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Keys to Successful Boards

20 Apr
by John, posted in business, Uncategorized   |  No Comments

board

Respect is the key to successful board relations in public and private companies, government boards, and non-profits.  And respect requires active communication, careful listening, effective committees, and detailed preparation for all meetings. But with all the focus on process in Sarbanes-Oxley, Dodd-Frank, public sunshine laws, most reform efforts miss these key mechanics of successful boards.

This is not a legal commentary.  Any competent law firm with an active corporate, government, or NGO (non-governmental organization) practice can advise on fiduciary duties of boards.  This is a commentary on the human elements of successful boards.

Expectations of a Rubber Stamp

Regardless of whether a board is corporate, governmental, or an NGO, if you want an effective board the organization will recruit strong, intelligent, vocal women and men. Experience in the organization’s field is often mentioned as important, but this is often a trap.  A board composed solely of industry, agency, or charitable experts is often imprisoned in conventional wisdom.

A board of strong, intelligent, and vocal members will not tolerate being  a rubber stamp.  They are on the board to advise the CEO or Executive Director and to push them and their staffs to overperform on operations, finance, and strategy.  Management has to expect that the board will reject or modify ideas.

And management cannot be defensive about rejection or modification.  More often than not a board is saving management from tunnel vision and conventional thinking.  Sometimes the board is raising profound ethical and strategic questions.  This is its greatest virtue.

Committees too Big for Their Britches

Committees of the board are an effective tool for preparing issues for the entire board to consider in a board meeting.  They are not substitutes for the entire board.  Committees report to the board.  Ideally, they present a range of possible actions based on facts and analysis with a recommendation about the best course of action.  They never, ever, present a fait accompli.  

Counting Votes

The most common mistake I witness in board preparation is management or the chairperson circulating an agenda and supporting documents last minute without board input.  Then the board arrives at the meeting expected to vote for a particular outcome.  Typically, board members have big egos.  It is part of their success.

At a minimum this is a recipe for hard feelings and board members believing they are disrespected or taken for granted. A worse outcome is a non-unanimous vote or an outright defeat.

In the best run public company board I served as general counsel and several boards where I was a board member we followed a simple process. A draft agenda and important committee reports were circulated two weeks in advance.  The CEO called personally each and every board member for advice and input.  The General Counsel, Secretary, or Chief of Staff called a few days later to follow-up in case there was an uncomfortable topic where an alternative listener was an advantage. Issues were resolved and although no decisions were made outside the meeting, we knew the vote count before the meeting.

Surprises

This is very simple.  There should never, ever be a surprise in a board meeting.  At every level from travel arrangements to CEO hirings make the board feel special.  Surprises are not special.

Fundraising

If you use the board just to fundraise, then make sure that you pick distracted, disinterested, rich people  to serve on your board.   At least be honest when you take people’s money and explain they are wallpaper in board meetings.

Picking the CEO

The most important issue boards face is the selection of the CEO.  Often a committee working with a recruiter is charged with producing a slate of candidates.  Again, the committee’s job is to do the grinding day to day work of producing a qualified slate.

It is never to present a single candidate.  Imagine a board member arriving at a meeting expecting a slate or a committee report faced with a vote on a single candidate.  They may vote “no” costing you a candidate who worries about lack of board support. Worse, you may create a perpetually disgruntled director.

Performance Reviews

The best run boards in my experience conduct annual reviews of board members performance.  Are they attending a minimum number of meetings? Are they prepared?  Are they providing ideas or offering network opportunites? Are committees providing effective work?  Are board members passive or active in pushing management and strategy?

It is an uncomfortable process that requires great listening and tact.  But it removes deadwood and opens up opportunity.

Respect at every interaction is the key.

Supreme Court Vacancy: Let’s Be Real

04 Apr
by John, posted in author, conservation   |  No Comments

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President Obama has nominated Judge Merrick Garland to the US Supreme Court.  By all accounts he is a fine person and a good jurist.  But the math is simple.  In 2014 the Democrats in charge  of the Senate changed the confirmation rules  to allow a simple majority vote to confirm judges and other appointments.  Except, they left the filibuster requiring 60 votes for a Supreme Court nomination. Then we Democrats lost the 2014 election including a huge loss in the Senate. There are now 54 Republicans, 44 Democrats, and 2 independents (who vote with Democrats).

Fourteen Republicans would have to vote with the Democrats and independents to get the required 60 votes.  There is no chance of fourteen Republicans abandoning their political base and campaign funding sources.

