Oversight to Insight: Elevating the Board-to-Executive Dynamic

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Episode Transcript:

ANNOUNCER: Welcome to Learning in Action, where we give you the research, ideas, and advice to help you lead and grow in business. In this special episode, we're showcasing a live panel conversation recorded during an Ivey executive education event at the Toronto Stock Exchange. Oversight to Insight. Elevating the Board to Executive Dynamic.

Moderated by Julian Birkinshaw, Dean of Ivey Business School, the event featured expert insights from Michelle Banik, Board Director at Empire and Western University, with deep expertise in HR strategy and organizational performance. Larry Lau, entrepreneur and board member. Bringing a founder's lens to board executive alignment in fast growing companies.

Wendy Kei, Board Chair of Ontario Power Generation. Known for her leadership in governance and ESG. And Lynn Beauregard, President of Governance Professionals of Canada and a national voice on board effectiveness and governance best practices.

Our panelists explore how boards and executive teams can build high trust relationships, improve strategic alignment, and lead with shared accountability, especially in today's high stakes, high speed environment. Let's jump in.

JULIAN BIRKINSHAW: Great to have such an illustrious panel. Huge variety of experience. We're going to be bouncing around a few different topics. But just to get us started, I am going to just dive straight into my opening question. What does great board executive collaboration feel like? How do you know the relationship is working? Michelle.

MICHELLE BANIK: I would say that great board executive collaboration feels natural. It feels respectful to the roles that everybody has to play. And that means the board shows up and leads with positive inquiry and curiosity, rather than trying to play gotcha with the executive team. And the executive team leads with transparency and is forthcoming, particularly when challenges arise.

JULIAN BIRKINSHAW: Lau.

LARRY LAU: I think a lot of it has to do with the momentum and positive energy that's being created. So opposed to a dynamic where it's always about proving or having to essentially justify your actions, I think a lot of it is you can tell that there's a really great dynamic when it's collaborative, and you can actually feel positive momentum.

So after each board meeting or after each conversation, there's very clear, actionable goals and excitement.

JULIAN BIRKINSHAW: Wendy.

WENDY KEI: So for me, it's a culture that is trusting and transparent. And there's mutual respect for one another. So the management team and the board. And that actually sets the tone at the top.

JULIAN BIRKINSHAW: Lynn.

LYNN BEAUREGARD: Not much to add, other than what I really see is that stewardship is a shared interest and goal. And it's the same boat that both board and management are coming from. I agree, it's candid, calm, respectful, and it's forward thinking. It's having those tough conversations, but knowing that it's a safe space to have those tough conversations. Being part of the same goal, having the same opportunities to work together to achieve those.

JULIAN BIRKINSHAW: So when it's going well, it's great. When it goes wrong is when it's actually you realize you've either got a good board or not a good board. I do want each of you to dive into an example, anonymized, unless you're particularly feeling brave, about when something has gone wrong. Because things do go wrong. And many, many companies get into difficulties for a variety of reasons.

And whenever there's problems, ultimately the board is accountable, responsible for trying to resolve those things at some level. So I think, Wendy, I think I was going to go to you first on this, but I do want each of you just to give us a little bit of a story of something that's gone awry.

In your experience, what went wrong? How did you kind of dig yourself out of the hole and come out the other side? Because that illustrates many of the functions of what ultimately you're trying to achieve. 

WENDY KEI: So my first board, publicly traded, we had an executive chairman. And as a board, we decided we needed to move on. Lo and behold, a couple months later, an a press release, he decided to do a proxy battle replacing the entire board.

Never did a proxy battle. I think I was chair of the special committee. I lived at the lawyer's office for six months. So everything you don't want happening on your first board happened on my first board. We're talking about I don't know how many sets of lawyers.

We had one for the board, one for the management team, proxy advisors. For those who don't know, they help you win a battle, replace every member of the board. We had a communications education specialist. I think that bill every time we met was like $35,000.

And all the management time. Instead of running a business, they were trying to figure out if they had a job. It was not fun. Went through the proxy battle hoping I was not the case study for ICD, because I was going through ICD at the same time. And then coming through the other end and being one of two board members on the new company board, and then couldn't get off.

