"What about our customers?"

Today’s edition of >> The Savvy Director™ << is focused on the challenges faced by a successful business person who is asked to serve on a government-sponsored agency, board or commission.

You might assume that the shift from a single bottom line (private for-profit) to a double bottom line (government revenue + social benefit) would be the most significant adjustment for the new director. You’re right. That’s part of it. The director’s role is essentially the same regardless of ownership scenario. I would suggest the main difference is how the income is put to use at the end of the year. Government entities may receive revenue targets for funds to be transferred to government coffers, while for-profit companies have targets for their owners or shareholders.

You would expect both types of organization to have a customer focus, wouldn’t you? But what if one entity has a monopoly in its market?

Meet Bob.

Bob has been a successful entrepreneur for over 30 years and is now transitioning his family business to the next generation. Bob set up an advisory board for his business a few years ago to provide advice on customer service, which he considers to be the foundation of a sustainable business.

Bob was appointed to the board of a crown entity this past year. Crown boards (boards of government owned or sponsored entities) serve at the pleasure of the federal or provincial or state government. The board Bob is on provides oversight to a retail business which, although it now has competition, enjoys a dominant market position due to its long history as a monopoly in the liquor, lotteries, and gaming industry. The business had been a monopoly for so long, it seems to Bob that customer satisfaction is taken for granted if not ignored outright.

With his entrepreneurial mindset, Bob gets frustrated by the government-style bureaucracy and the lack of customer focus. A recent board meeting increased his level of frustration when management’s reports failed to mention customer service metrics, goals or market development. In Bob’s view, the organization’s culture needs to become far more customer focused to compete in the marketplace and fulfill government’s revenue expectations. In the past, annual revenue targets have been attainable, but he expects the newly elected government will demand greater financial returns in the future.

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As Bob sees it, one of the barriers to changing the culture is the ‘Tone at the Top’ on the board itself.

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The long-serving board chair is a caretaker-style leader who refrains from challenging the board and the organization to achieve more. Bob feels quite sure that this board will not be able to make the required changes happen.

What would the savvy director do?

First, it would make good sense for Bob to find out what the other directors on the board are thinking. He could seek out their thoughts at a future board meeting following a management presentation on changing market conditions.

Second, it would be a good idea for Bob to meet with the board chair privately to get a better sense of the chair’s views of changing government expectations. This would also give Bob an opportunity to get a sense of the board chair’s plans to stay on the board or not, and to feel out whether there is an appetite for evolving the organization to face the expected competitive forces.

Bob could also suggest to the chair that the board needs to gauge the level of customer focus within management, and that leadership in this area ultimately has to cascade from the top down starting with the board.

Third, the savvy director would suggest that Bob prepare for some challenging conversations in the boardroom. Many of the current board members are long-standing government appointees who seem to be quite content with the status quo. Should Bob’s questions generate meaningful strategic discussion, his natural persuasion skills and ability to ask thought-provoking questions would be useful in moving the board and management in the right direction.

The best thing that could happen would be for the board to have a collaborative discussion with management to examine the potential for competitive threat over the next few years. And in Bob’s mind, that starts with not taking the customer for granted. To get things kick started with the board, he needs some good questions.

Special Bonus: Download Bob’s copy of >> Ten Great Questions about External Stakeholders <<

Your takeaways:

• Never assume that customers will be loyal to you forever. That relationship must be nurtured over the years. Consider the board’s role in that relationship.
• The board’s job includes paying attention to the voice of the customer. The board should ensure there is relevant data to assess how the organization is perceived and valued in the marketplace.
• Asking a carefully considered question can open up the discussion more safely than a blunt statement. People remember how you make them feel.
• Embarrassing the board chair (or other directors) is never a good idea. Conduct any challenging one-on-one discussions offline.
• Put your persuasion and influence skills to good use while maintaining confidentiality.

Thank you.

Scott

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 you prepare for your next board meeting.

Share Your Insight: What differences do you see between serving on a private company board and a government owned board?