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Board Governance Best Practices and Stories/Experiences Shared
Brad Sugars: [00:00:04] When the CEO dreads board meetings, if the CEO dreads the board meeting, you know that there's a challenge going on. There's a lack of support for the CEO. They're not being supported to get the job done type thing. If you don't, if you as a board don't believe in the CEO, then move on. Don't just punish them for 9, 12 months and then move them on type thing. It's not going to grow the organization. The second is when you see the sidebars happening, when the board is not operating as an inclusive group, when the meeting happens, and then people go outside and do their little chats with each other, and instead of saying it in the room, they say it outside of the room. A board that is open, trusting, believing in each other is necessary for it to be the case. There has to be that level of willingness to have the hard discussions in the room.
Munir Haque: [00:01:02] Hello everyone, and welcome to another episode of The Boardroom 180 Podcast. I'm your host Munir Haque, an executive coach and senior board strategist. I have partnered with Action Edge Executive Development to lead their governance and political acumen division. In each episode, we meet with governance leaders and step into their boardrooms where decisions shape the world around us. We'll hear the good, the bad and the ugly, but with a keen focus on where the gaps are, discover emerging best practices and real world tools to better evaluate, guide and grow you and your boards.
Munir Haque: [00:01:37] In today's episode, we have Brad Sugars. Brad Sugars is a seasoned entrepreneur and world's number one business coach, known for his captivating storytelling and actionable insights from his 30-year career. As a chairman and founder of Action Coach, 1000 plus globally franchised company, Brad has personally experienced scaling of business through marketing, leadership, franchising and global expansion with 18 authored books on business, marketing and leadership, including The Wealth Coach, The Real Estate Coach, Billionaire and Training and Pulling Profits Out of a Hat, Brad's message is packed with practical strategies for success. His engaging and hands-on style leaves readers and audiences inspired and equipped with actual takeaways. Brad's journey from being mentored as a teenager to becoming an internationally renowned speaker and CEO of multiple companies, underscores his passion for education and motivating entrepreneurs. He emphasizes building businesses that work without constant oversight, allowing for a better work-life balance. Brad's commitment to helping others achieve success is evident in a straightforward approach and dedication to sharing his expertise through speaking engagements, podcasts, and business forums. So thanks, Brad, for joining us today. I know you've got a very busy schedule. I'm glad that you found some time to fit us into it, and I'm really looking forward to the conversation we're going to have today.
Brad Sugars: [00:03:00] You know, it's an interesting subject, and there's a lot of boards that you know, I guess it's new to some people managing a board, working with a board, getting the whole result. So yeah, great to be here.
Munir Haque: [00:03:12] Oh, and so I think we'll just kind of jump into it just to kind of make best use of your time, you know, kind of in preparation for this meeting, I did go through your book, the Pulling Profits Out of a Hat. And in that book, you talk about the five disciplines of successful business. And so, you know, just to give kind of our listeners who aren't familiar with you a bit of a background of it. I was wondering if you could kind of go through those five disciplines and maybe give a little bit of an example to kind of so that our listeners can picture what you're getting at.
Brad Sugars: [00:03:42] Yeah. So what we did when we wrote that book, it took us about two and a half years. We studied our clients that were growing at an exponential rate. So year on, year on year on year growth sort of thing. And so we sat down and said, well, what are the similarities between those people? And came to five core disciplines? In no particular order. Number one, they had a great strategy, and we can dive into that in a second. What that looks like, number two, business development was handled. Number three, the people was handled four is execution and five is mission. Maybe I'll start with mission because I think that's sort of an addition to, you know, 10, 15, 20 years ago your business didn't need to be mission-oriented. Profit could be the central core focus. Whereas in today's world, mission needs to be at central core. Profits still needs to be there, obviously, because without profit nothing exists. But having something greater than profit to achieve for the company is necessary for exponential growth today, especially if we're dealing with millennial generation or younger. We're seeing that need. So the way I sort of summarize mission is the word love. Do you team love coming to work and do they love working for the company? And does your customer love doing business with you? It's got to be more than just satisfying their purchase need. For an exponential growth business, there's got to be a greater reason behind it.
Brad Sugars: [00:05:10] Like if you look at, say, Tom shoes that scaled by, you know, we give a pair of shoes to kids in need. If you buy a pair, we give a pair sort of thing. This mission-oriented business model for me at Action Coach, we started 31 years ago, and we've been always on the path of world abundance through business reeducation. When someone joins my team, they're not joining to just make money, do a job, be a business coach. They're joining because they want to be a part of creating an abundant planet, if that makes sense. You know, it's a reason over and above. But our customers also love doing work with us. We give out awards every quarter. And when they stand up and receive the awards, you see them saying how much they love their coach. And it's like the use of the word love in business didn't exist before. But in today's world, where employee engagement and all of these things mean more than they've ever meant before, there's virtual viral world that we live in, has changed. So I think that's there. If I go backwards, I think I said execution is number four. Execution is really about three main things. The planning, the systems and the management of the organization. So management for us is just a system. It is a day-to-day system, that of documents and meetings that mean, you create two things. Management is about creating competent, productive humans.