I had that time thinking I spent enough time on this board. I just won't be on the AGM list for the next year. And I told the board chair, and he said, no. And I was like, what do you mean no? I've done enough for this company.

And he said, if you come off, two other board members are going to come off. They will only stay if you stay. So I had to say to the very end. We sold the company.

JULIAN BIRKINSHAW: Just to be clear, ultimately, you prevailed in terms of the person, the exact chair you were trying to usher into retirement. You were successful in achieving that.

WENDY KEI: Correct.

JULIAN BIRKINSHAW: But obviously it was a bloody battle. And a lot of money was spent and a lot of anguish. In many of these cases, this is not your job. This is your little part-time non-executive role. And how many hours a week were you spending on this?

WENDY KEI: Six months to the extent I bought the receptionist at the law firm a Christmas present. I was there every day.

JULIAN BIRKINSHAW: Because obviously you get into these succession issues, and sometimes you've got somebody who's at the helm who is not the right person. What could you have done better? I mean, what could they have done better in terms of managing that?

WENDY KEI: Succession planning would have been a great start. I was the first female and the first visible minority in the board. And the only person with ICD. So governance was a big one for me. At times, trying to explain people why you needed to do something and going, no, yes, this is governance 101. You really do need to do this. And them not understanding.

JULIAN BIRKINSHAW: This was not a super experienced professionally run board.

WENDY KEI: I would say I had a lot of learnings, things I would do differently or things I wouldn't do in the future.

JULIAN BIRKINSHAW: Larry, let's go to you next. I mean, obviously the startup world is very, very different. Obviously, every startup has a board by sort of a legally requirement, but often there are very different types of boards.

LARRY LAU: As a startup, there are a lot of, I guess you can say money issues. Because a lot of startups are often not profitable, they're not cash flow positive. There are a lot of hard conversations that are being had at an executive level with the boards.

Let's just say, how are we-- with one company, it was a very fast growing company. It was in the cannabis space. And there are essentially excise taxes that you have to essentially start to pay. But there is like a miss-- there's a large gap in terms of the taxes that you're collecting and the money that you're receiving from the boards.

So we're actually having to accumulate like a debt liability. So as a board, I think one of those things as a good example was, well, this is a liability that as a board member we're actually fiduciarily responsible for, but we have to manage cash flow and sustain growth.

How do we recapitalize? What risks are we willing to take? What is the interest rate cost? There are things that in this specific situation, we had to do a calculated risk with the management and figure out also how to essentially inject cash into the business.

So very thankful to say that that business has now been acquired. It was a success story here in Canada, but at the same time, I think a lot of the people that are stakeholders, investors, and the executive team are happy to not have a headache.

JULIAN BIRKINSHAW: But there was a difference in view between management and the board in terms of the--

LARRY LAU: Management in this situation wasn't as experienced. So they were leaning towards the board for the advice and the guidance.

JULIAN BIRKINSHAW: And just one more on the startup world. Because when you think about startups that have kind of gone awry, I think about, you remember the WeWork fiasco with Adam Neumann and Travis Kalanick at Uber. I mean, cases of big ego, charismatic, successful chief executives who were ultimately toxic to the companies that they'd created.

And a lot of work had to go on behind the scenes in terms of removing them. I mean, I realize that those are not companies you would have been involved in yourself, but give us a flavor of how the boards of these fast growing startups manage these situations.

LARRY LAU: I think it really depends on the composition of the boards. Some of the examples, from what I have seen and followed, the really, I guess, like eccentric leaders, they've also been able to get super powered-- like super voting rights, or anti-dilution, and certain shares that they have that are different classes. So they essentially can never get kicked out of the company.

And I think it's a double-edged sword when you have an individual like Elon. Elon also can tweet something, or whatever you say on X, and then change the market cap of the organization, right? So I think that is really different. And I think when it's smaller startups, even venture backed, a lot of it is really predicated on how that board was structured. So a wide variety of different situations that people get themselves into.

JULIAN BIRKINSHAW: Yeah. Michelle, give us a horror story, or at least a sort of a slightly scary story from your background.

MICHELLE BANIK: So thinking back in earlier time in my board career, I was on a charity that was building the talent pipeline and working through getting more professional individuals to the table. Didn't have enough professional accountants and a relatively green CEO who was not as financially adept as they should have been.

