Wanna see a fish turn into good governance (don’t worry, this will make sense once you’ve listened to the episode)
TRANSCRIPT
Matt Voiceover
Welcome back to Sound-Up Governance. This week we have part two of my latest conversation with Andrew Escobar. Andrew, you may remember, prefers no title at the moment as he's in a bit of an uncertain place in his governance career now that he's about to wrap up a 12 year tenure on the board of the Canadian Internet Registration Authority, or CIRA. Today, we pick up and add on to some of last week's themes like focusing on foresight in the boardroom and what it really means for directors and boards to add value. Let's start with Andrew's reflection on how we can better help new directors to be useful if you need a refresher on Andrew's own path to the boardroom have listened back to Episode Five.
Andrew Escobar
I think when I first started to serve as a corporate director, I didn't have any idea what my role should be. I was learning on the job. And that's not an ideal spot to be in. Right? I was in a very unique circumstance that afforded me that opportunity. I wouldn't wish that upon anyone, right? You should, you should have more comfort around what you're there to do. And be given that opportunity to explore that your role as a director, and as an individual on a board. For me, though, getting started in corporate governance, it was all so new to me. I just accepted the way things were for many years. Because that's the way they should be. Because that's what you're taught in many ways. You're taught it by your fellow directors, it's learned by your engagement with management. It wasn't until many years later that I questioned my own role, and what we as a board could do. And that was really an important moment for me to just really question like, hey, like, why am I doing this? Does this matter? What value do I bring to this organization? And that's when you start to actually question how you how you do what you do, how you approach your work as a board member. I'm not sure if I would have arrived at this kind of thinking. If I began my hate, call it a career, but a career as a as a board member. With a full understanding of what board work is, I think, not knowing at the start maybe helped me more along in the latter years to really question what I was doing, how I was doing it, and the role that boards play.
Matt Voiceover
It's almost like there's a blessing and curse here in what Andrew's describing. Coming into the boardroom without an understanding of the role of a director made it hard to make an impact and especially to challenge the status quo. But it also afforded Andrew the opportunity to embark on a journey, an exploration of what's possible. That journey has led him to being a super interesting thinker in the governance space at a remarkably young age. One of the things I was interested in exploring further, building on our conversation last week, was how to actually unlock a board's potential to add future oriented value. A lot of boards I know are concerned that they don't spend enough time on foresight or strategy. But I wondered if just spending time on it is what really matters.
Andrew Escobar
Yeah, I I'm using the words, hindsight, oversight, foresight, and that maybe is the academic me, I would never use those words in a board meeting
Matt
Right.
Andrew Escobar
Because talking, you know, "Hey, guys, we're going to sit down in two months and have a day dedicated to foresight." You've lost the room. But I do think that time is important to that balance. Because I can think of specific times, specific days, specific afternoons where we've devoted time to the future, and setting ourselves up for success. And the reason that they work though, because we put a lot of time in advance to structure what it was going to look like, what will this day look like
Matt
Yeah.
Andrew Escobar
We're going to dedicate an afternoon or a day to this. What is the structure around this day or this afternoon? How are we going to frame this problem? And how are we going to tackle it? And I think that is the biggest challenge. We have specific structures or processes that we know how to follow for all these aspects of board work that everyone would agree is important to a board. For example, the annual audit, there is a clear process to follow or your annual budget. And that might, that process might be different in each boardroom, But it's still understood and you're comfortable with it. You don't need to put too much rigor behind it, because you've done it already. When you start getting into processes that try to deal with the future, that structure is really hard to establish, because you don't want to put too much structure. You're talking about the future, how do you structure a day around something that you want the board to be open to big bold ideas, to taking on a heck of a lot of risk, to managing systemic risks? That is hard to put structure around. But it's also necessary.
Matt
There it is!
Andrew Escobar
And so if you don't put the work in, you fail. And so you really do need, you need a chair who cares about this deeply. You need a management team, or are individual members of management who care on the specific issue. And again, it may not be your CEO, it may not need to be your CEO, but you need to have a willing accomplice on the other side and get structure around how you're going to use that time. So I do think devoting time is really important. But time isn't just saying "well, we've devoted an hour at the end of every board meeting to thinking about the future." That doesn't work.