Brad Sugars: [00:06:38] If there's a lack of competency, lack of management, if there's a lack of productivity, lack of management, or even bad management in most cases, I don't know why. I don't know if you noticed this, but somewhere in the 90s, management became a dirty word. And it's like, no, you don't want to be a manager, you want to be a leader type thing. And even like, oh, don't micromanage people. Listen, if you've got a brand new employee, they need micromanagement. There's no two ways about it. They're like a baby, you know, you can't just throw them in and hope they don't drown in the company type thing. You have to build competency and build productivity. A good manager reduces their number of hours of management every week, every month, because they're building competency and building productivity. A bad manager will be like, oh, my door is always open. Come and ask me any question. I'll answer every question and they keep answering the question. So the staff have to keep coming back to them and they become the bottleneck of the organization type thing, the planning. And we bring planning not just to annual but down to daily planning. What's the daily plan for every team member? And then the systems from checklists right through to full technology systems if you want execution. Those are the three main focuses. People, I'll summarize that one real fast. Build your people. They build your company. No more complex than that.
Brad Sugars: [00:07:57] You've got to learn how to recruit, induct, train, educate, etc. with your humans. But unless you build them, they can't build it. You know, someone says, I want to double my business. Well, okay, you've either got to double the productivity of the existing humans, or you've got to double the number of humans. Which one do you want? You know, we all know which one is more profitable, and that's doubling productivity. But you can't double productivity without increasing knowledge base. What did I say? Second, I think business development bizdev is really your marketing, your sales and your customer experience. So what is your lead generation system? How do you generate the leads to the organization? And we do that as two phases. One is the MQL say, hey, I'm interested the marketing qualified lead. And so we want people to raise their hands. Hence my latest book is called Raise Your Hand Marketing. So step one is get them to raise their hand and say I'm interested. Step two is get them to raise their hand and say, I'm ready. Only somewhere between 8 and 15% of people are interested when they first connect with you. And you've got to get them to ready to buy as well. And Google's done some great research with zero moment of truth that talks about, you know, seven hours of research, 11 touches in four different places. And so if your YouTube channel or your videos or you don't have ebooks or you don't have downloads or infographics or something that I can learn from for up to seven hours, and a bigger purchase is more than seven hours.
Brad Sugars: [00:09:31] Of course, a smaller purchase is less than seven hours. People are ready to buy. They go to Amazon. If people are researching, they go to Google. So it's it's that balance. Then your sales. Today's sales world is very different to ten years ago. In fact, even just pre-COVID, today's sales world, we've got statistics showing about 40% of the market doesn't even want to talk to a human being before they make a purchase. You know, they don't want to. They just want to be able to buy by clicking buttons. You've got the majority of the world saying they want to be somewhere between 70 and 80% ready to buy before they talk with a salesperson. The older they are, the more they want to talk with the salesperson early, and the younger they are, the less chance they want to ever even deal with a salesperson, if that makes sense. But people don't get their information from a salesperson anymore. They do their own research to get information. The salesperson's got to be very much a problem solver and very much an advisor to them in this day and age. And look at where are you now, where do you want to be? And let's help you get there. And then finally, the customer experience.
Brad Sugars: [00:10:35] You know, customer service is what happens when there's a problem. Customer experience is the proactive nature of building a lifetime value into a customer. And then finally back to strategy. Strategy is a mix of four things in business. The first two create your business model and that is leverage and scalability. My definition of leverage is do the work once, get paid forever. So an example of that would have been Apple. When Apple was first started it was a computer company. They manufactured a computer. You make it once, sell it once. Nowadays they're an information company. And it's a song, it's an app, it's a TV show, it's a movie. It's, and you know, Steve Jobs is smarter than me. He's like, I say, do the work once, get paid forever. Steve Jobs is like, never do any work and get paid forever. Like they haven't made a song or a movie ever, but they get 30 to 40 points off of every single one sold, if that makes sense. So leverage is number one. Get the customer once, keep them coming back forever. Do the work once. Get paid forever. Number two is scalability. And my definition there is that the next sale costs less and is easier. It's got to get easier as you get bigger. It's got to get easier as you as you want to grow the business. It's got to, like my rental business. The first time I ever rented out a refrigerator, it took a lot of work.
