Carl J. Cox 9:49

So, let’s talk about it’s interesting. Once again, I forgive me, you’re going to just like we all want to forget about COVID but I think the lessons are important from a risk management standpoint. Probably nobody. I maybe I’m wrong in this Mark, but I don’t think anybody had expecting to have a pandemic, right in one of the risks, but they may have had their building burning down. Absolutely. Right. So so what are other examples of that? Like where they had like, perhaps a scenario, right? Where, because to me a building burned down was probably the most relevant, especially for those who didn’t feel comfortable, or they couldn’t write actually work in an office. I mean, you live near New York City, everything shut down in downtown New York, right? It felt like, or at least what I observed, you know, from going to hear from other people, what were those things that they could have done to have those practical scenarios? And then how did they like once again, practically adapt? So they’re so their companies could get back up and running when they actually close down their headquarters

Mark A. Pfister 10:53

here? And this is I always say that that type of question is a very personal question for a board, right? what is important to them? And you can tell a lot about a board based on their immediate knee jerk response and answer to that. So let me give you a few observations I’ve had with a few 100 boards I’ve worked with over this time, and COVID, ranging again, from public, private and nonprofit organizations, so one of them. And we can relate this back also, Carl, to the preparedness to the risk and scenario planning, we are hearing countless issues right now with global supply chains. This is a perfect example for this right now. I mean, even GM is putting out cars right now where they’ve, they’ve eliminated certain shifts that are I relate them back directly to the ESG area, you know, protection of the environments where your car shuts off, when you’re waiting for at a light it’ll disengage two cylinders, right to burn less fuel, if you don’t need that power, they’re not able to actually put those functions as of right now in the trucks and cars at GM because they don’t have the chips, but they’re still rolling those trucks off the off the production line. their supply chain I just wrote about this two months ago, is a prime example of when an organization already had a robust risk and scenario planning effort at the board level continuous not just once and done one and done type of thing. That’s a prime example where the it may not have predicted something of the global scale of COVID. Right with a pandemic in the lockdown. But that’s definitely a risk that could happen through many different types of scenarios, right? remote working is another one, right? So how many boards or organizations do we know at the leadership level that I pushed off digital transformation for years now? Right? Well, when COVID hit, there was no more options. There wasn’t an option anymore to push these things off, right? It had to happen. And now it was what I call this issue of governance, simultaneity all these things were happening at once. So think about the pressures on the CEO. And think about the pressures on the board. Right, you’re talking about supply chain issues, you’re talking about digital transformation that has to happen, or your workforce is going to sit idle waiting for you to send them a laptop and have some sort of VPN access to be secure as they’re working. Right. I mean, the pressures on these organizations was incredible. And there was a lot of emotion in these boardrooms during this time as well. My point in answering your question core on all of this is that when the right areas are focused on, and the the outcomes of where you want to be, and this is this is a great definition of strategy, right? When those pieces are focused on, it doesn’t matter what causes them, it matters that you have an outcome and a plan and a strategy with the goals associated to those of how you going to address that. Right. COVID was unique in that it touched on many of the risks and scenario planning for boards that were good at this. It hit them all simultaneously. But they had a baseline to work from so yes, it was busy. Yes, it was stressful. Yes, they were still challenges, but they had a starting point data Foundation, the boards that did not have this. They were they were extremely stressed. I can tell you and the organization didn’t benefit at all from from their service for the last five to 10 years prior to

Carl J. Cox 14:07

that. Yeah, yeah. Well, and I appreciate you including the supply chain issue, right. Because it boy that is that is talking about that impacts everybody’s lives, you know, and I didn’t. It’s fascinating, right? When mortgages, manufacturers are making decisions to exclude to still roll things off, so to speak, and ship because they the wait time is too long, right? The cost of that. But then of course there’s the secondary costs as a result of not having those components available. What’s your

Mark A. Pfister 14:37

knock on effects of that were huge. I mean, in the article I wrote two or three months ago on this before, some of these manual car manufacturers even made the decision to start rolling them out without these parts. There was a reference article I looked at that talked about you could see the storage lots of these cars. Outside of the production facilities. You can see them from space. That’s how many, that’s how the backlog was being affected. And you’re looking at some supply chains that have been increased from normally two weeks of delivery to 50 weeks right now. So, you know, companies that put all of their efforts into single point of failures in their supply chains, they, you know, once again, that’s a risk that was not properly assessed, they assessed it during good times, good economic times, not bad economic times.

