At DirectorPrep, we’re obsessed with questions. Asking clear, compelling questions is often the best way that we, as directors, can make a significant contribution to discussions and influence board decisions.
We use questions to clarify information, launch and build on meaningful discussions, encourage dialogue, and challenge assumptions. Without questions, how would we explore fresh ideas, analyze problems, and generate solutions?
The concept is simple - better questions kick start better conversations, which lead to more effective board meetings and, ultimately, better decisions.
DirectorPrep co-founder Dave Jaworski likes to say that the best questions give directors super powers. So today, in honor of Dave, I’m calling my six favorite director questions ‘Super Questions.’
One of my Biz School profs used to like to ask this super question about pretty much every case study that we covered. At the time, it drove me nuts. But now I really appreciate the directness and simplicity of it.
When we ask, “What business are we in?”, it opens up the discussion beyond the obvious to consider what our customers are hoping to achieve when they buy our products or services. When we think in terms of customer desired outcomes, it establishes a different frame of reference. From there, the discussion easily flows into “What else could we deliver to help customers get the outcomes they are seeking?”
For instance, an insurance company might say that it’s in the business of providing financial coverage for your assets. Or, it might say that it’s in the business of providing peace of mind. That shift can make a world of difference to how you think about your organization’s current situation and future strategy.
“What business are you in? When industries answer this question incorrectly, they set themselves up for failure. … The way to get the correct answer to this question is to consider the outcomes that our customers want. … In the aftermath of the Covid-19 crisis, these questions will be especially important because the outcomes that your buyers want may have shifted.” – Darrel Amy, 'The Top Question For Business Leaders: What Business Are We In?'
The second part of this super question, “… and how do we make money?” is really about the organization’s business model, but without the buzz words. A business model is the rationale of how an organization creates, delivers and captures value.
Over time, a company’s business model can start to weaken. Maybe innovations to its products or services are creating smaller and smaller improvements, or its people have trouble thinking up new improvements, or its customers are increasingly finding new alternatives. These are all signs that the business model is running out of gas.
If that’s the case, it could be time to change it. Introducing a better business model into an existing market is the very definition of disruptive innovation.
One last point for directors of non-profit organizations such as educational and cultural institutions, healthcare providers, and charities. Don’t be turned off by words like ‘business model’ or ‘making money’. Instead of customers, you might be serving students, clients, patients, etc. If you’re not comfortable with the term ‘business model’, think of it as a funding model or a strategic model. The forces driving changes to your business model might be different from those of a for-profit business, but they are every bit as real.
As to ‘making money’, I think we can agree that non-profits need to be just as focused as for-profit companies on their sources of revenue, whether tuition, government funding, grants, donations, or other sources. The difference is where the money goes – into the pockets of owners and shareholders, plowed back into the organization, or for the benefit of those who receive your products and services.
This super question helps us to fulfill our oversight duties as directors. Asking “How do we know?” (or “How do you know?” depending on the context) helps to prevent us from making incorrect assumptions or jumping to the wrong conclusions. It brings data to the fore and supports evidence-based decision-making.
Spending quality time with the organization’s financial statements is part of the director’s job. This year, it would have been easy to jump to the conclusion that unusual financial results were due to the pandemic. After all, organizations suffered through lockdowns, cancellations, closures, capacity limits, social distancing, and a sudden pivot to work-from-home.
On the other hand, there were government programs that helped mitigate the crisis - wage subsidies, rent subsidies, and interest-free loans. All in all, there was a confusing jumble of plusses and minuses. What to make of it?
At a recent board meeting, the CEO presented the financial statements, and of course she commented on the financial impact of the pandemic. But then she pointed out the pandemic wasn’t the whole story. The CEO told us about this conversation with her staff:
CEO: “Why is the revenue for xxx product down so much?”
Staff: “It’s because of COVID-19.”
CEO: “Why is the expense for xxx down so much?”
Staff: “It’s because of government programs.”
CEO: “How do we know that?”
And there it was! That super question – “How do we know?”
As it turned out, when the staff investigated further and analyzed the data, they found there were additional factors at work – some significant, some less so. These factors might have remained unknown, if someone hadn’t asked the super question. In this case it was the CEO, but it could just as easily have been a board director.
This super question reminds me of Elon Musk’s favorite question (or so I’ve read) “What if we could …?” It’s super because it frees our minds, inviting us to imagine, create and innovate.
It’s a future-focused question, one that encourages us not just to predict what the future will look like, but to imagine what it might look like in various scenarios.
Directors spend most of their time on oversight. I’ve seen estimates that 70% to 80% of board time is spent on financial reports, operating budgets, audit reports and compliance. All of these focus on the past, or maybe the present. But certainly not the future. Most of us would agree that directors should spend a greater share of their time thinking about, and talking about, the future.
“Many Boards focus a significant element of their time on operational performance, corporate governance matters and asking the question ‘Why …?’. … The real challenge is anticipating what might happen in the future and [directors] should spend more of their time asking ‘What if ….?’ “ – David Tilston, 'The Power of “What If …?”'
As a super question, “What if … ?” has a flip side. It can be a great question to ask when thinking about risk. As in “What if our systems are hacked?” or “What if the CEO leaves suddenly?” or even “What if there’s a global pandemic?”
I like this super question because it can prompt management (and the board, for that matter) to think beyond the all-consuming demands of present-day projects and initiatives, to a time when those will be completed.
In my experience, a hyper-focus on the present happens most frequently with major IT projects and long-term capital builds. It can seem like all the organization’s resources are totally consumed with getting that project completed or that construction finished. The system or the building becomes an end in itself, rather than a means to an end.
Someone has to stop and ask the super question “What’s next?” In other words, what comes after the project is finished? Asking this question helps to re-focus everyone on the reason the project was started in the first place – to grow, to serve customers better, to streamline workflow, etc. Once it’s done, how will the organization build on that foundation?
I know, this one sounds like the beginning of a knock-knock joke. But what I mean to capture with this super question is a reminder to focus on people. As board directors, we spend a lot of time on finances, strategy, risk, compliance, governance. But do we spend enough time on the people who make the organization what it is – its leaders, employees, and volunteers; its customers, clients and service recipients; its competitors, stakeholders, and communities?
In that context, when I think of the super question “Who’s there?”, it’s really shorthand for questions like:
This super question is for following up. Follow-up questions bring deeper insights and buried connections to the light of day. They show the speaker that you’re listening and invite them to keep talking.
Follow-up questions are especially useful in certain situations:
In his article 'The Definitive Guide to Asking Follow-up Questions', interviewer Dan Brown describes how he uses “Anything else?” questions:
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Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online hub with hundreds of guideline questions and resources to help prepare for your next board meeting.
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