Brad Sugars: [00:11:53] By the time I was renting number 100, it was cheaper and easier. By the time it was number 10,000, it was cheaper and easier again, if that makes sense. So those two help you make your business model. A business model is not about the product or service. It's like, are you using a franchise model, a licensing model, a rental model, a wholesale model, like the model of the business is what we're looking at in the strategy. And then the second two things are opportunity and marketability. Meaning opportunity is how big is the size of the opportunity. Is it $1 trillion market we're going after. And to take 1% means we hit our goals? Or is it a $100 million? And to hit our goals, we've got to have 30% of the market type thing. You know, that's the opportunity. Size changes. It's the strategy. And then finally marketability. Meaning does it sell itself, for example, my commercial cleaning business. I don't need to convince you that your office needs cleaning. All I have to do is convince you to buy from us. You already have a budget allocated. You already know you need to buy it. So marketability is really about I don't want to have to convince you to buy it and convince you to buy from me. I want to just have to convince you to buy from me. There's, so that's the fastest way, buddy, that I can get through that point.
Munir Haque: [00:13:07] And I think you said right at the beginning that they're not in any particular order. Like when I was going through the book. Sometimes they're not in the same order. And I think I saw in my head I was thinking, well, you usually start with mission, then strategy, mission, vision. You're going to have to kind of figure that out, and then you go back and look at your mission again. And so you know, they're all connected.
Brad Sugars: [00:13:26] And if you look at the boards, and any organization leadership starts with a framework. Most companies, they teach leadership as in the type of area leadership. We break it down. First of all, leadership is about creating two things passion and focus. Okay. So whereas management is competency and productivity, leadership is passion and focus. And that's a lot of what you got to do with your people. But I break leadership down into a framework skills and then leadership style. The framework meaning things like your vision, your culture document or your agreed core values, your mission statement you know, where are you going if you don't have that leadership framework of your objectives, your key results, your OKRs, if you don't have that leadership framework, it's hard to lead unless you know where the goalposts are. We're not kicking a goal, if that makes sense. And then the skills that the leaders need to learn. And if I'm serving on a board, maybe my skill set is I got to learn negotiation. Or maybe the skill set I've got to learn is sales even, or maybe it's planning, or maybe it's, do you know what I mean? Like, I've got to learn certain skills to be good on that organization. And then finally, your leadership style. Who do you want to be as a leader? When I asked people, you know, name the three best leaders you know of, great. They make a list and say, well, what is the style of leader that they are? What is it about them that makes you want to be? And you know, it's not only what type of leadership, but what type of leader do you need to be for this organization? Some organizations need you to be a pedantic, detail-oriented, you know, really hard-nosed person. Others need you to be more drawing the vision out of people and helping them. So different organizations will need you to play different leadership styles.
Munir Haque: [00:15:17] Thanks for that. I want to move a little bit more into board and corporate governance. And, you know, because I have you here, I thought I'd ask, how does Brad Sugars define corporate governance and board governance?
Brad Sugars: [00:15:32] Listen, you have constituents and you have to represent all constituents. And it's a challenge because you've got to balance, like, especially if you're a shareholder and board member, you want to represent your own interests, but you can't you have to represent the interests of all members of the organization. You have to represent all constituents, meaning the customer. You have to represent the staff. You have to represent the suppliers, bankers, lenders. You have to represent the other shareholders. And you also have to, in this day and age, represent the community. You know, the community is also a stakeholder in the organization in this day and age. And so yeah, there's all of the legal requirements. And that's your guys area. That's not my area of expertise. But in my way of thinking about it, it's balancing the needs, wants, desires of all of those groups added together is what a board member is really looking for. And mostly we do that by gaining the value of the organization. Increasing the value of the organization is the best way we can represent all stakeholders. If the company is growing, it's doing a great job for its staff. It's doing a great job for its bankers, its lenders. It's doing a great job for everybody, the community, the shareholders, etc.
Munir Haque: [00:16:56] And, you know, how do you think that governance or that board responsibility changes based on like either the size of the company, the nature of the company, whether it's a profit to for-profit nonprofit or is it all.
Brad Sugars: [00:17:11] Dang. Now, buddy, you're getting into a lot of tricky situations. You know, let me take one step back. Unfortunately, Sarbanes-Oxley and board governance meant that boards went from helping companies to grow to being a pain in the backside to the CEO. There was this shift of, no, I'm here to make sure you're doing the right thing. I'm here to police the organization, and that's when you've gone too far, right? Your role is to assist the CEO. Your role is to assist the organization in its growth. Yes. Part of your role is to make sure they're doing it right. Yes. Part of your role is to make sure that they are doing a good job. But for example, the reactive board versus the proactive board. The reactive board is the CEO comes in, presents their report, and they're just question after question after question after question. Justify every decision you've made. And that reactive board is, losing CEOs at a rapid rate of knots. I mean, we've just seen in the last two days two massive CEOs, HSBC, I mean, these CEOs are resigning at a rate of knots because they're not getting board support. They're getting board, what's the opposite of support? But like aggression almost from the board.