And so ended up in real financial troubles, given accounting for how unrestricted and restricted revenue was coming into the organization. And so that came as somewhat of a surprise to the board because the audit committee, who had one professional accountant, was relying on particular information and the way the accounting was treated and was also new to the organization in terms of how that charity attributed unrestricted and restricted revenue.

So long story short, that experience-- and I was chairing one of the committees, not the audit committee. I'm not an accountant. But that was an all hands on deck situation because in the charity space, you're already fighting for every dollar and share of wallet. And now we've got a situation where if we're not careful, the organization may cease to exist.

And so a lot of sleepless nights, a lot of pulling together some external resources who were going to advise members of the board, and building out the board talent to ensure that we had the right skills at the table to help the company survive, which it did, and then rebuild from the inside. Because, again, in charity space, often as a board member, you're rolling up your sleeves, you're helping to build the organizations.

JULIAN BIRKINSHAW: You did come out the other side, and ultimately it's a success story. So let's go to you, because obviously you see a lot of this cutting across your various responsibilities. Do you have an example of a horror story, or do you want to reflect on where--

LYNN BEAUREGARD: I do actually have an interesting story. Not necessarily a horror story at all. Worked out well. I was sitting on the board of an NGO. I was on the board for eight years. I became a chair of the board.

But I think it was about a year into being on the board, the organization's funding was 80% from government agencies and had been so for about 30 years. But there were strong rumors brought by the CEO to the board very proactively that there may be a change afoot in terms of the funding that would be received by the organization.

So we literally threw out the agenda. We went into panic mode, I guess, at the very beginning. But what ensued was an opportunity really at the end that we started looking at other models of funding and ended up creating a partnership model where about 50% of the funding for the organization came from other sources and new partners and corporations that believed in the cause. It was a good story in the end.

JULIAN BIRKINSHAW: What's your takeaway from that in terms of what could have been done--

LYNN BEAUREGARD: It goes back to what we were talking about, the trust. The relationship between the executive team and the board. Because if it wasn't for the trust that the CEO had in bringing that information to the front right away and to have the board become a partner in resolving this situation rather than take it on on his own and not involving the board until things perhaps could have gone sideways, really.

It was a good collaboration in that regard. The organization still thrives on that model, partnership and government funding. So I think in this particular case, again, they rowed the boat together against the current.

[SOFT MUSIC]

JULIAN BIRKINSHAW: A lot of you talked about trust and alignment. And I'm going to use my own example just to sharpen the question, and then you can all respond to it. So one of my jobs is I am, as it were, the Chief Executive of the Ivey Business School Foundation. And we have a board.

And the question I always ask myself is, how much detail about our operational plans should I actually share with the board? And I know the principle that transparency is good, and my bias is to provide more detail. But the more detail you provide, the more the board then finds itself stuck in the weeds and then doesn't actually focus on the big picture.

And of course, it is human nature to not share every last detail when some of those details are a little bit, yeah, not quite what I wanted. I prefer, and I think this is human nature, to tell the aggregate story, which is a good story, and keep some of the little challenges we've got off to the side.

Now, I'm pretty much guessing that all of you have experienced this question about how much detail the board should actually get on every last problem and challenge and detail. Who wants to go first on this in terms of what's your recommendation, if you like, as to how transparent the executive should be with the board?

LYNN BEAUREGARD: I think it's a key question. At GPC, it's a conversation on board. And we want to be reading the sequel, not the prologue. We want to be able to plan ahead, not being tied up to oversight and compliance.

And so the role of the governance professional, the corporate secretary, the legal counsel, whomever works really closely with the board chair as kind of a custodian of the agenda, has an opportunity to really think about making the script one that will result in the board being more forward thinking.

And that means perhaps putting more emphasis on the pre-reads and managing the, I guess the sound bites, if you will, with the management team. Because the management team does want to wax poetic about their accomplishments and everything that's happened and the results. And they want to provide those details.

It's not for lack of wanting that from at the board level, it's also there's a need to be forward thinking. There's a need to think about strategy. And there are ways to manage that process in terms of bringing information to the board that is going to be everything that they need is there to see where the operations at, how everything is moving along.

