2. Rick Williams on Trust: Your Company’s Most Valuable Asset

February 1, 2020

It’s easy to think of companies as big, faceless organizations, valued only for profit margins or stock potential. But it’s precisely when organizations are viewed only by the numbers, and not by the people working within them, that company culture suffers and things can go south.

Rick Williams knows that the key to success is creating an atmosphere of openness and trust that makes for a great board of directors or advisors, and a healthy company overall. Rick spent many years as a consultant, founded his own real estate investment company, and returned to consulting once again. He has been an executive, board member and board chair – in addition to mentoring CEO’s. Now authoring his first book, Create the Future For Your Company and Yourself, Rick shares his most valuable insights into corporate culture and governance boards – namely that the best thing you can do for your company is to honor the people within it.

Links

Williams Advisory Partners

Arthur D. Little Consulting

Boston Consulting Group

McKinsey & Company

Quotes

“It’s a very human process…The truth is [companies] are collections of people working together.” [06:42]

“You have to be somebody who’s an empathetic listener.” [11:40]

“The leader has to set cultural expectations. So it has to be expectations for openness, trust, willingness to actually engage in difficult conversations. That’s where the culture part of it comes in.”  [20:42]

Big Ideas

The nexus of Williams’ new book and how it can benefit companies as a whole. [06:56]

Creating an atmosphere of faith in transition of leadership. [11:30]

How to develop a culture of trust and openness. [21:04]

We love our listeners! Drop us a line or give us guest suggestions here.

Full Transcript

Joe: [00:00:00] Hello and welcome to onboards a deep look at driving business success. Hi, my name is Joe Ayoub and I’m here with my co-host Raza Shaikh. Hey Raza.

Raza: [00:00:13] Hi Joe. Happy to be here with you co-hosting.

Joe: [00:00:16] Good to be with you. Onboards is about boards of directors and advisors and all aspects of board governance. Twice a month, in 20 minutes this is the place to learn about one of the most critically important aspects of any company or organization, its board of directors or advisors.

Raza: [00:00:37] Joe and I speak with a wide range of guests and talk about what makes a board great, what makes a board unsuccessful, how to be a good board member, and how to make your board one of the most valuable assets for your company.

Joe: [00:00:54] Our guest today has a breadth of experience as an executive and board director for technology companies, [00:01:00] including medical technology, software, and financial services.

Raza: [00:01:04] He is a nationally published thought leader who provides CEO and board advisory services for middle-market technology companies. He has been a board member , a board chair, mentor, and coach to CEOs.

Joe: [00:01:20] We’re very excited to have Rick Williams as our guest today. Welcome, Rick. We’re happy to have you as our guest on Onboards.

Rick: [00:01:28] Well. Thank you. It’s pleasure to be here. Happy to engage in a conversation with you guys who I regard as experts in this field.

Joe: [00:01:35] Thanks so much. I want to say to our listeners for an overview of Rick’s advisory practice and as nationally published thought leadershipc please go to his website, which is Williams, with an “S” – williamsadvisory partners.com. So Rick, I know you’ve written many, many articles and also have spoken frequently about boards and governance, but now you’re writing a book [00:02:00] entitled :”Create the future for your company and yourself,” which I understand is due in September of next year?

Rick: [00:02:08] My fingers are crossed, but that’s what we’re working towards.

Joe: [00:02:11] Good,  good. Why did you decide to write it.

Rick: [00:02:13] Well as you mentioned, I’ve been writing for a long time on how to be a more successful leader of your company. And I’ve written in all different aspects of leadership and the challenges that the company boards and CEOs face.

And as I thought about , what did I have to say that could be a unique offering to this audience. So I thought about it. I’ve had a significant experience with Arthur D. Little, a major international consulting firm, advising large companies on how to think about where they’re taking their company.

The challenge, if you’re a mid-size or small company, tends to be, okay, I can’t hire the McKenzie’s or BCGs or even me in an in an earlier life to help me think about the future. What could I do for myself and my leadership team and [00:03:00] prehaps  my board of directors to think creatively about where I’m going to take the company?