Munir Haque: [00:18:41] Resistance or.
Brad Sugars: [00:14:43] Yeah, resistance. It's even more than resistance in a lot of cases. And so you've got to think of yourself as a board. What are we actually here for? We're here to increase the value of the organization. We're here to make the organization more successful. That is our primary objective as a board to advise, to help, to assist. And that's where a proactive board has roles for each member. Like I ran several charities or was chairman of several charities over the years and been on boards of many of them. And one of the things I noticed is that when a board doesn't have a job to do, they get bogged down into beating up the CEO. You know, when a board member has a job to do, okay, your job is to grow the organization by helping them with access to capital. Great. That's your job on the board. Your job is to bring capital and assist the CEO and bring in capital. Your job is to assist the CEO with strategic connections. That's where you fit into this role. And sometimes a CEO has to lead up. Sometimes the CEO has to help the board, especially if they've got volunteer boards. Volunteer boards are one of the hardest groups to wrangle, but also easiest if you give them structure. A board needs structure. It needs to know what am I doing? What is my job, how, what am I here for type thing? And so we need to, as an organization agree the roles of board members. Should there be one board member who is very clear on governance? Yes, I like boards where there is one governance board member. That's their job. They're usually the lawyer. They're usually the person that actually. And then there's an accountant. Maybe they'll assist type thing. But those, that one person or those two people are accountable for the governance of the organization. And the rest of us can get on with helping the organization grow and connecting and adding value to the organization.
Munir Haque: [00:20:54] I found that good boards or, you know, the kind of person they want in those positions, the skill set that they need, like they've developed a skills matrix. And so when one leaves, they replace not like for like but usually one and maybe a backup type.
Brad Sugars: [00:21:08] Yeah look, I mean like any time someone leaves if you've got a great chair, they will always be grooming and building the group. I mean the best generals create the next best leaders. I mean, that's our job is to create further leaders. And so we are always recruiting as a board. We're recruiting the people that can assist us in growth. We're recruiting shareholders that can assist us with connectivity or, you know what I mean, or distribution channels or those sorts of things. So I think it's important to recognize that the board does have a job of moving the organization forward and growing the organization. I, you know, I'm forever a believer in whenever I'm asked to be on a board, that's my first thing is, okay, what would what's the job of everyone on the board? Show me the org chart of the board, almost. And if there is none of that, then it's like, you know, you guys, I'm not here to fix your board. If you want me to contribute, fantastic. But if you guys want a consultant to help you fix your board, go do that.
Munir Haque: [00:22:11] Okay. So I want to move this more into, like, how you can leverage the kind of the five disciplines to kind of help with board governance and coaching, coaching boards. So obviously, as the founder and chair, chairman of action coach and the number one business coach in the world, you must have a long list of executives and executives either. Report to boards, or they serve on either other corporate boards or philanthropic boards. So, you know, how have you kind of approached that use leveraging the five disciplines?
Brad Sugars: [00:22:47] Yeah so what we do in all of our organizations and when we're working with a corporation, whether it's the board or the executives, we're examining every quarter, all five disciplines, we're looking at all five disciplines and the breakdown of each of the five disciplines. So, you know, within execution, we'll be looking at the planning and the plans. We'll be looking at the management and we'll be looking at the systemization of the organization. And so we'll be evaluating where are we at and where do we need to get better on it. We run all organizations at both a board and a senior executive level. The annual planning session, whether it's 2 or 1 days offsite, we sit down and we go through all five areas. We go through the main objective, and then we look at what are the key factors to that. In the next 12 months or two years, we've extended most companies to two-year planning. And the reason for that we've found is the learning cycle. Once you set a new goal, the learning cycle today is usually somewhere between 6 and 12 months just to learn how to implement the strategy. You know, if you go straight to implementation, it doesn't work. You've got to plan, well you've got to learn first, do the study. And some of that learning is recruiting. You know, okay, we're doing this okay. Who can do that.
Brad Sugars: [00:24:11] And you look around the organization and you look around the board and you go, well, none of us have any real experience at doing that. It's new to us. So how do we recruit someone? And whether you recruit at a board level or an executive level or, or even just a team member level, you oftentimes have to learn enough just to recruit them. I mean, just to even ask the questions of a potential person in that role sometimes takes reading 2 or 3 books, or attending 2 or 3 podcasts, or doing something just to even know, like I was sitting with a CEO of a large organization recently, and he was looking at hiring a new CMO, and I said, well, okay, what is it you want in a CMO? And it took us two weeks for him to actually realize, where do they need the skills of the CMO? What is it that they want? What is the future of that CMO role for their organization? He had never really even thought about the data analytics side of it and understanding the data aspect of, you know, evaluating and studying the customer flow chart on the, on the web and all of those things. And so sometimes the study aspect of it is a really important aspect of that. So that's a lot of why we move to those two-year plans.
