© Ian Andrew Maxwell
For almost twenty years now I have been ‘enduring’ board meetings. This is a phenomenon that is rarely discussed by those of us that regularly sit on boards; most of us just silently ‘suck it up’.
For some people, e.g. independent board members, a board meeting can be an interesting monthly or bi-monthly diversion from their usual activities.
However for professional investors, such as venture capitalists, attending a board meeting can feel like Ground Hog Day.
For executives the preparations for a company board meeting can offer a useful opportunity that enforces a reporting and planning structure that otherwise just naturally drifts.
Yet even for executives, after a couple years in the job and when pushed on the subject, very few will admit to really enjoying board meetings; these are just seen as a necessary and unavoidable part of business.
So are board meetings always boring? Not always. Occasionally you get an entertaining one and the contrast to the run-of-the-mill meetings can highlight just how boring they usually are.
Here are some examples of when my board meetings got really interesting:
- A technology start-up was raising venture capital funds with a big ‘down-round’ in valuation and some nasty ‘pay-to-play’ terms for existing shareholders. There were some non-participating (and very angry) shareholders that led a day-long shouting match. It was hugely entertaining and very hard to forget.
- An operating company was going through an exit via a trade sale. There was a difference of opinions between board members (and the shareholders they represented) and the CEO as to whether the deal represented good value. Control rights in this particular company were pretty messy and some board members were ‘playing’ the situation in order to get certain concessions. This ended in days and days of board meetings with threats of legal action; it was one very large memorable game of ‘chicken’ (any hint of the dispute and the potential acquirer might have walked away).
- A board had got its act together sufficiently to decide that the ‘problem’ in the company was the CEO. However they went about the process of firing the CEO without bothering to first secure a replacement. This can only be described as ‘juicily messy’ or as a ‘slow moving train wreck’.
- A board decided to put a company into voluntary liquidation when it was still arguable that it was solvent and could (in a very, very unlikely scenario) trade its way out of its issues. The ‘pro’s’ argued that an orderly windup enhanced their (the liquidation preference shareholders) chances of getting full value for the assets. The ‘cons’ argued that they were going to get nothing anyway and they would prefer to give the wildcard option a go. This had to be the pinnacle of board-level emotion and an occasion like this is certainly not to be missed in any board career.
- Sometimes interesting board meetings occur out of the blue for no good reason. I remember one board meeting where a bunch of board members spent two hours debating a slight change to the company logo for no good reason other than it was the first thing in a year that they felt like they could contribute to. It’s the downside of having the wrong board members, experience-wise. After two hours, had there been a baseball bat in the room, I assure you there would have been blood on the video-conference screen. Entertainment of sorts!
The less in charge the Chair is at these ‘interesting’ meetings the more ‘interesting’ the meetings get.
The genuinely interesting board meetings must represent less than 1% of all board meetings. This means that, in order to be a participant in the interesting meetings, the price one pays is to sit through the other 99% of boring meetings. Talk about a long tail!
It was in this context, one day a couple of years back, that I was sitting in a board meeting that could have been a carbon copy (note to Gen Y’s – this is what ‘cc’ stands for) of the previous five board meetings of this particular company, wondering what we as a board weren’t doing (other than turning the handle over and over and over) and why we weren’t doing anything different to what we have done before.
The answer was of course ‘the board members’. They (and me included) were just politely going through the processes, ignoring the fact that this company was missing some great opportunities for growth.
Of course in order to grab these opportunities we would have needed a new CEO, lots of new equity investment, and some working capital debt. At least half of the board members and the chair would have had to go and there would likely have been a shareholder stoush or two if we tried that on!
Which led me to wonder why the board members at this company were collectively so ineffective at challenging the status quo?
The self-interest of some of the board members partially answered the question. They were more focused on their golf or their sinecures.
For the others, well they (including me) were very busy people and none of us felt like we had the time or energy to muster up the collective interest to force a consideration of change. In any case this is a fraught process with many downside risks.
But after consideration I decided that there was more to it. Fundamentally it seemed to me that it was all about group dynamics and personality types.
Firstly I noted that many people can behave quite differently in a board meeting compared to at other times.
For example, your wise old coffee-drinking colleague might become an outspoken monster in board meetings. Or the extroverted venture capitalist may never say a single world in a meeting (a habit based on hard won experience maybe) until he shuts his notepad and says ‘I am done here’ and walks out never to be seen again.
People often ‘change’ in front in an audience – it seems to be human nature.
Therefore for the purposes of judging people as board members, personality types have to be measured in the context of participation at board meetings.
And of course there is the old saying ‘You can’t manage what you don’t measure’. So I decided to develop a way of measuring board-meeting personality types.
