If you're a fan of One Minute Governance or Ground-Up Governance, you know that Matt is a bit obsessed with definitions. Turns out that when we have clear definitions for a few important concepts, good governance turns woke. And that's good news for everyone.
Adorable image of a guitar pedal created by DALL-E.
TRANSCRIPT
Welcome to another arbitrarily scheduled longform podcast episode about corporate governance to keep you satisfied while you wait for more stuff to happen in the world of one minute governance and ground up governance and wherever else. My name is Matt Holbrook, and as usual, I've been thinking about some stuff. Human brains are unfathomably amazing, and the way that human brains think is often embarrassingly shitty.
And sure, you're already thinking, Ooh, Matt, look at you. You're so provocative. I'm so super impressed. Let's be friends. Yeah, I realize I'm not among the first 100 billion people to point out that human cognition is flawed, and nothing else I'm going to say in this episode is particularly original either. But I hope I might frame my concerns in a way that for some of you at least might be helpful and kind of fun.
Let's start by establishing some baselines, just so you know what I mean. When I use certain bits of nerdy jargon, when I say confirmation bias. I'm referring to a well-established quirk in our brains that makes it so people aren't actually interested in the truth. We're interested in validation. So we dismiss information that disagrees with our beliefs and overvalue information that confirms our beliefs without much concern at all about whether the information in question is any good or whether we're actually correct.
As long as we feel validated and don't have to change our minds about anything. And when I say corporate governance, all I'm talking about is the way that decisions get made in an incorporated entity, as in all of the decisions made by any person in an incorporated entity. When I say good governance, I mean intentionally cultivating effective conditions for making decisions.
When I say diversity, I mean being actively and intentionally interested in bringing multiple and potentially divergent perspectives, cultures, lived experiences, personalities and more into the process of governance, corporate or otherwise. When I say inclusion, I mean intentionally cultivating effective conditions to ensure that all of those diverse perspectives, cultures, etc. can be safely expressed and taken into careful account in decision making.
When I say equity, I mean the ideal result of doing diversity and inclusion well, meaning all the people in and affected by a system have equiv violent opportunities to affect the system. And when I refer to diversity, equity and inclusion or DEI or whatever other term people are in their feelings about, I'm simply referring to the critical and undeniable intersection among diversity, equity and inclusion as defined a few seconds ago.
When I say woke, I mean an awareness that there is injustice in this world and that injustice is bad for basically everyone and that some people have way more power than others do, and that it's smart for powerful people to want to do something to help with the whole injustice thing. So being woke just means acknowledging those easily provable facts.
When I say anti-woke, I'm referring to a false dichotomy that pits the status quo against a mis definition of woke. The status quo is some people having way more power than others, often for no useful reason. Basically, the thing that Wokeness acknowledges and the definition of woke is a bad faith lie told by powerful people that frames the world as a zero sum game where doing something about injustice means powerful people have to suffer.
The reason it's a bad faith lie is that there's literally no reason to believe it's true. Yet people spread the lie anyway because it's triggering and manipulative. The objective of the lie appears to be for powerful people to manipulate others into helping to protect their power, even if it hurts everyone. Sorry that one was long winded. In case you've forgotten already. That's what I mean when I say Anti-woke.
I'm probably leaving out some other important definitions here. We'll see.
Anyway, have you ever felt lazy about anything? I mean, like, too lazy to even consider doing a thing? That's probably important. Even if it's only important to someone else. Or important optically or theoretically. You know, like being too lazy to put on pants for a Zoom meeting.
Sure. Your better half or roommate or cat or whatever might file this away in the file labeled. Is this really a serious person? But you could care less. And that moment, all you're thinking is. Pants are stupid. Zoom meetings are stupid. I'm too lazy for this nonsense Fuck pants. But then again, there's that risk that you might forget.
The camera's on entirely. Space on the whole no pants thing and reveal something unexpected to your fellow coworkers when you get up to refill your coffee. Also, what do you think? Is it more mortifying to be in your worst underpants or your sexiest underpants? So up until that moment, you were too lazy to even think about this problem.
Certainly too lazy to care about this problem. Your decision not to wear pants wasn't about anything. It wasn't a statement. It wasn't a reflection on your dedication to your work or your life or your appearance. And ultimately, it only barely matters unless actually, I'm going to vote for worst underpants being more embarrassing. But only by a little. Anyway, I happened to listen to the recent Freakonomics Radio series on academic fraud.
It's a lot to process this idea that the entire incentive framework for academics encourages researchers to fabricate data so that they have sexy results. Sexy results get you published in better journals and more media coverage and then more money to do more data fabrication and so on. It's pretty disheartening. And intentionally falsifying data is definitely not an example of laziness.
