This is the phrase most often associated with the responsibility of being a director. And to fulfill that responsibility there was never any better tool for the director than a well-formulated, well-timed, and well-executed question. In a perfect world (which doesn’t exist) there is for every company the perfect question that discloses at the right time a revolutionary business opportunity, or, a bankrupting disaster, such as:
What if you could buy a book online?, or
Has there been an external audit of our subprime mortgages?
It’s a possibility that the right question asked in the right way at the right time may have made someone else the richest person in the world, or, prevented a corporate icon from being brought to its knees. The perfect question, then, or even just a good question, is truly the director’s most powerful tool.
Characteristics of the Best Question
There are good questions, better questions, and best questions. What separates the best from the routine are three characteristics:
1. The best question is asked with the right content
A director, like a CEO, must know a fair amount about many things, and this general knowledge must be translated appropriately to the specifics of the organization’s products, services, and market. The dilemma most outside directors face is that they will never know as much about the business at any point in time as the CEO, which leads many directors to assume that they cannot challenge management outside of shallow waters. This is dangerous thinking by directors, evidenced by the scrap heap of supposedly invincible companies and the lineup of directors who went down with the ship.
While the director generally knows what his or her answer would be, it is preferable to formulate the question so that management must fully discover and deliver THEIR answer, not the director’s.
2. The best question is asked at the right time
Timing is everything as they say, and impossible to teach in the context of a board meeting. A good question asked too soon lands on deaf ears. Likewise, a good question asked too late is just that. The director’s best protection against bad timing is to function like an “audit radar screen,” always scanning left and right across the scope of the business, up and down the company hierarchy, and internal and external to the company to spot dysfunction or a corporate UFO……Unwanted Failing Operation.
As a rule of thumb, if the question is not asked, the answer is generally not forthcoming either because management would just as soon not disclose that issue, or they haven’t even asked the question among themselves.
3. The best question is asked in the right way
There is the “art of the deal” and there is the “art of the question”. One good question asked in the right way can start the process of disclosure, discussion, analysis, decision, and action to improve, correct, defend, or prevent. The primary person fielding the director’s questions is the CEO, who by definition is strongly confident in his or her ability to effectively manage the business, so developing the proper posture for questioning and dialogue by the director with the CEO is crucial to building and maintaining a director-CEO relationship that functions as it should for the company and the board by
carefully constructing the question to start a discussion, not to monopolize it, and
carefully constructing questions that prompt logical follow-on questions by other members of the board to get them involved.
Asking questions about operational details is not necessarily micro-management by the director if the question meets the first two requirements of a good question. However, telling the CEO how you did something in your company (as if to say, “You should do it my way.”) is micro-management, but asking the CEO what s/he plans to do is a focused act of accountability.
Notwithstanding the responsibilities placed upon the board, directors must realize that real solutions to the challenges facing the company must ultimately come from the collective intelligence of management and employees. The question is the tool the director uses to tap that force, confirm its direction, grant it authority to proceed, and challenge and refocus that collective intelligence when necessary.