Matt
Yeah. And then one of the things I really like about the the buy in, or it's probably much more than that, from a person in management is when I've seen this type of thing work really well, like generate something exciting, it's because the thing it generated is something that that manager wants, right? The board helped to give them something that they wouldn't have gotten on their own. Maybe it's a set of questions, maybe it's some ideas to think about, maybe it's some prompts, maybe it's just inspiration, it doesn't really matter. But it should serve the manager who's going to leave the room and use it right?
Andrew Escobar
It has to, because they're the ones who are going to ultimately put in the work, or their team,
Matt
Or they won't. And then why did we bother?
Andrew Escobar
Exactly. And that's what I'm always looking for. What is... sometimes it's a spark in the eye of the CEO and you want to understand why is that spark there? Why are they so passionate about this? Why does this matter? Let's dig in. And it might not always be the CEO, it might be your CFO, it might be the chief marketing officer. And they have a reason for why this is important. And they want to structure time around something to dig in deep. That is the best kind of work that you can do as a board.
Matt
And there they, I think, if I could go back to a comment that I made earlier, I think that we've kind of conditioned or allowed a set of habits to perpetuate where those senior managers might have the potential to feel excited about something, but they just don't believe the board can help. And so they don't try to to share that excitement or to provoke the types of conversations that they want to have. Because they just sort of imagine that it's either not possible or that that's not their job, right? I hear sometimes from managers, "the board should be able to show up and do this." And I sort of say, "Well, why would they be able to do that?" You know what I mean? Where would they get that? So I think that there's, this is the mindset shift that I'm really interested in. I liked what you described in terms of your behavior change. And I think it's more substantial than you seem to believe, which is, you know, yeah, sure, wouldn't it be great for you to be able to walk away and have revolutionized the way that meetings happen, that kind of thing. But I think it's more important to be interested in how you are able to engage yourself and others in work that actually matters. That's way more important than any of the sort of like, you know, let's have 1000 meetings instead of 10, or whatever. Right? Like I think I think that's really substantial work. But I'm, so let me let me go back to where I wanted to go earlier, which is, I think I understand why you would maybe not be the perfect person to turn things upside down because you'd be creating something that other people need to live with and you don't have to live with. That's fair enough. I don't think that new people coming into boardrooms are empowered to do that anyway, right? So we're not empowering them and the people who are on their way out are too nervous to leave other people with a mess or whatever. Like who's, whose job is it to deal with this?
Andrew Escobar
I don't think I have a good answer for you. I only have my view of my time on one board for 12 years. To assess how I felt about it, and how I might feel differently about it. Coming in into it a bit differently. I didn't enter my time on on a new board, my first board with the understanding and the competence, I needed to have. I needed to have confidence in my ability to move the board in a meaningful way. I do think that the people best placed to do this work are not necessarily existing ones. But I don't know if my view on that is clouded based on my experience with boards, right?
Matt
Can I share something quick with you and get a reaction? Which is, I'd been asked by a good friend of mine, I was basically a substitute teacher a couple of weeks ago for a little portion of a course on the importance of creativity in business. And he said, "Look, I need someone to come in and help. But you're the only person who's going to be in the class who's got access to CEOs and boards and that kind of thing." And he just, he was curious if I had a perspective on the need for creativity in that world. And every for all the reasons we're talking about, I really do believe there's a need for creativity, it can take a lot of different forms. But you know, the biggest problem in the space is status quo. And creativity is kind of the opposite of that. And we pushed and pulled in a lot of different directions. I provided a lot of stories and silly ideas, but one of the students had a really smart question at the end, which is "this all sounds great, but am I just gonna walk into a room someday and get shut down?" And my response was, "maybe, yeah. But my impression is that even if they're trying to shut you down, they want to be you more than you want to be them. So keep trying." Is that fair?
