Group think causes boards to miss opportunities and make avoidable mistakes. This is so because the fewer differing perspectives that are applied to a challenge, the fewer options will be seen, heard, felt or deducted from the data.
As a minimum requirement on a board, let’s move away from having “broad shareholder” – or even “broad stakeholder” – representation in the room, and rather move toward having broad, varied, conflicting, challenging (choose the word that works for you) thinking. As few shareholders as possible should be “represented” on the board with the ideal being none! This might sound unusual but hear me out: The best strategic thinking people, with the company’s best interests at heart, who have the best understanding and deep insight into all of the influences and factors that affect the success and longevity of the company should be on the board.
In Theory
“For a system to be stable, the number of states that its control mechanism is capable of attaining (its variety) must be greater than or equal to the number of states in the system being controlled.” W. Ross Ashby’s Law of Requisite Variety
In colloquial terms, Ashby’s Law has come to be understood as a simple proposition: If a system is to be able to deal successfully with the diversity of challenges that its environment produces, then it needs to have a repertoire of responses which is (at least) as nuanced as the problems thrown up by the environment.
So a viable system is one that can handle the variability of its environment. Or, as Ashby put it, only variety can absorb variety.
In Business Practice
- In a business context, Ashby’s Law means that we need to:
Reduce variety through systemisation and implementation of a strong governance architecture (methodology, policies and procedures) AND - Increase the capacity for dealing with variety by building skills and experience in dealing with complexity. This is achieved through applying systems thinking and increasing diversity in the boardroom so that there is enough variety in the group to absorb the variety in the environment in which the business operates.
Around the Boardroom Table
How does one increase the diversity of directors sitting around the boardroom table?
Group think occurs, for example, when everyone around the boardroom table is the same gender, age and went to the same, or similar, school or university. When presented with a problem, their life experience is likely to lead them to similar solutions. They in all likelihood also have so many other things in common that the answer is likely to coalesce around whoever has the strongest opinion and everyone else just falls in line. Sound familiar, especially in a business started by a bunch of mates?!
What is not commonly understood is that an all-female board has similar challenges to an all-male board; an all-male Jewish board will struggle just as much as an all-male Catholic board.
Diversity of thought comes from having representation from different genders, age groups, levels of education, languages, cultures, religions, countries, regions, industries, life experiences – not simply from the colour of one’s skin.
We need to stir the pot, shake things up a bit! As they often comment in MasterChef ™, “where’s the crunch; where’s the flavour; where’s the colour and texture; it’s too salty; it’s too sweet”, and most importantly, the judges will score based on how all the elements work together to create the whole that is greater than the sum of the parts.
