TRANSCRIPT
Hi everyone! This is Matt Fullbrook and here’s a quick year-end episode of Sound-Up Governance to wrap up 2025. This one’s all about questions that kind of baffle me in the governance space. I’ll start by admitting that this has been a really light year in terms of content around here. Sorry about that. The main explanation is that I, along with my Ground-Up Governance ally, Nate Schmold, have been working on a project. Currently, that project exists in the form of a book proposal with the working title The Hidden World of Boardrooms: Revealing the Secrets of Good Corporate Governance. In short, the book reveals some of the absurdity behind the current state of affairs in boardrooms and proposes new approaches to addressing common boardroom pain points, all based in scientific evidence and extensive experience. It’s all very accessible, fun and practical. I can’t say much more about it yet, because we’re still in the phase of figuring out if anyone might be remotely interested in publishing it. So if you know anyone who might want to have a look, send them my way. In any case, as soon as we have that whole thing sorted, you’ll be the first to know. Not only that, but the project itself will give us tons of new stuff to put out on the Ground-Up Governance platform. So if you’re not subscribed, now might be a good time to sign up, for free, and make sure you’re in the loop.
Anyway, this isn’t, strictly speaking, a full podcast episode. It’s like my longer episodes in that it’s scripted, but it’s not as long as normal, and there’s not going to be any weird music metaphors or special guests. Just some ideas. As I said, this one’s about questions that are kind of bugging me. Some of them are mysteries that I hope to explore, and others basically fall into the category of rhetorical questions. Not in the sense that they have no answers, but in the sense that by asking the question, I’m trying to make a point, even if the answer is readily at hand. As in, does Pink Pony Club still really need to be playing all the time, everywhere? The answer, obviously, is yes. But it’s in the asking where my point lies, which is that I’m sick of that frickin’ song. Get it? So here we go. My top five corporate governance questions to close out 2025.
Question #1: Why are we so fixated on question-asking?
I did a whole season of One Minute Governance about this in 2024, but to my great chagrin, it appears not to have had the transformative cultural impact that I’d pictured in my dreams. Sigh. Long story short, the dominant narrative around boards of directors is that they should be question asking machines. Seriously, just Google “boards should ask questions” and look at all the stuff that comes up. There are manuals guiding directors to ask questions about everything from agendas to strategy to nature to revenue generation to succession planning to secret keeping to IT to, well, seemingly everything else. Cool. There are two big problems with framing a director’s role as question asking, and lots of smaller problems that we won’t talk about today. The first big problem is that sometimes a question is just not the right way to get things done. Like, for example, when someone wants to make a point or a statement but thinks they’re supposed to be asking a question, so they shoehorn some complex perspective or strident opinion into the form of a question. Back to the rhetorical question thing, right? Sure, rhetorical questions can be awesome, but are usually pretty brutal when the question is there to disguise a point instead of enhance it. “ Hey John, great presentation about the new rug in the lobby at HQ. I learned a lot. Have you considered any other actually important operational topics that you could present on in the future in addition to or even instead of this fascinating rug stuff?” Like, we all know John’s rug presentation sucked. That’s okay. Not all presentations can be bangers. But a question in this case is probably not the right way to get us to a better place. So, before opening their mouths, directors should have an idea of what they hope to accomplish and then consider what approach is most likely to get them there. Sometimes it might be a question, sometimes a statement, sometimes a standing ovation, sometimes nothing at all. But we have a million articles about questions directors should ask, and precisely zero that I could find about when boards should give standing ovations. The second big problem is that it really sucks being on the receiving end of a relentless barrage of questions. Let me give you an example. There’s a frankly very good interview that McKinsey published a few years ago about boards confronting what they call extraordinary risk. It was in the wake of COVID so you know what the vibe was. One of the interview participants sensibly criticizes directors for thinking they’ve done their jobs just because they’ve asked some challenging questions. She then goes on to suggest that, instead, maybe it should be *new* directors asking simpler questions. She and the other participants offer some examples of huge, mindset expanding questions that boards could ask. Like, “what if we had a Covid breakout in our distribution centers?” Or, “do our safety measures help to protect our organization during an incident and do they preserve its ability to invest coming out of the crisis?” Of course, boards should want to know the answers to these questions. But picture yourself as a senior executive in a board meeting and having a director just plop one of those doozies on the table while everyone around the room is looking at you, expecting some brilliant response. Maybe it would be fine. Maybe it would even be magical. Maybe it would even be magical. Or maybe you’d be like, “dude, seriously?” Sometimes the only difference between magic and a turd on the table is who’s asking the question, or when, or in what tone, or what was going on immediately prior to the question. If it’s the first question, then it might be totally fine. If it’s the 47th question, maybe not so much. Anyway, you get it. Of course, directors are and should be free to ask whatever questions they want. That’s really important. My point is this. Why don’t we also and equally encourage directors to consider lots of other potential approaches to getting good things done in boardrooms? That’s question number one.
