July 3, 2025 • 19 mins
When pressure mounts, boards often default to easy narratives. But Professor Alex Edmonds, finance professor at London Business School, argues that now is the time to double down on dissent and critical thinking.
In this timely episode, Alex challenges common assumptions around ESG and DEI. Drawing on academic research and real boardroom experience, he urges directors to look beyond the surface—and beyond what they want to be true.
“Rather than making broad claims as to whether sustainability works or doesn't, what I try to do is be more granular and look at the specific sustainability dimensions that pay off.”
The episode explores confirmation bias, the misuse of data, and how well-intentioned directors can still fall into intellectual traps. Alex shares practical tactics for chairs to foster dissent, such as holding back opinions to let others speak freely.
“If you see a study that you really want to be true… ask yourself what if the study found the opposite? How would I take it apart?”
The message is clear: dissent isn’t dysfunction—it’s discipline. And in today’s complex world, boards need more of it.
“It’s simple but not easy. We know where we want to get to—but putting it into practice is challenging.”
Three Takeaways:
- Academic research is a critical resource.
- Challenge what you want to believe.
- Reward dissent.
Boards that confront complexity won’t just survive—they’ll lead.
Remember to subscribe and never miss an episode of the Better Boards Podcast Series. It’s available on Apple, Spotify, or Google.
To find out how you can participate in the Better Boards Podcast Series or for more information on Better Boards’ solutions, please email us at info@better-boards.com.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:01):
Overcoming misconceptions and lies in the
boardroom.
Welcome to the BetterBotspodcast series, the podcast for
chairs, CEOs, non-executivedirectors, company secretaries,
and their advisors.
Every episode is filled withpractical insights and learnings
from those inside boardrooms.
We discuss what really mattersand highlight actionable steps
(00:23):
you can take to enhance theperformance of your board.
In this episode, I'm delightedto talk with Professor Alex
Edmonds.
Alex is professor of finance atLondon Business School.
He has a long track record inhaving served on the world's
leading business schools.
He has given TED talks, writtennumerous books.
He is a non-executive directorand an advisor to large
(00:48):
institutions like, for example,the Morgan Stanley Institute for
Sustainable Investing.
Now, Alex dares to havecontroversial views.
Yes, Alex is an academic, but healso promotes to look behind the
surface and I think in timeslike this this is so so crucial
what we are seeing is of coursethere is a lot going on in the
(01:11):
external world and around everyboardroom and this is then a
time when people I think try tofind comfort in an easy route
and nobody wants to add to thepressure of maybe someone else
or cause additional stress butthe uncomfortable truth is it's
a time when descent is moreimportant in order to look at an
(01:36):
issue from all perspectives, inorder to make sure that we
really knock the tires beforemaking a decision that takes us
forward.
So I'm really delighted aboutthis episode.
I think it's crucial in timeslike this.
Alex, thank you so much forcontributing to the Better Bots
podcast series.
It's fantastic to have you.
SPEAKER_01 (01:58):
It's great to be here, Sabine.
Thank you so much for invitingme.
SPEAKER_00 (02:00):
Alex, I follow you on LinkedIn and your posts are
really most interesting.
It's not what you typically tendto hear, which is why we invited
you and I'm glad that youaccepted.
What are, in your view, some ofthe most common traps boards
fall into?
SPEAKER_01 (02:17):
So I think it's not recognising the nuances on
sustainability issues.
So we often think thatsustainability always pays off.
Every measure of sustainabilitypays off as well.
And so the goal is to just doit.
Don't talk about it.
Just do it.
Push out foot on the acceleratorpedal as far as possible.
(02:37):
But what I'm trying to highlightis that the evidence for
sustainability working isactually not as unambiguous as
people think.
And this is not to be asustainability deterrent.
I'm absolutelypro-sustainability, but by
looking at the evidence on whatdoes work and what does not
work, then we make sure thatwe're pushing on the right
level.
(02:57):
So as an example, some of mypotentially controversial posts
on LinkedIn will be about thelink between demographic
diversity and financialperformance.
And what I highlight is thatsome popular studies by the
likes of McKinsey, which claimthat there's an unambiguous
benefit of demographicdiversity, Actually, the
(03:18):
evidence is much shakier thanthat.
And this is absolutely not to bean opponent of DEI, but to
highlight that actually when youwant to look at DEI, we don't
just focus on demographicdiversity.
We want to look at cognitivediversity and also incorporate
equity and inclusion.
