TRANSCRIPT
Matt
Welcome back to Sound-Up Governance. This week's guest is Judith Athaide who's been one of the most inspiring allies in my governance journey. We first crossed paths in the boardroom of NB Power, the government owned power utility in the Canadian province of New Brunswick. Sure, fundamentally, it's just another boardroom. But the fact that NB Power's only shareholder is the government, plus the fact that it provides electricity to the whole province, plus its many massive assets include a nuclear reactor... Well, let's just say it's the perfect environment for Judith, who thrives in that weird place where governance challenges meet incredible organizational complexity. Right, so who is Judith anyway? Nowadays, she calls herself a corporate director and a curious generalist. She sits on a cool array of boards, including Canada Pension Plan Investment Board, Computer Modeling Group, Kiwetinohk Energy, Sustainable Development Technology Canada, and, of course, NB Power. I'll let Judith tell you a bit more about herself just to fill out the picture.
Judith Athaide
I'm an immigrant. We moved from from Bombay. So 26 million to Brandon 26,000.
Matt
That's Brandon, Manitoba, Canada.
Judith Athaide
Quite the journey in so very many different ways. So you know, I started growing up in India and Pakistan. Continued growing up and in Brandon. Went to school in Winnipeg to do a business degree in what I call human skills, so human resources and labor relations and then did a master's in finance. Worked as an Assistant Professor at the University of Brandon teaching all the business courses other than accounting, and returned to University of Alberta to do another undergrad in mechanical engineering. And it was a crazy time, Matt, because I was going to school full time, I was working part time in the Faculty of Business as an instructor, because I was trying to finish a four year degree in two and a half years. So truly crazy, crazy time. Graduated and moved to Calgary started in the energy industry, as most Alberta graduates do. Started in oil and gas as a reservoir engineer and then made my way from oil and gas into what I would say is, is downstream into the electricity utility sector. So really, from wells to wall socket, is what my journey looks like, professionally.
Matt
If you're thinking that Judith's journey doesn't exactly sound like a traditional path to an in-demand corporate director, you're not wrong. From there, she started a consulting firm that worked with big and small companies on projects of all sizes, including some that Judith calls "mega huge." She took governance courses, including the Directors Education Program offered by the ICD here in Canada, and eventually made it to where she is now. What exactly is it like being a member of a board that's responsible for nuclear reactor?
Judith Athaide
It takes a lot of mind space, it takes a lot of mind space. Not all the time. It's about getting the right people into place. It's about getting the right processes. And it's about having a strong risk management framework. As my colleague, Bob McFarlane says, he calls it a "risk smart culture." And I think that's a good term. It's a risk smart culture. So it's about understanding all the risks now, not just with nuclear, but all the risks that go into an organization that has a variety of generation. Clearly nuclear is is is the risk, it's not the riskiest, but it is the one that in the utility industry, we would call a HILB a high impact low probability. Right? Yeah. And and the impact is devastating if there was an accident. And so you're spending a lot of time thinking about it, thinking about your risk processes, thinking about the culture, thinking about the quality of the people thinking about continuous learning, bringing best practices in. And one of the things I learned very quickly was when I joined the organization, and, you know, I got closer to nuclear, there was a term we use in nuclear that's called "hostages of each other." And that's exactly what nuclear is - it's true for the airline industry as well, I would say - but it's really you're, as a as a nuclear operator. you're only as good as the license you have to operate. And your license is predicated not only on your operations, it's predicated on everybody else's operations globally. So there is an accident somewhere else in the world, there is incredible scrutiny on you, and what are you doing to make sure that will never happen to you? So when the Fukushima accident occurred, every nuclear facility in the world said, "what's the probability of us being in that situation?"
Matt
Right. So I'm imagining myself in that chair, and I'm not you, you know, I could never hope to be that intelligent, or that knowledgeable. But no matter how intelligent and knowledgeable you are, I don't as far as I know, you weren't a nuclear expert when you walked in the room among lots of other gaps that you might have had. How do you... how do you find a way when you get into that position, to make sure you know the stuff you need to know and understand it at the depth that you need to understand it?