Question #2: Why are we so complacent when putting up with boardroom pain?
If you listened to my last episode about board evaluations not working, you might remember me saying that I could just guess, with a high degree of confidence, 10 sources of boardroom pain where most organizations would want to improve in most of the 10 areas.
Why am I so confident? Because nearly every board and executive team suffers through the exact same pain. And that’s despite the fact that they pay eye-watering amounts of money on consultants, lawyers, courses, coaching, and all kinds of other interventions that promise pain relief but never really make things better. If you scour the world for insights on how to fix, say, the balance of focus on operations, strategy, governance and compliance, the range of proposed interventions is really uninspiring. For instance, a lot of people, including my past self, seem to think that shuffling the agenda is going to solve the problem. Schedule your strategic items near the beginning of the meeting. Set aside time for generative discussion. Put your routine items in a consent agenda. These are all great ideas. Seriously. But remember the actual complaint. We’re struggling to balance operations, strategy, governance and compliance. Every organization that I’ve ever met still has the same complaints after shuffling the agenda. That doesn’t mean the interventions are bad, they just don’t solve the problem they were designed to solve. This would all be fine if everyone - boards, executives, advisors, educators, etc. - was saying “shit, we haven’t figured this out yet. It’s been 25 years and we still have the same problem. We gotta try some new approaches. Let’s get on it immediately!” But as far as I can tell, nobody’s saying that about any of the pain points that basically every board experiences. What the butt? This one really bugs me, honestly. I’m not saying I have things figured out, but it feels urgent to me. Shouldn’t we all be constantly coming up with new ideas? Like seriously new? That’s question number two.
Question #3: Why do we think we can learn governance lessons from extreme failures?
In front of us lies the rotting corpse of Enron, and it’s our job to identify the cause of death. We get scrubbed in and gowned up and get ready to work on the autopsy, and it becomes clear very quickly that the cause of death was an extreme case of crime. Absolutely riddled with crime, lousy with crime. And as a secondary observation, we also notice that the victim had lower than normal levels of director independence in general and audit committee independence in particular. “ Interesting,” we might say, “on the one hand, non-independent directors are closer to the company and therefore have a higher probability of witnessing any crime that might be going on, which is good. But they’re also more likely to be involved in the crime, which is bad. And they’re certainly less likely to report it since they have more to lose.” “Good point,” we might reply to ourselves, “I wonder if increased independence might help to prevent future crimes by decreasing the probability that directors will be involved and increasing the probability that they will report whatever hinky stuff they witness. Sure, it might decrease the probability that crime will be detected in the first place, but it’s a worthwhile experiment.” Alright, we have a plan. Side note: for some reason we also at the same time decided to perpetuate a narrative that every corporate failure means that the board did something deeply blameworthy, which is both false and unfortunate. So, here we are 20-plus years later, and we have the results of our experiment. Increased independence has, let’s see, failed to eliminate or even decrease deaths from crime. We also have no specific reason to believe that crimes are attributable in general to the fault of boards in the first place. Except insofar as we can always imagine, in hindsight, things that the board could have done differently. Which means we can arrogantly argue that “I would have prevented the crime if I had been on the board.” There are a bunch of obvious problems with this whole line of thinking. The most important to my mind is that we really don’t want boards to adopt a catastrophe avoidance mindset. Why? Because they already do mostly approach their work with a catastrophe avoidance mindset and everybody hates it. On top of the fact that we have no reason to believe that it actually leads to fewer catastrophes. Not to mention, as already discussed, we’re always trying to find a better balance between operations, strategy compliance, and governance, whatever those things mean to you. But how are we supposed to do that when boards are conditioned to obsess over the compliance and operations in service of avoiding catastrophe? The other major issue with the catastrophe avoidance mindset is that it leads to bloat. It might have seemed like I was dissing director independence a second ago, but I actually think independence matters to good governance because it tends to increase the diversity of perspectives around the room, which is generally good for decision making. But mandatory independence is one of many examples of rules and regulations that came as a reaction to extraordinary corporate failures. Rules that are born out of failure are fine in theory, especially if we treat them like an experiment. As in, we don’t want more failures in the future, so let’s try a new intervention and see what happens. If it doesn’t work, l Let’s. et’s adjust. The problem is, we don’t ever adjust. et’s adjust. And for the most part, those new rules are also reactions to failures, big or small. And I’m not aware of any rule that’s designed specifically to increase the probability of good stuff happening. They’re all just supposed to decrease the probability of failure. Honestly, I think this sucks. I could go on, but I won’t. That’s question number three.