And again, the pre-reads, pre-meetings, agreeing on the way that the information should come to the board. It's managing the space between the board and the management team. It's a tricky role. They're the custodian of that timeline and that space. And there's a lot that can happen to help that system along.

For example, they can provide memos for everything that they put into the board meeting package, which summarizes at a very high level what they're about to read and what they need to know. And if it's for a decision making process, there needs to be a resolution or if it's for information only. It needs to be pretty clear.

And we do that for all of our board meetings at GPC. We have very clear memos that go in front of every single item. If it's for information only, it's in the package for information. Everything is delineated so that the board knows what they need to do with all of this information.

Do we need to know this? And do we need to talk about it at the board meeting, or do we just need to park it so that it becomes information in decision making further down the road? It's also managing the executives team's need to put things at a certain level of information, bring them up to that altitude, and managing that information so that it's more forward thinking rather than what they've accomplished. It's a tricky thing.

JULIAN BIRKINSHAW: Wendy, what's your view?

WENDY KEI: For me, it's also the structure of your committees. So your detailed work should be done at your committee level, and your board should be definitely focused on the strategy. So at OPG, we have an operation committee called generation oversight, where all we talk about is all the operations. And it doesn't-- we don't repeat it at the board level.

But on my goal board, we have a technical committee, where we talk about the operations. And we often-- we will always start our board week with the technical committee. Which means my audit follows that. I'm not talking about operations, I'm not reviewing any of that.

Those questions are asked and answered at the tech committee, and my audit committee that I chair is focused on the accounting and the matters that are non-operational. So how you structure those committees are really important, and the flow, right?

We try starting with the audit committee first, and all the operation questions get asked. Well, that just made my audit committee an hour longer than it should. So we flipped it, and that's worked out well. My other suggestion is you need a strong committee chair or board chair to say that's not the role of the board or that's not the role of the committee. My board members know I will cut off the conversation if it's in the weeds.

JULIAN BIRKINSHAW: Lau.

LARRY LAU: Within a startup space, nothing is linear. In a larger organization, you do have these different committees, you have this structure that you can kind of rely on. But in a startup space, it's constantly, every day, it's like a constant fire, multiple fires.

So I think having all the details is just information overload. I do think it's more about setting expectations and understanding the why and the what, but not the how. So as long as I set a mandate for the executive team or the founder in terms of this is what you have to accomplish regardless, like this is non-negotiable. As long as they're not doing anything illegal, that's the goal that they have to meet.

JULIAN BIRKINSHAW: And in many startups, particularly early stage startups, the founders are very inexperienced when it comes to business matters. And in some of those cases, you've actually got seasoned investors who actually know more about the business than the founders, which is a very different situation than when we're running big professional companies where the executive running it, almost by definition, must know his or her business better than anybody else.

And I guess that's your point, is that they're going to roll up their sleeves and kind of get involved into the details in a way then.

LARRY LAU: Yeah, I think a lot of the board meetings that we have in the startup space it's much more informal. There's a lot more-- I know that's a theme and something that the whole panel, we all agree on this. It's not about the six meetings or four meetings, the AGM, it's really the relationship and the dynamic that has been built throughout the whole process.

So even though in a board meeting, you're kind of checking off the boxes in this formality, in between these meetings, we're already addressing some of these issues and concerns. So I think when you're talking about the information that's required, if you're having a fluid conversation and dynamic, you're already aware of some of the issues that are being brought up.

JULIAN BIRKINSHAW: Michelle, what are your thoughts on this?

MICHELLE BANIK: Having conviction on something is healthy. And I think constructive and challenging conversations at board and executive tables is necessary. If those two things combine, and you end up with unfiltered insight, it likely resonates best when it's delivered free of bias. So the person delivering the insight doesn't just need to sound like the smartest person in the room. And when it's delivered constructively in a way to contribute to informed decision making.

If it's delivered in a way that is, these are my views. My expectation as a board director is you executive will do it this way, that's an expectation. That's not-- that's wading into the micromanagement. I think you can get unfiltered insight, you can have constructive conversations, which is critical, and you can do that without micromanaging.

