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AI can do amazing and wonderful things. And you know, we're all astonished every
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time we put a complicated question in and it outcomes the answer in 2 seconds. But actually, one of the things
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that AI cannot do is exercise judgment. Welcome to Grit in the Boardroom, the podcast that takes you behind closed
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doors to unpack the pivotal decisions that shaped organizations for better or worse. I'm Erica Elias and Norris and
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each week I sit down with a senior leader who stood at the edge of a defining moment, a crisis, a turning
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point, a challenge where the stakes were high and the outcome uncertain. These are the conversations you won't find in
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annual reports, honest, strategic, and grounded in lived experience because governance isn't about theory, it's
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about pressure, people, and making the call. My guest today is Sir Andrew Likierman.
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He's one of the UK's most respected voices on leadership judgment, corporate
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governance, and decision-making at the highest levels. Former Dean and Professor of Management Practice at
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London Business School, he has combined academic insight with deep practical experience serving as a non-exec
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director on more than 20 boards across sectors including the Bank of England, Barclays Bank, Times Newspapers
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Holdings, and helping to shape UK corporate governance as part of the Cadbury Committee.
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Alongside this boardroom experience, he has advised the United Nations on governance. He has led the Government
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Financial Service at HM Treasury and spent decades studying how leaders make better choices in uncertainty with
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insights captured in his latest book, Judgment at Work. Welcome to Grit in the Boardroom,
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Andrew. Let's get into it. Thank you very much for having me. Sir Andrew, um
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you've spent decades in boardrooms across sectors. Which moment comes to mind when you think about judgment
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shaping a company's fate? Well, when you use the word fate, of course, then it implies drama, it
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implies [laughter] conflict, it implies lots of things where you got a really big issue and big stakes and so on. Um
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and so inevitably, it's mergers and acquisitions that come to mind in terms of the big moments in a company's life
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and history. In fact, though, I think that judgment's an incredibly important
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element of everything a board does um and doesn't do. I mean, it's the thing
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leaves out as well as the things that actually does. But mergers and acquisitions is the big area here. And
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was it the case um that good judgment made the difference between the right and the wrong kind of answer or outcome?
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Yes, I I've been involved in in a number of discussions and negotiations and
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outcomes and what's completely clear is that judgment, the way the board approached this, was absolutely critical
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in terms of the future of the company. Um and the evidence seems to show, in general, that the people who gain most
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from an acquisition are the shareholders of the company that's being acquired.
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That's to say, very many acquisitions have very poor outcomes and it's a
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problem in getting value for money in terms of a takeover. Why is that? What what do you think is kind of one of the
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grounding issues that means that, as you say, the shareholders of the the company
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that's being taken over actually could end up in a better position than anyone
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else than the other stakeholders? Well, this links to the work I've done on judgment and one of the things that it
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seems to me is incredibly important in the way people make choices is the feelings and the emotions that
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they have. And feelings and emotions run high often in these situations and companies seeking to take another one
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over often are in the grip of a huge desire to go through with the deal and sometimes, not inevitably, but
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sometimes, embarrassing facts come to light during the negotiations, for example, and they're disregarded because
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everybody's so mad keen to do the deal that they kind of ignore these inconvenient facts. So that's a kind of
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example of feelings and beliefs getting in the way. Yeah, do you think ego has anything to do with that? Oh, yes. I
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mean, it's would be it would be naive not to believe that ego doesn't have
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part to play. To be fair, though, I don't think it's true that it's all
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driven by ego and that leaders are all about themselves and they don't think
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about the I mean, I've my experience has been on the contrary that people running
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organizations, on the whole, are pretty professional about what they do. You know, they will not do things on whims.
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Now, there are people who do things on whims and there are people who do things based entirely on emotion. And some of
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them get away with it. It's fine, you know, and it all ends well. But one has to understand that a risk is
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being taken here and sometimes the risks pay off. What we know very often is the
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risks don't pay off. What do you think stood out um for you on how the board
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navigated that uncertainty in that moment? Well, as I said, I've had experience of quite a lot of different
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um events of this kind. It is a moment of drama. It is a moment in which a great deal is at stake. Um assumptions
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are made. People have to come to a view often against deadlines and that's a tough thing to do. And on
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the whole, organizations who have good managers, good leaders, will be tending to make these decisions on a more
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rational basis than those that don't. Now, I mentioned rational because I've
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also mentioned emotion here and I'm not excluding the fact that emotion plays a good part in in these
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things. But those who use their mind as well as their gut in deciding what to do will tend to come
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out better. You can use your gut, you can take a big risk, but it is a risk and, you know, a lot is at stake here,
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particularly in terms of mergers and acquisitions. Mm. Have you got an example you can give where that was the
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case? Well, I mean, let me take one that I wasn't involved in because it's in the
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public domain and easier, which is uh the takeover by Royal Bank of Scotland of ABN AMRO where
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on the back of a successful merger or rather takeover by RBS of NatWest the board were very, very confident
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about their abilities and the chief executive in particular was very confident about his ability to do this.