So that’s the basic idea of this book. How do you actually do that if you’re not going to hire a big outside consulting firm to take you through the process?

Raza: [00:03:13] Who is the intended audience for this book?

Rick: [00:03:15] Well, it’s a good question. Since I’ve spent some time thinking about that. So the basic audience will be CEO’s, company owners of, I’m going to say mid-size to smaller companies, but I also think that in the end this book is going, it will be valuable to consultants to these companies, to coaches to like the YPO or industry associations where their members are anxious to think about what’s the future of their company going to be. I think broadly that’s what the audience will be.

Joe: [00:03:45] So I’m curious, when you started on this endeavor, did you have any idea how challenging it would be to write a book?

Rick: [00:03:52] I haven’t actually written a book, a standalone book like this before, but I’ve written many of these large [00:04:00] reports and studies, and in a way, this process is similar, except I don’t have a large staff helping me write different sections of the book. I’ve got to write the whole thing myself. So you know, you go through the process of thinking about what do you actually have to say.

What’s the table of contents for the book? What’s the content of each chapter? How does it all fit together? You’re sort of assigning yourself the tasks of getting the whole report done. So that’s, that’s what I’m actually working on right now.

Joe: [00:04:28] Are you enjoying the process itself?

Rick: [00:04:30] I’m enjoying the creative part of it.

It’s hard work. I do most of my writing in the in the morning, fairly early morning. I find in my mind is fresh at that point, but it’s hard work, but I’m going to get it done and I’m close to finishing it.

Joe: [00:04:44] Excellent. Well, we’ll look forward to it next fall.

How did you initially get involved with board work and why was that of interest to you?

Rick: [00:04:52] As I said, I spent many years as a management consultant working with large companies. [00:05:00] And I then founded my own company and ran that for a number of years. Mostly the company was mostly doing real estate investment and development here in the greater Boston area. And I got asked to join a couple of boards of people who knew of my background and thought, gee, I might be able to help them with, with the companies they’re working on.

So I kinda got drawed back into the board of director work, mostly because I was bringing this experience of being a company founder and leader, along with the experience of having a consultant to larger organizations on how do they be successful. That combination is what brought me into it.

Joe: [00:05:40] What do you enjoy most about actually being a board member?

Rick: [00:05:44] I’m one of these people who likes to think about the big picture. How do all the pieces fit together for this puzzle about how to deal with the challenges of this company? Also, I’ve always liked the consultant’s role. In fact, I think the challenge for me has been the consultant’s role is one in which you’re [00:06:00] dealing with many different clients and the and each company is different in its own way.

And as opposed to, I’m going to be the world’s greatest expert on production economics. You’re dealing with challenges of a company that might be in the medical technology space versus a bank versus a software development company. You’re taking your skills to the different companies and thinking about how can I  help them be more successful as a company.

So that variety of the challenges, what’s interesting to me.

Joe: [00:06:32] How did the work that you’ve been doing lead you to the theme of your book, which is the importance of leadership in a business success.

Rick: [00:06:42] It’s a very human process. We tend to think of these big corporations as well their  just some big legal entity that’s money running around and products coming in and out and production.

But the truth is they’re collections of people working together. So I see this book as a toolbox for helping groups of people work together as a team. to identify what their goals are, look at their opportunities, think about barriers to getting there, and then finally making decisions. So, so this is really a how to book drawing on my experience of seeing that the real barriers that that companies face is the individuals working together through either individual leadership or the teams to make the entity, which we call a company, successful.

Joe: [00:07:31] Rick, how did the work that you’ve been doing lead you to the theme of your book, which as I understand it, is the importance of leadership in business success?

Rick: [00:07:40] I guess I’d look at it in a couple of different ways. One is that we think of companies as sort of big, faceless institutions, and in truth, the company is a group of people working together and in order for groups of people to work together, they have to have effective leadership.

I see. this [00:08:00] book is a workbook, a tool book for leaders to take themselves and their core advisors and board of directors, leaders of the company, through the process of creating a future for the company.