And when you do that, you dohave a positive link.
So what I'm highlighting is theimportance to be more holistic
(03:40):
when we think about issues suchas DEI.
SPEAKER_00 (03:42):
And you made a similar point actually on
sustainability.
UNKNOWN (03:45):
Yes.
SPEAKER_01 (03:45):
That's right.
So we often have this debate asto does sustainability pay off?
But I think that that is thewrong question because
sustainability comprises lots ofdifferent things.
So it could considerenvironmental issues.
And within environmental issues,there could be water or climate
change or biodiversity.
There could be social issues.
(04:06):
And sometimes these conflictwith each other, for example, to
shut down all coal-fired powerstations is good for the
environment, but it's bad forworkers.
So rather than making broadclaims as to whether
sustainability works or doesn't,what What I try to do is be more
granular and look at thespecific sustainability
dimensions that pay off.
(04:26):
So some, like employeesatisfaction and corporate
culture, they are linked tolong-term returns, and others,
such as environmental issues,are not.
Now, I wish they were, but theproblem is that they are
externalities.
They're issues that a companycan get away with without
actually suffering in terms ofits long-term effect.
So I view this as similar tofood.
(04:47):
Nobody would ask, is food goodfor you?
Some food is good for you.
Broccoli and other food like icecream is bad.
And the goal is rather thanbeing blunderbuss and blanket
about it, is to highlight whatfoods are good and what foods
are bad.
And similarly, that is myapproach to sustainability.
SPEAKER_00 (05:03):
So how come that really accomplished, intelligent
people don't look behind thisand they fall into these traps?
SPEAKER_01 (05:12):
I think the reason is these people are very
well-meaning, so they're nottrying to be misled or to
mislead others.
They have good intentions.
But if we have confirmationbias, we like to believe studies
that we want to be true.
So it is tempting to believethat all forms of sustainability
pay off because then we don'tneed to look at the nuances and
(05:33):
distinguish between differentsustainability issues.
And it's also tempting to thinkthat demographic diversity pays
off because it's much easier toevaluate demographic diversity
than it is to evaluate cognitivediversity.
And also, we might think there'sa moral-ish lens behind this.
We might think morally andethically, women are
(05:53):
underrepresented, ethnicminorities are underrepresented.
And therefore, if we believethat what is moral is also good
for business, then that issomething which is comforting.
Now, even if one saw no linkbetween demographic diversity
and financial performance, youcould still legitimately pursue
this on moral grounds.
(06:15):
All I'm highlighting is theevidence for financial
performance is not as strong.
That doesn't take away at allfrom the moral argument which
people are absolutely entitledto instead be pursuing.
SPEAKER_00 (06:26):
So what can we do?
How can we help boards who arealways under time pressure?
And particularly at the moment,there are so many issues they
have to deal with.
How can boards, board membersspot these traps early on and
avoid them and really get to thebottom of the issues?
SPEAKER_01 (06:44):
It is to think critically.
And so this is why I wrote myrecent book, May Contain Lies,
is to allow busy people whodon't have PhDs in statistics,
who don't have the time to lookup every reference and to dot
every I and cross every T, tothink about how to know what to
trust and what not to.
So in particular, if there is astudy, just to think about Are
(07:07):
there alternative explanationsfor that result?
So if a study found thatsustainability improves
financial performance, whatmight the alternative
explanations be?
It could be that it's anindustry effect.
Maybe more sustainableindustries like tech have just
had tailwinds, whereas fossilfuels may have headwinds.
(07:27):
Maybe there's other factors likea great CEO.
She both improves sustainabilityand and she also improves
financial performance, but thereis not a direct link between the
two.
One simple tip that I have toavoid confirmation bias is if
you see a study that you reallywant to be true and you would
really love to share it onLinkedIn and share it with your
(07:49):
other board members, askyourself, what if the study
found the opposite result?
How would I take it apart?
So if a study foundsustainability is linked to
worse financial performance, youdon't like that.
You want to argue against that.
And you might appeal toindustries.
You might say, well, perhapsthis is because the fossil fuel
(08:12):
industry has done well becauseof Trump.
It's got nothing to do withsustainability.
Now that we've highlighted thatindustry might be an alternative
to exhalation, ask ourselveswhether industry can explain the
positive link So we want to makesure that we are just discerning
as something we don't like, assomething we do.
(08:32):
And the idea of imagine theopposite is to awake the
discernment that we already havewithin us.