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And the kind of incredibly complicated issues attached to this multinational merger were, it appears, rather swept
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aside in the fact that, you know, we are wonderful, we can do things and, you know, what is to stop us? And it all
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ended, as we know, in tears and not just for the shareholders of RBS. Mm. And do you think that those outcomes
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would have been the same but for a different set of board members? I'm absolutely sure they would. I mean, if
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if you undertake a huge merger of this kind, very, very complicated, which involves partners, which involves
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divestments the question of the use of cash rather than shares and so on. I mean, these
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were really big stakes involved. And all right, it's easy in retrospect to say
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that all ended really badly, but I think it must have been clear at the time that this
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was a huge risk. And how do you think board members can prepare themselves for something like this? Well, I mean, what
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you need unsurprisingly, since I write about judgment and talk about judgment, what
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you need, I believe, as a board member, as a as a company, is to have board members who have good judgment. In other
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words, you know, they look at what is going on here. You know, they're aware
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of the fact that feelings and beliefs are involved, they you know, and so on. They want to know who and what to trust.
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These kinds of elements, which for me constitute judgment, are a really important part of what a board has to
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have in order to achieve its objectives. And the difference between boards with and
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without these seems to me pretty significant. And it's judgment, I suppose, reflection on what they are
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bringing to the table as well as reflection on what they are hearing from other people because everybody works, I
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presume, on their own level of judgment and they bring that to the boardroom. You can end up with a lot of biases, for
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instance, around the table. That person themselves also needs to be able to call
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out their own biases, no doubt, to be able to say, "Actually, I'm feeling that
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because something's happened and I've experienced this before, I feel that we
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this is not a good idea or this is a good idea." How can people be objective
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about themselves um in that situation where there's high pressure and drama?
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No, I I don't think you can simply say, "I have no biases." Or indeed, you can
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say, "I'm going to get rid of all my biases." It's simply not realistic. You
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know, we're human beings. And so what we have to do, I believe, is to be aware of our biases. And I tell
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the story in in an organization which I was which I was running, one of my colleagues came to me and said, "Andrew,
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you know, I think you're a little bit cautious." And I was a bit surprised by this. I
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thought, "Oh, me? I don't think that's probably right." And then gave some evidence about this.
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Now, that was a very good example and I took that seriously and I thought, "Actually, that's right. Being aware
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thereafter of my tendency to be cautious then helped me, I believe, in making better choices. So, I think as long as
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everybody's aware, you know, what their biases are, what they tend to do, are
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they always optimistic about absolutely everything turning out brilliantly? Well, you need to know that before you
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plunge yourself into something. And similarly, like me, let's say you're too
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cautious, maybe you don't take enough risk. So, being aware of one's biases and
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one's feelings and beliefs seems to be really at the heart of this. Mhm. And
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how can people improve their self-awareness? There's lots of ways of doing it. It's a
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board appraisal, normally speaking, should be an important part of that every year. So, that when you get
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feedback on how well you're doing, how badly you're doing, what you're doing to
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do and so on. I mean, that's the kind of thing that ought to come up. And I found
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myself that board appraisals and, you know, board reviews each year are really, really helpful
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in terms of identifying things that you may not know about yourself and that your colleagues help you to get better
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at. You know, so I'm a great fan of board review because I think that actually is a way in which boards do get
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better. As individuals, you know, we can become more aware of ourselves. Plenty of ways of doing that. Simply getting
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mentoring or coaching or something like that can help you as an individual to become better. So, I think there's
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actually lots of ways in which you can get to know yourself. This was something back in ancient Greece, as it were, they
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talked a lot about and it still applies today. There are many examples of boards
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that have had board appraisals and have gone on to have corporate scandals or collapse or whatever else very soon
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after. What do you think are some of the key things that board should kind of think about when they have their reviews
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to make sure it's not just, you know, a pat on the back and and it's ceremonial as opposed to
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actually making the change or calling things out that really do need to be called out for for the kind of long-term
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sustainability of that organization? Well, look, there's a requirement to have board reviews for listed companies
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in number of countries. And that seems to me really sensible. It doesn't say you've got to have a great
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board review or a board review that really tells you what's going on. You know,
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actually, you know, board reviews can be rubbish. You know what I mean? They you
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can simply get somebody in to go through the motions, number one. Secondly, you can have a board review where nobody
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takes any action as a result of the board review. So, you've gone through the motions, okay, but nothing actually
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happens or changes. And I've known organizations where people are too polite, you know, or too afraid to
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address particular issues or particular people. And so, there's no guarantee a
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board review will do the business. But actually, if done well, being done well means usually being done by
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outsiders if possible because insiders are a problem in terms of confidentiality and so on.