JULIAN BIRKINSHAW: I've got a question now about board dynamics and some of the pathologies of boards. And frankly, this actually applies to literally any group. I'm going to quote from a friend of mine in the UK. He wrote a book called Disaster in the Boardroom.

And so I seem obsessed with negativity. I'm not. I just think that by looking at everything when things go wrong, you actually learn an awful lot about what things can go right. So he picks up-- and I'm just going to pick on three or four of his pathologies when boards end up in this negative sort of context. And I guess my question will be, which ones of these have you either experienced or feel that are most toxic or most dangerous?

So one is groupthink, which is where there is perhaps a little bit of a love in. There's a little bit of a perhaps, many members of the board were even appointed by the person who's running the company, and they all start to think in exactly the same way. And of course, we all know that that blinkered thinking can mean you the iceberg.

Another pathology is excessive bureaucracy, where everything is just done by the rules, and there's no room to actually break from the rules to discuss the substance of things. A third is imbalance. You're missing key voices. You've actually got a board which is really strong in some areas and perhaps really weak in others.

I'm going to give you one more. It's called the bystander effect. Which means that if you've got perhaps too big a board and it's too diffuse, no one actually takes any responsibility. And you kind of start saying yes to things because you think somehow somebody else will.

MICHELLE BANIK: I'm happy to jump in here. It sounds as if groupthink and the imbalance almost result in the same negative outcome, right? Because you're not hearing the voices at the table that you need to have. Boards do their best work when you've got the diverse perspectives sharing those views at the table, whether they're popular or unpopular.

And I think that with groupthink, when I've seen that happen, whether as an executive team or as a board, it stifles the really important contributions at the table.

JULIAN BIRKINSHAW: So getting the right voices around the table, the right voices in the discussion. I guess that's the chair's job to ensure that.

MICHELLE BANIK: The chair plays a critical role in that at the committee level or at the board as a whole. And in some instances, if you see the groupthink taking place, you've got to draw in other voices and change the conversation to make sure that it moves off to the side.

JULIAN BIRKINSHAW: So we talked about imbalance, we talked about conformity. Have any of you experienced boards which are so obsessed with just following the rules and principles that they actually stopped doing the job?

LARRY LAU: The composition of boards for a venture-backed company, there are some misaligned motives, right? So if you're a lead investor, and you have a lot of influence, not only are you a board director, there's a shareholder aspect and there's also a board dynamic aspect, right?

So if you're a majority shareholder or you have a big potential financial interests, that may change how you're also dictating and governing the organization.

JULIAN BIRKINSHAW: Wendy, did you have anything to add to that or Lynn.

LYNN BEAUREGARD: I would agree the chair has a huge role to play in this. And I also think the board needs to have some accountability. At least whether it's once a year or every couple of years, do a board evaluation process so that there's some feedback on board behavior, on board effectiveness and so on.

And there's also an opportunity there to look at the skills and competencies of the board. And that should be tied to the strategy of the board. Whether or not they have the right minds at the table that are going to really reflect where the board is going, where the organization is going.

So it's-- I think that's more the solution problem, but I think the idea is to catch that somehow. And ideally, the chair is the one that is bringing that into the fold. And also pointing out to the board members in individual conversations wherever possible, because there should be some form of a relationship just outside of just the boardroom table between the chair and the directors to have those informal conversations.

And to be able to really give them feedback where possible. Where there may be some things that aren't working in their favor, or maybe there's an issue that they don't understand, or maybe they're just not feeling confident and safe to bring their perspectives to the table. So somehow you need to get to the bottom of that.

JULIAN BIRKINSHAW: And in some ways, that is exactly akin to any sort of high functioning group or team. Which is you're managing the process, you're making sure that people understand their roles, you're tackling latent or sort of emerging problems by having conversations off to one side.

So, Wendy, anything more on the pathologies of the board dynamic? We didn't talk about the bystander. In other words, where the board gets a bit fragmented because no one feels that they're actually taking responsibility.

WENDY KEI: So I have seen that. And that would be where they're not appointed based on the skills needed to drive the strategy, as Lynn was saying. They are buddies with the board chair. And so they won't respond until the board chair responds.