Andrew Escobar
I think that's fair. And that goes back to confidence, confidence of being shut down, but being okay with it. And I don't think we have enough of that in our boardrooms. That we don't want to ask that difficult question. We don't want to make waves. We don't want to seem too radical even. And that's always been my challenge. I don't want to seem too radical. And I think sometimes the way I think about governance might be viewed by some as being really radical, where I view it as simple. It's just good governance. We just don't agree on what good governance is.
Matt
Right?
Matt Voiceover
I just want to interject here, and then we'll pick it up exactly where we left off. listening back to Andrew's comment here, I actually find it pretty disheartening. Or maybe it's actually kind of validating. Disheartening, because Andrew is one of the only directors I know who has a clear and confident understanding of what they think good governance is and how to do it. And he's cautious about pushing too hard toward good governance, because it might be seen as too radical. The reason this is also validating is that it's a perfect illustration of the problem with the status quo. I know we have a serious selection bias happening with our listener base here, but I bet everyone who hears this will be saying to themselves, "man, I sure could use a bit more Andrew on my board." If so first off, you should pick up the phone and call him right now. And secondly, what are you going to do the next time you walk into your boardroom to make sure that the Andrews in the room are empowered to affect change? Anyway, I was saying...
Matt
Okay, yeah. And now you're getting back to the whole origin of a lot of the work that I've been doing over the past couple of years, which is I don't... people might disagree on what good governance is, but it's usually that they're disagreeing, but don't have a clear idea of what they actually do think it means. They might say, "I don't think it's that, Andrew, whatever you think it is, I don't think it's that." And you might say, "Cool, well, what do you think it is?" And they don't really know. And that vacuum is a really significant problem. When people very confidently will go out in the world and behave a certain way, with a very shaky or maybe even non existent foundation. Part of the reason why I prompted you to come back and chat with me is because you'd heard something out in the world that that sounded similar to some of the vocabulary that you and I use, and I'm starting to hear more of that too. Is there something more systemic happening here? Is this just coincidence? Like I start to feel it too, but I doubt myself.
Andrew Escobar
in many ways. It's still a small community. I don't know if you have a good handle on the amount of directors and I use that term broadly. Directors there are in Canada.
Matt
Oh, yeah. Tens of thousands.
Andrew Escobar
Yeah, tens of thousands. But there's a smaller community of engaged directors. People who really care about the work that they do. And I think within that community of engaged directors who want to improve not only themselves but their boards, this is just a start. Right? The seeds have been planted, and some of the work that you've talked about around good governance and that I've, I think, fully embraced, and sort of came to the conclusion that I've been sort of practicing for many years.
Matt
Yeah.
Andrew Escobar
I do think that is beginning to take hold. But we're just at a start. And it's how do you cultivate this notion? For me, having a shared understanding around good governance is really, really important. I'm gonna see if I can do your current definition, justice. It's always evolving. I think that you define, Matt, good governance as the act of actively cultivating the conditions, the effective conditions for decision making.
Matt
This is really silly. Some of you who watch any of my stuff will know that I have this thing called a Vestaboard in my office, I want to put something on the Vestaboard for Andrew.
Andrew Escobar
I kind of want to wait and see.
Matt
I'm signed out standby, this will be the more boring pause, that I can't fit the entire thing on here. But there's most of it.
Andrew Escobar
Wow.
Matt
There's the imperative version.
Andrew Escobar
Intentionally cultivating effective conditions for decision making
Matt
That's the act. Right? So the the decision making thing is the is the the, the object, the subject is us being intentional about the conditions.
Andrew Escobar
What I like about those four words, is that actually it does remove decisions out of it. Because decisions can come later. You can still be engaged in good governance without ever arriving at any one decision. As long as you're putting the work in around those effective conditions, you're engaged in the work of good governance,
Matt
Right!