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And having the right kind of structured review, having then it followed through by the chair talking to each individual
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board member or whatever it is, and the senior independent director talking to the chair,
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you know, these are ways in which you can actually make a review work. So, you know, of course, there are companies
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that have gone horribly wrong after board reviews because they've had to do the board review, but it may not be the
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board review that was the problem. Otherwise, it may have the board review that was the problem because they didn't
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address the issues. Yes, I've been in situations and experienced kind of companies whereby board reviews have
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very much been toned down before they even reach the board. So, the chair and maybe the CEO will review what's been
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drafted by an external independent and little did the rest of the board know or were they even aware that actually what
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then went to the board was a sanitized version with everything stripped out that could possibly be helpful to
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improve. Well, I'll give you two two examples. In one case, I was on a board
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where the board appraisal took place. The chair talked to the board member after the review was taken and the man
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resigned immediately. Basically, he had lost the confidence of his colleagues and the chair did not hide this from the
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individual as some chairs would. And basically, he said, in that case, I'm going. He resigned on the same day.
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Quite right. You know, I was on the board with him and he was useless. All right. So, that's that was a good
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outcome, I think, for the organization. I'll give you another example. So, on a
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board review that I was involved in, so I was the person being reviewed, and the chair said to me, Andrew, you
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know something? You're quite aggressive. And I said, me? I'm such a nice person, you know, I'm
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aggressive, me? Good heavens. And he said, well, yes, you when you ask questions, you ask them
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in a pretty aggressive way. I mean, you're not nasty, but it's aggressive.
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So, I walked out of the room and I thought, well, you know, I don't think she's right, actually. I think this is a
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bit of a mix-up here. Anyway, next board meeting, put up my hand and started to ask a question and I just listened to
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myself asking the question and it was very aggressive. And I had simply not been aware of the
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fact that although I thought this was, you know, a penetrating question asked in a nice way, it was actually the tone
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was quite wrong. And again, that was very helpful to me in toning down what I the way I then asked it. I hope I kept
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on asking good questions, but I didn't ask them in such a nasty way. Well, it
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comes down to self-awareness, right? >> It does. Exactly. Mhm. I think the
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chair's position can be particularly challenging. They may have to deliver feedback to peers or or others that
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maybe they don't want to hear. What do you think are some of the kind of key
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things that chairs can do to prepare themselves for that sort of experience cuz it's very different, right? From
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moving from a non-executive director role to a chair. And often, people kind of think, well, it's just the person
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that's leading the group. Can be quite different, right? It is very different
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and I do think that being a chair is a really skilled thing to do. And sadly, a lot of chairs are not very skilled
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because they haven't had the experience, they haven't had the training, they
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haven't had the feedback. And quite a lot of people become chairs and think,
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well, now I do whatever I want, really. You know, and people are too scared, perhaps. And sometimes, you know, they
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don't want to cause trouble, whatever it is. So, the chair gets away with an
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awful lot. Now, it seems to me in terms of what chairs need to do, chairs need to get
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good feedback on how they're doing. Again, the senior independent director has a role here to do that and act as a
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formal channel, as it were. So, people can say, look, the wrong things are coming on the agenda or X and Y get a
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lot of air time and you know, A and B are ignored, you know, these kinds of things. So, the senior
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independent director can do a lot to help the chair. But the chair really, you know, has the
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responsibility to act on behalf of the organization and it not just to be a big ego trip, excuse
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me, for the chair. Because it's all very well, you know, people often love being
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chairs because they're kind of in charge of the agenda, charge of the meeting.