Now you can argue tradition and decorum, but the bottom line is the Senate is not required constitutionally to hold hearings and a vote.  It is simply required to give its “advice and consent”, which it has now done via the Majority Leader exercising his rights under the Senate rules with the full support of the Republican caucus.

44 + 2 = 46, not 60.

So what is the argument really about?  The real issues politicians often fight about are not what they say, but  something else a layer below the outrage.  This is an election year and  politicians perceive the need for issues to raise money from their bases.  This is not about the constitution, Judge Garland, or election results.  It is about money.

But on the merits is Judge Garland a wise pick?

The entire sitting Supreme Court came from four law schools:  Harvard, Yale, Stanford, and Columbia.  One could argue just three, as although Justice Ginsburg graduated from Columbia, she spent the bulk of her law school tenure at Harvard. Judge Garland graduated from Harvard.

At times modern political discourse devolves into “diversity” arguments. There are 207 accredited law schools currently in the United States.  How is it diverse to have the highest court in the land made up of graduates of 1.4% of law schools?

Reading the Justice’s biographies after law school a similar geographic concentration leaps out:

  1.  Justices Breyer and Kennedy are originally from California, but have spent much of the last thirty years in Washington, DC.
  2. Justice Thomas originally practiced primarily government law in Missouri, but has now been in Washington, DC for thirty-five years.
  3. All the other Justices have spent the vast bulk of their careers in Boston, the New York City area, or Washington, DC.

Not a single “flyover” Justice.  Not a single politician familiar with the rough and tumble of winning elections and governing.  Very little trial or judicial experience outside the elite federal appellate courts and any such experience decades old.  Judge Garland is more of the same – a government career, a federal appellate judge, Washington, D.C. as his lodestone.

We hear endlessly from President Obama that he is looking for judges with diverse backgrounds who can bring their experiences to the court.  Why not a Westerner or a Southerner?  Why not a real trial lawyer or trial judge out of the state courts?  Why not a Native American?

Using the West as an example.  The biggest issues in most Western states are:  rapid population growth and development; water; D.C. based management of more than fifty percent of Western geography;  and Native American tribes and their rights plus relationships to land, water, and wildlife. Is it too much to ask that one justice of the U.S. Supreme Court have actual knowledge and experience of these issues?

Justice O’Connor, now the favorite conservative of Democrats, had much of this background.  Raised on a dry cattle ranch in Southern Arizona she had first hand experience with water rights and federal land management altering and even destroying ranching.  In Arizona she was a state attorney general, a state trial lawyer and judge, a state appellate judge, and an elected politician.  And even though she was a graduate of Stanford law, she brought a knowledge of the West and politics to critical cases before the Supreme Court.

We have enough Merrick Garlands on the Court.  Let us hope the next president will find enough wisdom to give the “flyovers” one seat on the nation’s highest court.

Notes: History & Middle East; Sanders In The Long Term

16 Mar
by John, posted in author   |  No Comments

innovationguyonglobe

History and the Middle East

I just finished The Fall of the Ottomans by Eugene Rogan, which chronicles the destruction of the Ottoman Turkish Empire in World War I at the hands of the British, French, and Arab forces.  In the context of growing US involvement in the Middle East since 1973, it takes its place in my mind with Tom Segev’s One Palestine Complete (Jews and Arabs under the British Mandate), James Reston, Jr.’s Warriors of God (Richard the Lionheart and Saladin in the Third Crusade), The Old Testament/Hebrew Bible, and the New Testament.

It is the same old lesson – Arabs, Kurds, and Persians want to rule themselves.  The current disaster is not a war of “Radical Islam”, but Radical Arab Nationalism and civil war.  From  the Romans, the Crusaders, the Ottoman Turks, the Imperial Powers of Western Europe, to the United States foreign powers have attempted to control Arab, Persian, and Kurdish lands.  And often they mistook the resistance as religious, whether it was Jews in Pilate’s time or Muslims from the 8th century onward.

And those outsiders could hold power with brute force for significant times.  But the inescapable conclusion is that Arabs, Kurds, and Persians do not want foreign rule.  Religion is the easy veneer that allows foreign powers to believe they are fighting against a backward theocracy.  But, in the end foreign intervention fails not because of religion, but the strong desire for self-rule outlasting foreign national occupations.

We do not understand the fight in the Middle East and we are falling into the same multi-millennial mistake of our forefathers. And we just need to stop doing it.  It really is that simple.

shutterstock_164500820Sanders In The Long Term

“The Democratic Party is ideologically bankrupt, they have no ideology.  Their ideology is opportunism.”

“Why should we work within the Democratic Party if we don’t agree with anything the Democratic Party says?”