Or you can actually wait and probably count and say, OK, emails going out. It needs approval. They're going to wait till somebody else says, yes, I agree, and then you will see. You can time it. And I have counted it. It's usually between five and 10 minutes, and you'll say, Oh, I approve.

JULIAN BIRKINSHAW: When new challenges come along, and we'll do it in the context, if you don't mind, of artificial intelligence. Because every company in the world is grappling with what does Gen AI mean for Ivey Business School, what does it mean for your respective companies?

Clearly, the executives have a responsibility to take ownership of how they're going to deal with this new threat opportunity. Every board member is also thinking, are these guys on top of this thing? Are they actually moving fast enough?

So examples from your own experiences today of how the board is engaging with generative AI. Are they simply responding to what the chief executive is saying? Are they bringing in questions forward? Are they trying to encourage away days where you're talking about this issue in an open-ended way? Wendy, do you want to go first?

WENDY KEI: So I think there's two approaches. One, board members need education on Gen AI. I had one a couple of weeks ago on agentic AI. So you have to build that into your board meetings. Some sort of continuing education. I also think the conversation with management on AI needs to be done not at a quarterly meeting.

You got to do those deep dives off cycle. Otherwise you can spend a whole day on it, and it's much easier to do it in pieces. So I like to call it the management team taking the board on a journey. You give us an hour here, another hour here, because we only can absorb an hour, and take us on a journey to where we need to be.

Don't dump it all on a seven hour AI day. That's not going to work. We're not going to absorb any of it. So take us on a journey, but we also need continuing education from a third party. And I've seen my boards do is it's not always the same people. And it's different. Maybe it's different accounting firm. It could be Microsoft coming in and talking about it. But giving us a variety of experts that we can ask our questions to, but also take us on a journey on AI.

Just to build on what Wendy shared, directors have to stay current themselves. So you have to go on your personal journeys. The executive team should be taking you along 100%. They are embedded in these issues every single day.

And as directors, you don't sit in those operations roles. So you come in on a quarterly basis or every six weeks, whatever the cycle is, and you're picking it up from there. So my encouragement is stay current on your own. The boards that I sit on, that is actually encouraged of us.

Personally, I'm married to a technologist, and I have a 17-year-old. I was the last one at the dinner table to talk about ChatGPT 4 when it came out. No word of a lie. I encourage everybody to embrace what's coming. Because pace of change is accelerating, stakeholder expectations are becoming more complex. And if we wait as directors, if we wait for just the board education session, we will be left far behind.

JULIAN BIRKINSHAW: Yeah. I'm going to add a quick reflection on my own before I go to the others. So Ivey Business School, I think we're pretty on top of what's happening. We're making a lot of changes to our curriculum. We're doing all sorts of dabbling in new technologies to help students learn better. We're thinking about the new jobs they can get.

But I'm conscious that whenever I go to my board, they say, you just don't get it. You don't realize how quickly everything's changed. 30% of the jobs your students are getting now won't exist a year from now. Now, that's their prerogative to prod and sort of challenge me, but I actually do believe that they're wrong. I think they are overstating the extent of the challenge.

And I find myself in this strange position of actually having to defend what I already think is, in fact, quite a positive position because it's not quite as extreme as these folks. It's their job to provoke and challenge, right? And they don't have to stand by their decision. It's me who has got to make the actual decisions.

I do think that getting that conversation right about who is ultimately right about how fast this thing is changing is a difficult one to resolve. Lynn, what are your reflections?

LYNN BEAUREGARD: As GPC, we hear it every day. We need more information. So we do offer some content as well on that. And I think a lot of the conversations, especially from the board's perspective, are, well, how is this going to change the way we do business? And what are the risks, more so than what are the opportunities?

And I think that there's both. But there is a need for board education on AI. Our own board has just gone through a session ourselves just to kind of get the general parameters of what we're looking at in terms of what's out there and how it can impact both their job and our organization.

JULIAN BIRKINSHAW: I mean, sorry, it's a terrific point. Because for every provocateur on my board who was saying, you're not moving fast enough, actually, we need a couple of people on the board to say, are you actually being thoughtful about the risk? Because we know that there's huge risks with generative AI.

And ultimately, the board's job is to avoid the negative more than to provide the positive. I mean, governance is about risk management as much as anything. Larry, what are your thoughts on this?

