Forbes - The Crucial Edge That Makes A Board Exceptional by Punit Renjen

Forbes - Online
The Crucial Edge That Makes A Board Exceptional
By Renjen, Punit
06/14/2013

Which of the following is the mark of a great board room, (a) an eyebrow raised, and then a hand, quickly followed by a challenging question, or (b) nodding heads and then smiles all around, quickly followed by the next item on the agenda? 

In exceptional boardrooms, the intellectual rigor generated by a challenging question is both an accepted norm and a precursor to reaching informed decisions. This is the crucial edge that sets apart boards that lead from boards that follow. Exceptional boards embrace creative tension fully and ensure its presence continually in engaging the management teams they govern. 

Creative tension is known by various names. Constructive discontent, respectful challenge, and “What if?” are just a few that describe its inquisitive and often skeptical nature. However, this key differentiator of exceptional boards is hardly meant to thwart management. Creative tension is constructive. Its purpose is to bring out the very best in management so that senior executives can generate the greatest value for shareholders, stakeholders, and society at large. 

Exceptional boards put creative tension into play many different ways: 

As brand guardians, for example, boards can initiate the debate on how short-term solutions could potentially impact their brands long-term. 

As risk and scenario planners, chairmen and directors can pose hypothetical situations that in today's fast-paced business environment can quickly become all too real. 

As succession stewards, boards can identify current leadership strengths that should be continued and new leadership attributes that should be sought. 

As bold strategists, boards can imagine the organization's vision on fast forward—and brainstorm with management about which actions will keep the trajectory of the organization straight and true beyond the horizon. 

Creative tension drives the journey. A director can begin that journey by asking a question that may defy convention or political correctness. I like inconvenient questions. They often lead to others and enable boards to use oversight and stewardship as catalysts for management's actions. 

The Power of Never, No, and Not Yet 

I grew up in India. From my childhood, I remember the great reverence that people held for our national hero, Mahatma Gandhi. He galvanized millions to march as one, disarmed the empire that had ruled his country for nearly a century, and enabled India to become a free and independent nation. 

As a board chairman years later, perhaps what I admire most about Gandhi is how this bespectacled, humble man of slight stature applied the enormous power of creative tension. Gandhi held no formal position of authority. Nor was there an organized army standing behind him. What he did have were his core beliefs and the audacity to speak truth to power. Gandhi knew that to remain silent would leave authority unchallenged and unchecked. He defied those who sought to silence him, by saying “never” and “no” countless times in a soft, calm voice—and with an iron will. He had to. His relationship with those who occupied his country was adversarial. 

Boards and management, however, have a decided advantage. They are on the same team in helping the enterprise excel. Boards foster creative tension through their responsibility to review and approve—or consider, table, or deny. When a board says “not yet” to a management proposal, the creative tension that results is intended not to undermine but to inspire. And if “not yet” or even an outright “no” escalates boardroom dialogue into full-throated debate, that's okay. Passion is good. Opposing views can collide, but they also can converge and yield exciting new ideas, especially when an organization's core beliefs unite everyone involved. 

How does management respond to creative tension? It depends on the executive. Exceptional leaders embrace it, whether they're in a conference room or the boardroom. Speaking of his C-suite experiences, former Medtronic Medtronic chairman and chief executive Bill George said, “Reward people who challenge you. I didn't promote people who didn't take me on.” Now a professor at Harvard Business School, he also supported that same attitude vigorously in Medtronic's boardroom. According to Mr. George, there were times when a single, compelling voice of dissent caused the board to reconsider and eventually pull back from a major decision. Otherwise, he recalls, those decisions would have probably been unanimous—and most likely disastrous. 

Good for the Gander 

Management shouldn't be the only recipient of creative tension. Board members can enrich their own discussions by challenging one another, including their chairman, and not just during executive sessions. Such openness in front of management can actually deepen trust. It helps convey the message that creative tension is designed to elevate the entire team, not pull management down. 

History tells us that fomenting dissent can lead to a more perfect union. That was the message shared by the biographer and historian Doris Kearns Goodwin, who chronicled how one of the greatest CEOs this country has ever seen stacked his boardroom. Instead of creating his own personal cheering section, Abraham Lincoln purposefully brought together a cabinet that included many former opponents who had run against him for the presidency, and who had railed against his viewpoints along the way. The advisers Lincoln assembled agreed with his ultimate goals of abolishing slavery and preserving the union. Yet he wanted the clash of opposing perspectives to fully inform his own views on how best to achieve that vision.

The success of Lincoln's team of rivals holds a lesson for boards everywhere, that it's better to have tough questions asked by directors in the boardroom than by consumers in the marketplace. 

Challenge, Verify, Trust 

The art of creative tension has many facets. At times, it can leave some wondering if it's worth the effort. Creative tension is not for directors who are quick to judge or slow to envision. It takes both time and imagination. Creative tension is not for directors who crave order. It can alter alignment and disrupt the status quo. Creative tension is an act of professional exertion for board members, one that requires the courage to challenge, the tact to verify, and the confidence to trust.