“It would be hypocritical of me to run as a Democrat because of the things I have said about the party.”  Source.

Sanders has also praised the Castro regime and the Ortega regime in Nicaragua.  Sanders has sought to portray that support as anti-imperialism or discreet support for parts of the communists’ social agenda such as health care.  Source.

But that support has given credibility to regimes that kill and jail political opponents and made Daniel Ortega one of the richest man in Central America.  You cannot praise the Soviet Union for social equality, while overlooking the sixty million dead Soviet citizens killed to create it.

“We can disagree in a democracy, and that is what a democracy is all about, but I hope that we can all agree that we are not going to let billionaires and their super PACs destroy American democracy.”  Source.

Substitute your favorite racial epithet for “billionaires” and you see the same lazy stereotyping that socialists and fascists always use to begin their long march to tyranny.   We know where Sander’s policies lead.  Best case is Great Britain in 1975, a creaking socialist state with three day work weeks, uncompetitive internationally, failing public services, and an empty treasury. Worst case is the country of my birth, Venezuela, in total failure as the result of socialist envy and scapegoating.

If you care about the Democratic Party and a future for your children, you cannot vote for this fraud.  And spare me the talk about Denmark and Sweden. I have had a chance to work in both countries and I have never heard a Swede or a Dane praise Castro, Ortega, or stereotype classes of people.  Danes even under Nazi occupation rejected such stereotyping. They risked their survival to smuggle their Jewish neighbors to safety in Sweden.

Sanders supporters are by and large good and honest people seeking change in a frustrating time in history.  In that way they are similar to Trump supporters.  But a demagogue who stereotypes and preaches hate of groups of his fellow Americans is never the answer. Every person is an individual and they deserve a President who sees them through that lens.

My Offer to Sierra Club & Defenders of Wildlife on the Mexican Grey Wolf

10 Mar
by John, posted in conservation   |  No Comments

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This is an excerpt from my comments as a Commissioner, but only for myself, at the Colorado Parks & Wildlife Commission March 9, 2016.  My offer to Sierra Club and Defenders of Wildlife remains open and unresponded to since I made it in the January CPW Meeting.

Mr. Chairman and with some trepidation I want to briefly respond to a host of press reports, social media commentary, and email traffic that I was sent after our last meeting regarding the possible introduction of the “Lobo” or Mexican Grey Wolf to Colorado. I also had an opportunity to speak with both Defenders of Wildlife and Sierra Club after our last meeting in the hall and I like to think I am a good client to Counselor Monahan.  So, I want the record to reflect those brief conversations.

I told both Defenders of Wildlife and Sierra Club that I appreciated their attending and their polite and professional conduct.  And I would say the same about the Cattlemen’s Association, Wool Growers, and others. Here I also want to pay tribute to Staff and the State Patrol for the smooth handling of such a big meeting and for taking care of all of us and the public. I thought it was great to have that much public engagement.  Lastly Mr. Chairman I want to pay tribute to your admirable handling of the meeting, including the single unprofessional moment which you handled with great aplomb. I look forward to the rest of your Chairmanship.

I also told the two environmental groups that I would be happy to help them in Southern Colorado. That I believed they had a lot of spade work to do.  What did I mean by that?  I’ve given some thought to how to say this precisely.  And then I remembered a quote that with your indulgence, Mr. Chairman, I would like to read.  I think it sums up my thoughts more eloquently and precisely than I ever could.

For those of you younger than me, you may not recognize Ernie Pyle and his book, Brave Men.  Ernie Pyle was the greatest American combat correspondent of WW II.  If I tear up, Mr. Chairman, it is only because when I read Pyle I always remember he was killed on Okinawa in the very last days of the war with almost the last bullet.

And that is how I was first introduced to Sergeant Frank (“Buck”) Eversole, one of the old-timers.  He shook hands sort of timidly and said, “Pleased to meet you,” and then didn’t say any more. I could tell by his eyes, and by his slow, courteous speech when he did talk, that he was a Westerner.  Conversation with him was rather hard, but I didn’t mind his reticence, for I know Westerners like to size people up first.  The sergeant wore a brown stocking cap on the back of his head.  His eyes were the piercing kind.  I noticed his hands too – they were outdoor hands, strong and rough.

 

Late in the afternoon I came past his foxhole again, and we sat and talked a little while alone.  We didn’t talk about the war, but mainly about our West, and just sat and made figures on the ground with sticks as we talked.  We got started that way, and in the days that followed I came to know him well.  He was to me, and to all those with whom he served, one of the great men of the war.