Carl J. Cox 15:29

Yeah, that symmetric because we know that right, one piece flow and maintaining key supplier relationships are so critical, right to having a smooth and trying to be as lean as possible in inventory management. But when something breaks, there’s no analogy I like to do from a manufacturing perspective, or like, like, think of a car using the same analogy of a car, you want to have just enough oil, so the engine runs, you have too much oil, it’s messy, you don’t have any oil, it breaks. And and what’s been happening is both right, you know, we’ve been having a lot of mess, as you mentioned, with all the cars sitting in the lots, and then you have just companies breaking right now. Right? And they cannot deliver to their clients, and then they missed out on opportunities. Right? Where That’s right, there isn’t an alternative, there is alternative solutions. And so they’re going and they’re leading long term relationships towards that. And then what worked for me, I think what you’re saying here is if if you don’t truly have another function, right, and another supplier, and you do have a single set of failure, you know, source of failure, you’re going to fail, you know, one way or another,

Mark A. Pfister 16:34

many companies became very comfortable over the years with just in time. I mean, it’s, it’s very easy to get into that realm, you can order something today and have it at your doorstep tomorrow from Amazon, right? Many large global organizations got very comfortable with that with these supply chains, both for services and for products that have touch on multiple geographies around the globe to actually get to their finished product. It’s amazing. But you know, even if we’re talking there about the the effects on the what I like to call the technical components, right of what the services and the offerings are the products of these organizations. Another interesting trend, Carl on this, and this was another test for boards is that many boards had to they were forced to become the emotional support arm for the organization, mainly the CEO. So think of the shutting down of travel and shipping and even employees being able to come to the to the office to work. The emotional toll on CEOs and senior leaders of organizations Not to mention the employees was massive. So boards that were able to shift into this realm of Well, I’d like to view it back to emotional intelligence and mindfulness intelligence, right EQ and mq, the boards that were able to identify that need and support that need, and the CEO feeling supported. And the executive level feeling supported those organizations is another measurement point that I look for, to see how did the board do in the emotional support side of this, and that is part of a strategy Dude, you know, make no mistake, the emotional component of the company, which is a direct relation to back to the values and the culture of the organization, right? That is a strategy. It’s part of the overall strategy. And I don’t think strategy is holistic without that piece. And many boards were tested with this. And once again, the boards that were able to identify and understand that it wasn’t just them going through the emotional toll of the pandemic. But think about that on a multiplied scale for a CEO, the ones that identified that and addressed it and made sure that the CEO realize that the board was an outlet for them. And it wasn’t just about governance and strategy. But if you need help you reach out, those companies also made huge strides very quickly, because that also is another trickle down effect the board to the CEO, and the CEO exudes that to the organization as well. And that should be part of someone’s strategy for the values of the culture components for an organization.

Carl J. Cox 19:00

As great insights Mark, and I appreciate your sharing this. And I think, you know, there’s always one of these interesting things. I think a lot of times people fail fairly unfairly put a lot of blame on the CEO, but the CEO has nowhere else to go but the board. Right? If they can trust the board, and they have a really good board, right? They can’t go down and complain, right? It doesn’t help. That’s right. And and these times were so difficult, and they do have this pressure that they really do the really good ones truly care about every single employee and organization that care about the customer, even they care about the suppliers. And the stress that happens with it is enormous. And so you know, once again, having a good board where they can truly be a sounding board in a good way and then provide them good advice and counsel so they can help make the right decisions which critical because once again, all the changes that happened at one time and I think we one thing we say even No, I think so many things are accelerated, it’s accelerated the speed of everything. Like you mentioned digital transformation, something that may have been slowing in over the next decade is like accelerated now. And we have to move towards that faster and ever. So your book across the board, I really enjoyed. It’s it was, frankly, was unique because you don’t typically read about that you don’t read about this this often hidden karuk. Right, the Board of Directors, and and there were there once again, is intended to be counseled to provide. When, for me, I had a ton of insights that came when I read it. And for you, what is the most common reflection you hear after people read the book? What do they say, wow, I had no idea after reading your book.