Raza: [00:08:15] Rick, switching gears,  you’ve had many experiences with the board of companies and organizations.

Are there one or two that stand out as examples where the board made an important positive impact or where the board failed to do its job from which the listeners can learn?

Rick: [00:08:33] I’ll just briefly talk about one of my own experiences. So for a while, I was chairman of the board of a medical device company, and I became board chair. I’d been on the board, but I became board chair at a time when the company was going through the transition from a founder, CEO to a non founder, CEO, and my role, and in fact the role of the board was to be [00:09:00] trusted advisors, to the team that had founded the company, particularly the leader, founding leader of the company was a CEO.

There was also a venture capital firm, which was the primary owner of the company, and there was a core of staff who were very dedicated to the, to the mission of the company. And rather than have, for instance, the owner, , the venture capital firm come in and say, okay, well we want a new CEO. You’re out of here,  what was needed for the company was  a process that everybody could accept and particularly the founder because , it was important that the founders stay involved with the company, feel good about the process and what you needed was trust on the part of everybody involved that a fair process was going to be a worked through.

And that was my role is to build, be that builder of trust on the part of everybody involved, be a clear communicator and sort of shepherd the process through a huge contribution on the part of the board

Raza: [00:09:59] At that time, why do you think the board felt or had the view that the transition was necessary?

Rick: [00:10:06] This was a case of a very talented individual who had the technical expertise, found the company, but recognized herself over time that she really wasn’t the right person to be the CEO, would say that she wasn’t the right person to be the CEO, but going from that verbal recognition to actually making it happen was a very, very traumatic for her and for the other founders of the company.

Raza: [00:10:31] And what role did you yourself end up playing, and why did the tran sition presuming it was successful, how did that happen with your role?

Rick: [00:10:41] Well, I had over, Oh, I dunno, a year, year and a half, gotten to know the founder or the other board members.

I knew the VC firm quite well. And one of the issues that kept coming up was the need to do this, but as sort of was never actually happening. [00:11:00] And so in discussions among the board and with the  primary owner of the company and the founder, it was, okay, well, let’s change something to make this actually happen.

So I then became in effect, kind of the facilitator of the process. Anyway, that was the contribution.

Joe: [00:11:18] So what does that mean in this context, the facilitator? What did you actively do to create a, I think when you called, it was a fair process that the founder would be comfortable with?

Rick: [00:11:30] This is a question about how do you build trust?

Well, first of all, you have to be something that everybody involved with this believes that their voice is being heard. So you have to be somebody who is an empathetic listener. You have to be somebody who can verbalize in a clear way what the goal is. You have to be somebody who can say, okay, here are the steps we’re going to take in a way that is visible to everybody so it’s clear what’s actually happening.

We ended up doing a search for [00:12:00] a new CEO to come on board, so there was then integrating that person into the company and getting acceptance. So this was a new person in a company that had been, this company had been in existence for probably 10 years. So it wasn’t a startup situation.

So that acceptance of the process, clarity about where you’re going and clear communications was core to getting all this done successfully.

Joe: [00:12:25] How long had you been on the board before you took the chair

Rick: [00:12:29] I’m going to guess a year and a half, something like that.

Joe: [00:12:31] So in a relatively short time, it sounds like you were able to develop a trust relationship with the founder. How did that happen?

Rick: [00:12:39] I would say, again, it’s being able to listen to what the founders doing. The founder was an extremely talented technical person. The founder brought an awful lot into the company to make it successful. And you have to be able to acknowledge that, accept that, and make [00:13:00] her and the others feel that, okay, there is a change that’s going to happen here and that change is going to be maybe difficult in some ways, but it’s a change that people can say that they accept and they’re ready to move on.

Joe: [00:13:12] Did she take a role after the new CEO came on board?

Rick: [00:13:17] She stayed involved with the company mostly to support the technology of the company. She also had been a major point of contact with  some distributors outside the U S so there’s sort of a transition for those connections as well.

Joe: [00:13:33] Did you invite her onto the board?