Think about it. Maybe you spent months or years gathering real data and were super stoked because you're totally positive it would show something cool. Like people born during solar eclipses are always really awesome at curling that sport that is with the stones and ice and brooms and stuff. So there you are with all this data and you spend even more months analyzing it, only to find absolutely nothing.
People born during solar eclipses are just like everyone else. Picture the headlines Multi-Year study finds people are the same as other people. Very unsexy. And without a better headline, you won't get published in a good journal or get coverage in mainstream media. Heck, if you don't have tenure yet, you might not even get to keep your job even though you worked your butt off to do exactly what you're supposed to do, which is scientific research.
So instead of losing your job, you spend another few weeks fabricating some data that suggests that people born during solar eclipses are great curlers and super good looking, too. Problem solved. You know what they didn't talk about in that Freakonomics Radio series about academic fraud? Sloppy citations in academic papers. Is it possible that being sloppy about citations also known as maybe not always giving credit to your sources, doesn't count as fraud?
Squint a little at sloppy citations and you might interpret it in the super provocative realm of plagiarism, which is bad, maybe even kind of fraud. Squint a little harder or maybe from a different direction and it might look like something else. Something more like being innocently lazy and forgetting you had no pants on and standing up during the Zoom meeting so everyone can see your ugly underpants.
Some people in that zoom meeting might say, This is totally fucking unacceptable. Matt has no respect for himself or any of us, and now we have to question every bit of work he's ever done. Was he pants free at all of our Zoom meetings? I am outraged. Also, no, I will not stand up to prove that I have pants on.
Also, where those Canadian flag themed beer cans on his underpants. Ugly. Yes, I do have underpants as described. They also have glasses of beer on them. And yes, they're mad ugly. Other people in the same meeting might say, Oh, damn, dude, I better go put on some pants before I make the same mistake. That's super embarrassing. I hope Matt's okay.
Maybe I should send him some better underpants for Christmas, though. By the way, if you haven't consumed any news in the Western world in the past few months, I would like to say that the plagiarized them example is based on nothing at all. And you should probably just ignore any instinct that it might be influenced by the real world.
Actually, even if you have consumed news in the Western world and do see a connection, you should probably just ignore that. Moving on, I skipped through this ultra cringe video a year or so ago, some YouTube algorithm recommendation that turned out to be long, but occasionally fascinating. It was three flat earthers and three non flat earthers, all strangers.
I think each side trying to convince the other to change their minds. I don't remember much of the detail except that the creators of the video would interject every once in a while with a question or poll or something to see where the participants heads were at. I only remember one of the questions, and I'll probably get it mostly wrong.
The creators asked the participants something along the lines of, Hey, do you think if your adversaries here only took the time to get more information, they'd totally see everything your way? As in they're not educated or knowledgeable enough. I don't know if you can guess what the responses were, but to me it was both surprising and funny. The three flat earthers all said yes.
These other people over there are just ignorant, and if they had more information, they would definitely realize the earth is totally and obviously flat and the non flat earthers all said no, there's definitely a problem here, but a lack of information in it. And I, as a spoiler alert, staunch non flat earth there found this really interesting because like my peers in the video, it seems obvious to me that we've got a nasty case of confirmation bias going on here.
For instance, let's say you asked a flat earther to explain to you where they think New York is, or Vancouver or Hawaii or Japan or Singapore or India, and to explain why flight times among all these different places are what they are or how gravity works, or whether they believe in satellites or whatever, any answer they might confidently offer is definitely not coming from a lack of information.
I mean, no matter what, you need a lot of information to answer those questions. It's because once they decided to believe the earth is flat, they automatically overvalue information that tells them they're right, even if that information makes a lot less sense than the truth. And they choose to reject the truth because it doesn't confirm their belief that I'm assuming every astronomer in modern history, every pilot or air traffic controller, every astrophysicist, etc., is in on some meaningless conspiracy or something.
What the hell am I even talking about?
Sorry. Before I get to what I'm actually talking about, I want to tell you about this cool new guitar pedal I got recently. It's called Blooper by the company Chase Bliss. No, I don't get anything for talking about this pedal. It's just cool. For those of you who don't know, there are a bajillion different types of guitar pedals out there.
You send the sound of a guitar or other instrument, if you like, into the pedal, and it processes the sound in some way. Pedals can add distortion or modulation or echoes or reverberation or whatever, and they come in pedal form so you can control them with your feet, which is convenient because your hands are busy playing guitar. The blooper pedal falls in the category of pedals referred to as loopers.