LARRY LAU: Yeah, I think as a director, as a founder, entrepreneur, it's important to be informed of this technology. I think as an organization, as a business, as an NGO, whether it's generative AI or just AI in general, I do caution the putting a square in a round hole or whatever that's saying is.

I think a lot of people are very intrigued about how do you create enterprise value and using these buzzwords and adopting AI. But in the reality, at least present day, there are definitely benefits to streamline your operations day to day, but trying to force feed the adoption of AI into your business is, I think, creating more of a distraction more than anything.

From the board level and governance, I think it's the opposite of, well, obviously be informed to be dangerous and understand it and the risk. But it's also-- I think it's the opposite of whether or not the organization should be pursuing it, yeah.

JULIAN BIRKINSHAW: I mean, there are risks on either side. There's no question that you can overdo it in terms of reacting to a disruptive challenge like this.

[SOFT MUSIC]

We're going to have two or three questions, maybe more, and then I'll have one last sort of summary comment from the panel.

THERESA UPTON: Hi. Theresa Upton, MBA 2022, VP Investor Office at the Ontario Securities Commission. I have a question for you because you all started out with some excellent comments about collaboration and respect on boards. The type of behavior we expect from leaders, leader-to-leader communication.

But in the last maybe five to 10 years, we've seen an erosion, maybe on social media and perhaps with certain leaders that are prominent in the world, there is less respect in communications. And I'm wondering if that's trickled down to the board level, and how might we maintain that culture of respect and decorum so we can move forward and have the positive momentum that you speak of?

MICHELLE BANIK: So I spend a lot of time with my board members and my executive team between quarters. I have coffee or virtual coffee with every single one of them every quarter. And what that does do, it builds a relationship. It was really important during COVID to check in with everybody.

It wasn't so much what are you doing, but how are you coping? I can see the kids running around behind you and your husband at the end-- the other end of the table. So how are you doing? That has built such a strong culture that the board chair will reach out, and she doesn't want a PowerPoint presentation.

And the first person I asked called HR and asked if they were being fired because the board chair doesn't call for coffee. No. But now it's quite normal for us for me to call up and say, hey, can we go for coffee or, hey, do you want to go for lunch? It's a very warm culture.

It's really changed the way we do things. And it's gotten like when I send those emails out saying, hey, anybody available? They jump on it. Because to have a one-on-one with the board chair over lunch, highly unusual, but they thrive on it. So I know all of these people so well. When it comes to succession planning, it's a no brainer.

GREG DONOVAN: Hi. It's Greg Donovan from Avondale Private Capital. One of the challenges we have here in Canada is there's conservatism of Canadian corporate culture. Boards can be enablers of that conservatism and that governance. And you've seen in the most recent election cycle here in Canada, where we need to invest more more quickly to enable Canadian competitiveness.

From a board level perspective, to what degree do you feel like the board has a role in enabling executives to invest more more quickly in growing the business, defending Canadian competitiveness, defending the firm's competitiveness, notwithstanding that we just covered the topic of AI?

LARRY LAU: This was one of the questions that we prepped for, I was hoping to answer. I think what boards can actually take away from is being nimble. So I think boards, as you mentioned, like there's a lot of red tape. I think that's what board members are known to be bad for.

I think when boards take on a more scrappy, gritty type of mentality, I think that's how these businesses or organizations are able to be innovative. So, for example, an executive team might say, Oh, this might cost like $50,000 to like, try or test and build this whatever system.

As an individual, even as an executive, you should be challenging to say, what is the MVP that I can do to create some type of traction or to prove a thesis that this is the path to move forward? So is that $2,000? Is that $5,000? There should be a fraction of that cost.

And now you can-- if that was $50,000, you could do 10 different tests, let's just say over a period of time and understand what is going to be working, what's going to build traction, and then you can double down from that. And I think that is something that is missing in corporate culture.

As much as I am in a startup, I know a lot of people in corporate organizations. A lot of banks are trying to get into more kind of innovation labs or whatever. And I think that has to be rooted in how they take on risk.

JULIAN BIRKINSHAW: Any other thoughts on that question?