Mark A. Pfister  20:51

Yeah. And maybe it’s good to before I answer that question directly, just to say that nobody was more surprised than me, in my career of the board consulting realm, that if you had to reference something, a roadmap, a strategy for that matter, on not only how to build a board, but how to rebuild a board, so it serves the functions that you exactly need for your organization, and in support of the CEO, or the non executive director if we compare this to nonprofit organizations. So in my consulting realm, it was honestly and I say this, but openly, a lot of my consulting work is like Groundhog Day, right? It’s the same stuff you go in, what most boards are focused on are symptoms, right? They want to fix the symptoms. Whereas I go in and I focus on what is causing the, you know, what is the cause of those particular elements that the board is feeling or going through. And I started to realize that boards that had certain components, or a specific architecture, and I use the word architecture over structure, because I think the word architecture is much more deliberate and proactive. Whereas structures usually to me a little more reactive, and something you would do to evaluate after something happened, right. So in seeing those particular components, I started over the years with hundreds of boards I work with to start to document you know, what were the differences between these boards, the ones that were great, the ones that didn’t work so well, the ones that worked great in this area, but not in another area. And I started to put together this framework, which I was doing is the architecture with this modern architecture is be far behind in an effective board of directors. So that realization card that I had to answer your question, I think is the realization that many have when they read the book, they say, wow, I don’t, most people did not realize or do not realize still to this day that there is a structure, a process of path and an architecture, a proactive architecture, you can follow at any stage of a board before you build it. If you’re a private company. If you’re a public company, you frequently have folks that are rolling off as board members, term limits, mandatory retirement ages, they retired just out of their own their own choice. And instead of just finding someone who’s an exact replica of the person that left, it’s a perfect time to do an evaluation of that structure, as I say, the architecture of the board. And this realization globally now is happening. And I like to think it’s because of this book. They’re starting to look at that as an opportunity, not just to refill the seat. But to first and foremost look at it in terms of how do we go and proactively approach this, let’s just not make an assumption. Let’s have somebody come in and look at this to see what exactly we need. And I can tell you in most cases, when they see how structured you can make this, I’m not talking about bureaucracy, I’m just talking about the matching back to a successful path. That usually is both what people experience from the one on one type work that I do, or the one to board type work that I do, and absolutely what they get when they read through the book. That’s the realization and most of the comments I get back as they say, you know, I wish I knew this 20 years ago, right? Or I wish your book came out 10 years ago. They’ve been through the path when that architecture has not been applied to the board. And they paid the price for that and effectiveness and efficiency and even enjoyment of serving in that role on a board when that when that architecture is not correct.

Carl J. Cox 24:14

His great insights for me one of the biggest insights that came out of it was the amount of time we should be spending with boards. I’ve been on a couple boards are currently on a couple boards. And often there’s this Oh, just show up. You know, share with the board meeting. That’s like the concept of some in once again, it depends on the board and whether you’re being compensated or not. Or not for profit or not, or engagement or not. But helped me out again, what is it 160 hours.

Mark A. Pfister  24:46

I view it this way, Carl, and I don’t view this being different for public, private or nonprofit boards. Let me first say I have never seen a truly successful board director put in less 200 hours per year for any board they serve, I don’t care what their it’s compensated or not, I don’t care if it’s public, private or nonprofit, it doesn’t matter, it is impossible to meet the expectations of a modern day board director, right of all the things we just mentioned a moment ago as pieces that play into this, right, and those are just scratching the surface, it is impossible. And then there are, I write about this in the book as well of these add on areas, right. So if you’re serving as Additionally, the chairperson of the board, tack on 50 hours to that 200. So you’re a 250. And by the way, all the numbers are mentioning under normal operating times, this does not include under times of COVID, or pandemics or any type of crises that you’re dealing with, right? If you are on the board as a base member, 200 hours and you also sit on a committee or you’re a committee chair, tack on another 40 or 50 hours to that yearly, it’s impossible to do the things that are required, and integrate them into both the governance and strategy areas, and to the other committee areas without putting in that time. And as you mentioned, showing up prepared to board meetings, it’s impossible, the amount of reading that has to be done an education, ongoing education, to give savvy input and decision and vote with confidence. That’s a minimum amount of time, I believe. And I think we’re gonna see that that amount increase, we’re definitely gonna see the averages of board, directorship involvements go up over the past 18 months or so simply due to COVID. Right. But it remains to be seen what that actually settles back down to shortly we’ll see where that goes, that date is not out as of yet, we still have a few more months to go.

Carl J. Cox 26:37

Well, I appreciate once again, you bring that because i don’t i don’t think a lot of people understand the depth of what is required and what should be happening. And so I appreciate those insights, you know, to it, and that is what it takes right to be a great board member, you know, we shouldn’t take these things lightly. They should be really thoughtful, because we’re truly trying to once again help the organization be more effective. I think that one concept you talked about is was the nose and fingers out, right? I love that visual, right of get we’re supposed to be aware of but it’s still the job of the company to run the company still provide governance, insight, counsel and appropriate amount, and you have to be in depth enough to actually be able to get insights. And you can’t do that with just showing up, you know, to a board meeting on a quarterly basis, or however often it happens. So we’re gonna How do you measure success with the board? is there is there a number or a quality quantitative factor or qualitative factor? We say, this is the type of metric I like to measure. And when I know a board is running Well, sure,

