[also posted at austhinkconsulting.com]
I’m currently collaborating on a draft whitepaper on how decision mapping techniques might be used to improve the deliberations behind board-level decisions.
In 2006, Michael Useem, a distinguished professor at the Wharton Business School, published in Harvard Business Review an article entitled How Well-Run Boards Make Decisions. This seemed obviously relevant. I read it carefully looking for useful insights
It turned out, however, that the article is mostly not about how boards make decisions, but rather about what decisions are or should be made by boards.
If you winnow down the material to identify useful insights about board decision making itself, the article really just makes three recommendations:
- Research and review the decision options before approving a plan of action.
- Subdivide large strategic decisions into smaller, sequential ones.
- Request and evaluate explanations and assumptions for proposed executive decisions.
Two skeptical comments:
- Aren’t these suggestions just stating the blindingly obvious? Well, certainly the first and third are. They really just boil down to “make sure you think carefully about the options and the case for the decision.” Try turning this around. A board that made major strategic decisions without reviewing the decision options, and without evaluating the explanations and assumptions behind proposed decisions, would surely be guilty of some kind of gross delinquency.
- I’m gobsmacked that pablum of this kind can be put forward – in the world’s most distinguished business journal, by an eminent professor at one of the most prestigious business schools, after interviews with 31 large, publicly traded companies, along with a detailed study of three particular boadroom decisions – as the best insights for making good board-level decisions. Its like advising wannabe tennis stars to practice hard and to think about your game plan.
Truisms are, of course, true. Yes, of course boards should review the options and they should evaluate the explanations and assumptions behind proposed decisions. These are starting points, not useful guidelines. The really interesting question is:
What concrete and practical things should boards do in order to ensure that they can effectively do things like reviewing the options and evaluating assumptions?
Our proposal is that one thing they may do is systematically adopt decision mapping practices.
More on this soon, when we release a draft of the whitepaper.
Oh, yes, please, give us something that meets the promise of that journal article! I was hoping to glean something fresh and practical to use in my work with nonprofit/ngo boards. Looks like I should check in with your blog more often, and leave Harvard Biz Review alone!
I just completed doing an analysis for Useem’s article on Well-Run Boards published in HBR (2006). And just as you wrote above, for the life of me, I cant understand how HBR printed this article. Reasons:
– The conclusion is stating the most obvious. Its like saying, humans should be more smarter than animals because they are humans. Boards should do what they should do because they are boards. Does not make any sense.
– The findings of the results present decision making at three companies that made decisions based on the situations they were in (Universal Investments had a incompetent CEO as per that study). This gives NO insight whatsoever to other companies and their boards.
– Boards are MEANT to do what Useem says they MUST do. Whats the point he is making?
Looking forward to a more insightful revamp from you.