Rick: [00:13:35] She was on the board and she stayed on the board for awhile and then eventually dropped off the board.

Joe: [00:13:40] So she did sit on the board. After the new CEO came in for a brief

Rick: [00:13:45] For a while. Yes.

Joe: [00:13:45] Yeah. I think that is, to your credit, a very, very positive thing. I mean, that is great that you found a way to bring the founder in to the point where she was comfortable sitting on the board with the new CEO.

I think that’s great.

Raza: [00:13:59] And did the greater board play any role in supporting this transition, or was it one point person or the board chair.

Rick: [00:14:06] It’s interesting as I’m thinking back on it, so yes, we had regular board meetings. We had some special board meetings. I became much more of a communicator of what the board was from the through the board minutes and that sort of thing as to what the board was saying and concluding, I think the board prior to that had been less, it wasn’t, it wasn’t closed, it was just, okay, we had the board meeting, what’s move on, kind of thing. So I instituted a lot more clarity as to terms of what the board was doing, how he communicated its decisions, and next steps, that sort of thing.

Joe: [00:14:43] . Rick, you and I have talked about another board experience you had where the board’s action didn’t work out as well as, I’d like you to share that as well if you would.

Rick: [00:14:52] I had was on an  I was on this board for quite a long time, almost 10 years. In fact, this was actually anot for [00:15:00] profit board, but a pretty large organization.

I’m not going to name the organization cause it’s not particularly relevant. This was also a CEO turnover situation in which the CEO, for a considerable period of time, I’m going to say five or six years, something like that, had resigned.  And so we did a nationwide search for a new CEO for the company.

And we had had candidates literally from all over the U S and a few from outside the U S and a search consultant, all of the right sorts of things that you did. And we minnowed it down to about five candidates. And in the end, the candidate that the board chose was somebody who was from the Boston areas,  this is Boston area organization, had been a player in the same field that this organization was active in, and he had always been a sort of number two [00:16:00] guy at several organizations, and he was the one that the board chose, would not have been my choice, but he was, he in my mind, was in the acceptable last four candidates to be considered.

So what ended up happening was that over the year, year and a half after he came on board, that he was not able to assume leadership of the organization. The staff was unhappy because he wasn’t leading. The staff was unhappy. He was not going out and getting the new revenues and fundraising that you needed to be doing.

We ended up actually terminating and after roughly a year and a half.

Joe: [00:16:41] Oh, that is a short period of time. So you met the board must have came to the conclusion pretty quickly that this was a really a bad decision.

Rick: [00:16:49] Yes, it was a bad decision.

Raza: [00:16:51] From that experience what learning comes out in terms of the failure.

Rick: [00:16:56] Boards and I, we talk about them as [00:17:00] these are the boards of directors, but the truth is that they are a group of people and they’re trying to do good work. They invest a significant amount of their own time, and in a case like this, what I believe happened is that the members of the board basically decided when it came down to who are we actually going to choose, said we’re going to choose the lowest risk candidate. The candidate who was  from Massachusetts, the candidate who sort of knew the players in New England, the candidate who had kind of been around the circle. The problem was that,  this is choosing the low risk candidate  over somebody who was not from this area, would be a challenge to the organization, meaning challenging the organization to move forward in an aggressive manner, and I think that groups tend to make low risk choices. I think that’s the challenge you have as a board is that boards are not usually [00:18:00] great leaders. It’s a CEO who has to be the leader, not the board.

The board is more of a, okay, let’s make sure we don’t do anything really stupid here, and whereas the CEO has to be the initiator. So in this case where the board had to take the lead, it tended to take the low risk approach, and in the end, that turned out to be the wrong approach.

Joe: [00:18:23] Were there situations  in which you were involved subsequently when this experience came to bear and helped you either as the chair of a board or a member of a board guide it in a different way than it might have gone otherwise?