Brad Sugars: [00:25:25] But once we've agreed the objective and the key results and we start to break down and say, okay, where does, is our strategy ready for that? Do we need to upgrade update? Because often, and usually it's somewhere between 7 to 10 years. Your strategy has to change. You know, the strategy that you used up till now is going to have to shift. And I see a lot of companies that don't shift strategy. I know for me, like just with Action Coach alone, we're 31 years in business. We've changed strategy four times, you know, and we've had to because the market shifted. And if we'd kept with the original strategy, we would be out of business. You look at Steve Jobs, came back to Apple and had to shift their strategy massively because the old strategy didn't work. It was out of date, you know. And so you see those sorts of things. So I think that just on a quarterly basis, examining the five disciplines and bringing the CEO to understand those five disciplines and getting them focused on it, you know, and you can grow each one of them and get better. And we call them disciplines, by the way, because, you never finished. You never finished the people side of the business. It's a discipline that you've got to maintain day in, day out sort of thing. So.
Munir Haque: [00:26:44] So do you, would you, when you're working on the quarterly sessions with them, do you work strictly with the CEO and the chief kind of the senior leaders of the corporation, or do you include the chair and anybody from the board?
Brad Sugars: [00:26:56] Both, depending upon the organization. Some organizations are small enough where you need the board as a part of it. You know, I mean, you guys know this better than I do. Some organizations, some of the executives sit on the board. And so it's really a mixed group. And having the board in the room does help. We also have done it where it's the morning with the board involved and then the afternoon with the team to get into the weeds, I guess, and come up with the detail side of it. Sometimes having the board involved in the details is actually a negative, because once they get involved in the details, they want to be involved in the details. And that's not their role sort of thing. I like to help board members see themselves in a mentoring coaching role in a lot of cases, you know, and I think that that ability to be a great mentor and add value from that front is really important.
Munir Haque: [00:21:51] You kind of drifted into my next question, which is around, like if you are coaching, like, how do you coach, let's say the chair of the board differently than you would the CEO or the CFO or something like that, is a different methodology, or they have different responsibilities to focus on?
Brad Sugars: [00:28:10] You know, the CEO is mostly about execution, you know, getting the job done type thing their day in, day out doing it. So it's more short term than you would with a chairman. But then an executive would be even more short-term than it would be with the CEO type thing. The CEO still got to be longer term than the staff. But the chairman is really about, you know, where is this organization going long-term type thing. How are we getting there three, five, seven years from now? The chair isn't to be in the weeds on a day-to-day basis. They're about building the team, building the people. I loved reading Alan Mulally's story when he turned around Ford, American Icon, was the name of the book, and Alan Mulally said, even as CEO, my biggest job is to say nothing. You know, it's like, because once you say it, it's gospel. If you bring it out of the people, then it becomes, you know, something that's owned by them. And so coaching, the key skill of coaching is questioning. It's the questions you ask. You know the answer, but if you tell them the answer, it's not real. You know, if you ask them questions and guide them to find the answer on their own and it'll take longer. Like my youngest daughter is five. And so the tying of the shoelaces is one of the current challenges in life.
Brad Sugars: [00:29:33] And you're heading out. You're in a hurry. Dad, I'm tying my shoelaces and it's like, okay. Two minutes later. I'm doing it. I've got it. 17 minutes later, I've got it. It's fine. You know, it's like sometimes with your team, you need to let them stumble and fall and tie their own shoelaces to learn the process. And sometimes you could give them the answer in one minute or less, or do it yourself in one minute or less, but allowing them the process of learning the thing by asking them the right questions and making them think for themselves next time they come to that same question, they know the process of thinking for themselves. And that's why the more boards can include people, even if it's just to have them listen. And sit around the room. I know if you go back to Alan Mulally, actually, he was famous at Ford for allowing the executive team to bring another senior manager just to sit behind them in the executive meetings. Not to speak, not to add anything, but just to listen and see why decisions were made the way they are and start to get an understanding of that. And that's, I think, a big part of bringing people through. And, you know, a board that grooms future people is a great board because it's a long-term thinking board.
Munir Haque: [00:30:58] Now, I've seen that in organizations where, you know, the decisions come from the top and there's just bad communication and there's no champions within the organization to convince other people, other workers, that that's this is why these decisions are being made. They seem contrary to logic, but you don't know what the pressures are.
