Michael Jary is chair of Duchy Originals and Itad. He’s also the lead NED for HM Government, a NED of Barclays Bank UK, and a trustee of The Prince’s Foundation and Opera Holland Park. Prior to this, Michael sat on the board of Nationwide and was chair of The Fairtrade Foundation and Highgrove Gardens. Michael has spent 35 years with OC&C Strategy Consultants, where he was one of the founding team and worldwide managing partner.
This is a key question, because the role of the board is still poorly understood. Ask most employees and they will have a pretty good view of what the CEO does but be much less certain about the board members. Ask the average retail investor and he or she probably assumes that board members are well paid for a few perfunctory meetings followed by lubricated lunches. And, in my experience, even boards themselves sometimes seem unclear about their role — not quite knowing where it starts and where it stops.
“Even boards themselves sometimes seem unclear about their role — not quite knowing where it starts and where it stops.”
A good board, above all, focuses on constantly sharpening and applying the definitions of why the company exists, who it serves, and how it can win. These very basic, fundamental questions are not settled once a year in some countryside hotel but returned to again and again, through every board topic, with the intent of making the best possible, evidence-based decisions.
Everything else you hear about good board governance — composition, diversity, independence, and so on — is a response to that purpose and an attempt at answering one question: “How do we make the best possible choices and ensure the company has the capability to turn them into action?”
We’ve seen examples of colossal decision-making failure in recent years: Boeing, Hewlett Packard, Post Office, Kids Company, The European Super League Company, and many more. These boards seemed to fulfil many of the commonly accepted criteria for good governance. They were stacked with experienced and well-known business people. But they still made poor decisions — and not only as judged by perfect hindsight. They failed to carry out the board’s purpose, damaging the company and their own reputations.
What we should take away from this, then, is that boards need to be truly demanding on themselves and always assume that the best-practice codes and the regulations they follow — quality directors, relevant experience, diversity, well-chaired meetings, and so on — are necessary but not sufficient and can even provide false reassurance that the board is doing its job. As board directors, we should each ask ourselves “How can I be sure that I would have performed better in those circumstances?”
“Assume that the best-practice codes and the regulations they follow — quality directors, relevant experience, diversity, well-chaired meetings, and so on — are necessary but not sufficient.”
I’ve found it useful to think back through my own experience of where boards I’ve been part of got things wrong, and indeed where I got things wrong. My conclusion is that it’s not that I had no inkling of concern but that I failed to go far enough in questioning, or in expressing reservations. So I think the key ingredients are maintaining the clarity to think independently, and the courage to speak up if you’re not convinced.
As chair, your job is not just to orchestrate agreement but to do so in an atmosphere where positive argument is encouraged. You should seek out challenges to the prevailing view, or even to your own view, and ensure that they are aired and pursued. Chairs are rightly praised for developing a collective purpose and for building consensus, but if taken too far these inhibit challenge of the norms.
“Chairs are rightly praised for developing a collective purpose and for building consensus, but if taken too far these inhibit challenge of the norms.”
That doesn’t mean a board should be a place of conflict, at least not usually. But it should be accepting of curiosity, challenge, and disruption of the implicit assumptions that can all too easily overtake our thinking. To take a couple of those earlier examples: the European Super League forgot to ask their audience and collapsed in embarrassment when they finally heard its views; the Post Office board assumed its technology was showing the correct result and didn’t sufficiently consider the alternative; the Boeing board had no risk committee prior to two crashes of the 737 MAX.
And as a director, it’s your job to stand up for your own view even as you listen to everyone else’s. That doesn’t mean being stubborn or awkward, but it does mean keeping clear-headed and persistent. Keep asking the questions until you are convinced.
Many topics arrive at the board at too late a stage for this sort of constructive challenge. Being an executive director is very demanding and it’s natural that once you’ve worked out your way forward, you want to have the board approve it so that you can get on with it. But a board paper is not a piece of homework to be marked. It should be a vehicle for joint understanding and decision-making.
So, it is critical that the executives have the confidence to expose their own thinking processes, show the alternatives that were considered, highlight the risks, and consider where they want the board’s help to improve the decision. Equally, that means non-executives should find ways to build a trusted relationship with the executives, such as asking questions on the paperwork in advance rather than exposing shortcomings in the meeting, and asking boardroom questions in an open and low-ego way.
I tend to avoid reading business books, particularly of the anecdotal “this is how I did it” variety — although, as I’m giving this interview, I feel I should be saying that with a dose of self-irony!
On my table now is Piketty’s latest book, A Brief History of Equality. Having got stuck in Capital in the Twenty-First Century, I hope I will be able to get through the whole thing, as it’s such an important challenge for society. And for bedtime, Without Ever Reaching the Summit, a beautiful description of Dolpo in Nepal where I’ve made a number of treks.
This interview was conducted by Niamh Corbett and Maximilien van Gaver.