was having earlier, which I think comes into what are your beliefs? What are your beliefs around risk? What are your beliefs about funding sources? And I really love what you drew out there because it comes into this space of self-awareness and so understanding, well, what are my beliefs and why do I believe that? And what story do I have that means that I go to that place every time there is risk or there is um we shut down conversations around funding sources, etc. And so um, yeah, I just think that's a very important point to draw out that we don't the board is is a uh collection of individuals, and so each individual having the the that awareness um of what is driving them as a board director is also um very important. Apologies, Sean. I cut you off. I've done that a bit this morning, so I'll pass over now. That's all right.
SPEAKER_03Any last comments from you, Serge? Yeah, well, I do want to uh equivalently unpopular viewpoint on the cost side. You know, again, I you can do scenario planning on the cost side, right? Like there's a business I'm I'm involved in. We were 120 people uh 2023, I'd say, and we had a couple lost a couple of big contracts, and we see we've got choices here, and when you know, what could 10 what could we achieve with 10 people? What could we achieve with uh 20 people, what could we achieve with 60 people, you know, or how much money extra do we need to find either in capital or customer contracts to remain at 120 people? And we're now 17 people having the same productivity as 120 uh and profitable. So, you know, you can do that. It's not popular because no one wants to be axing jobs and all of that stuff. Uh and again, I actually think you can bring your staff with you when you sort of think, you know, we've got a particular curly set of situation here. Um we what scenario should we consider around uh different cost models? Um so you can do the same thing. I just uh I you know again, I think on the cost side, many leaders go to status quo. We need the same organization with the same people paying them exactly the same plus some inflation next year and the year after, and the year after that. And I just think that's again not a growth mindset. Again, it's not popular to say, especially in the nonprofit sector or government sector, but it absolutely the same principles we've been discussing today, those apply as well. Excellent.
SPEAKER_02Stephen, anything last from you?
SPEAKER_01No, I think this is a great conversation that hopefully will you know give different perspectives on things and you know challenge status quo a little bit. Excellent.
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