Episode 20 - Collective intelligence

In this podcast, Jennifer Sundberg, Co-CEO of Board Intelligence, discusses her company’s theory of collective intelligence, which advocates moving away from superstar CEOs and board-centric decision-making to recognising the whole organisation’s potential to make great decisions.

Board Intelligence, a leading provider of business reporting software that supports more than 3,000 organisations and 40,000 leaders. Lucia, their AI-powered management reporting tool, acts as management’s critical thinking guide, helping to unleash their collective intelligence.
Find out more at www.boardintelligence.com 

In this podcast, Jennifer Sundberg, Co-CEO of Board Intelligence, discusses her company’s theory of collective intelligence, which advocates moving away from superstar CEOs and board-centric decision-making to recognising the whole organisation’s potential to make great decisions. In practice this means applying Board Intelligence’s core principles throughout a business not just in the boardroom. For example, asking simple questions to spark critical thinking. Jen says we need to rediscover our childhood tendency to ask questions and unlearn writing conventions that stop us communicating clearly. She adds that the approach is particularly important now when the ability to move fast and take quick decisions is what sets a business apart.


Transcript

RJ

In today's podcast, I'm talking to Jennifer Sundberg, Co-CEO of Board Intelligence, about what her organisation refers to as collective intelligence. Jen, it's great to be speaking to you today. Perhaps you could start by telling us a bit more about your background and your work with governance professionals.

JS

Absolutely, and thank you very much for inviting me on. For the last just over 15 years, I think it must be by now, I've been co-leading Board Intelligence together with Pippa Begg, who many of your listeners may know. Through much of that time, our work has been – as our name suggests – with boards. Helping boards to operate at full pelt, so have more of the conversations that really matter, and take better decisions and faster off the back of that.

Before we met, before Pippa and I joined forces, we each had separate experiences of working with boards. There was one in particular that really shaped me, which was working with a board of really great people, but throw them together in a room, call it a board meeting and something would go strangely wrong. I was there as a strategy consultant. I didn't claim to know any more than the next person about how to run a board, or why what I was seeing was happening. But it got me interested. It got me curious. I wanted to get into the skin of this to understand how to help a group of people, even really great people, to be more than the sum of the parts?

Pippa had a similar experience as well. Over the years, we've gone on to work together, join forces to try to really crack that [problem]. Over the last 15 plus years, we've developed a playbook that underpins what we now do and how we do it. We now sell that playbook combined with a set of technology products that help to support its implementation. We support just over 3000 boards and 30,000 plus directors.

RJ

How do you work with governance professionals in that area?

JS

Governance professionals engage us to help apply our playbook to their boards. [For example,] the work we do around making sure board members have the right tools for the job, in the form of really effective board packs, making sure the content itself is really up to scratch. We often think about a board member like any top-grade sports person, they need the tools for the job. You wouldn't put your top racing car driver in a low-grade car. You wouldn't put Frankie Dettori on a lame horse. If you've got a really great board of directors, you've got to also equip them with top grade tools, which in this case is the information that flows into the boardroom. A board is there to formulate their judgements around the information they're provided with. They're not clairvoyants. So, making sure that the information flow is really up to scratch, that's one of the things that we do with governance professionals - helping to really get the information flows right. The other thing that we supply is a board portal, which helps with the secure and efficient distribution of those board papers.

RJ

Okay, that's really interesting. So that's a lot about boards and how they operate and boardroom intelligence. But what we're here to talk about today is collective intelligence. So why are we talking about that?

JS

Yes, Rachael, that's right. Over time, we came to realise that board-level decisions were just the tip of the iceberg. Of every decision made in the boardroom, many, many more are taken outside of it. What we came to appreciate is that the most successful organisations are the ones whose decision-making centre of gravity is closest to the front line.

Your members will understand that boards have very limited time in which to transact an enormous brief. One of our clients, a FTSE 100 non-executive director said, ‘I feel like I need a horizontal board agenda for all of my many “number one priorities”.’ There is just too much to do. If all the important decisions have to roll up to the board, you just won't be able to move fast enough and get enough done. I think whilst we felt hugely proud of the work that we did with boards, helping them to really punch above their weight and operate at full pelt, it's not enough.