LYNN BEAUREGARD: I just also want to go back to the board psychology, if you will, and skills and competencies. Some boards talk about evolving the board in terms of that. They just rearrange the furniture. Instead of bringing in innovation, instead of bringing in younger board members, there is still-- there still seems to be a trend for the pale male stale, perhaps.

But I think what some boards are talking about is bringing in that next gen board member, the younger generation so that they can tap in to more innovation. They can tap into the way of thinking, because they think very differently, and they communicate very differently.

So if boards are not tapping into that, they're not necessarily going to be at the forefront of innovation, I think.

WENDY KEI: I'm a naturally impatient person. So sitting on boards, I always ask, how can we go faster? And when somebody says, we need 15 pilots of x, y, and z, I say, what can you do in five? Because if we let perfection be the enemy of the good, by the way, our competition has already flown past us, and we're already behind.

MARI JENSE: Hi. Mari Jensen. I'm Treasurer and CAO of MUFG Bank and member of the Toronto Investment Board. I'll just preface this by saying this does not apply to me, but what does the board do when they have a toxic CEO? You touched on this, but I was just wondering if you could just delve into that in a bit more detail.

WENDY KEI: Not that I've had a toxic CEO, but I will say all my boards provide feedback on the CEO. And the board chair is the one who gives that feedback. And I think that's a good place to start, is, do they understand their impact to the executive team and to the board?

LYNN BEAUREGARD: I'll just build on what Wendy has said. So Wendy and I both subscribe to the view that-- and I chair a board as well, and I'm chair of the committees. In between quarters, directors need to stay connected to executives.

Not only do you learn about what's going on, because they're doing these roles day in and day out, you get to understand the culture in a way you will not understand it on a quarterly basis when everybody's all buttoned up at your board cycle.

You have to pay attention to what you're seeing then. And this is where maybe then the board has to have one of those constructive and hard conversations that are absolutely necessary. I'm also the former chief people officer. So I pay very close attention to things like this. But it's so important because toxicity in an organization, particularly an executive team, will just ruin things very, very quickly, and it's hard to rebuild from that.

JULIAN BIRKINSHAW: What is your single best piece of advice to a board or executive team looking to strengthen their partnership?

MICHELLE BANIK: I have so many, but I think the main one is going back to rowing the boat together means there has to be that trust, openness, and transparency and that honesty. And you have to have those tough conversations.

Myself as a COO, I have that kind of relationship with my board chair and my entire board. I know that if there's something that needs to be pointed out that isn't maybe going the right direction, that's a conversation that I can have. And I feel confident that that's something that can be then worked on together, just because there's that kind of a relationship.

JULIAN BIRKINSHAW: Wendy.

WENDY KEI: Get to know your board members if you're an executive. And there's often board dinners. Sit beside somebody you don't know well. And so that was always my advice to manage the executive team, was they said, Oh, who should I sit beside? Sit beside someone you don't know. And build that relationship.

LARRY LAU: I think the biggest piece of advice or information to take away is that being on a board is not just governing and being kind of doing this like checkbox and having this formality. I think there is a lot of work, as everyone on this panel kind of mentioned. There's a lot of work that needs to be done in between these meetings.

I think you have to put in a lot of energy to understand the industry and the business. But not to the point where you're micromanaging. But you can govern if you don't understand that industry and the business. You can't challenge the executive if you don't understand. So I think that's the biggest thing that I would share and for myself was the biggest learning.

JULIAN BIRKINSHAW: Michelle.

MICHELLE BANIK: It's a bit of a theme. But trust is built one moment at a time. So don't take that for granted, and focus on how you earn that trust as a member of the executive team or as a board director. You don't want to be the director that goes into a room who hasn't built any relationships and hasn't established trust when there's a crisis and say to executive team, just trust me on this. So it seems simple and likely gets overstated, but I would say focus on building that trust.

JULIAN BIRKINSHAW: And as an incoming chief executive for the company, the organization I'm running, for me, trying to build that relationship with a chair who'd been there before was the single most important thing for me to do. So I was fastidious in checking in with her frequently. Probably more than I would ordinarily have done, just to make sure that I understood what she was wanting.

That's just my own personal experience, but having a chief executive who's not getting on well with their chair is a recipe for disaster. So I've been very careful to nurture that relationship.

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