And while as a board leader, youmight think, well, this is all
complicated that I need to bediscerning about evidence.
This makes your lives easier.
Why?
Because there's so many issuesthat you have to deal with as a
director, as you're mentioning,Zabina.
If indeed I know what issues arematerial, And what issues are
(08:53):
less material that actually doesmake my life easier than having
the impression that every singlesustainability issue is
financially material.
So I need to track 250 KPIs.
SPEAKER_00 (09:04):
So how can chairs, Alex, really promote critical
thinking on their board?
What can they do?
SPEAKER_01 (09:11):
It is to actively seek dissent, to reward it, and
to be wary of the fact that youas a chair, due to the respect
that you command, you mightunintentionally reduce
dissenting opinions.
So one example will be as achair ensuring that you don't
give your opinion at the startof a topic, to ask people for
their thoughts first rather thanensuring that they anchor on
(09:34):
your view.
And this happened to me recentlyon a board that I'm on.
I'm not the chair, but Ireceived an email from an
external person called Brucewith a proposal.
I read the proposal.
I didn't think it was workable,but I thought, well, let me send
it to the rest of the board toget their views.
So I said, dear board, here is aproposal from Bruce.
(09:55):
I don't think that it's workablefor these reasons, but please
read it with an open mind andlet me know if you disagree.
However, before I click send, Irealized that they would not be
reading it with an open mind.
Why?
Because they would have seen mypreamble, which made it clear
that I didn't agree, beforereading the proposal.
(10:15):
So before I clicked send, I thenreordered my email and I said,
here is Bruce's proposal.
Read it.
My thoughts are at the end.
And then Stefan, who's also onthe board, wrote back to me and
he said, Alex, I agree with allthe concerns you raised after
the proposal.
But reading between the lines,actually, Bruce might be
amenable to something else.
Why don't you counter-proposethat?
(10:36):
And I did, and he accepted.
And so why was that soimportant?
It's because had I primed Stefanto thinking the proposal was
bad, he would have probably readit quite superficially, knowing
that Alex has already evaluatedit, but he was able to read it
with a fresh mind without mepriming him.
So that's an example of tryingto allow time and space for
(10:58):
different viewpoints.
But another thing to do is toactively reward or actively
acknowledge differentviewpoints, if somebody
disagrees, to really highlighthow much you value this.
Sometimes it may well be that ifthe decision still goes ahead,
despite the objection, you mightgo to that person and say, I
want you to know that eventhough we still press ahead with
(11:21):
the decision, we value yourconcerns and we will bear them
in mind when we execute thedecision.
Because if you didn't do that,the person who raised the
objection would might think, Iprolonged the meeting by 15
minutes or half an hour to raisemy objection, and it made no
difference anyway, and itprobably upset the people who
were in favour of the proposal.
Next time I will self-centre.
(11:42):
So the idea of explicitlyacknowledging the value of a
different perspective issomething which I think is
really useful.
SPEAKER_00 (11:49):
Alex, this sounds so simple in theory, but when I see
that external times are gettingtough, the tougher it becomes
externally, with all sortseconomically, politically,
socially, the more boards avoiddissent, the more boards try to
(12:09):
align around, try to go down theeasy route.
What can be really done?
And still, it is now so, soimportant to stay competitive,
to remain at the edge of things,to allow this descent in
boardrooms.
But it's so tough to reallyimplement it.
SPEAKER_01 (12:28):
I think there's a couple of things.
Number one, when the stakes arereally high, which is tough
times, I think that's when wereally do want different
viewpoints.
So it's not, it's a luxury tohave different viewpoints when
times are good.
Actually, it's a necessity tohave different viewpoints when
times are difficult to make surethat you're facing the crisis
(12:49):
with the best possibleinformation.
And indeed, there are issuesthat happen during crises which
might otherwise have beenavoided.
Let's say the collapse ofSilicon Valley Bank when
interest rates rose.
This is something which may wellhave been addressed had there
been a greater variety ofopinions and greater knowledge
of the risks that would happenif interest rates changed.
(13:12):
I think another thing to note isthat even though it is tempting
to default to the status quo, asa board, you want to be
different from your competition.
And if you are going to have acompetitive edge in a world in
which it's difficult toencourage dissent, why?
Because people on boards aresuccessful.
They don't like to be told thatthey're wrong or they've missed
(13:35):
a viewpoint.
actually can you be quitedifferent by running the board
in a different way, which istruly encouraging of different
viewpoints.