And this in turn led me to develop a whole structure (I had almost four hours after all) in which to evaluate the board members, their personalities at board meetings, and their efforts at participation at board meetings.
Below I will share the results of this four hour session, namely a structure for measuring personality types at board meetings together with some suggestions on how to use this information.
At worst, this structure offers a template for useful personal entertainment at boring board meetings and, at best, it will highlight what is wrong with your board and what you can do about it.
A Structure for Board Membership and Participation
What I developed in that boring board meeting is primarily aimed at a process to deliver the following outcomes:
- Identifying the different individual board member types in order to see why they form sub-groups of self-interest, and
- Checking if board membership is properly balanced for optimal outcomes, and
- Ensuring that appropriate board leadership is in place
The basic structure that I came up with follows that of the well-known Myers Briggs Typing, although noting that there is no connection with Myers-Briggs at the psychology level (I checked with someone who claims to know this stuff).
I have used an analogous structure to that of Myers-Briggs because it has proven successful, with enough complexity to differentiate different personality Types, but not too complex such that it becomes unwieldy.
My Board Member Types
- The Process Types
Bureaucrat (B) – Pragmatist (P)
People fall in between two extremes in the context of the process of the board meeting. Firstly there is the Bureaucrat (B) Type who believes the process which governs how a meeting is held is more important than the purpose of the meeting. The opposite of the Bureaucrat is the Pragmatist (P) Type who believes the process should be a slave to the purpose of the meeting.
- The Outcome Types
Utilitarian (U) – Factionalist (F)
With regards to the desired outcomes of the meeting there are two extreme Types. The Utilitarian (U) Type believes in creating the greater good for the greater many (as defined in the broadest sense for the company and its stakeholders). Whereas the Factionalist (F) Type believes in the greater good for a small faction, typically one he or she is involved with.
- The Group Dynamics Types
Individual (I) – Consensus (C)
With regards to group dynamics there are those who revel in being outspoken individuals and/or being different from the majority of the group – this is the Individual (I) Type. Others however prefer not to stand out, they seek agreement amongst many members, they associate with the collective view, and they like to go into a meeting having previously had ‘one-on-one’s’ to ensure that there is no board conflict – this is the Consensus (C) Type.
- The Strategy Types
Strategic (S) – Tactical (T)
With regards to the conduct of a meeting or any group decision-making process there are those who prefer to consider longer-term strategic issues, the Strategic (S) Types. Then there are those who prefer the meeting to dwell on the very near term issues, and these people are Tactical (T) Types.
A Summary of the Group Types
The primary Types are the Process Types and the Outcome Types. The primary Types describe fundamental psychological or learned preferences that determine behaviour in the group/meeting setting.
The secondary Types are the Group Dynamics Types and the Strategy Types. The impact of the secondary Types can be attenuated by good team leadership, mediation or self-awareness.
Just like Myers-Briggs, on any specific dimension of Type an individual can be anywhere between 0% and 100%. For example one individual may be 100% Bureaucratic Type whereas another might measure 60% Bureaucratic and 40% Pragmatic.
I haven’t gone to the effort of putting together a Myers-Briggs style questionnaire because of two reasons. Firstly, when you start thinking about people in terms of the structure it’s pretty easy to estimate their Types with some accuracy. Secondly, I have many other better things to do.
Commentary on Group Types
It must be stressed that there are no ‘good’ or ‘bad’ personality Types for board members.
I believe that all Types have a role in boards but that a self-awareness of one’s Type will certainly help an individual contribute more positively.
I suspect that problems arise when there are imbalances of the Types of people on boards. For example when there are too many similar Types or there are inappropriate Types in certain key roles.
Here are some common problems with board membership that I have observed:
- The Affinity Group Problem: When boards get into ‘group-think’ it is likely that they are dominated by Factionalists and Consensus Types, possibly also with a shorter term (Tactical) views. If this is the case the tendency towards Consensus behaviour prevents any Individual questioning whatever the group believes, especially if there are no Individual Types to question the orthodox view. Similarly Factionalist Types are more likely to be aligned to a shared view so long as they represent the same faction of interest. Longer-term thinking associated with Strategic Types leads to behaviours which challenge group-think, specifically the introduction of ‘scenario analysis’ of short-term tactical choices in order to test how these might impact the probabilities of the achieving the desired long-term strategic outcomes of the company.