Andrew Escobar
So what I was talking earlier about, the most exciting work for me wasn't around decisions, it was setting yourself up for future success. Another way to say that is we're cultivating the conditions today to serve us later on. That, to me is really important work. And, again, sometimes it might be, the end result might be really structured. And that doesn't sound like it's the effective conditions you need. Like, to me, one of my favorite ways of approaching future looking work is around strategic risk. And strategic risk, and get super academic super bullet points and graphs and all that kind of stuff. But that, to me, is working on the conditions for decision making. I'm trying to actively cultivate those conditions today, to serve us tomorrow. And the decision itself isn't a part of the work. That doesn't mean it isn't good governance, that doesn't mean that we aren't doing good work here.
Matt
One of the bits of conventional wisdom that I hear frequently and get challenged on frequently, and it's a completely fair challenge is about results. And I'm not trying to trivialize the importance of results. I mean, whether you're whether you measure your performance by profitability, or share price or impact or whatever, you're going to die without results. And I'd like to argue that the fact is, yeah, you know, you might die. And that's not bad governance. That's bad results. And good governance can lead to bad results the same way bad governance can lead to good results. It's not about that, right? For all the reasons you've just described. I'd like to think that it increases the probability that you'll have good results, but it's hard to know, right? Like, there's a lot of reckless, awful, stupid behavior that gets good results. And maybe reckless, awful, stupid behavior can be good governance, but I doubt it.
Andrew Escobar
The reason I don't fully leave the decisions themselves off the table is because I need to understand how the conditions that we set up affected that decision. And so revisiting that decision in the future is very, very important. to my work.
Matt
Yeah. I agree.
Andrew Escobar
And that's almost antithetical to board work, revisiting decisions that the board has already decided on. It's not reopening those decisions. It's not re litigating them. It's understanding the decision you made on that day. And why, what were the outcomes you were hoping for? What actually happened? How are we going to assess this decision? I think that's part of the process that we don't do enough of. We make a decision and then we forget about it. As opposed to thinking "okay, we are about to make a decision. How are we going to evaluate this decision that we as a board are making or as an organization?"
Matt
Right, and whether the decision had good results or not, we still have more decisions to make
Andrew Escobar
Exactly
Matt
So the cultivation never ends, right?
Andrew Escobar
And so what you're doing is you're not, you're not re-litigating that decision, but you're improving upon your process. So how do you evaluate the decisions to improve upon your decision making process? Again that but that is tough work. And it's not viewed as critical to the work of a board member or a board. But it is the way you succeed.
Matt
I had a conversation recently with a friend of mine whom I won't name just in case - I don't think he'd mind but I don't know - who used to play a role of some kind in the evaluation or the the exam process at the end of the Directors Education Program. And I don't know if this is reflective of the process that you went through, but we had a conversation about something or other I can't even remember what and he said, "you know what? I'm rethinking one of the things that we used to do in the exam, which was, we'd give someone a very difficult set of circumstances, I don't know what they were and incomplete information, and not allow them to abstain from a decision. We forced them down, they had to choose one path or another. And well, to us, it was you weren't doing your job if you weren't willing to take a stand and go one direction or another." And I thought that was a really unusual, maybe I don't know how I feel about it from an ethical perspective, but it seems unusual to me that we would say, "you know what your job as a director is always to take a stand in one direction or another." Didn't feel right to me. First of all, you don't have to reflect on your experience on the DEP exam. But how do you feel about that? I'd love if I, if I were, if I put myself in a position of a director and something where I felt like I could just absolutely not take a stand in one direction or another. I think it's completely appropriate to say "I have no idea."
Andrew Escobar
Those final exams are interesting.
Matt
Okay.
Andrew Escobar
And I'll get into it really quickly. I think that there's a multiple choice component to the exam, you're either right or you're wrong. And I get that totally. But there's the in person component where you're around the table with two experienced directors and maybe four other directors who went through the program. So it's like a mock boardroom.
Matt
Yeah. A simulation of some kind.
Andrew Escobar
There's some simulation, there's a decision at the end of it. But you also have a one on one time afterwards, with one of the individual experienced directors. And I remember going through my answer, I arrived at an answer. And they said, "Well, you were right on these three aspects. And you were wrong on this fourth one." And I thought that was the strangest thing.
Matt
Yeah, it does sound strange.