You stomp on the pedal and it starts recording what you're playing until you stomp on it again, at which point it begins looping the recording over and over. Then you can record more and more layers on top of the looped recording and build a little composition. It's a really fun creative tool Here. I'll record a silly, sloppy thing just to show you how it works.
[music plays]
And so that is the first layer of our loop. And that'll just if I leave it, it'll just keep on looping forever, just like that. Let's add some funky slap bass.
[music plays]
And that'll loop just like that with those two parts on top of each other forever. And for those of you who pay attention to Harmony, I left that first loop with just the guitar a little bit ambiguous. And now we've got a bit more information and it makes the whole thing sound and feel a little bit different. It's kind of cool, right? Let's add one more layer.
[music plays]
Fun, right? Blooper in particular has some features that are pretty out there and I find them super fun and inspiring, but we'll get to those a bit later as we build a cheesy metaphor for boardrooms. Maybe you can already imagine a boardroom metaphor, even just based on the basic looping we've already done.
Let's get another important definition on the table. When I hear other people say merit, as in we hire people based on merit. My interpretation is that they mean they care about what people have done in the past as far as they know and don't think it's very important to wonder what new things people might be able to do in the future unless they can prove that they've already done it in the past.
As in merit is somehow separate from potential. That's not usually what I mean when I talk about merit, but for the sake of this podcast, that's what it'll mean when I say it. Merit is a judgment of a person's past accomplishments in service of predicting what they might accomplish in the future. This is a good place to bring in the whole DEI thing because there's a common lazy argument fueled, I'm sure, by confirmation bias that suggests that it makes sense to put merit and DIY on opposite sides of a dichotomy, as in if we allowed diversity, equity and inclusion to inform our hiring behaviors, for example, then we must necessarily de-emphasize merit.
Before we get into why this very much makes not even a tiny bit of sense at all. I'm pleased to inform you that merit ain't all that. First, our talent and merit, the same talent being something innate rather than learned as in should we only hire people who are naturally gifted at the thing we need them to do?
Most people would say no instinctively at least, but then would still stick to the merit versus die dichotomy. Fair enough. How about this? Are opportunity and merit the same as in Matt had this great opportunity as a no nothing 21 year old to start working on projects around corporate governance, which opened up a million other opportunities to get on stages and in classrooms and boardrooms and meet tons of influential people before he was old enough to even understand that there might be a difference between ugly and sexy underpants at the moments those opportunities emerged.
Matt had not earned any of them. They were just there. All he did was decide to give them a shot and it worked out okay. Now he's got a neat career and awesome and supportive community. Some reasonably well informed opinions about lots of stuff and isn't a thousand years old yet. There are literally millions of other people who, given the same opportunities, would have made just as much or more out of them.
And this isn't even talking about the opportunities that are assigned to us randomly at the moment of conception, the what's whens and wheres and other circumstances that determine whether countless doors are open to us or if we instead have something much more miserable. So opportunity, is it mostly the same as merit? Like let's hire Matt because of all his accomplishments, which are mostly the result of his random encounters with opportunity.
At least we have to accept that without opportunity, nobody would have any merit to speak of. So if I'm understanding the merit versus DEI argument correctly, it claims that we should be allocating future opportunity based on merit, based on what a person has done or appears to have done in the past. Let me take this and turn it into a gross exaggeration.
We're saying then that it should be a no brainer. And February 20, 24, to want 60 year old Michael Jordan on our basketball team instead of 20 year old Victor Wembanyama. Merit over potential every day. I mean, who needs someone who has the potential to do something generationally awesome tomorrow when we can have someone who already did something generationally awesome 35 years ago?
Dumb, right? Just as dumb, for example, as choosing someone who's only got raw talent over someone who's got a rad combination of slightly less talent, but also grit and wisdom and fresh perspectives and a cool personality. And if we see the potential for a person to have all that, why do we care so much about whether they have merit?
I mean, shouldn't future opportunity be allocated in large part on future potential? And what about a person's potential not only to be great on their own, but to make an entire group or team greater? And if we take an abrupt turn into our weird little world of corporate governance, the greatness of our team is defined by the inputs into our decisions.
What's an important factor that increases the probability that the decision will be a good one? Considering multiple perspectives and multiple options before choosing a path. What's an easy shortcut to bringing multiple perspectives to the table? Holy shit, it's diversity. What's a shortcut to making sure that diversity actually works the way we all want it to? Bam Inclusion. And if we do those things right, we might have equity.
Holy nuts. I think we may just have a sensible and relatable argument that D and E and I are like a life hack for good governance. Sure, we can add merit into the mix too, if you like, but really all we need merit for here is to make sure the group collectively has the technical skills it needs. And one of the things about technical skills is that if we worry about DEI first and then worry about technical skills, we'll end up with everything we want skill and good governance.