Rick: [00:18:38] It’s clarified my thinking about the point I just made that  boards tend to be risk averse. And usually  the role that the board versus the CEO plays is that the CEO is one who’s take the initiative, move forward, and the board tends to, their role tends to be. Let’s make sure we’re not going to do something really crazy here, cautious, et cetera. That tends to be the balancing act that’s going on.

Joe: [00:19:04] But are’t there situations where there are boards that are pretty active and creative and actually help drive the strategic plan as opposed to just being, you know, passive and taking, I mean, you’re making it sound like boards just follow the lead of the chair and if the is not aggressive, then they just, they’re complacent. But that isn’t always  true.

Rick: [00:19:23] No, that’s true. it’s not always the case. And we’re using shorthand ways of talking about this oversimplifications but so, absolutely. So there are cases in which there are investor expectations that are set, the board represents the shareholders and the shareholders have set expectations of where the company’s supposed to go, and the CEO is not doing that, then the board will at times step in and say, hey, wait a second. You know, here’s what we representing the  shareholders expect from you, Mr . CEO, you’re not doing that and why not?

So [00:20:00] yes, that is absolutely an example of the board taking initiative.

Raza: [00:20:04] Rick, that segueways into the idea of culture, where culture eats strategy for breakfast. Does that tend to be true for boards as well, and how do you build strong elements of a board culture?

Rick: [00:20:19] Okay, well, I am in complete agreement with your statement that culture beats strategy all the time.

Absolutely does. And this has a lot to do with both culture and leadership, because the culture that you have on a board has to come from the leadership of the board. If it’s a CEO who a chairman, or if it’s non-CEO chairman, that leader has to set cultural expectations. So it has to be expectations for openness, trust, willingness to actually engage in difficult conversations.  That’s where the culture part of it comes in.

Raza: [00:20:58] So in a board, how do you [00:21:00] make sure to develop these elements into the culture?

Rick: [00:21:04] Either the principal owner who is controlling the board or the CEO has to set the culture. It can’t come from just sort of a person on a board.  To simplify this, just assume it’s a CEO who is the leader in some form or another.

The CEO is then saying, okay, I’m going to bring my really tough problems to the board. I really want to hear what you have to say. I’m not having this board meeting just to tell you what to do and then we’ll all go have a dinner together. I’m really bringing to you the difficult challenges for this organization, and I want you as a resource to me to help us work through where we’re taking this company.

That’s the leadership that the CEO has to bring to the board.

Joe: [00:21:47] We’ve talked about how important it is for a CEO to be transparent with a board and to bring challenges to the board. What does the board need to do in response and as the chair of a board, what [00:22:00] is that person’s responsibility to make sure that the board, if you will, responds in kind to that kind of action of the CEO.

Rick: [00:22:07] This is a more generalized question about how do you deal with any challenges that come before the board and I, what I would say is, okay,  what the board is doing is  saying, what is the goals that we’re trying to achieve here in addressing this challenge, whatever it is.

I mean, it could be that somebody made an offer to buy the company. That could be the thing, could be the question that’s on the table. What’s the goal that we as a board are trying to achieve through the company, consistent with the goals that we’re trying to achieve? What are the different ways we could achieve the financial goals?

For instance, if we. Have to put this into a committee, we’ll ask the committee to go away and come up with options and then come back to the full board. And then we as a full board can make a final decision on which way to go.

Joe: [00:22:51] So one of the things we’ve talked about in the past is the fact that most board members don’t spend a lot of time together.

I mean, maybe they meet four times a year, [00:23:00] maybe there’s a special meeting here and there. So there, what I think the phrase you use, they’re infrequent collaborators. What does a board chairneed to do to make sure they become effective at collaborating with one another?

Rick: [00:23:14] Part of it is they spent more time together.

So this is often why people will say, okay, we’re having our board meeting, we’re going to get together the night before and have dinner together, or spend more time together just  when you’re not having a board meetingso people feel more of a connection. Committee work is very important.

So instead of saying, okay, well,you know, bring whatever issue to the board,we’ll discuss itand take a vote, and then that’s it. Say, okay, well this, this is really worth more of a conversation. We’re going to have the audit committee or the strategy committee or the compensation committee. You guys go off on work, work on this for a while, and come back with recommendations to the board.