Judith Athaide
I'm not a nuclear expert, there are less than a handful of nuclear experts on that board or any other board that has nuclear because you need you need directors with different broad skill. So it comes back to that generalists, you need generalists at the table. And the reality is, whether it's nuclear, its coal, its gas, its auto manufacturing, the risks are the same. There's some nuances to it. But the risks are the same. And they start with financial and they go to reputation and culture and so on. And so for us at New Brunswick Power, we had to encourage the the shelving of the technical terminology and the jargon, because it wasn't about the valve, for example, it wasn't about whatever acronym was being used. It was about what is the implication for the organization strategy? And risk? Do we have adequate certified operators? If the nuclear facility is down, do we have replacement energy? And what is the cost of replacement energy? Because on an operating basis, a variable cost basis nuclear energy is quite inexpensive relative to other forms. But when it is not available, replacement energy is very, very expensive, relatively speaking. So it can blow through your budget. So it's understanding what is the implication for budget for replacement energy? For safety while it's down? For security? When is the part going to come back? How is supply chain impacting it? So all the same questions you would ask on any other board, you can ask on a nuclear board. It's it's about moving away from jargon so every member around that table, both management and board can speak a common language, it's about finding that common language.
Matt
Now, anyone who knows me personally would tell you that I've been obsessed recently with the idea of building a common vocabulary in corporate governance. So Judith is really in my zone here. But still, it wasn't entirely clear to me how to zoom out and start building common language and objectives in these complex organizations, especially in utilities or financial services where you have regulators and other very, let's say, observant stakeholders,
Judith Athaide
I start with the premise that the regulator has a role to support the industry. And for example in the financial industry, OSFI is the regulator and OSFI is really driven by the desire to make sure that the financial industry is safe and sound. The financial industry touches every aspect of every Canadian from your paycheck through how you spend your money through how you invest your money to how do you prepare for retirement. And so OSFI wants to make sure that the entire financial industry - banks, pension funds, insurance companies - are all using best practices, which which sort of come together from everybody moving forward together, is really looking at risk and really being stringent in how they look at risk. For instance, in in OSFI. It's the same thing on a electric utility or a gas utility. The regulator may or may be more prescriptive at some point in some aspects. But but that's what all the regulators care about. And the good news is that whether you're talking about the regulator in the utility energy industry, or you're talking about the regulator in the financial sector industry, Canadian regulators are truly respected globally. And globally, regulators come here to talk to our regulators to say, "how do you do this? How do you do that? How do you think about?" So that is helpful. But as a board member, I am aware that there is regulation and that we have one or more regulators and that we need to be at minimum compliant with the regulation. I accept that. But I also believe that that the threshold that I hold for myself and those around the table is higher than compliance with regulation. We have been given the privilege of providing oversight into long term value creation, right? Long term sustainable businesses. And so we as directors need to accept there's a regulator, but we really need to focus on long term value creation. And that's, that's really about getting there through good governance. And you're right, there's no definition of good governance. And I think if you brought three really experienced directors to the table, they would all have slightly different definitions. I mean, there would be commonality, but there would be nuances. And those nuances are probably a reflection of each individual's experience of what good looks like.
Matt
Can I put you on the spot and ask you what you would say?
Judith Athaide
Yeah. I would say that I don't have a definition for good governance. It's not about a definition. I'd say it's more about the culture in the organization and at the board table. I'd say it's about the processes. And I'd say it's about the outcomes. That and those three, the culture, the processes, and the outcomes, is what's going to drive growth and operation of a business that's going to be sustainable in the long term. And so, you know, I think in more recent years, Matt, the governance the G is getting greater scrutiny, it's that G of ESG. Right? And so it really is getting more scrutiny. And and so I think boards should be if they're not talking about what does good governance look like and how does the culture underpin that good governance, because I really do think it starts with culture. And good culture, drives, processes and drives good outcomes.
Matt
So I'm really curious how you... I know you evolved really meaningfully and pretty early in your career out of the like, super technical engineer-y kind of thing, right? So that that's great, but how do you walk into a boardroom where the technical demands of the organization are super high - and that would define a lot of the board's you've sat on - and try, how do you get into a mindspace where you're like, "Okay, I, I do have a really technical kind of bent. And I understand the role of a director and I want to scratch both those itches!" how do you how do you walk in the room and make sure you're satisfying your desire for technical understanding, while also not getting too tempted to just stay in the nuts and bolts?