Mark A. Pfister  27:42

yeah. And it relates back again, due to the fact that I believe that 90% of the challenges are the areas that undermine proper board operations. And success relates back to its architecture and its structure. Some years ago, I created what’s called a board architecture assessment, and it assesses those pieces. And what I like about it, and what I purposely did on this with the weighting, and the measures of it, is that it’s looking at components of the architecture, but also measuring the performance against that. It’s a truly interesting way, I think, to look at that, that performance measurement of a board. And it’s not it’s both qualitative and quantitative and quantitative simultaneously. So that’s one way to do it. And there’s other indicators, you know, I wrote an article also a few months back called heating the board’s five observables. And if we look at just a few of those, one of them is very clearly how does the board communicate? Right? What is the level of communication? Do they have the proper level and honed EQ and mq mindfulness intelligence to actually have a conversation without it being undermined or moving to some other area where it gets heated, right? And the outcome of that I look for is what I call respectful dissent, right? Is somebody able to be disagreeable? Or to disagree, but not be disagreeable, right is a difference between those two words. And when I see a board that operates in that particular realm, I know that you know what you said earlier about a board having trust, I’m also looking for not just trust, but I’m looking for respect. I’m looking for respect between board members, I’m looking for the respect level and trust between the CEO and the board as well. That’s another huge indicator on how effective the board is in actually having the authority and also the relationship with the CEO to make things work. So that’s, that’s one area. I mean, another one that particularly comes to mind is is well, of course I’m gonna go back to the architecture component, you know that I’m going to evaluate that architecture, but there’s things that are just they fit into some of what what some will call the squishy or soft skill areas where, you know, a respectful board is a constructive board is an effective board is the best way to look at that. And those are the types of indicators you

Carl J. Cox 29:50

want to look for. Okay, you do 80 plus speaking engagements. You’re How do you keep your personal level? How do you how do you keep your energy So you can properly do that and and do well.

Mark A. Pfister  30:03

Yeah, well, I’ll tell you that the speaking component to me years ago, I got involved with it because it honestly scared the bejesus out of me. So I used it more as a personal challenge than anything else. But I realized that, in essence, speaking is the same thing to what you would do as a consultant. It’s the same thing as you would do and writing a book, doing webinars doing a podcast such as this, you’re educating, right? And there’s something very good about educating because you feel like you’re giving back right, it’s that feeling everybody talks about when you when you serve in a nonprofit, or you help somebody out, I gain extreme positivity from that aspect of it really is, that’s my motivation for the travel can be a lot, the last year has been all remote. Of course, for the speaking stuff I’ve done, it’s been a little bit less, but it’s come back with a vengeance, I can tell you, and if I had the time I’m going I don’t care where it is in the world, I’ll do it. The people that you need the ability to spread the word on things that are successful, especially if it’s on the topic of board architecture, or another favorite topic of mine is becoming an exceptional board director candidate, right? How does somebody truly package themselves properly, and get to know all of the inner workings of what has to happen in the boardroom. So they are truly saddled in that space? That is the motivator to me. And I like the fact also my travel, the travel component can be so quiet time where I do my writing. So that’s how we balance it.

Carl J. Cox 31:24

It’s good, it’s good. So I always like to ask our guests, of course, they’re gonna recommend anybody to read your book across the board, Mark. But what’s one of your favorite past books that you would recommend to our listeners?

Mark A. Pfister  31:39

Sure. Well, there’s one that I’m trying to get through right now. It’s been a little busy, but it’s a balanced at time. It’s called playing to win how strategy really works. I’m finding it to be an interesting book. Anytime you read about strategy, there are many different principles. There are many different foundations, I’ll say where that person got their experiences, they either try to describe or build a strategic pathway. I’m always infinitely interested in understanding how they do that. And I’m also looking at these books, Carl, that I read about strategy or governance in the realm of the crisis management side, and that term I used earlier that I started to use called governance, simultaneity. Right. And there’s a direct correlation to strategy simultaneity in that as well. But in how do you oversee something was so many moving parts and the ability for things, as you mentioned to earlier how fast things change today, right? I think governance, simultaneity type of simultaneity is a great way to look at that and saying, you know, how do I create a mechanism that allows me to oversee the strategy and to give me those data points. And that dashboard is what I know it’s on track, or I quickly know it’s off track, right? Or it’s a strategy is no longer valid is another way to look at this. Right? Right. goals can change overnight right now with different technologies and new processes that are launched right or new tools that come out. So doing those double checks, and having that ability from a governance standpoint to be directly integrated into strategy is extremely important. Absolutely. So Mark, where can people learn more about you and your organization? Sure, all of my stuff is at one location. I’ve worked very hard over the years to do that. The website is pfisterstrategy.com, psisterstrategy.com. You can find everything on there from recordings on teachings to coursework in the certifications that our organization does, speaking engagements, the types of consulting work that we do for boards and leader, any leadership level. It’s all in that one spot if it’s Australia, calm.

Carl J. Cox 33:39

That’s great. Well, Mark, thank you so much for being a guest on our podcast today. You really have some wonderful content. Thank you. Thank you, Carl. Appreciate it. And thank you to the audience. And thank you so much for listening and wishing you the very best and measuring your success. Have a great day.

Outro 33:58

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