Question #4: Why don’t we care more about training executives to be great at working with boards?
This one’s mostly self-explanatory, so I won’t dive too deep. Senior executives, in general, and especially CEOs, have more influence over board effectiveness than boards do. They control information flow. They have a heavy hand in crafting agendas. They make the presentations, they make the conversation prompts and more. What boards know and what they think about, the questions they consider, the discussions they have. It’s largely driven by executives. There are a million good training resources for directors on how to do their jobs well. But I’m only aware of one course designed specifically to help executives to be more useful to their boards and increase the probability that their boards will be more useful to them. And it’s one that I teach. Even if there are more that I’m not aware of, resources on this topic are scarce. That’s dumb.
Question #5: Shouldn’t literally every director be a lovable star?
This is another one I can cover quickly. About 20 years ago, my friend Professor Tiziana Casciaro and her co-author Miguel Sousa Lobo did some really influential research on how hiring people just for expertise, even if they’re assholes, doesn’t turn out very well. They referred to those types as competent jerks. The opposite of the competent jerk is the lovable fool, who people will choose to work with despite their incompetence, because working with them is really fun. Anyway, the lovable star is the person who’s both competent and awesome to be around. Lovable stars are rare and difficult to find and attract and retain. But when it comes to boards, we’re talking about an ecosystem that’s high-status, sometimes well paid, high impact, and high consequence. In my opinion, there’s no room for fools or jerks here. We’re usually OK at filtering out fools, but I don’t think we have nearly enough anxiety about filtering out the jerks. Remember, nobody wants to work with jerks. They would rather work with fools than jerks. And since boardrooms are no place for fools, then every director should be a lovable star.
Bonus question that’s been on my mind and is only sort of board related: Why do we keep pretending that bad AI outcomes are because of user error?
According to a tracker at damiencharlotin.com, as of December 4, 2025 there have been 643 legal decisions in “cases where generative AI produced hallucinated content, typically fake citations, but also other types of AI generated arguments.” That sucks. And this is only the situations where there’s been a decision. So, fake content in court filings is an even bigger problem than this. Not to mention AI hallucinations in journalism and academia and everywhere else. In the case of hallucinations, as well as all kinds of other bad results from the use of LLMs, some people want to just say that it means LLMs are categorically useless and should be disregarded entirely. I disagree, but that’s not what I want to talk about here. Many other people like to boil the whole thing down to user error. As in, you just need to know exactly what applications LLMs are good for and then work hard to craft appropriate prompts and know how to refine the results, etc. As much as this might sound like a sensible position, let’s think about it for a second. I’m looking right now at the main chat interface for OpenAI’s ChatGPT. It has a headline that reads “where should we begin?” And then it has a text input box that says “ask anything.” That’s it. So, used as directed, it’s perfectly sensible to type, for example, “can you please write me a legal opinion for an upcoming hearing?” ChatGPT sensibly starts by giving you some warnings, but then also welcomes you to tell it what jurisdiction you’re in, what the issue is, what position you’re taking, and what facts and documents you can provide. It even asked me if I want to take a formal legal opinion tone in its response. For someone under a lot of pressure from time constraints or professional consequences or whatever, think of how easy it would be for you to just lean into ChatGPT’s congenial and helpful workflow and not sweat too much about double checking every part of its work. If there are hallucinations in the results, is that user error? No, the user followed the instructions perfectly. Even if a new user has no idea what ChatGPT is for, you can ask it. What does it say? To me, it said “ChatGPT is a tool that helps you think, create and solve problems by turning your ideas or questions into clear, useful answers.” End quote. Again, no indication that there’s a good or bad way to use the product, or that there are any particular risks involved. Is there any other product you can think of that’s positioned as harmless and valuable for everyone, that requires no instructions or training, but that fails frequently with occasionally catastrophic results? I’m not shitting on LLMs as a concept. I use them all the time and find them really helpful. What I’m saying is that I doubt any of those legal professionals submitted hallucinations at trial on purpose. They believed everything was real and accurate. They used the product exactly as directed. The product generated garbage. That’s a design flaw, not user error.
Okay, that’s everything for now. Thanks for listening. I’ll be back next year with more fun stuff on Ground-Up Governance and One Minute Governance. And if you want to connect in the meantime, whether it’s about the book proposal project, or cool ideas for content or music or other nerdy governance stuff, shoot me a note at mattfullbrook.com. In the meantime, have a great holiday and Happy New Year.