Brad Sugars: [00:31:16] Well, as a board you're balancing out change versus steadiness, aren't you? You're like, we know we need to stay on track, but we also need to keep changing with the market type thing. And as a CEO, it's the same. I guess in an executive it's the same. It's how much do we keep on track and how much do we change? And there was a great little book called My Iceberg Is Melting that talks about change management. And as you mentioned, champions have to be a part of the organization for any change. If we look at massive change, the statistics show us that for massive change to happen, in fact, there was a big, big study done and 78% of massive change in organizations will fail because they don't do one thing, and that is change the people first. Change, going in, leading with the strategy and the plan doesn't work. Leading with the humans works. So if we get the people on board and understanding and what it is and start training them and moving them, then they bring the change with it. You've got to train, educate, move the people. So that they bring the change about rather than, here's the new strategy, go to work.
Brad Sugars: [00:32:30] Well, they don't know how to do the new strategy. See, the biggest killer of goals is the word how. See if let's say I said to you, I want to double the size of this business and bring it to market and do this over the next five years. The immediate thing in people's head is, well, how are we going to do that? How kills most goals, because when you set the goal, you by virtue of it being set as a goal, you don't know how you literally have no clue how to do it. If you did, you would have already done it. And so we as organizations have to understand that we're setting the goal so that we can determine what learning needs to happen so that we can determine what planning needs to happen so that then we can execute. But if we accept the goal and try and execute immediately, we kill off a lot of the projects because we just push people straight into execution rather than learning, growing and planning.
Munir Haque: [00:33:29] Thanks for that. So one of the, kind of one of the goals of this podcast is to help boards and or chairs and CEOs learn from others mistakes. So, you know, what have you seen like in terms of key indicators for poorly functioning governance boards? So like that. So what do you see them kind of essentially just running off the rails or you know, if you can see that ahead of time.
Brad Sugars: [00:33:53] I'll do, there's three things I see where it's coming up to it. When the CEO dreads board meetings, if the CEO dreads the board meeting, you know that there's a challenge going on. There's a lack of support for the CEO. They're not being supported to get the job done type thing. If you don't, if you as a board don't believe in the CEO, then move on. Don't just punish them for 9, 12 months and then move them on type thing. It's not going to grow the organization. The second is when you see the sidebars happening, when the board is not operating as an inclusive group, when the meeting happens, and then people go outside and do their little chats with each other, and instead of saying it in the room, they say it outside of the room. A board that is open, trusting, believing in each other is necessary for it to be the case. There has to be that level of willingness to have the hard discussions in the room. And if we're not willing to do that. And the third is when there isn't a plan or a framework or something of where we're going, what we're doing and doing that. If I'm a great board, I'm giving the CEO the challenge, saying, okay, this is as a board, we want you to be doing this. We want you to be achieving this. This is where we see it needs to go, and we want you to help us get there type thing.
Brad Sugars: [00:35:22] We want you to design the plan to get us to that place. The board and the shareholders are all driving that CEO for growth and profitability. But you've also got to bring in someone that you believe in. And I guess that's probably the other one, recruiting the board. The board's role of recruiting the CEO is there's got to be really strong, 2 or 3 team members who are in charge of that recruitment of the CEO. And there should also, with the chair, be a great mentorship of the CEO. The chair and the CEO should be in a great mentorship relationship. If we're getting a great job done, I know when I've been chair of boards whether it's not for profits or for profits, my job is to really keep that CEO on track and make sure that they're doing the right thing, and whether that's by hiring them an outside coach or whether it's me being their coach. I know when I invest in a company because that is my role. I like being the coach for a period of time with them to just make sure that, you know, they're doing a great job and I can help build them because, again, who builds the CEO? Who's there to help the CEO get better at their job?
Munir Haque: [00:36:34] I mean, just in terms of examples. And they can be kind of theoretical or hypothetical, you know, where where the board is suffering right now from a poor functionality. Like how is it, how does it affect the rest of the corporation? Are there instances where it doesn't like the corporation can still function and meet their targets while they've got a poorly functioning board?
Brad Sugars: [00:37:00] Rarely.
Brad Sugars: [00:37:01] Rarely in my experience. If the CEO is spending the majority of their time dealing with the board and not growing the company, then it's rare that they're ever going to hit their objectives and their goals. CEO can't be fighting that battle and winning the war out there with the customers and the suppliers and the competitors and that sort of thing. We've got to be there to be their backup. You know, you've got to have your CEO's back, I guess is probably the simple way. And the only other times where I've seen it where, and I'll give you an example, I was on a charitable board where the founder of the charity was still active on the board and would essentially try and veto anything the CEO tried to do. That changed things too much. And I did say to this person when they brought me on the board, you don't want me on the board because I'm going to corporatize your organization. I'm going to actually make the board run like a board. It's going to work like a board. We're going to bring in the right people. We're going to do all of these things. And they were very clear with me that, no, that's what they do want. And about three years down the track, she came to me and said, you were right. I didn't want you on the board, but I'm glad that we did this because it moved from fighting with the CEO to empowering the CEO. Over that period of time.