Judith Athaide
With trepidation! But I you know, I have you heard that that's saying by Alvin Toffler, he says, "The illiterate of the 21st century, are not those who can't read or write. It's those who can't learn, unlearn, and relearn." And I'm a big fan of that. For me, it's important for me to learn, which I have done, unlearn, which I need to do all the time because because the landscape is changing so quickly, and relearn. So how do I approach it? I think, is a commitment to continuing education, generally, a commitment to continuing education. So this is not this is webinars, this is seminars, this is actually taking formal courses every year, one or two formal courses, it's reading my reading list, and is quite large and trying to stay abreast. But but in terms of a specific board, when I first start on a board, if the board chair does not, you know, does not already assign me a board, buddy, then I will ask for a board, buddy. And that that's a board buddy that's going to really give me the 10,000 foot overview of the organization, a bit of its history, the cultural history, some of the decisions that flowed from that cultural history, and what is the strategy risk, and how does the culture support it. The the questions that you may not want to ask the management team, because they may not have an objective view to it. Now, having said that, I will ask my board buddy but I will also ask the CEO, and I'll ask some of the some of the members of the team so that together from from all of those different perspectives, I can build my own quilt of what this what this looks like.
Matt
Okay, I'm going back to the Alvin Toffler quote, which, you know, I'm completely into that. And in fact, there's just an an ever increasing body of science that shows that rethinking things matters a lot. There's another thing that works against it. And it's really common in boardrooms, so I'm going to be a bit snarky here, but I suspect you walk into boardrooms, and you're often surrounded by people who not only don't rethink, but they confidently and stubbornly stick to the position that they're an expert in, right? Because that's what "I'm the expert! Why do I have to relearn?" And, and I know that it's not your job, or any other director's job, to kind of bully them into changing their minds, but how do you... What's the best way to put this? How do you encourage your peers to get into a rethinking mindset? And/or how do you activate those people who don't really want to rethink? Despite their stubbornness?
Judith Athaide
It's, it's a good question. So, you know, on one hand, I'd say, it comes back to my earlier comment: the importance of a good skilled, experienced chair. The chair can set the tone for gently questioning, re-questioning, challenging, "what if? what if this wasn't true? What has to be true for this to happen?" Right? The chair can do it. It's sometimes harder for other members of the board to do it. So how I do it, is I'm always interested in why people say what they say. What is their experience, right? Because everybody has scars as we come to the place where we are. So what are the scars that you have gained that have you believe what you've just said? So I tend to, I tend to reach out to those directors and see if I can do a coffee or a phone conversation to better understand it. Because that may be that we didn't understand that perspective, or they didn't communicate it well, or maybe one on one, we can both move a little bit to to better understanding each other's perspective. Now, again, to do those types of reach outs, requires a chair that feels it's perfectly okay for directors to talk amongst themselves. Not every not every chair feels comfortable with that. But most chairs do. Good chairs certainly do. That's how we together build towards a longer value creation journey.
Matt
In a bit of a continuing theme on Sound-Up Governance, Judith is clearly pretty different from most other people sitting around the board table with her: an immigrant, a person of color, a woman who came through an unusual career path and also a dedicated re-learner. What's it like being so...well...different?