Yes, every company says we valuea diversity of opinion, but when
the rubber hits the road, howmany of them actually act in
that way?
Probably a minority, asignificant minority.
SPEAKER_00 (13:54):
Yeah, you know, I just come back from a board
observation from the continent.
And yeah, it's so far awaysometimes what you see And what
we are discussing in the podcastthat I'm thinking, gosh, how can
it be done?
How do we get the message acrossto our listeners to really live
also, to take what we discusshere in the podcast, to make it
(14:17):
happen in their own boardrooms?
SPEAKER_01 (14:18):
Absolutely.
And these are things which justmake sense in theory.
So I've just done a report ondiversity and inclusion for the
Diversity Project, which is aconsortium of asset managers to
promote diversity, not justdemographic, but also cognitive
diversity in asset management.
And this will be launched in theHouse of Lords on the 11th of
June.
And if you were to read thereport, nothing in it might seem
(14:40):
earth shattering, which is weneed to be intentional about
different opinions.
We want to have a diversity ofperspectives.
But one way that a director ofan advisor to the diversity
project described it is it'ssimple, but not easy.
And I love that description, isthat we know where to get to,
but actually putting it intopractice is challenging.
(15:02):
It's like healthy living issimple, not easy.
I want to abstain from alcoholor cut down on desserts and
exercise, but actually puttingit into practice is difficult.
So even if the message is mightseem simple, just to reinforce
them, reinforce what to do andhow important it is to get
there, I don't think you canever graduate from, I don't
(15:23):
think you ever need to.
need to be embarrassed byrepeating things which are
simple, but still not yet done.
SPEAKER_00 (15:29):
Fantastic.
Alex, this is so, so helpful.
And this whole discussion is agreat reminder.
Maybe our listeners want to evenlisten to this podcast episode
several times to really get theinspiration and make it happen
in their own boardrooms.
At the end, we always ask, Alex,what are the three things our
(15:50):
listeners should take away fromthis podcast?
SPEAKER_01 (15:53):
I'd say number one is the importance of academic
research.
Now, you might say, I would saythat because I'm an academic,
I'm talking my own book.
But this is to highlight thatacademic research is much more
relevant to practitioners thanyou might think.
We often think, oh, there'sacademics here and practitioners
here, and never the twain shallmeet.
(16:13):
But academics and practitionerswork on the same issue.
So business school professorslook, what really drives
performance within business?
But what we have have is thetime and the space.
We have maybe five years to workon a project rather than a
practitioner study might be sixmonths.
And that really allows us tonail down causation, not just
(16:35):
correlation, highlight whichfactors really matter and
disentangle different thingswhich might be conflated.
So I do think academic researchdoes matter for practical board
members.
The number two is the importanceof critical thinking to question
what you really want to be true.
You might think, well, if I'm atrue believer in DEI and
(16:58):
sustainability, I shouldn't bequestioning because that
suggests that I'm not trulycommitted to the cause.
If it is that I'm a believer, Idon't necessarily want to be a
doubting Thomas and always askfor the evidence.
But no, this is not an issue.
of ideology.
This is an issue of what makescompanies more effective.
And I do want to look at theevidence for what drives company
(17:20):
effectiveness.
Actually, do I have theconfidence in this cause that I
am willing to look at theevidence?
I'm willing to hear the otherside because I know that I think
that even if there is somethingwhich is going to be informing,
which is different, I'm willingto hear this because I'm
confident in my view.
(17:40):
And the third and final point isto encourage dissent within
other people.
So again, what a confident chairwill do is to realize that I
don't have all the answers.
I'm not necessarily the smartestperson in the room.
I would like people to disagreewith me.
So this is to give them time andspace to do that.
Be that them speaking first inthe meeting or putting your
opinion at the bottom of anemail that you're forwarding or
(18:02):
actively going out and rewardingpeople.
This could be just through averbal acknowledgement.
if these are people who'vedisagreed with you.
One example might be TomGarrity.
He was the former dean ofWharton where I was first
professor, but he was the CEO ofa company, Index.
And what he did is he hired aconsultant to come in and tell
(18:24):
him in front of his entirecompany in a town hall all the
things that he was doing wrongand could be doing better.
Now, that's admittedly extreme,and I'm not suggesting every
company do that.
But why I think that was sopowerful is that he highlighted
that I might be the CEO of thiscompany, but this does not mean
that I'm infallible.
If you were to highlight myfallibilities, you're improving
(18:47):
the performance of this firm.