Andrew Escobar
Because it says if you go into a board meeting, and make a right or wrong decision, and know it right away. You don't! I didn't push on at that point. I didn't think I was wrong. And I didn't need to get into it. But when we think about decisions in such a simplistic way, in right or wrong, and having to make a decision to begin with, I think we do a disservice to the actual value a board can bring within a meeting. Sometimes the right decision is no decision. And that is probably very frustrating.
Matt
Especially for CEOs.
Andrew Escobar
Yeah, for CEOs. Maybe it is for, you know, the minority the board, who was hoping it was going to resolve. But that's the right decision at some points. And I know that I've experienced that myself over the past 12 years. There are times when the board says "we are not ready to decide on this. We don't even want to say no, we're asking you to come back to us." That to me sounds like a great thing.
Matt
Agree
Andrew Escobar
that we would, because what then happens if you're trying to drive your decision, you're driven to the safest decision. And sometimes the safest decision is "no." Sometimes the decision that driving to is the reckless one. We have to leave room to make the right call, which might be no call.
Matt
Yeah. Right. And I think that I'd like to say that that's on the level that you're talking about, but also inside an individual. Even if their abstinence from the decision...Even if they're absent is from the decision doesn't affect anything, at least they should feel like ...
Andrew Escobar
Here's why that matters to me. Yeah. And I would still, I'd be totally comfortable with a board member doing that. Because if the rest of us are saying we're ready to make a decision and we want to vote on this. But you don't feel like you have enough information or you feel uncomfortable with something. And so you're abstaining. I'm sure there's all sorts of ramifications that are more academic in terms of your responsibility, and if you should have done that. And I care less about that than I do about you signaling that you were uncomfortable with the process.
Matt
100%
Andrew Escobar
You want better conditions? Great. Let's work on it.
Matt
Yeah, even if it doesn't happen this time, it might in the future. So with the last couple of minutes we have, there's, and this is we've, we've tangentially touched on this a bunch of times. But it's the it's the sort of community aspect of this. And we've got a very, very good, very fruitful but very compliant to the status quo community everywhere. Which, and I adore them. They're great. And I think the one of the things that has been a real and continue will continue for a while to be an obstacle to more systemic shifts is that this minority, or these sort of outliers like you and me, we we like each other, we know each other, but it's really hard to find and build a community around this. Right now. It's not maybe not impossible, but maybe the questions are to what extent does this matter? And what what would you be excited to do in service of community building around this?
Andrew Escobar
One thing I do now is I share with everyone my view on what good governance is, I love talking about the conditions, and how they impact good governance. Because the more I can share with a community of engaged directors, the more I can find either like minded individuals, who we can build upon this idea with, or find the contrarians to test the ideas to work through their views. Like I think getting both perspectives are really, really helpful. I've only to date have found those who are really excited and interested in exploring it. I would love to find more who hear this, this notion of what good governance is and disagree. But I would, I would love to get in the room with more engaged directors who want to explore what good governance means to them individually, to their board, and how to apply it in a meaningful way. And I think it will look different from board to board. Publicly listed company, to small arts not not for profit. It's different, it's going to be different. But I think the idea around the conditions is actually the same
Matt
It's universal.
Andrew Escobar
Yeah, it's universal.
Matt Voiceover
I mean, maybe Andrew and I are just confirming our own beliefs here. You might remember that Paul Smith and I reached a similar conclusion back in episodes 18, 19 and 20. But the thing is, I've been working with boards and executives over the past year or so through the lens of good governance as intentionally cultivating effective conditions. And honestly, it's the first time in my 20 plus years in this space that I feel like positive change is easy, inexpensive, and high impact. I really hope Andrew's board journey continues and that he gets an opportunity to be the new guy over and over so that he can add a bit of disruptive boardroom magic everywhere he goes. And I hope you enjoyed this conversation. Thanks for tuning in to Sound-Up Governance. If you have a disruptive governance streak of your own or even just some bad dad jokes or something, send them to soundup@groundupgovernance.com Thanks for listening.
Sound-Up Governance (ep.35) - Going from status quo to good governance (feat. Andrew Escobar)