John Timpson takes it even further. The John Timpson of shoe and key repair fame. We pitched to him once, many years ago, sitting in our old offices. Pippa and I were trying to persuade him that he really needed us and Board Intelligence to come help him get more out of his board. He very kindly let us get a few slides in before he said, ‘I don't need a better board.’ He went on to say, ‘the important decisions in this business aren't made in the boardroom,’ which for us, as people who, like many of the listeners, are very much focused on [how to] help people to really operate well, that's quite something to swallow. He subscribes to what he called ‘upside-down management.’ Helping every layer of management to really support those below them in the hierarchy; their job is to empower the staff on the shop floor.

Today our playbook, which we built working with some of the world's most demanding boards, is now used from the boardroom to the shop floor. So that at every level of an organisation, absolutely everyone has the tools, the skills, and the confidence to use their brains and take good decisions. Then we decided, let's write a book about this, let's open source what we've learned, and that's what drove us to write the book that we're releasing at the very beginning of November, 9 November. It's called Collective Intelligence, how to build a business that is smarter than you. It's really for any business leader who wants to tap into the combined brainpower of their team, whether that's a chairman running a board, whether it's a chief executive with their leadership team, or whether it's a team lead at any level of an organisation.

RJ

Okay, that's really interesting. I wonder though, we see a lot of organisations that are really successful that are led by these super-smart CEOs, I’m thinking of Apple or Amazon. So, having what you might call a genius at the helm, can't be a bad thing, can it?

JS

Yeah, it's a good challenge. Because the opposite of collective intelligence, the opposite of the thesis in our book would probably go something like, go hire a genius superstar chief executive. Then just get out of the way so they can move fast and break things. Let them make all the big calls and get everybody else in the organisation just rowing behind them and doing as instructed. The fabulous new biography of Elon Musk that has just come out from Walter Isaacson, it really reignites this conversation around the superstar CEO formula. And it's fanning the flames that this is the model to aspire to.

But when you scratch the surface of most of the companies that are enduringly successful, they look very different to how they look on the surface. You mentioned Apple and Amazon. We all know that they were both led and founded by extraordinary chief executives. But Steve Jobs didn't come up with the idea for the iPhone and actually he was firmly opposed to the cell phone market and had to be persuaded by his colleagues that this was a good idea.

Warren Buffett, another extraordinary individual, he was dead against investing in Apple. He didn't like tech stocks, but one of his lieutenants insisted and Warren Buffett gave him the latitude to take that call. It turned into the most successful ever investment.

Jeff Bezos didn't come up with the idea for Amazon Prime, which changed the way we shop. I was chatting to a woman called Anne Hyatt, who worked with Jeff Bezos for many years, she was his right-hand man, or right-hand woman. She went on from working with Jeff Bezos to become Chief of Staff to Eric Schmidt at Google. So, she knows a thing or two about these extraordinary characters. She said to me over coffee just a few months ago, for sure the confidence and the vision of these larger-than-life chief executives is incomparable. But they also think hard about how to help others to think well.

Unquestionably, she said, this is why they've been as successful as they are. Because the truth is, they don't have all the answers. You can't be everywhere at once solving every problem. And if they try to be they create a massive bottleneck, and their organisations will move at a snail's pace. In the end, excessive concentrations of power make you stupid. History reminds us of that time and time again, from Icarus through to, well you pick the latest corporate scandal.

RJ

How do you move from theory to practice? How do you go about building collective intelligence or a smarter business? Is it just about hiring more smart people? Or is it more about who and how you recruit?

JS

To build a smart business, like building a smart board, of course you want to hire as well as you can. But I suppose going back to that earliest experience that Pippa and I both had when we knew nothing, particularly about boards, it's what you do with the people that you've hired that is just as important, and we would argue, probably more so. You can't just throw a group of great people [together], chuck them into a room and expect great things to happen. It should [do] but it doesn't.

Then the question becomes, what can you do to systematically tap into the combined brainpower of your people? And to create the conditions for everybody to think well and think deeply. What we set out in the book is the three critical capabilities that you need to build throughout your business, and what the new habits and rituals are that you need to wrap around these three capabilities to make that real and to make that stick.

Those three capabilities are: critical thinking skills, the ability to communicate clearly – great thinking without great communication just withers on the vine – [and] thirdly, a shared focus on what matters most. Because again you can't have lots of great people doing all this great thinking if that energy isn't tied to the same goal. When you get this right, this is how you create the conditions for people to use their brains and make it a habit.

RJ

Interesting. If we explore how you do this, you said that these critical thinking skills are one of the three capabilities you need to build. So how do you get everyone in an organisation thinking more and better?

