BOARDS AND THE EXPERTS MYTH
Boards of Directors, which have proven to be crucial in the task of instilling excellence within the business world and thus in the economic growth efforts, have repeatedly, in developing countries, shown a passive attitude. This has become an obstacle in the proliferation of truly great companies and has steered us away from the longed path towards progress.
Blame, however, is not to be put solely on the boards themselves nor the board members. There are systematical issues that have promoted such passivity (sometimes disinterest) within the members of the board. The insufficient compensation of board members, which is the standard in developing countries, is one example. Another one has to do with our understanding of the boards: we understand their nature as groups of experts.
The logic behind such an understanding seems reasonable: if we´re going to have a consulting figure within the company, then we should bring experts on different fields that are strategic to the company. Experts that can help us to make better decisions. In competitive business environment such as ours, deep expertise presents itself not only as convenient but also as a tool for levelling up. Or at least we think so.
In his book Adapt: Why Success Always Starts with Failure, the renowned British economist and columnist Tim Harford casts a shadow of doubt over the excessive trust we have put on experts. Harford quotes a study by psychologist Philip Tetlock, who studied the judgement of experts over a two-decade period. Tetlock gathered 300 experts and tested them in order to determine how accurate their predictions of certain political and economic events were. The results were astonishing.
Although experts expectedly outperformed the undergraduates from the control group, their performance, by objective standards, wasn’t good. Additionally, something quite counterintuitive happened: the performance between experts was more or less the same: Russia´s expert´s prediction of Russia was as accurate as the prediction of Russia that Canada´s expert made.
Harford´s conclusion is simple: we are blinder than we think. We live in a complex and changing world and the problems we try to tackle, both in business and society, have, according to Harford “a human dimension, a local dimension, and are likely to change as circumstances change”.
If expertise is not the way to solve our biggest issues, ¿how then can we tackle them? The answer might disappoint you. It is, after all, as basic and old as humanity itself – through the most human of all processes: trial and error.
The logic is as follows: if problems are complex, impossible to fully grasp beforehand, and their nature is prone to change, not even the best plan is enough. What works instead is to have the ability to adjust the plan as you try to solve the problem. ¿Do you know who are proficient at that process of trying things, evaluating results, interpreting them, and readjusting direction? Entrepreneurs.
I don’t intend to claim that we should fill our boards with entrepreneurs. What I believe is that we must cultivate an entrepreneurial attitude in our boards. What if we help our much-trusted experts cultivate an entrepreneurial attitude? To regard strategic plans not as the final say on a matter but as a flexible roadmap that can change in order to better tackle a complex problem?
Expertise and an entrepreneurial attitude are not opposing ideas but rather complementary. Experts cannot offer perfect solutions to all problems. There are many global and market challenges that must be approached with a different mentality – with a a trial and error approach. And that’s where an entrepreneurial attitude complements our much-needed experts.
That would probably not only help us make better decisions but also aid us in our mission to leave behind the passive attitude, of mere observing and counseling, that is the norm in our boards of directors. Entrepreneurial attitude has an element at its core: proactivity. Proactive boards, with experts that cultivate an entrepreneurial attitude, demanding and contributing excellence to our companies: that’s the ideal. For now, a dream. Just a dream.