Judith Athaide
It's good, because the other 99% have very low expectations of me. So that's good! So historically, most directors have been ex-CEOs, or serving CEOs or ex or serving C-suites. Right? And that has been the definition of what a valuable director is, what are the skill sets they bring. And so directors feel that way, and recruiters feel that way. And every once in a while an organization will go outside of that pool of ex or serving C-suite and find somebody. It may be that they go into the into the C-suite of a not for profit, like a university or a large hospital. But that's been it. That's changing slowly so that people like me, who've had a non-corporate career are starting to be seen as adding value. But I will tell you. Matt, when I when I first started, you know, probably about five, seven years after I had done my DEP but still quite early in my governance career. I had a conversation with a recruiter and he said to me, he says "Judith, I don't know how to package you up for a board opportunity." He says, "If you were a CEO, if you were a CFO, if you were a chief risk officer, all I have to do is put your resume on the table. And everybody would say, a-ha! I know the skill sets. I know the responsibilities. I know the accountabilities and I could sit back and just have your resume speaks for itself." And he says "with you, I don't know what to do, so I struggle to put your resume forward." And my response to him was, "well, you're going to have to work harder without a doubt than if you had a resume of a CEO or CFO from a large cap." I said, "I have worked at large public companies, but I'm an entrepreneur. I've I have founded an advisory company that has served organizations in Canada, the US the Caribbean." I said "I have been, you know, through those advisories, I have done transformative strategy for my for my clients, I have looked at operational effectiveness I have done large, large cap large mega projects. So I may have wider experience than I would have had if I had come up the CHRO o the role or the CRO role." You know, not to say it's always true, but I have wider experience, and at the end of the day, organizations need you to think outside of your training box whether that be engineering or risk or finance. They need you to be able to connect the dots between strategy, risk and culture. And that's how I see the value add, which comes back to how I first started: the curious generalist, right? It was really interesting, this mentor of mine said to me, he said, companies are still thinking they need, they need specialists, they're looking for somebody who's a CFO, because then they can do finance and M&A, et cetera. And he says, "that works really well, in the early part of your governance career. Be a specialist in the early part. But soon you have to become a generalist to be a good director." And he said, "You know, it's fine. you come in as an engineer, or you come in as an energy professional, but you're gonna have to broaden if you're going to add value." And I've that's the other piece of advice that I've taken away from him is, be the generalist! Ask the questions in different areas. And sometimes, what looks like a stupid question, from my perspective inside me is I ask it really catalyzes a conversation that adds value.
Matt
Okay, I want to go back to something you said, right at the beginning of that answer, which is the that others have low expectations. I don't even know if I have a question, but I just like to know what that what does that do for you? Or how does it work against you?
Judith Athaide
It reminds me, if they have low expectations of me, it's very easy to exceed their expectations! So that's the starting point, right? So I don't mind low expectations of me. What I do mind is after we've had some time to work together, if you still don't respect me and continue to to have low expectations, then that's on me. The initial low expectations, not a problem, because I will do my best to add value.
Matt
Taking advantage of having a big thinking director on the show, I needed to know what Judith thinks is the next most important area in the governance world that needs ongoing improvement.
Judith Athaide
I think the most, most important next step, and it is the current step as well, in many organizations is diversity. And when I say diversity, I mean much more than ethnicity or gender. I mean training. I mean geographical knowledge. I mean sectoral knowledge. I mean age. And and my own experience, Matt, is that when you have a diverse board in all those facets of diversity, when you have a diverse board, you have more courageous conversations. And it's in having those courageous conversations, that you get to good governance that you get to long term value creation. If everybody had the same perspective, then most of those people don't need to be at the table. You only need one person. Early in my career. I served on a board where I was a bit of the sand in the oyster that was never going to become a pearl for the for the board chair. Right? I was just the irritating sand. He said to me, he said, "Why do you always disagree with me?" Not always, always is an exaggeration. "Why do you disagree with me so often?" And I said to him, "Well, I have a different perspective!" I said, "If I agreed with you all the time, one of us doesn't need to be there." And he took that to heart. And he he after that he encouraged the divergent opinion, because he hadn't thought about it that way. He had probably thought about it as I'm taking more time on the agenda. It's kind of irritating to be disagreed with so often. And don't get me wrong, you don't want to disagree for the joy of disagreeing, there is no joy in disagreeing. But you do want to bring out a perspective that may be different in order to strengthen the organization and to build resilience. You want to bring out different perspectives. And so a good chair will seek divergent perspectives and make sure they're heard. So I think that's that, for me, it's about diversity is the first thing and diversity to result in courageous conversations.
Matt
Judith and I covered even more ground than you've heard on this episode, so hopefully we'll hear more from her in the future. But in the meantime, let's reflect on what she taught us. Judith, adeeply technical entrepreneur who sits on the boards of a bunch of crazy complex organizations, is encouraging us to cut through the jargon, build a common vocabulary, learn, unlearn, and relearn again, all while embracing the superpower of diversity. Thanks once again, for tuning into Sound-Up Governance. See you again soon. In the meantime, reach out anytime at soundup@groundupgovernance.com to share any questions or insights or suggest future topics and guests, thanks for listening
Sound-Up Governance (ep11) - Effective governance in deeply complex organizations (feat. Judith Athaide)