Board Engagement and Constructive Challenge

This summary highlights how boards can foster effective governance through constructive engagement and challenge. It covers four key areas: engaging boards constructively, avoiding dysfunction, the role of the chair and embedding constructive challenge in board processes.

1. Board Engagement and Dynamics

Good governance relies on effective board engagement, where members collaboratively set direction, approve decisions, and oversee management. Effective boards strike a balance between providing direction and oversight without micromanaging or rubber-stamping management’s ideas. Dysfunction arises from behaviors like passive or aggressive conduct, factionalism, or overly deferential attitudes, all of which can harm board performance and reputation. Constructive challenge involves asking probing, respectful questions to clarify decisions and prevent "groupthink" or complacency.

2. Overcoming Entrenchment and Groupthink

Entrenchment occurs when board members or management become fixed on conventional views, making it challenging to embrace new ideas. Funston references historic examples, such as Kodak and Blockbuster, that resisted change and missed valuable opportunities. Boards benefit from diverse perspectives to challenge prevailing assumptions. Effective boards avoid groupthink by promoting diverse voices and constructive tension, as demonstrated by Eli Lilly’s overhaul of its product development process, which revitalized the company’s innovation pipeline.

3. Constructive Challenge and the Role of the Chair

Constructive challenge means respectfully questioning management and each other to foster better decision-making. This approach helps boards understand risks, improve performance, and maintain accountability. The board chair plays a central role in maintaining constructive dynamics, encouraging open discussion, and ensuring orderly meetings. Constructive challenge should be adapted to the context, such as crisis situations where more pointed questioning may be needed. This practice helps avoid passive approval (or "rubber-stamping") and holds management accountable without adversarial confrontations.

4. Embedding Constructive Challenge in Board Processes

To ensure constructive engagement, Funston emphasizes incorporating structured processes, including setting clear agendas, using dashboards, and implementing “policy option summaries” that outline alternative solutions objectively. These practices help depersonalize discussions, facilitate open dialogue, and prevent board members from becoming overly reliant on individual personalities or styles. Constructive challenge needs to be institutionalized across the board’s powers—setting direction, overseeing execution, verifying actions, and decision-making—ensuring sustainable and balanced governance.

Lessons Learned

Overall, this talk underscores that effective board engagement and constructive challenge are essential to high-performing governance. By fostering a culture of mutual respect, thoughtful questioning, and clear roles, boards can improve decision-making, overcome groupthink, and maintain accountability.