If we do it the other way around, merit and then DEI, all we're guaranteed to get is skill. So if one of the main gripes from the Anti-woke crowd is that we're de-emphasizing merit, my response is about damn time. Because in this sense, being anti-woke is kind of like being anti potential. And being anti potential is kind of like being anti performance.
Frankly, merit is butt. In the Phife Dawg, go get yourself some toilet paper cause you're lyrics is butt kind of way and I get it. It feels scary to some people to think they might need more than merit to succeed, especially because a lot of us with merit got it. Because we had a heaping dose of a combination of unearned talent and unearned opportunity.
I mean, shit, am I going to have to actually earn my opportunities now? Relax. I'm here to tell you it's going to be okay. It's not a zero sum game. The lie is that the size of the pie is fixed and you got to push other people out of the way to get yours. Remember our loop, The blooper thing?
Here it is again. Check out what happens when I turn some knobs or press some buttons on the blooper for a second.
[music plays]
Cool, right? Check this one out.
[music plays]
I'm not trying to tell you that these changes are making things better, but like we've heard it slow now. We've heard it backwards and we've heard it with that, like kind of really cool tape effect. Let's see what else we can get.
[music plays]
Oh, man. Now we've got this, like, cool little fragment that when we loop it, it's got this whole new kind of vibe and rhythm to it that I can imagine creating something else out of. I'm almost done. Let's try one more and then wrap up.
[music plays]
Okay. It's getting nerdy more than musical now, but I bet if you were sitting here twiddling these knobs and pressing these buttons, you'd be kind of getting nerdy too. The point is that when we sit and play with blooper, the original stuff starts transforming and maybe even revealing a whole new idea out of the original information that we put into it. Super freaking cool, right?
Reflecting on the woke versus Anti-woke thing or even the flat Earth thing. I think we should take a second to talk about contempt to avoid being lazy about citations here. I think I'm getting influenced again by Freakonomics Radio and their fun interview a few years ago with The Economist Arthur Brooks about his book Love Your Enemies: How Decent People Can Save America from the Culture of Contempt.
Actually, I can now verify 100% that I'm being influenced by that show, the title of which was How Can We Break Our Addiction to Contempt? Because that's where I just found this quote where Brooks says about contempt that it is, quote, this nasty cocktail of anger plus disgust. It's a cold emotion. It says you are worthless. And what you said is worthless. You're beneath my regard. And that's something that should be reserved for something that's not human. End quote.
Why does this matter to me right now in this podcast on this topic? I'll give you an obvious big example and then direct us back into the boardroom. There is a person in the world right now, a very high profile politician who likes to use dehumanizing language to describe people and organizations with whom they disagree.
One word this person uses with relative frequency is scum. I chose scum because from among the other inflammatory words this person uses, it's one I feel reasonably comfortable repeating. And it can be a kind of funny word, to be honest, but directed with anger and disgust toward any human being. Scum takes on a whole different vibe. And like Arthur Brooks says, contempt should be reserved for something that's not human. Like stepping in dog poop or something.
The reason I bring up this very high profile politician is that they and others who might have similar behavior to this person dehumanize the people they don't like, and they do it from the most public and influential of platforms.
Let's imagine that I have the same tastes or distaste as this politician. I might feel really good and validated when they dehumanize the people I dislike. But that's pretty messed up. Contempt might get normalized, but it'll never be normal. Meaning we should regret feeling contempt toward other people no matter the circumstances.
Back in the boardroom. Picture a super sticky problem, one where all the options are bad. Like I don't know, You're required by your regulators to publicly endorse only one of the nominees for best album at the Grammys, which are on my mind because they aired the day before I wrote this sentence. For what it's worth SZA’s SOS was my pick, but I don't get a vote for some reason.
Anyway, the position sucks, especially if it's the kind of awful bind where there's also public scrutiny. So you can basically guarantee you're going to get dragged to no matter what path you choose. So imagine you've narrowed it down to Taylor Swift and boygenius, and let's say half your board members are super intense Swifties, a.k.a. Taylor Swift fans, and the other half are… Is there a name for the boygenius fandom? Let's say boyfriends. It might feel natural to the Swifties to feel like a vote for boygenius is a vote against Taylor Swift and for the boyfriends to feel the opposite.
So there you are with two bad options. No matter what path you choose, you're going to piss off a bunch of your stakeholders, maybe customers and strategic partners and shareholders and more and piss off half your board. And you also find yourself on fertile ground for contempt between the boyfriends and Swifties in the room. That scum ward might even make an appearance.
