Charles Conn: “CEOs should be excited about board meetings, but most boards are crap”

Charles Conn is an investor, entrepreneur, and the chair of pioneering outdoor retailer Patagonia. A former partner at McKinsey, he was founding CEO of Ticketmaster-Citysearch, a leading Web 1.0 company, and later became CEO of the Rhodes Trust.

A board veteran at various non-profits and for-profits, Charles co-founded investment firm Monograph Capital in 2021, and is co-author of The Imperfectionists: Strategic Mindsets for Uncertain Times (Wiley 2023).

What’s the value of a great board?

A board meeting should be something leadership teams get excited about. If you’ve picked your board right and they’ve done the work, they will have different perspectives and see things you’re too close to see.

I don’t think the work we do at Patagonia or the other boards that I'm on is unusual. What we're looking for is board effectiveness. Are we being an effective partner to the CEO? Do we know enough to help them set the strategy? Are we being good stewards of the long-term financial stability of the firm?

The board shouldn’t just be reactive, but a lot of boards don’t have any comment until something is put in front of them, and then just ask obvious questions. That’s not partnership. If you’re going to be a partner, you need to have knowledge, engagement and ideas.

If they’re being honest, most CEOs don’t feel like they get very much value from their board and want to get board meetings out of the way as fast as possible. That’s because very few boards are the kind of steward of the enterprise and partner of management that they should be. Most are really crap.

Why is there such a problem with most boards?

There’s a social cache to being a board member, and people accept board memberships without understanding board responsibility. It should be on a par with accepting a very senior executive position. It amazes me that some directors don’t even read the board materials, let alone engage in the way that they really should. They’ll come to the meeting, sternly take off their glasses, and ask the same critical question every time, because they aren’t really prepared, but want to check the participation box.

To be a proper steward, you need to be very deeply engaged in the business. You can’t do that when you sit on eight boards. Good boards do much of their deep work in committees, and you would expect each board member to sit on one to three committees. When you see someone who sits on that many boards, you know they’re not going to be as effective. And you know the board governance and selection committee was aiming for big brand names rather than really driving business results.

What does engaging deeply with the business look like for board members?

You need to do independent research — secret shopping, if you will — and a substantial amount of engagement outside the board meetings with senior management, ideally down into the organisation. I have something like 50 relationships in Patagonia that I keep active, from supply chain to product development. A good CEO will be happy with this, because they know that when they speak with you, you’ll be speaking from genuine connection and experience.

At Patagonia, we do board meetings that meet for two or three days. It’s full contact. We’ll bring in people from all across the organisation. Then, in between meetings, we are expected to visit stores or distribution centres, to be engaged with suppliers and wholesale partners, where appropriate, and immersed in the purpose and mission of the company.

How do you set high expectations for directors that aren’t engaging?

Every board should have a serious onboarding process, including the chair setting clear expectations around cultural norms and engagement. If a particular director always shows up four to seven minutes late, for example, that’s unbelievably disrespectful. At Patagonia, if you don’t understand the mission, purpose, history and daily workings of the business, you’d look like a fool. The onboarding process should make it clear what’s expected.

I also think board evaluation is really important. When it’s done well, it's time consuming — but it means the chair needs to sit with each board member and ask, ‘How do you think you're doing?’, which is hugely valuable. Good boards have a questionnaire that tracks these things over time.

Finally, having a good board secretary is critical. We have a superb board secretary who is always two steps ahead of me, helping make sure we get things done way ahead of time.

How do boards make sure they get board information right?

We tried having every direct report writing two or three pages for the board each month, and discovered that 45 pages of single space, 12-point type is too much for most directors to read. At the other end of the spectrum, you will see a 13-page deck mailed out the day before. The sweet spot has to be somewhere in between.

We like to see a board deck going to directors seven to 10 days in advance of the board meeting. There’s nothing wrong with it being 200 pages, though not all dense text. Good graphics really do help. There are new online platforms that make it easier to work through the materials and ask questions in advance.

As a chair I love when you can see who’s reading the deck, and where you start seeing people’s comments coming in advance, with little explanations and debates happening. Patagonia’s founders are really engaged, making those pre-board comments, and that sends a signal to all of us to be engaged too. It’s one of the advantages of interactive technology: by the time you get to the board meeting, you’re not going through the basics, because everyone knows that stuff already. You’re talking about the finer points of how we can change our go-to-market strategy, or how we can get three more points of margin, etc.

What is the role of AI for boards, in your view?

As a venture investor, I invest in AI companies, but I’m very cautious about its role in my life and its role in boards. I went to a dinner with 15-18 CEOs around the table, and the organiser asked who used AI. Every hand shot up. Then they asked, what are you doing with it? Some said they write a first draft of a board memo, others said they use it to write emails. But if you’re not engaged in the logic of thinking through your board memo or the strategic input of your emails, then you’re not engaged in the problem solving that’s inherent to being a good board member or management team member. Your brain centres don’t light up. You don’t even have good recall of it.

We should be using AI to do the things that it does better than humans, like pulling insights from large and fuzzy data sets, or using AI trained on very specific data sets to help us answer technical questions, which frees us to spend more time on problem solving. But I’m nervous about the wholesale adoption of AI that undermines our cognitive and communication processes rather than supporting them.