SPEAKER_00 (18:49):
Fantastic, Alex.
A very important podcast.
Thank you so, so much forcontributing to the BetterBots
podcast series.
SPEAKER_01 (18:57):
And thank you so much for giving me this
platform.
I mean, I really appreciate whenpractitioners are interested in
my views.
SPEAKER_00 (19:03):
Well, thank you for listening to this episode.
As you know, behind this podcastare real people.
So please do get in touch.
We are always delighted to hearfrom you.
If you have an idea for anepisode, if you would like to
hear more about the work we dowith sports, reach out.
You can do so on our website.
You can write us an email.
(19:24):
You can even book a time.
You can freely see my calendarand set up a Teams call.
Once again, thank you forlistening and maybe we meet in
person.
Overcoming misconceptions and lies in the
boardroom.
Welcome to the BetterBotspodcast series, the podcast for
chairs, CEOs, non-executivedirectors, company secretaries,
and their advisors.
Every episode is filled withpractical insights and learnings
from those inside boardrooms.
We discuss what really mattersand highlight actionable steps
(00:23):
you can take to enhance theperformance of your board.
In this episode, I'm delightedto talk with Professor Alex
Edmonds.
Alex is professor of finance atLondon Business School.
He has a long track record inhaving served on the world's
leading business schools.
He has given TED talks, writtennumerous books.
He is a non-executive directorand an advisor to large
(00:48):
institutions like, for example,the Morgan Stanley Institute for
Sustainable Investing.
Now, Alex dares to havecontroversial views.
Yes, Alex is an academic, but healso promotes to look behind the
surface and I think in timeslike this this is so so crucial
what we are seeing is of coursethere is a lot going on in the
(01:11):
external world and around everyboardroom and this is then a
time when people I think try tofind comfort in an easy route
and nobody wants to add to thepressure of maybe someone else
or cause additional stress butthe uncomfortable truth is it's
a time when descent is moreimportant in order to look at an
(01:36):
issue from all perspectives, inorder to make sure that we
really knock the tires beforemaking a decision that takes us
forward.
So I'm really delighted aboutthis episode.
I think it's crucial in timeslike this.
Alex, thank you so much forcontributing to the Better Bots
podcast series.
It's fantastic to have you.
SPEAKER_01 (01:58):
It's great to be here, Sabine.
Thank you so much for invitingme.
SPEAKER_00 (02:00):
Alex, I follow you on LinkedIn and your posts are
really most interesting.
It's not what you typically tendto hear, which is why we invited
you and I'm glad that youaccepted.
What are, in your view, some ofthe most common traps boards
fall into?
SPEAKER_01 (02:17):
So I think it's not recognising the nuances on
sustainability issues.
So we often think thatsustainability always pays off.
Every measure of sustainabilitypays off as well.
And so the goal is to just doit.
Don't talk about it.
Just do it.
Push out foot on the acceleratorpedal as far as possible.
(02:37):
But what I'm trying to highlightis that the evidence for
sustainability working isactually not as unambiguous as
people think.
And this is not to be asustainability deterrent.
I'm absolutelypro-sustainability, but by
looking at the evidence on whatdoes work and what does not
work, then we make sure thatwe're pushing on the right
level.
(02:57):
So as an example, some of mypotentially controversial posts
on LinkedIn will be about thelink between demographic
diversity and financialperformance.
And what I highlight is thatsome popular studies by the
likes of McKinsey, which claimthat there's an unambiguous
benefit of demographicdiversity, Actually, the
(03:18):
evidence is much shakier thanthat.
And this is absolutely not to bean opponent of DEI, but to
highlight that actually when youwant to look at DEI, we don't
just focus on demographicdiversity.
We want to look at cognitivediversity and also incorporate
equity and inclusion.
And when you do that, you dohave a positive link.
So what I'm highlighting is theimportance to be more holistic
(03:40):
when we think about issues suchas DEI.
SPEAKER_00 (03:42):
And you made a similar point actually on
sustainability.
UNKNOWN (03:45):
Yes.
SPEAKER_01 (03:45):
That's right.
So we often have this debate asto does sustainability pay off?
But I think that that is thewrong question because
sustainability comprises lots ofdifferent things.
So it could considerenvironmental issues.
And within environmental issues,there could be water or climate
change or biodiversity.
There could be social issues.
(04:06):
And sometimes these conflictwith each other, for example, to
shut down all coal-fired powerstations is good for the
environment, but it's bad forworkers.