JS

The playbook we've developed over the years is called the ‘question-driven insight principle’, which we shorten to the ‘QDI principle’ because questions are the catalyst to critical thinking. We’re question fanatics and a lot of what we talk about at Board Intelligence, a lot of what you'll find in our literature and everything that we publish, questions are the common theme. They’re the spark and the fuel of curiosity, creativity. There's a lovely quote from Stephen Hawkins, he says, ‘I am just a child who's never grown up. I still keep asking the how and why questions and occasionally, I find an answer.’

We give an example in the book of how this can really play out in a more commercial context. There's this fabulous American football coach called Dwayne Douglas and he is stood on the touchline watching his team, as they kind of go into battle. He's looking out there and he's watching them play and he suddenly has this question pop into his mind. He says to himself, isn't it weird that during a game, players don't urinate more, why is that? Even at half time the toilets in the locker rooms go strangely unused. This question was the start of it and it went on to him uncovering the role of electrolytes in the body – this was before this was as well understood as it is today – and it ended up with him creating a new drink, which he called Gatorade; his team were the Florida Gators. It opened up a multi-billion-dollar business and a whole new segment called the energy drink market. But it all started with a really simple question.

To build collective intelligence and to build those critical thinking skills, we all need to get better at asking questions. There's good news and bad. The good news is that we are born questioners. We all start out life – as anyone with small children knows – asking lots and lots and lots of questions. There's a Harvard Business School study that says that apparently children between the age of about two and five will ask around 100 questions a day. But as we also know that atrophies and it tails off the more we learn. By the time we get into the workplace, we've lost that habit of asking questions and we're preoccupied with knowing the answers. Not just any answers but the answers at the back of the examiner’s booklet.

What we set out in our book is, how do you build back that habit of questioning? How do you create a culture of questioning? Like any new habit, you can't just command it into being. You can't just stand up at your town hall or your kickoff for the year and go, ‘right from here on everyone's to think more and question more!’ You've got to wrap it into activities that are scheduled and make that impossible to avoid. What the book sets out is how you weave this new behaviour into these activities, whether it's preparing for board meetings, quarterly business reviews, requests for investment. All of these readymade activities that are already scheduled, how can we turn them from a bureaucratic timesink, as people often find them to be, and turn them instead into the place for deep critical thinking and questioning? It's the how that we really spend most of the rest of the word count in the book trying to get across.

RJ

Do you have any tips on those hows? What are your recommendations for making sure that people are asking questions?

JS

We do. I mentioned our methodology is called the ‘question-driven insight principle’, QDI. We recommend that organisations make this a little easier by building what we call QDI plays, which are sets of starter questions that are really well suited to typical situations that management will find themselves in.

For instance, a QDI play around a performance review would be as simple as [asking], ‘what are we trying to achieve? What's working? What's not? What are we going to do about it? What are we going to stop doing, start doing, do differently? What's my level of confidence in delivering our goals?’ Incredibly simple questions, but as we've learned; it is the simple questions that are the most powerful. It's the, what? Why? So what? Now what? It's a big distraction, this idea that you're trying to hunt for the clever question, the killer question. Very often, when you go down that line of thinking, that's using questions as a weapon, or as some sort of kudos hunting.

When you're asking questions with the sincere intent to progress thinking, it's actually the simple questions that are the powerful ones. A I say, it's the, What? The, Why? The, so what and now what? If you start to drill those questions into these set-piece activities, particularly in the preparation for them – the time that we spend in advance of a quarterly business review, or a board meeting – really engaging deeply with those questions, and challenging yourself as a member of the management team to get to the nub of the answer to those questions, that's how you start to build this culture. [That’s how you] normalise the idea that the first thing you do is not dive into sharing a bunch of stuff – like all the data imaginable and chucking in a document – but actually you spend the time first trying to get comfortable and clear on the critical questions that matter. Providing these starter questions is a really good way to make it easy for people to start to adopt the habit.

RJ

Okay, that sounds really helpful. What else do leaders need to do to ensure effective communication within their businesses?

JS

Business is a team sport. It’s no good helping everyone in your organisation to think well and think deeply, if that's not matched by an ability to communicate it well. You've got to get the thoughts out of your head in a way that others can both challenge them and improve them but also fundamentally act on them.