Now, Mr. Chairman, I like to think even after the huge population growth on the Front Range of Colorado that Ernie Pyle’s description of a Westerner still applies statewide.  But, I am certain it still applies in Southern Colorado where I am fortunate to visit several times a year.  And what I believe Sierra Club and Defenders need to do is what Pyle did.  Not to go straight down to Southern Colorado with facts and figures about how wolves are great in Yellowstone. But to sit on the edge of the foxhole drawing with sticks in the sand getting to know Southern Coloradans and letting them get to know the environmental groups. Do the spade work. Because that is the only way I can see support for the Lobo arising in Southern Colorado amongst mayors, county commissioners, and the public.

Now folks might say that’s an impossible task. But, I’ll close with a story about a great Coloradan who was not afraid of impossible tasks. Both Counselor Monahan and I studied at the University of Colorado Law under David Getches.  When Getches taught us Indian law or as we say now, Native American law, he was also the Executive Director of the Colorado Department of Natural Resources.  So, we had to take the course at 8 pm at night after he had finished more than a full days work.

It was the greatest course of my college career.  Dean Getches, who died way too early, as a young man left a lucrative legal career to work for Native Americans and their treaty rights. When he started treaties with the tribes were a quaint anachronism. A piece of history, but no more.  But he plugged away for years in and out of court, cajoling, persuading, earning respect broadly, and pushing until the dominant culture realized the error of its ways. When he finished those treaties had the full force of our Constitution.

He did the spade work.

And surely the cause of the Lobo is an easier task than that.

Thank you, Mr. Chairman.

Notes: Colorado Caucus, Gates, Moses.

28 Feb
by John, posted in author   |  No Comments

shutterstock_183650075Colorado Caucus

I am caucusing on Tuesday for Mrs. Clinton here in Boulder.  Looking forward to hearing from my fellow Democrats and attending my first caucus.  This will be my first time to try and understand in person from a Democrat why they would vote for an Independent (Sanders has not changed his affiliation in the Senate to Democratic).  I have yet to talk with a Democrat supporting Sanders and the online presence has not impressed me. As far as I am concerned this is about the Democratic Party picking a Democrat or going outside the party for someone.  Should be an interesting night and I hope to learn something.

Bill Gates

My experience with Microsoft over the years in negotiations was they were a zero sum partner.  Unlike Apple, they honestly never cared if we as their partner was successful.  And I long ago gave up using any of their products as buggy, insecure, and overly complex.

Although Gates has been lauded over the years for his philanthropic efforts, I have never been able to find any evidence that the money he has spent has done much.  Certainly all the evidence indicates to me if he had simply donated money in blocks without strings to major charities he would have generated better results.

But he has now hit on a major idea that is truly insightful.  None of the energy sources we have now, “clean” or otherwise, are going to bend the curve on climate change and poverty.  And more importantly none of the “clean fuels” have the ability to provide the power necessary to raise those in the Third World poverty into modest prosperity.

He and his fellow billionaires are pouring capital into next generation nuclear, next generation solar and wind combined with as yet non-existent storage capacity, and other alternatives.  This is precisely the right approach. I had the opportunity to serve on the Board of new generation battery company funded in large measure with President Obama’s stimulus program.  The government as Gates states is important in basic research, but it is hopeless in investing.  In 28 years of business I have never seen anything more incompetent than the stimulus investment in the battery company we ended up selling to the Chinese and Russians with $35 million of US taxpayer paid for equipment.

Gates is on to something and I wish him luck.

Outside the Comfort Zone

Today’s sermon at St. Ambrose here in Boulder was the best sermon I have heard in 54 years.  Our priest, Peter, used the Old Testament/Hebrew Bible lesson of Moses and the burning bush to illustrate.  He drew a small circle, a larger circle around the small one, and a large one around all of them.  They were labeled “comfort zone”, “wilderness”, and “dying/new life”.  Moses walked out of his comfort zone shepherding his father-in-law’s sheep into the wilderness.

Many of us never leave our comfort zone.  We do not reach out to a homeless person on the street to start a conversation, or speak up with a view contrary to everyone else’s in the room, or extend our hand and introduce ourselves in an unfamiliar gathering. But Moses walked into the wilderness and met God.

Then God challenged him to go back to Egypt to free His people. Moses gave God all the reasons he could not: he was not good enough; he had a speech impediment. But God sent him anyway into the unknown.  Not the known wilderness, but into the unknown where he might die.  Moses and Aaron went and from that leap into the unknown they achieved great things.

You do not have to be religious to understand that important lesson.  Whether it is Moses, our Founding Fathers, Gandhi, or MLK it is that outer circle that is the realm of those who achieve greatness for others.