So rather than making broadclaims as to whether
sustainability works or doesn't,what What I try to do is be more
granular and look at thespecific sustainability
dimensions that pay off.
(04:26):
So some, like employeesatisfaction and corporate
culture, they are linked tolong-term returns, and others,
such as environmental issues,are not.
Now, I wish they were, but theproblem is that they are
externalities.
They're issues that a companycan get away with without
actually suffering in terms ofits long-term effect.
So I view this as similar tofood.
(04:47):
Nobody would ask, is food goodfor you?
Some food is good for you.
Broccoli and other food like icecream is bad.
And the goal is rather thanbeing blunderbuss and blanket
about it, is to highlight whatfoods are good and what foods
are bad.
And similarly, that is myapproach to sustainability.
SPEAKER_00 (05:03):
So how come that really accomplished, intelligent
people don't look behind thisand they fall into these traps?
SPEAKER_01 (05:12):
I think the reason is these people are very
well-meaning, so they're nottrying to be misled or to
mislead others.
They have good intentions.
But if we have confirmationbias, we like to believe studies
that we want to be true.
So it is tempting to believethat all forms of sustainability
pay off because then we don'tneed to look at the nuances and
(05:33):
distinguish between differentsustainability issues.
And it's also tempting to thinkthat demographic diversity pays
off because it's much easier toevaluate demographic diversity
than it is to evaluate cognitivediversity.
And also, we might think there'sa moral-ish lens behind this.
We might think morally andethically, women are
(05:53):
underrepresented, ethnicminorities are underrepresented.
And therefore, if we believethat what is moral is also good
for business, then that issomething which is comforting.
Now, even if one saw no linkbetween demographic diversity
and financial performance, youcould still legitimately pursue
this on moral grounds.
(06:15):
All I'm highlighting is theevidence for financial
performance is not as strong.
That doesn't take away at allfrom the moral argument which
people are absolutely entitledto instead be pursuing.
SPEAKER_00 (06:26):
So what can we do?
How can we help boards who arealways under time pressure?
And particularly at the moment,there are so many issues they
have to deal with.
How can boards, board membersspot these traps early on and
avoid them and really get to thebottom of the issues?
SPEAKER_01 (06:44):
It is to think critically.
And so this is why I wrote myrecent book, May Contain Lies,
is to allow busy people whodon't have PhDs in statistics,
who don't have the time to lookup every reference and to dot
every I and cross every T, tothink about how to know what to
trust and what not to.
So in particular, if there is astudy, just to think about Are
(07:07):
there alternative explanationsfor that result?
So if a study found thatsustainability improves
financial performance, whatmight the alternative
explanations be?
It could be that it's anindustry effect.
Maybe more sustainableindustries like tech have just
had tailwinds, whereas fossilfuels may have headwinds.
(07:27):
Maybe there's other factors likea great CEO.
She both improves sustainabilityand and she also improves
financial performance, but thereis not a direct link between the
two.
One simple tip that I have toavoid confirmation bias is if
you see a study that you reallywant to be true and you would
really love to share it onLinkedIn and share it with your
(07:49):
other board members, askyourself, what if the study
found the opposite result?
How would I take it apart?
So if a study foundsustainability is linked to
worse financial performance, youdon't like that.
You want to argue against that.
And you might appeal toindustries.
You might say, well, perhapsthis is because the fossil fuel
(08:12):
industry has done well becauseof Trump.
It's got nothing to do withsustainability.
Now that we've highlighted thatindustry might be an alternative
to exhalation, ask ourselveswhether industry can explain the
positive link So we want to makesure that we are just discerning
as something we don't like, assomething we do.
(08:32):
And the idea of imagine theopposite is to awake the
discernment that we already havewithin us.
And while as a board leader, youmight think, well, this is all
complicated that I need to bediscerning about evidence.
This makes your lives easier.
Why?
Because there's so many issuesthat you have to deal with as a
director, as you're mentioning,Zabina.
If indeed I know what issues arematerial, And what issues are
(08:53):
less material that actually doesmake my life easier than having
the impression that every singlesustainability issue is
financially material.
So I need to track 250 KPIs.
SPEAKER_00 (09:04):
So how can chairs, Alex, really promote critical
thinking on their board?
What can they do?
SPEAKER_01 (09:11):
It is to actively seek dissent, to reward it, and
to be wary of the fact that youas a chair, due to the respect
that you command, you mightunintentionally reduce
dissenting opinions.