Munir Haque: [00:38:27] Okay. I think you kind of answered my next question, which is, you know, now I look at it, it was kind of a negative question, like, where have you found like these, if you had examples of just governance that's kind of gone off the rails, but maybe flipping that and say, where have you seen that improvement happen, where the board has changed and it's kind of providing clear direction and seen a bit of a trajectory going up for the corporation.
Brad Sugars: [00:38:52] Yeah, I think that most of the time and my foundation, we coach a lot of charitable boards. A lot of the time the board means they have a lot of great meaning in what they're doing. Like, none of them are there to be a negative, if that makes sense. If you're on a board, it's because you believe in the organization in some way, shape or form. And so until the board though is given direction, it's very difficult. And so strengthening the chair and strengthening the CEO allows the board to move forward at a great rate of knots. And, you know, just even one thing where you say, okay, each of you has this job, when you remove everyone from having to deal with governance to 2 or 3 board members being in charge of governance, it just frees up. It allows the board to move forward at a different rate. I think is probably the simplest thing. But look, I've seen a lot of dysfunctional boards over the years and they didn't get there on purpose and they didn't get there in a day. It's a gradual degradation and I think that's why a lot of boards don't see that they're doing the negatives. They just, it's only changed 1% every week or every month for a long period of time. And they don't see that they're holding the company back. But when it's put in front of them, like if they're watching this podcast and they go, yep, we're doing that. Yep. We're doing that. Yep. We're doing that. That's okay. As long as you now realize that, okay, we need to shift to a proactive board and a board that helps grow the company. A board that is about value-adding, not about disciplining the CEO type thing.
Munir Haque: [00:40:35] Okay. No, and I think, you know, the next section I want to talk about was about your approach to coaching boards and, you know, success stories and future trends. I mean, you've talked in general terms about how you've approached them. Is there anything in that that you'd want to elaborate on, or if you have practical tips that you can offer governance boards to be looking at?
Brad Sugars: [00:40:56] Yeah, most of the time when we're coaching a board, we're really working mostly with the chair of the board. And the reason is the chair should be the one making the shifts in the organization. If we try and work with the whole board, what we find is, again, the differences of opinions bring about it. If I'm working with the whole board, usually it's in a brainstorming slash visioning of the future type thing, designing the future of the organization with the CEO present obviously in most cases. But what is the future of the organization? It's very difficult for a board to operate in harmony if they don't know where they're going. You know, if there isn't a clear goal, a clear direction, a clear vision for the organization, then that's the challenge. And so when we work with the chair of the board or when we coach the chair, a lot of the time it is just that what is the vision of the organization, especially if they're the founding father or founding mother of the organization type thing. If you're the chair emeritus because you founded the company or founded the organization, then you've got to give people that ability to grow and give people that ability to see the vision of the organization. I think that's probably the important thing. I think the other thing is that if as a board, when you come together, you don't have free-flowing discussion time, a lot of board meetings are so structured that there isn't time to brainstorm, to assist, to come up with ideas, to. You know what I mean? Like, there's just too much structure to the board of, oh, we do this and this and this and this and this and this.
Brad Sugars: [00:42:43] We read the minutes and then we do that, like, okay, I get it. We've got to do the formalities. That stuff's really important. But we also need to grow the organization and add value. What are we seeing out there in the world where the organization might be needing to think about stuff? Most board members are in other organizations, they're in other companies, or they're on other boards. And so them sharing what they're seeing in the market right now can often be a very valuable time in the organization or in the board meeting to assist the CEO. Sometimes the CEO just needs an objective viewpoint out there in the market. I think that some of the most effective boards that I sit on, the CEO will bring questions to the board at every meeting, like the CEO will come to the meeting with, here's my 4 or 5 questions. I need assistance or I need ideas or I need thoughts on and that sort of thing. And I also do like board members submitting their questions to the CEO before a meeting. I don't like them. I'm trying to be polite around this one. When they play gotcha with a CEO at a board meeting is just a bad experience for all around. You ask your questions beforehand, you submit your questions beforehand. And that means the board reports got to be done early enough for the board members to be able to review it type thing. Yeah, there'll be questions that come up in the meeting, but the playing gotcha with the CEO is not a fun board meeting for anyone in the meeting.
Munir Haque: [00:44:20] No, that's a great advice in terms of how to run those meetings. In terms of future trends like do you see any, I mean, you said you've been doing this for a long time. You've seen changes in governance over time. What do you think are kind of the next evolution of corporate governance or, you talked about now the community being part of your organization or one of the stakeholders?