I'll never forget the early days at Board Intelligence, doing what we do, opening up client board packs and finding that I couldn't make head nor tail of them. Of course, at the time, I just thought it was me: I'm not as smart as these people on these boards and of course they can understand it all just fine. I've just got to work harder, try harder, and maybe one day, I'll get there. But the nature of the work we do meant that we would then talk to these non-executive directors, these incredibly accomplished individuals. And many of them would confess the same and they’d say things like, you know, well frankly it’s just too long to be read. And if I do read it, similarly, it's really hard to make sense of what they're trying to say.

I've got a few quotes that stick in my mind from some fabulous characters that we've encountered over the years, working with them. Sandy Crombie, he was once chief executive of a big life insurer, he was at the time a non-executive director of a big, major retail bank. He pointed to his face and he said, in this wonderful Scottish accent, ‘this is not the face of a very old man. This is just the face of a man who has ploughed through 5,500 pages of board papers.’ There's another non-executive who used the wonderfully vivid phrase of ‘reading my board papers; it’s like trying to drink water from a firehose. I feel like I'm joining the middle of a conversation.’

Your listeners will know this better than anyone. I'm preaching to the converted here. The way that ideas, updates, plans, proposals; the way they're communicated in business today is pretty challenged. Board packs are just one example of this, they're not the only things that get fed in business, but they are one example, and it doesn't get better elsewhere. There is a reason for this. It's because the tenets of good communication that we all learn at school and that are often reinforced in the workplace are simply wrong. What we explain in the book is, we boil it down to five conventions that we consign to the bin and replace them with something that works. To fix this, basically you need to unlearn what you thought you knew about how to communicate clearly.

RJ

Tell us a bit more about what we need to unlearn, then. Tell us a bit more about those conventions.

JS

The convention would be that serious subjects demand formal writing. We put that in the bin and we replace it with, write like a human being, no matter what you're writing about.

Anyone who's familiar with Dame Mary Beard, who's a classical historian and she's a fabulously strong communicator, she said that in the early part of her career, quoting her, she said she thought formality was the stamp of authority. But then she had an epiphany when she asked a friend to read through something she'd written. This friend said to her, ‘this is probably right but it's boring.’ That was this big awakening. Again, she was a product of a really successful academic career. But study after study shows that long words where a short one would have done actually make us sound stupid.

There's another problem with excessively dry, formal prose, quite apart from it being just hard work. Lots of use of the third person, phrases like ‘it was reported that’, and the passive tense puts distance between you and your message and it implies a lack of accountability. So, ‘the sales targets were missed,’ instead of ‘we missed our sales targets.’ On the one hand, the dry, impersonal tone is hard to get through; it's hard to read, reads like it was written by a robot. But far more importantly, you're not displaying the accountability and the leadership traits that your reader is looking for. Whatever your message, whether it's good or bad; own it; use your voice. That's how you'll get your reader rooting for you.

RJ

Interesting the idea [of] trying to throw away what you received as wisdom and start afresh, but it makes perfect sense. You finish your book on this topic of collective intelligence with a chapter that's called ‘when it all goes wrong.’ You're throwing a bit of a fly in the ointment right at the end there. What can we learn from that?

JS

The central thesis of the book is that if you can get everyone in your business to think well, if you can help them communicate that thinking clearly, so others can act on it, and if you keep all this thinking focused on what matters most, so it's directed towards a common cause, great things will follow. I hope it sounds coherent, and it's also true. The book, most importantly, doesn't just make the case for this, it shows you how to do it.

But real life is often much messier. Real life just serves up an inconvenient number of examples of where great thinking, clear communication, and focus on what matters most leads nowhere. Counter to the logic that underpins the theory, it just doesn't always work. We tackle this in the book, at the end. We give an example of – there are countless examples in real life – but in particular we share the example of Harry Markopolos. He was a fund manager. He was under pressure to match the performance of this other fund out there, run by some guy called Bernie Madoff. His boss was saying to him, ‘Look, this Bernie guy is really knocking it out of the park. What's the matter with you? You're just not cutting it.’ So, he did what his boss wanted, he took a look at Madoff's fund and had a look at his returns. And, to quote Harry Markopolos, he said, ‘it took me five minutes to know it was a fraud. It took me another almost four hours of mathematical modelling to prove that it was a fraud.’ He wrote all of this up as a crisp, 21-page memo and he gave it a title, ‘The world's biggest hedge fund is a fraud.’ And he sent this off to the SEC (US Securities and Exchange Commission).