So one example will be as achair ensuring that you don't
give your opinion at the startof a topic, to ask people for
their thoughts first rather thanensuring that they anchor on
(09:34):
your view.
And this happened to me recentlyon a board that I'm on.
I'm not the chair, but Ireceived an email from an
external person called Brucewith a proposal.
I read the proposal.
I didn't think it was workable,but I thought, well, let me send
it to the rest of the board toget their views.
So I said, dear board, here is aproposal from Bruce.
(09:55):
I don't think that it's workablefor these reasons, but please
read it with an open mind andlet me know if you disagree.
However, before I click send, Irealized that they would not be
reading it with an open mind.
Why?
Because they would have seen mypreamble, which made it clear
that I didn't agree, beforereading the proposal.
(10:15):
So before I clicked send, I thenreordered my email and I said,
here is Bruce's proposal.
Read it.
My thoughts are at the end.
And then Stefan, who's also onthe board, wrote back to me and
he said, Alex, I agree with allthe concerns you raised after
the proposal.
But reading between the lines,actually, Bruce might be
amenable to something else.
Why don't you counter-proposethat?
(10:36):
And I did, and he accepted.
And so why was that soimportant?
It's because had I primed Stefanto thinking the proposal was
bad, he would have probably readit quite superficially, knowing
that Alex has already evaluatedit, but he was able to read it
with a fresh mind without mepriming him.
So that's an example of tryingto allow time and space for
(10:58):
different viewpoints.
But another thing to do is toactively reward or actively
acknowledge differentviewpoints, if somebody
disagrees, to really highlighthow much you value this.
Sometimes it may well be that ifthe decision still goes ahead,
despite the objection, you mightgo to that person and say, I
want you to know that eventhough we still press ahead with
(11:21):
the decision, we value yourconcerns and we will bear them
in mind when we execute thedecision.
Because if you didn't do that,the person who raised the
objection would might think, Iprolonged the meeting by 15
minutes or half an hour to raisemy objection, and it made no
difference anyway, and itprobably upset the people who
were in favour of the proposal.
Next time I will self-centre.
(11:42):
So the idea of explicitlyacknowledging the value of a
different perspective issomething which I think is
really useful.
SPEAKER_00 (11:49):
Alex, this sounds so simple in theory, but when I see
that external times are gettingtough, the tougher it becomes
externally, with all sortseconomically, politically,
socially, the more boards avoiddissent, the more boards try to
(12:09):
align around, try to go down theeasy route.
What can be really done?
And still, it is now so, soimportant to stay competitive,
to remain at the edge of things,to allow this descent in
boardrooms.
But it's so tough to reallyimplement it.
SPEAKER_01 (12:28):
I think there's a couple of things.
Number one, when the stakes arereally high, which is tough
times, I think that's when wereally do want different
viewpoints.
So it's not, it's a luxury tohave different viewpoints when
times are good.
Actually, it's a necessity tohave different viewpoints when
times are difficult to make surethat you're facing the crisis
(12:49):
with the best possibleinformation.
And indeed, there are issuesthat happen during crises which
might otherwise have beenavoided.
Let's say the collapse ofSilicon Valley Bank when
interest rates rose.
This is something which may wellhave been addressed had there
been a greater variety ofopinions and greater knowledge
of the risks that would happenif interest rates changed.
(13:12):
I think another thing to note isthat even though it is tempting
to default to the status quo, asa board, you want to be
different from your competition.
And if you are going to have acompetitive edge in a world in
which it's difficult toencourage dissent, why?
Because people on boards aresuccessful.
They don't like to be told thatthey're wrong or they've missed
(13:35):
a viewpoint.
actually can you be quitedifferent by running the board
in a different way, which istruly encouraging of different
viewpoints.
Yes, every company says we valuea diversity of opinion, but when
the rubber hits the road, howmany of them actually act in
that way?
Probably a minority, asignificant minority.
SPEAKER_00 (13:54):
Yeah, you know, I just come back from a board
observation from the continent.
And yeah, it's so far awaysometimes what you see And what
we are discussing in the podcastthat I'm thinking, gosh, how can
it be done?
How do we get the message acrossto our listeners to really live
also, to take what we discusshere in the podcast, to make it
(14:17):
happen in their own boardrooms?
SPEAKER_01 (14:18):
Absolutely.
And these are things which justmake sense in theory.
So I've just done a report ondiversity and inclusion for the
Diversity Project, which is aconsortium of asset managers to
promote diversity, not justdemographic, but also cognitive
diversity in asset management.