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You know, what could be nicer? They love the sound of their own voice. When I've
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joined boards, after a while, I begin began to ask, if I was approached to join a board, I would look first at the
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chair. And if my sense was this was a lousy chair, then I wouldn't accept going on
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the board even though it was a lovely idea and I liked the idea of the company because I knew the meetings would be
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would not be good. Mhm. And what do you mean by a not be good? Well, we've all
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been in meetings, haven't we? On and on, you know, it will sit there for hours. We've
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already set agenda items. Everybody knows what the outcomes are going to be, but we've gone through a 60-slide
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presentation, you know, and lots of discussion. Discussion about what exactly? Have anybody advanced their
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views? You know, very often people end up with exactly the same views as when they started. That kind of thing. I
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mean, for me, my bugbear is meetings that last too long, you know, and since I've I've mentioned that. But also,
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chairs who don't bring in the expertise around the table, who ignore certain
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kinds of people they don't like and bring in others that they do like or, you know, support their point of view. I
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mean, the most brilliant chair I ever saw was a man called Ron Dearing, um long dead, Lord Dearing,
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who came from very humble background, rose up to be rose to be chairman of the post office, then went to the House of
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Lords, he did and his chairing of a meeting was completely brilliant. It wasn't anything which wasn't carefully
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focused on getting through the agenda, not because he had a view, because he wanted to get the best out of the room.
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And so, people were asked for their contributions. He thought beforehand, who shall I bring in to talk about this?
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He brought them in that it's because they had something to say. If he knew somebody was counter that, he would ask
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somebody, I understand you're not in favor of that, could you explain why? So, he guided the discussion without
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ever pushing the board to a conclusion. I mean, it was a, you know, it was a work of art to see him as a as a chair.
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And I presume that's not in any textbook or any course that people just sign up
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to and do a day and all of a sudden they become an amazing chair. How how do you
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learn these sorts of skills or is it by experience? I think it's back to the
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business of, yes, it's experience, but also being willing to learn, getting feedback, you know, trying to be better.
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And I come back to it realizing that you have responsibilities to the people in this room and to the organization. This
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is not simply a vehicle for your views and your ideas about life, even though you have the chair. I had a very
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interesting conversation not that long ago with somebody that was talking about succession and particularly CEOs.
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And they were talking about how you hire CEOs, and they were talking about kind of psychological type testing way beyond
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uh you know, psychometrics and those sorts of things. More what sort of a individual is that and how will that
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impact the organization and actually um this particular person spoke about the fact that you need to go through kind of
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tests and things if you are a bus driver or if you're an airline pilot, but you
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don't you're not expected to go through the same sort of tests as a CEO of a
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business that could affect many, many hundreds of thousands or even millions of people. What do you think about that?
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Well, look, uh it's absolutely right. This is not something where you do some
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psychometric tests, you know, and fit into something or ask chat GPT, you know, who's the best candidate. No doubt
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this will happen increasingly. I mean, what you need is who is the right person for this group of people at this time.
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And you know, you may want a CEO who has certain characteristics for a company at one stage of its existence
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and a rather different kind of person at a different stage. And to face certain kinds of
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circumstances where you've got dynamic growth, you don't necessarily need the same
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person to lead that as the as the person who's leading a kind of steady as she
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goes approach to make sure the organization doesn't run out of money, you know, is well run and so on and seem
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to be seem to be right. So, I think it's very much a question of saying who is
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right in these circumstances for this situation. And coming back to my own subject of judgment, it seems to me the
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one thing you need, doesn't matter what else you have or don't have in somebody,
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is judgment. Because if they don't have judgment, you know, frankly, it's a bit
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of can be a bit of a nightmare. You know, you never know what they're going to do or how they're going to react to
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things. You need that kind of quality to make sure that they actually are able to
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understand a situation and respond to it and take action accordingly. Andrew, you
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mentioned a little bit about chat GPT and digital technology. Looking at how boardrooms might evolve
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over time, have you got any insights into what you think might happen or the impact that might have, particularly
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around judgment? Well, yes, because I mean, I would argue that AI can do amazing and wonderful things. And you
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know, we're all astonished every time we put a complicated question in and it
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outcomes the answer in 2 seconds and we all think, "God, that's amazing,
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fantastic." and so on. But actually, one of the things that AI cannot do is exercise judgment.