So critical thinking: tick; clear communication: tick; focused on something that matters: tick. He's fulfilling everything that we advocate. But did it work? No. Because the people he shared it with, the SEC, they just couldn't let go of their strongly held belief that Bernie was clean, that he was a good guy. He was establishment; this couldn't possibly be a fraud. It was a long time later before the truth came out. All the evidence in the world at that time wasn't going to change their minds. You see this the world over. We can all point to groups of people who just are not listening.

Our point here is that collective intelligence won't work in pockets. Critical thinking and the ability to question everything you know needs to be the lifeblood of your whole organisation. Because if good thinking, well communicated, falls on deaf ears, you're not going to get very far. Our point here is that the principles that we are proposing, [for them] to really thrive, you need to apply this from top to bottom. That doesn't mean you shouldn't try. If you're a team lead, you can get your team humming absolutely through the application of these principles. But I suppose to really make a difference you want to showcase those principles and celebrate them to the others in your organisation. So that where you need ideas to travel across different parts of the business, they are open to hearing what you have to say.

RJ

Okay, that's really interesting. What's the governance professional’s role in making that happen?

JS

We would define governance as the discipline of a well run company. If you think about it in this way, then everything I've spoken about goes right to the heart of the role of the governance profession. But not every governance professional, in truth, has that mandate. Not every governance professional is going to be empowered to wander across the organisation dictating how weekly, monthly, habits, rituals are performed. If your mandate, in practical terms, is more rooted in what goes on at the top, in the boardroom, you're still perfectly positioned to get things moving. Because a great place to start is with the board papers and applying all of our principles to the way management prepares their reports for the board. If you start here, you also tackle a typical bugbear of most boardrooms, things like too much information, not the right information. [You] also set a perfect example to the rest of the organisation. And you have the opportunity to win over each member of the C-suite who is part of the process of contributing to the board papers. If you can win them over, in turn, they can start to cascade the same principles down to their teams.

RJ

Why should collective intelligence be a priority for organisations right now, when there's so many other challenges that we're all grappling with?

JS

Good question. There's a lot going on in the world right now and lots of competing initiatives and priorities. That's actually part of it. Why do you need to do this? Well, first of all, because to win in today's world, you have to be fast moving, which means you've got to tackle the bottlenecks. You can't afford for your board to be unable to take a decision because they don't have the right information. You can't afford to be bottlenecked by the type of structure that requires all important decisions to go up to the board in the first place. In this day and age, it's the fast that eats the slow, not the big that eat the small.

There are just too many decisions for everything to have to go up to the board. You need to put in place the skills, the processes, so that everyone in an organisation has the confidence and the capability to take decisions well. So that those at the top have the confidence to let out some rope and empower others to take important decisions. So first off, it's about tackling the bottlenecks, making it quick and easy for the board to take decisions and empowering more [people] below the board to take decisions.

But secondly, it's because it's just such a monumental waste not to tap into your employees’ skills and insights. In a hyper-competitive world, who can afford waste? Waste is not a winner. As long as there's thinking that only humans can and should do, it's down to leaders like your listeners to help them do it and do it better.

RJ

Absolutely, I think it taps in as well to some of the themes that we're working with now as we recover from the Covid-19 pandemic. You talked about quick decision making, and that makes me think of the quick decision making that was needed during the pandemic, when we were thrown into such a state of flux and boards needed to make quick decisions. And the understanding of the importance of the workforce that we've developed since Covid. In particular, like you said, harnessing the capability of all of the workforce to make great decisions.

It's been so interesting to speak to you today about this idea of how a business can harness the capabilities of everyone in the organisation through good decision making throughout the organisation. Understanding that decisions are made on the front line, like you said, as well as in the boardroom, and how that can maximise their business's potential. And move away from the idea of relying on a superstar CEO to find a different way of leading organisations in these challenging times. It's been great to hear how our audience can help to put the theory of collective intelligence into practice through understanding some of those core tenants of the approach that you've outlined today.

Thank you so much for joining us today, Jen, it’s been really insightful.

JS

Thank you. And if anyone would like to buy a copy of the book, it's out on the ninth of November, available at Amazon and all good bookstores. Very much hope that your members will enjoy reading the book and get in touch with us with any thoughts or questions that it sparks.

RJ

Fantastic. Thank you for that. Thank you very much, Jennifer.

JS

Thank you.

Collective intelligence

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