Brad Sugars: [00:44:49] The future of organizations is moving a lot from head leadership to heart leadership. We've got to get more into, you know, the human side of what we're doing. I see boards getting more diversity, not because of a rule that says you need more diversity, but because we're getting very clear on finding the best person for the job. I see that as a part of what we're doing. It's only getting harder, though, to recruit board members. That, to me is a big part of the future, is how do you recruit board members? You've got to be consistently thinking about taking care of those board members because they're a value. If they're the right people, they're a very valuable asset to the organization. And board seats aren't just, well, I own this many shares I need some board seats to represent ourselves. It's got to be about the growth of the organization. And I think that as, you know, especially for charitable organizations, the level of responsibility a board member is taking on by signing their name on that dotted line is getting more and more. We're never going to, I don't see us going backwards on the amount of accountability that you as a board member are going to have. So we need to, as organizations, be more protective and more valuing those board members and the relationships that they have with us and where they can take us. It should be a wonderful value-adding for both sides of the equation. The board member should get a lot more out of being a part of it than they should just their remuneration for being on the board sort of thing. They need to get a better experience than that.
Munir Haque: [00:46:35] We talked a little bit about nonprofit boards already. You know, what I've always found is that nonprofit boards are made up of leaders in the community, and they're a good way to kind of exchange ideas, understand how other organizations operate. Is this something that when you're working with your CEO, with your kind of executive clients, that you do encourage them to serve on other boards? And like, how does that kind of reflect on their own personal growth?
Brad Sugars: [00:47:06] So I'll answer that in three different ways. Number one, if I've got a CEO of a not-for-profit, I don't want them on other boards. I want them 100% focused on this particular organization and giving their all to this particular organization. I think that's an important factor for me in not-for-profit or profit businesses type thing. I want them really, really focused. Number two way I'll answer that is that I believe that there's a distinct difference between a board of an executive board or an actual board of people with a fiduciary duty to run the organization, and a group of leaders or board of advisors or trustees or patrons to an organization. I think a lot of the time we include people on the charity's board that really should be patrons of the organization rather than board members. They're not there to work. They're there to put their name or add it to their résumé that they are on this, know there's patrons, there's fundraisers, and then there's an actual board. I think there are three very distinct groups in that organization. And if I can answer that question for profits I like executives to get a broad range of knowledge from other areas and other things.
Brad Sugars: [00:48:35] And I find that they can do that not necessarily by being on boards, but by being part of organizations that are out there, whether they are like a YPO or EO or something like that. But I'm a firm believer in our people attending other training programs, or being parts of other mastermind mentoring groups to bring back to the organization knowledge that we don't have in the organization. I think too often we try and get people to grow the company, but we're not willing to give them the chance to go and learn other information to bring it back into the company. I remember one time I gave a speech in Dublin, and just after me was Sir Richard Branson, and he was asked the question about people leaving. You know, you train your people. And I think he answered it the best way I've ever heard it, where he said, you've got to build a group of people that are so well trained, they can leave your company, but you've got to build an organization and a culture that's so good they don't want to leave your company.
Munir Haque: [00:49:39] We don't have much time left. So I've got maybe a quick question for you, as our listeners can tell that by your accent or you're not native to Nevada, but your center of operations is out of Nevada out of Las Vegas. Is there a reason why, what's different about Las Vegas?
Brad Sugars: [00:49:58] Well, it's the only city in America fun enough for an Australian to live in, let's put it that way. Australians build businesses so we can have great lifestyle. We don't do it the other way around. You know, we build a business that is a vehicle for our lifestyle. And I think that has served me very well in building companies where my people run the company, and I just get to coach and mentor and work with my people.
Munir Haque: [00:50:24] Nice. Okay. And I guess lastly, where can people find out more about you if they're interested. We'll put it in the show notes.
Brad Sugars: [00:50:30] Real simple. bradsugars.com, actioncoach.com or google.com. You'll find me on all of them.
Munir Haque: [00:50:35] Perfect. Well thanks a lot for joining us. And it's been great. Thank you.
Brad Sugars: [00:50:36] Be well. Thanks, guys.
Munir Haque: [00:50:38] Thanks everyone for listening to The Boardroom 180 Podcast. You can learn more about me and Action Edge Executive Development on our website at aeenow.com. That's aeednow.com. Fill out the form if you want me to reach out to you, or if you have any thoughts for future subjects or guests on the podcast. We also have a free board self-evaluation that will be linked on our website. You and your board can fill this out either individually or together, and it gives you a bit of a quick temperature check on how your board health is. As always, don't forget to hit like and subscribe to The Boardroom 180 Podcast. It helps us grow and bring more governance insights. We're recording from the Pushysix Studios in Calgary, Alberta with production assistance from Astronomic Audio. You can find their info and the links to AEX forums in the show notes. We've come full circle to conclude this episode of The Boardroom 180 podcast. Goodbye and good governance.