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It is programmed by people with biases, with views and so on. The data is trained by people. You have to
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know what question to ask, the prompt you give it. You've got to interpret the
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results and so on. Somebody has to program it. So, AI is not a person. It is a thing programmed and interpreted by
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us. And as I say, it's wonderful what it can do. But we do have to interpret what comes
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out of it. And I'll just give you one example. I asked chat GPT the other day, "Do you
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tend to be more positive than negative?" And it the answer came out, "I am more positive and that is by
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design." And it gave a series of reasons why it tended to be more positive in the
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outcome. Now, there you are. That's a great example. You know, I'm not saying
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it isn't lovely to have constantly positive responses. And the way, you know, it gives these answers with so
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chatty and nice. It all feels as if it's coming from another person and that
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person is completely objective. It isn't another person and the person isn't
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objective. So, in a world of AI, people have a great deal to contribute and that
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applies also on the board. Mhm. And people are starting to use AI for minutes and for recording conversations
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that took place. Obviously, there's a certain amount of admin that gets taken
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out of the the whole process if that happens, but I guess there are some challenges around that, right?
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Particularly around the emotion in the room and and other such things and the way that people exercise their judgment
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and biases and things that may be apparent to a human, let's say, but not to a piece of technology. How do we
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navigate that sort of thing? You're absolutely right. I mean, one thing for example, if you think about it, a
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machine does not have is consciousness. All right? It's the kind of thing which
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picks up what consciousness picks up. So, in terms then of of how this can be applied, it can it's wonderful. I mean,
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it's fantastic that you can actually get it doing the minutes, as it were, and so
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on. But, and this is the same but in every field, including, for example, the use
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of AI in medicine, you know, you can ask the question, but you need to monitor to
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make sure that the answer is, you know, corresponds to what you understand the situation to be.
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So, it can't write the minutes and then say, "Well, that we don't have to worry
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about it." Somebody's got to read through these brilliantly assembled minutes and make sure that it actually
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has captured what goes on. Just as, you know, if you ask a machine in the field of medicine I mentioned,
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you know, it can do fantastic things on the mechanics of the body. But as soon as you've got any human
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emotion involved in psychology or comorbidity and so on, you need a human being to do a quite a lot of
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interpreting. You know, my sense is I'm very optimistic about AI. I believe it'll do wonderful things that were
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often drudgery and, you know, not and make us more productive, but it's going
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to be us plus machines, not one or the other. I've even heard surgeons say that
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they won't take somebody into surgery if they have a very pessimistic view of
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their own ability to be able to get through, for instance. But actually, on paper, it may look like they absolutely
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need what they need to have done. And uh yeah, I've got friends that have turned
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around and said, "Actually, we just we said no. That you come back another day
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and think about it and think about the upside and the positivity because we can't have you going in." which is an
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element that technology can't yet do. Yeah, and you say not yet. You know, the
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technology will get better. Mhm. You know, it'll At the moment we've got
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hallucinations, we've got things made up, you know, and so on. It'll get
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better at that. Of course it will. What it can't do is it can't know what
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it doesn't know. If things are not in the public domain, if they're in people's minds, if they're not
00:27:00
registered, the machine by definition can't know about them. You know, so that's, you know, that's one of the
00:27:07
reasons why um you know, so there's a number of a number of reasons why, you know, it
00:27:12
simply won't just be the inevitable march of the machine. And taking it back
00:27:17
to independent judgment, what do you mean uh with regards to boards when you say that they need to exercise
00:27:23
independent judgment? And what is it and why is it important and how do you actually do that in practice? I wrote a
00:27:30
a booklet for the uh for the Chartered Governance Institute on this because having done my work on judgment, I was
00:27:37
struck as a director by the fact that as a director, one is obliged by law, section 173 of the Companies Act in the
00:27:45
UK, to exercise independent judgment. Ah, I thought, "Really interesting. Where's the definition of independent
00:27:53
judgment?" And there is no definition of independent judgment. In other words,
00:27:57
directors are required by law to exercise something that is not defined. So, I thought, "Okay, well, I'll try and
00:28:04
help here." And so I talked to a lot of directors about this. I talked to, you
00:28:10
know, people who would worked in this field and so on. And I came up with a number of ways,
00:28:16
mainly based on examples of what independent judgment means. The law, for example, says it's all about conflicts
00:28:23
of interest and so on and being independent from that. But for me, it's also a branch, as it
00:28:28
were, of the general area of judgment. The question, for example, of you are presented with figures and facts. You
00:28:35
look at the person and you think to yourself, "Do I trust this person?" That
00:28:39
is part of independent judgment because simply taking things on trust from somebody, you know, without
00:28:47
understanding whether it needs to be vetted or not, does not seem to me independent judgment. It's simply taking
00:28:52
things as they're given to you. So, that's just one example. And I go through a number of ways in which
00:28:59
directors can think about the question of how they exercise independent judgment and I hope offer some guidance.