So you’re then getting people to say, okay, it’s not our quarterly board meeting. These guys are going to go [00:24:00] off and work with each other on  some problem. That’s how you get people to start working with each other.

Joe: [00:24:05] So find opportunities to give board members a voice.

Rick: [00:24:09] Absolutely. And give them both a voice and a and a task.

Give them a role.

Raza: [00:24:13] But how does a board member balance between being a team player with the obligation to be honest and direct, raising the issues that may be uncomfortable or challenging proposals from the chair or the CEO?

Rick: [00:24:26] It’s one of the challenges to being an effective board member.

Boards and groups like this tend to operate through consensus or rough consensus. So you’re trying to find consensus where you can, and you’re also at the same time, need to be able to speak honestly and openly about what you’re feeling your situations are. I can just share you another experience I had and it had to do with a proposal that was brought before the board about buying a quite substantial [00:25:00] property, a piece of real estate that I happened to know something about. The CEO kept bringing it before the board, well, we’re about to do this. We’re thinking we’re thinking about it. It’s gonna happen some way down the road.

And I knew that there were some significant problems with this property that I kept sort of mentioning, hoping that the CEO would look at this more carefully, and it was clear the CEO wasn’t doing that at the point when the CEO actually brought  it to the board for approval, I said, well, wait a second, I  just want to be clear in the minutes of this meeting that I’m going to vote against this and I’m going to want  in the minutes of the meeting, why I’m voting against this. And that actually stopped the process and got the CEO for the first time to go back and look at the problems with this property that I had identified. So at some point, you have to be willing to in a [00:26:00] constructive way,  I don’t mean a hostile or accusatory way, put the real information that you have or the concerns you have on the table in a way that’s going to have real impact.

Joe: [00:26:10] It sounds to me like in that situation you are  being the ideal board member. If a board member is not going to raise issues or concerns that he or she has, then what is the point of being on the board?

Let me raise another question with you. So we’ve talked about for years it’s been considered good practice for boards of private companies to have executive sessions without the CEO so they can talk candidly. I’ve recently heard some pushback on that, to the effect that, well, maybe the culture needs to be stronger so that the CEO can be in the room and the board actually has the guts, or has the, you know, is comfortable, if you will actually expressing their concerns while the CEO is there.  What do you think about that?

Rick: [00:26:59] I am a very strong believer in executive sessions.   I know you and I’ve had this conversation before and, and I’ve seen cases where, in my mind, the board meeting didn’t start until the CEO left the room. Not that that’s what the agenda showed, but in truth, that’s what actually happened.

I think there’s both. I think the board has to be willing to have open conversation with a CEO while a CEO is present, but it’s just the normal human dynamics that people feel more comfortable, and, and I don’t mean that the executive session is about saying something negative about the board, and it may have nothing to do with the CEO at all.

It may just be that the board members feel more comfortable talking about themselves and what they’re feeling, when the CEO’s out of the room, I, so it’s not that the board meeting is where the CEO gets criticized. It’s usually not that, and that’s usually not what’s happening. It’s more that there’s a more freewheeling conversation [00:28:00] about how do I, how do we really feel about whatever the issue is?

It may have nothing to do with a CEO, and then you find out that the dialogue within the board then can get condensed down into some specific communication with the CEO, not about the CEO himself or herself, but about actions that the board feels should the CEO should be taking.

Joe: [00:28:24] No, that makes sense.

Rick, it’s been great speaking with you. Thanks for joining us.

Again, everyone, please check out Rick’s website, Williams advisory partners.com and make sure to buy his book next September. It’s called “Create the future for your company and yourself”

And thanks to everyone for listening to Onboards with our guest Rick Williams. Take care Raza.

Raza: [00:28:50] You too, Joe.

Rick: [00:28:51] Thanks an awful lot, it’s been great talking with you guys.

Joe: [00:28:53] Thanks Rick, take care. [00:29:00]

Thanks for listening!

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