Nokia was the leader in the mobile phone industry and then almost went bankrupt, while the reasons are numerous there are lessons to be learned. In the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019, the author offers some views. Mr. Siilasmaa was Board Chair for a number of years.
You can easily imagine if the company is going through many changes, the Board of Directors is facing many changes. As Chair, Mr. Siilasmaa wanted the Board to operate differently and came up the Golden Rules.
1. Always assume the best of intentions from the actions of others. Operate openly, honestly directly and expect others to do the same.
Give everyone the benefit of doubt. Agreeing to the rule allows for the leader to listen to criticism and have a constructive discussion.
2. Our philosophy is data driven and based on analysis. We always aim to analytically map out the alternative future scenarios for the company and strive to understand the triggers and levers related to those scenarios.
This means it obliges you to find out how things really are. To be successful management needed to change how it worked with the board.
3. Be well educated in the company’s business and deeply engaged in the discussions with the management. Expect the management to support you learning more and be open, straight forward, and engaged in its dealings with the board.
The idea is the board becomes familiar with the issues to be a brain trust. When something works you both win and when something fails, you move on and try again.
4. Be prepared to debate, but do it in an informed unemotional, respectful manner. Affirmatively support the decision even if you did not win the debate.
Disagreement is important, if there is no way to hear worries why be there?
5. Firmly and respectfully challenge management while keeping in mind that the board is successful only when the management is successful.
The board should assist top management to come up with the best possible strategies. Absolute challenge and absolute support.
6. We seek to constantly improve in everything we do. All board members are expected to contribute to the improvement of our work, tools, and processes as well as the way we work as a team.
Continuous improvement is a good thing.
7. We encourage the management and board members to engage with each other outside the board meeting as well.
To improve it makes sense to talk outside of the formal forum.
One important caveat: management see the board members as consultants it is there call if they use the idea or not. The board member should write a memo to the other board members so all can learn
8. Our board is light on formality and heavy on substance.
A meeting without laughter is not a good meeting
Linking to dividend paying stocks, there was a Chair of a Board who once was quoted in the press the AGM should be over in 15 minutes. In view of that statement do you think directors disagreed with the Chair? Eventually the company parts were sold, could it have been a different story?
There are more questions than answers, till the next time – to raising questions.