00:29:04
So, I think it's it's really important for a board because people who can
00:29:08
exercise independent judgment are are really valuable to the organization. And how do you think boards should balance
00:29:15
data, experience, timing, and instinct? Well, look, this boards are always balancing, you know, there's no there's
00:29:22
no limit to this. I I mentioned the endless meeting, the one that goes on too long. On the other hand, you don't
00:29:28
want to rush through the agenda. I've been a chair and board members have come
00:29:33
to me afterwards and said, "You rushed it." You know what I mean? This was too
00:29:38
short, actually. You were too keen to get to the end and I acknowledged that was so, you know, that simply you're
00:29:45
always balancing. Is there enough data? Is there enough information here? You know, in terms you mentioned instinct.
00:29:51
I'm I'm not a great instinct fan. I mean, instinct I think is fantastic. On
00:29:57
my bike around London, you know, I need to know what's going on around me. And
00:30:01
if my instinct is this lorry here is about to turn left in front of me, you know, that's the kind of thing where
00:30:08
instinct is really valuable. You know, similarly if one's in danger or whatever
00:30:12
it is. But I mean, you know, most cases instinct is very animal thing. It's about us simply responding to certain
00:30:20
kinds of stimuli. And I think board members need to do a bit more than that. Yeah, absolutely. I think it's
00:30:26
interesting. I think from some of the conversations I've been having with people, we kind of get back to the fact
00:30:31
that we we are animals. We are human. And yet sometimes we put ourselves in a box where we think that we are just
00:30:37
invincible and we know everything and we can do everything. And I guess that comes back to the self-awareness kind of
00:30:44
piece. Absolutely. And And if I can pick up another word here, intuition. I mean,
00:30:49
intuition is often regarded rightly as being a valuable thing to have. And linking this I would say to my to my
00:30:57
judgment work, I would say if you've done something 50 times before and number 51 time comes up, you're in a
00:31:06
pretty good position to think about your intuition here because your intuition is
00:31:11
actually your accumulated experience. If you've never done something before and it comes up,
00:31:17
then intuition is not a good guide because you don't have any knowledge about this. It's the first time. And
00:31:24
simply going from the gut, I mean, is really taking a risk again. I would say if something comes up which is
00:31:30
completely new, then intuition is not necessarily where you should be looking, frankly. You
00:31:37
know, you need to do a bit more than that because you don't have the background and the knowledge and the
00:31:43
experience to make that intuition work for you. Do you think we are reducing the amount of intuition we have as a
00:31:50
species with particularly with over the course of time maybe with AI and whatever else we're relying on something
00:31:57
else as our answer to the to the problem. And if you take us back to kind of caveman days, intuition had to be
00:32:04
exceptionally high that you kind of just felt that camping down somewhere in particular could actually lead to your
00:32:11
death, your downfall. We don't have half as many issues and challenges as we did
00:32:15
back then. How do we kind of navigate that now? Some people have more intuition than others, I'm sure. I pride
00:32:21
myself on being an expert on one or two things, but cavemen is not one of them, I'm afraid. [laughter] So I can't I
00:32:26
can't really comment on that on that side of things. I I'd find it quite
00:32:30
difficult to say are we relying more or less on our intuition. Some people clearly set great store by
00:32:38
their intuition. And it's part of the way they operate as individuals. And I'm not saying that's
00:32:45
wrong and somehow that people don't have no intuition are better than those who
00:32:50
have got lots of intuition as it were. But what you want with intuition is you want good intuition. You know, and I'm
00:32:57
saying I think you stack the cards in your favor of good intuition by using experience. I mean, going for something
00:33:04
without evidence, without data for the first time purely on the basis of intuition is just risky. You know, it's
00:33:12
not the end of the world, it's just risky. And if the stakes are low, it's
00:33:16
fine. Should I take that chocolate bar or the other chocolate bar? Well, all right. It's not the end of the world
00:33:21
here. Should I marry X or Y? Probably better to get a few facts first, I think. Absolutely. I've been on a board
00:33:30
before where I highlighted to the chair that one of the people within that board, one of the executives, was
00:33:38
definitely not the right person for the role, put it that way. And kind of moving more towards something that if it
00:33:46
hit the front-line newspapers, definitely wouldn't have been something anybody would have been
00:33:51
happy with, let's put it like that. A number of the people on the board after I had
00:33:57
raised factual information about the challenges that I'd faced, they were very aware of it. And they thought, oh,
00:34:04
actually, I thought that, but I didn't Oh, actually, when you look back. And I
00:34:09
think sometimes people don't necessarily use that intuition all the time. And they just cast it aside and just
00:34:15
think, oh, but it's it'll be okay. It'll not a problem. Until something comes up and
00:34:20
then all of a sudden the house of cards falls. And people start to think, actually, maybe when I piece everything
00:34:26
together, I knew more than I thought I did or felt more than I thought I did. I think that's a very good example of when
00:34:33
intuition is indeed valuable. Having a feeling that something isn't quite right.