And this will be launched in theHouse of Lords on the 11th of
June.
And if you were to read thereport, nothing in it might seem
(14:40):
earth shattering, which is weneed to be intentional about
different opinions.
We want to have a diversity ofperspectives.
But one way that a director ofan advisor to the diversity
project described it is it'ssimple, but not easy.
And I love that description, isthat we know where to get to,
but actually putting it intopractice is challenging.
(15:02):
It's like healthy living issimple, not easy.
I want to abstain from alcoholor cut down on desserts and
exercise, but actually puttingit into practice is difficult.
So even if the message is mightseem simple, just to reinforce
them, reinforce what to do andhow important it is to get
there, I don't think you canever graduate from, I don't
(15:23):
think you ever need to.
need to be embarrassed byrepeating things which are
simple, but still not yet done.
SPEAKER_00 (15:29):
Fantastic.
Alex, this is so, so helpful.
And this whole discussion is agreat reminder.
Maybe our listeners want to evenlisten to this podcast episode
several times to really get theinspiration and make it happen
in their own boardrooms.
At the end, we always ask, Alex,what are the three things our
(15:50):
listeners should take away fromthis podcast?
SPEAKER_01 (15:53):
I'd say number one is the importance of academic
research.
Now, you might say, I would saythat because I'm an academic,
I'm talking my own book.
But this is to highlight thatacademic research is much more
relevant to practitioners thanyou might think.
We often think, oh, there'sacademics here and practitioners
here, and never the twain shallmeet.
(16:13):
But academics and practitionerswork on the same issue.
So business school professorslook, what really drives
performance within business?
But what we have have is thetime and the space.
We have maybe five years to workon a project rather than a
practitioner study might be sixmonths.
And that really allows us tonail down causation, not just
(16:35):
correlation, highlight whichfactors really matter and
disentangle different thingswhich might be conflated.
So I do think academic researchdoes matter for practical board
members.
The number two is the importanceof critical thinking to question
what you really want to be true.
You might think, well, if I'm atrue believer in DEI and
(16:58):
sustainability, I shouldn't bequestioning because that
suggests that I'm not trulycommitted to the cause.
If it is that I'm a believer, Idon't necessarily want to be a
doubting Thomas and always askfor the evidence.
But no, this is not an issue.
of ideology.
This is an issue of what makescompanies more effective.
And I do want to look at theevidence for what drives company
(17:20):
effectiveness.
Actually, do I have theconfidence in this cause that I
am willing to look at theevidence?
I'm willing to hear the otherside because I know that I think
that even if there is somethingwhich is going to be informing,
which is different, I'm willingto hear this because I'm
confident in my view.
(17:40):
And the third and final point isto encourage dissent within
other people.
So again, what a confident chairwill do is to realize that I
don't have all the answers.
I'm not necessarily the smartestperson in the room.
I would like people to disagreewith me.
So this is to give them time andspace to do that.
Be that them speaking first inthe meeting or putting your
opinion at the bottom of anemail that you're forwarding or
(18:02):
actively going out and rewardingpeople.
This could be just through averbal acknowledgement.
if these are people who'vedisagreed with you.
One example might be TomGarrity.
He was the former dean ofWharton where I was first
professor, but he was the CEO ofa company, Index.
And what he did is he hired aconsultant to come in and tell
(18:24):
him in front of his entirecompany in a town hall all the
things that he was doing wrongand could be doing better.
Now, that's admittedly extreme,and I'm not suggesting every
company do that.
But why I think that was sopowerful is that he highlighted
that I might be the CEO of thiscompany, but this does not mean
that I'm infallible.
If you were to highlight myfallibilities, you're improving
(18:47):
the performance of this firm.
SPEAKER_00 (18:49):
Fantastic, Alex.
A very important podcast.
Thank you so, so much forcontributing to the BetterBots
podcast series.
SPEAKER_01 (18:57):
And thank you so much for giving me this
platform.
I mean, I really appreciate whenpractitioners are interested in
my views.
SPEAKER_00 (19:03):
Well, thank you for listening to this episode.
As you know, behind this podcastare real people.
So please do get in touch.
We are always delighted to hearfrom you.
If you have an idea for anepisode, if you would like to
hear more about the work we dowith sports, reach out.
You can do so on our website.
You can write us an email.
(19:24):
You can even book a time.
You can freely see my calendarand set up a Teams call.
Once again, thank you forlistening and maybe we meet in
person.
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