- The Wrong Chair Problem: The best Chairs of boards are in my opinion the Pragmatic Utilitarian Consensus Strategic (PUCS) Types. Pragmatism in a leader ensures the process does not get in the way of the purpose of the board. However, a good leader must also ensure that due process is followed so that other members respect the ‘institution’ of the board. Therefore I believe that the best Chair is ‘just’ a Pragmatic Type over Bureaucratic Type. By being the Utilitarian Type a Chair is motivated to ensure that factional interests do not dominate. Consensus Type behaviour is important in a Chair; however the best Chairs are also outspoken and bossy when they need to be and in this context the best Chairs are ‘just’ the Consensus Type over Individual Type. And finally a Strategic Type leader will allow others (e.g. the Tactical Types) to detail the short-term needs but at the same time ensure the board and the company has a longer-term strategic focus.
- The ‘Ignore the Shareholders’ Problem: When a company board is not serving shareholder’s interests very well it usually because the board members are serving their own needs first. This is usually because a bunch of self-serving Factionalist Types have control of the board. The problem is exacerbated if there is a weak (e.g. Bureaucratic Type) Chair and also if there is an absence of any outspoken Individual Types to ‘call’ the issues.
- The Loudmouth Problem: We have all been on boards where you get that one BFIT (Bureaucratic Factionalist Individual Tactical) Type that drives everyone mad.Outspoken, self-serving, process-driven and with short-term thinking; you would think that such a person should be sent to a salt mine in Siberia. But even so, with appropriate leadership and team balance these individuals can make useful and unique contributions. They just have to be very well managed.
- The ‘WTF?’ Problem: For the boring 99% of your board meetings it doesn’t really matter who is on your board – you could have a bunch of soft toys and it would make little impact, either positive or negative. However it is those one-percenters, the ‘interesting’ meetings, when the big decisions are made that you might be surprised at the irrational or self-serving behaviour of one or more of your board members. The whole purpose of a board is to serve all of the shareholders’ needs (or ‘stakeholders’ for the organic types) using collective wisdom rather than individual greed. Because many people reserve their dark-side behaviour for the times that ‘matter’ the only defence against this unknown is to structure your board appropriately so that the collective is armed and ready to shoot (the misbehaving individual(s)).
There are many other common board problems and most of them can be tracked back to the behaviour and personality of board members; what they are willing to do and what they are not willing to do.
The primary purpose of the structure I have documented here (apart from providing a template for board ‘sport’ if you are bored in a board meeting) is to help set up boards with the optimal balance of membership, or to identify when boards have issues relating to their membership.
Now here is the universal truth – the best time to address these issues is before the company itself has issues!
Now here is the universal truth – the best time to address these issues is before the company itself has issues!
But if the company is a victim of, say board group-think, how do you even get the board to accept that they have a problem?
One option is to introduce a formal process under the guise of good HR practice. Possibly using a mediator, the imbalances can be formally identified. This is the first required step before any change can be effected.
A mediator could for example ask every board member to identify their own four Types and also those of the other board members. This process could be very quick and it would provide a complete 360 degree view of the board.
In terms of processing the data from such a review these would be the key outcomes:
- Any disparities between self-assessment and the group’s view of an individual would help that individual realise their shortcomings
- When a whole board or team is in denial about their Types, then the outside assessment from the mediator (or even a stakeholder) should highlight this and drive the process to address it
- If there are too many similarities of Types then there may be an ‘affinity group’. These are much less effective than a well-balanced team because of the missing capabilities that balance board efforts
- A board should have appropriate leadership in place – preferably a Pragmatic Utilitarian Consensus (PUCS) Type or similar
Of course the best time to consider all of this is when boards are first being formed. I have had one opportunity to do this.
On this particular occasion I quietly used this Type structure to ensure that the board membership was well-balanced and had an appropriate chair (me).
In the process we got to avoid a few ‘clangers’ (board members that would have been disasters) and the board, since formation, has performed very well.
This is really worth doing!
 The Myers-Briggs Type Indicator (MBTI) measures psychological preferences in how people perceive the world and make decisions – see http://en.wikipedia.org/wiki/Myers-Briggs_Type_Indicator  I say ‘board’ but the Types I describe pretty much exist in any group meeting. Boards just happen to be where the personality traits impact most because boards usually operate without reference to the ‘rules’ of an organisation which often are designed to attenuate the impact of personalities on meeting outcomes.
All articles on Startup88 are the copyright of their authors © Ian Andrew Maxwell
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Ian A. Maxwell is a Technology Entrepreneur and Investor. He is currently CEO of BT Imaging, Chair of Instrument Works and
Co-Founder of Accordia IP and Ian Maxwell Consulting, as well as an Adjunct Professor at RMIT. He has a PhD in Chemistry
and has either founded or worked at Memtec, Allen & Buckeridge Venture Capital, Redfern Photonics (Venture Capital),
Sydney University Polymer Centre, Eindhoven University, DuPont, James Hardie, Viva Blu, Enikos, Wriota and RPO. You can
connect with him on Linkedin au.linkedin.com/in/maxwellian