00:34:38
I mean, this for me is part of the awareness element of judgment. You know, you just feel
00:34:43
this person doesn't sound quite right or you know, this email looks dodgy or
00:34:48
whatever it is. And you think to yourself, wait a minute, what's going on here exactly? And as you say, the
00:34:54
difficulty then is to say, do you translate that feeling into a question on a board? I mean, I can think of a
00:35:00
couple of occasions where I had also you know, I wish now that I had followed my
00:35:06
intuition. Because at the time I thought, well, you know, I'm not sure I'm right there. And
00:35:11
actually it would have been better for me to speak up. And other occasions where I did speak up. So it's, you know,
00:35:16
I don't I don't think I've got a sort of zero score here. But I I do think
00:35:20
there's there is room for intuition here. But it is asking the question which is a great way
00:35:28
to do it rather than making a irrevocable choice on the basis of no evidence. Can you take us inside a room
00:35:36
where judgment was tested and where that shifted the decision? So kind of moved from A to B as a result of being able to
00:35:45
apply some of these things. Yeah. Yeah, I mean, I can think of it in in example of of the firm was being
00:35:51
encouraged by one of the biggest firms in the industry to take over another firm in
00:35:59
order to safeguard its future. Now, they wanted to make sure they had the continuing market available. So
00:36:07
they didn't want to take it over, but they encouraged us to do that. And it looked like a sort of very good deal. I
00:36:13
mean, here they they were with the agreement of the management saying, you take it over. Now actually,
00:36:21
in the room with nobody only the board members present, the question then was, are we at risk here? You know, where are
00:36:30
there things we simply don't know about? The decision was taken and that was a
00:36:34
very good decision. It would only be done if this firm doing the encouraging, the
00:36:40
jumbo firm in the industry, would give certain kinds of guarantees of certain kinds. And otherwise we would walk away
00:36:48
from the deal. And they did give the guarantees and the guarantees were needed because this turned out to be a real
00:36:55
turkey. Wow. I mean, and they didn't know it, but we we thought, you know, we are at
00:37:01
risk here. It's all very well for them to say, look, you've got this wonderful
00:37:05
opportunity. But actually, it's not their money at risk, it's our shareholders' money at
00:37:10
risk. So that was I think an example of just stepping back for a moment and say because of course everybody was very
00:37:16
keen to do it. It looked like a great deal, you know, good economically, good for the share price. Everybody would be
00:37:23
really pleased with it and so on. But then we thought, wait a minute, what's
00:37:26
you know, what's going on there exactly? We don't know enough. I mean, we'd done
00:37:30
some due diligence, but we didn't know enough. So that I think was a good example of
00:37:35
judgment at work. It can definitely be one of those things, due diligence. I've
00:37:40
worked in businesses that have gone through all that sort of process. And sometimes you come out the other end and
00:37:45
think, okay, I've written many, many words on a bit of paper about this. But
00:37:49
actually we still haven't got to the heart of whether this is a good idea or
00:37:52
not. Absolutely. And as I say, as where we started with mergers and acquisitions, this is of course is where
00:37:58
the stakes are very high and people have not done it before and often the knowledge is not there. You know, I
00:38:04
mean, you don't have all the facts. Are all these key people going to leave the
00:38:07
firm as soon as it's taken over? You know, will they cash in their chips? There's hundreds of different things
00:38:13
that one needs to think about. So what can boards do in those sorts of kind of high risk moments where they have to
00:38:19
make a decision quickly? How can they try and make sure that that decision is grounded in the best possible roots
00:38:25
essentially? Well, I think this comes back to the elements of judgment. So there's the knowledge and experience.
