Sunday, December 25, 2016

Power moves in the boardroom

What can we learn from the boardrooms ? I'm not talking about the ordinary meetings of a board of eight, but the crucial meetings that shape the direction of a business.

What goes on behind the close doors ? Boards of Directors meetings are off limits to outsiders. In fact, as recent as 1995, even courtroom procedures were not televised (The O.J. Simpson trial changed all of that with the live feed).

Executive meetings of all kinds allowed me to see the interplay of power among the participants. Of course the dynamics were unique to each meeting, but I can talk about: dysfunctional boards, well functioning boards. I've seen people unable to contain themselves throwing things at people they were in disagreement with. People resigning on the spot (or better said, after five hours of arguing). Boards firing their CEOs.

Here are some observations from the boardroom that I can share with you today:

1. Seating and proximity to the leader (CEO/Pres.) have meaning.

This is self explanatory. Seating at the head of the table is customary. Business Insider picked up on the Trump meeting with tech leaders seating significance. Aides surround the leader who in that case sat at the center of the table.

2. Have a sidekick that keeps on giving.

I've often seen the CEO or the top negotiator working in a two-person team. Why is that ? It is a power move where the second character comes in to spin the case. A less notable individual is needed, not to amplify, but to rephrase the spiel of the CEO. If they didn't buy into the CEO then this second person can try it from another angle, shifting gears. The solution is the same but the delivery is different. The sidekick is usually someone that does not overshadow the main character. Sort of the court jester in the Middle Ages. The court jester in antiquity played a major role in the Kings and Queens negotiations. The court jester wasn't just a clown, but an essential, entrusted, personal sidekick.

3. Some people make up imaginary talks to non-existent people. Distracting ? Annoying, perhaps ?

One interruption too many: At a meeting there was this individual excusing herself to "talk to her adviser". As it turned out, she was going outside the room pretending to talk, there was no one she was consulting with over the phone. Her tactic, designed to bring attention to herself, will backfire if done too often. I thought she was manic depressive.

4. Overheard short power phases CEOs repeat over and over with the highest number of repetitions:

"That's not right."
"At what cost ?"
"We are family."
"It's anything but ordinary."

5. When you speak with authority people will believe almost anything.

To quote one executive: "We've transposed a new record of liquidity after retiring 40% of outstanding debt". Whatever that means...People will often try to "hide in plain sight" and express dismal results in flowery language. It works in deceiving those that don't know how to delve in metrics and numbers.

6. While public and private boards have perhaps different bylaws, founder-led Boards have the highest degree of governance "impunity" risk (it's important to have D&O liability insurance on those). They all have a strong fiduciary duty, however. Sometimes Boards bring notable academics and media celebrities on "just to have folks everybody knows". One board had a well known singer in it, who was saying he had agreed to join because he liked their main product. I think his ability to do any critique was close to zero.

7. You have to take sides. You can't be a bystander. 
Spineless people need not sit on boards. You are given a vote for a reason. A lot of Boards look for the diversity factor nowadays, when what they should be looking for is vetting out spineless executives.

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