Are you sensing a bit of B.S. here, though? Like, okay, fine, we're forced to make a choice and that sucks. And yeah, we can't please everybody but doesn't it feel like something kind of dumb is happening? For starters, are we maybe ignoring the potential for people to love both Taylor Swift and boygenius? Meaning, no matter who we choose, there'll be a bunch of people who would have been cool either way.
And maybe there's an opportunity to help our board members realize that we're not voting against anybody. And can't we acknowledge our board members intense feelings while also accepting that our collective job as a board doesn't have much to do with individual board members feelings at all? So yeah, we might have to eat a bit of shit from our community and it'll be particularly hard for our Swifty board members to be the public face of a boygenius backing company or vice versa, as the case may be.
But this is part of what we all sign up for when we become board members. For the most part, boards aren't platforms for us to express our individual preferences musically, politically, socially or whatever. Every important and impactful decision has complicated and maybe unpredictable implications that might feel a bit shitty when we process them through the lens of our values or beliefs or fandoms.
But if the only lens we use is our personal values or beliefs or whatever, and we choose to feel contempt for those who disagree, then we've misunderstood the job, which, as the law informs us in most jurisdictions, doesn't give a flying fuck about your feelings. It's about the corporations impact on others, which is yet another reason why contempt is more than a little counterproductive here.
Through all of this, I'm being willfully naive on a bunch of fronts. Maybe the most important front goes back to the misaligned incentives thing, like what makes it better for some academics to fabricate data than to be honest? Or why people who want to be politicians get good at campaigning but often don't bother being good at well, anything else really. It's also why executive compensation consultants never, ever recommend cutting CEO pay in half. And so on. Misaligned interests is my point.
What does that have to do with me being naive? Here's the thing. Contempt sells. It's the reason negative news always gets the biggest headlines. The reason social media algorithms always prioritize posts that make people feel bad. We kind of really do get addicted to contempt and we just saying “contempt bad, DEI good, earth round, etc.” ignores a lot of important obstacles. Hence the whole naive thing.
But I think we have to treat the contempt trap using similar tools to what we use for confirmation bias. Confirmation bias can't be eliminated. It's a permanent feature of how humans process information. We can manage it though. Lots of tips on that at your fingertips if you Google managing confirmation bias but will only manage it if we acknowledge it and acknowledging it necessarily involves acknowledging our own flaws.
Which kind of sucks, but it's essential for good governance. And think about blooper for a second. Let's make that cheesy board metaphor I talked about earlier. A regular looper pedal is like a conventional board conversation where we put information into it and different participants layer their perspectives on top. Until we have something that feels and sounds good to us.
But I think what we really want sometimes is the blooper version of a board conversation where we take what we've built together and find ways to consider it from unexpected new angles. We tweak the shit out of it before landing on a final decision. We might end up with ten new ideas that are way better than the original one.
Even if we end up back where we started, the blooping experience revealed a lot more about the information we had and the potential paths we might travel. Cheesy but apt, right?
Before we wrap up, I know I'm clumsily dancing around the margins of topics that some of you might find very controversial and may have strong feelings about.
I do, too, have strong feelings for what it's worth. These are topics where the potential for external scrutiny is heightened, as is the potential for misalignment between you and your peers. They are having an unavoidable impact on your organizations and boardrooms, and you're maybe even feeling forced to make choices based in large part on optics or political influence or even contempt yours or someone else's, instead of being able to just do your actual job as a director or executive.
It sucks. I'm sorry, but seriously, try blooping the shit out of this stuff before you walk in the room, think about what you actually hope to accomplish. What things you might say or do to increase the probability that those things might happen? Think of fresh angles you might hope to explore with your team and imagine some questions or stories or prompts that could encourage them to explore alongside you. Prepare yourself to pause first before the disgust and anger creep in and acknowledge that the boyfriends and Swifties are just human beings with different information, different lived experience, different cultures, different preferences, maybe different personalities.
And if we were all the same, we wouldn't need each other at all. Plus, we'd make worse decisions. There's almost always a way to do something good in the world, even when you might have to face the terrifying ire of the Swifties.
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So if any of you have stuck around this long and happened to be wondering what's going on with my Ground-Up Governance friend and partner Nate Schmold, who illustrated all the Ground-Up Governance stuff, go to YouTube and check out his channel, which is 3030 dash TV, 3030-TV where Nate posts something new every day. At least he has done for the past six weeks or so. And in those six weeks he's amassed about 6000 subscribers and the stuff is really cool. I won't spoil it for you. And here's another blooper just for fun. In case you care.
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BONUS: Good governance is woke, and that's good news for everyone