00:38:31
What do we know and what do we not know and what do we not know that we don't
00:38:36
know? I mean, there's traditional variation of that. You know, how much experience have we got in this kind of
00:38:43
work? Do we trust people? Do we trust the data? You know, can we trust what's
00:38:46
going on? Are we aware of all the situations that we're letting ourselves in for? What are our feelings and
00:38:52
beliefs here? Have we actually looked at all the elements of the choice? You know, we've
00:38:58
got this or this. Is there a third option? We could do something slightly different. And also in this particularly
00:39:03
[laughter] in this case, is the question of can we deliver? You know, this is the
00:39:07
sixth element of my judgment framework. And in many cases, it's not a question
00:39:12
of saying, it's great in theory. Question is, can you actually do it? Have we got the people? Have the people
00:39:19
got the bandwidths in order to carry this through? It's all very well saying, you know, we're mad
00:39:24
keen on expansion, it's absolutely fantastic. But I can think of of, you know, one public company, you know,
00:39:30
where which it expanded very rapidly and they just lost complete control of the company. You know, it was all very well
00:39:36
having all these acquisitions, but actually lost control. Delayed its accounts, share price went down,
00:39:42
plummeted, as they say. You know, these are the kinds of things. And if our audience adopts one new habit to improve
00:39:50
their own judgment, what would you recommend? Look, I'd say it's a question
00:39:54
of looking at yourself and saying where are the things that I'm strong? Where are the things that I'm not so
00:40:02
strong? And on the not so strong bit, saying, all right, can I make up for my relative weaknesses by getting
00:40:12
other people to do this, being advisers or helping me to do this? Can I improve myself? We're all
00:40:19
different, and all of us have got relative strengths and weaknesses. So, I think it's a question of identifying it
00:40:24
for yourself and then focusing on that to get yourself better. And final question, do
00:40:31
you feel that there's a single question that you ask yourself before making a
00:40:36
decision that might be helpful to our audience? I'm not sure there's a single
00:40:40
question because even, for example, of where if you've got to take a decision
00:40:44
quickly, you can't hang around thinking, oh, you know, have I gone through all
00:40:50
the factors? Do I think If you've got to be quick, you've got to be quick. It's a
00:40:53
low-risk item, doesn't really matter, frankly, you know. But I would say, you
00:40:59
know, if you're making an important choice, I think you need to ask yourself, even if it's for a fraction of
00:41:05
a second, have I thought about the kinds of things I ought to be thinking about right now? You know, have I got to take
00:41:12
this irrevocable decision right now? Sometimes you have You've got no choice.
00:41:17
You may get it wrong, you know, but you've got no option. But if you have the luxury of a bit of time, it is
00:41:23
really worth thinking about the process, about how you've come to your conclusion. Andrew, thank you for
00:41:30
joining me on Grit in the Boardroom and for bringing such clarity and good judgment and showing us what it really
00:41:36
means for the boardroom. Thank you very much for having me. I think there are a number of key points
00:41:42
from the conversation with Andrew today. I think that he drew on the fact that intuition is so vitally important and
00:41:50
maybe it's an underutilized skill by some and something that we can all look
00:41:54
to improve upon. That chairing is an art. He touched on that himself about how important it is to be able to get a
00:42:01
good chair and how he decided not to join certain boards if the chair didn't
00:42:05
appear to be that great and how much that can lead an organization positively or negatively. And also around AI, how
00:42:14
important it is for us to, obviously, use the technology, embrace the technology, it's fantastic, just as
00:42:19
Andrew said, but we also need to be really aware that it only understands and has knowledge of what it has in the
00:42:26
public domain and what it has access to. So, we need to make sure that we're
00:42:29
always looking at things with our own independent judgment to be able to assess whether or not that's something
00:42:35
that we ourselves would want to stand behind and back. That's it for this episode of Grit in the Boardroom. Thanks
00:42:41
to Andrew for sharing his story with honesty and insight, and thank you for listening. If you found this
00:42:46
conversation valuable, please follow the show and share it with someone who leads
00:42:50
through complexity. Until next time, stay thoughtful, stay brave, and stay in the room.