In this episode, Bob Arciniaga discusses how creating a strong strategically focused board will help a company achieve its key growth initiatives in a more accelerated time frame.
About Bob Arciniaga
Bob is the founder and managing partner of Advisory Board Architects, a global firm that leverages expertise and proprietary systems to help build and manage fiduciary and non-fiduciary boards for both private and public companies. In this capacity, he has coached companies ranging in value from $12 million to well over $1 billion for the past 13 years. Bob also regularly shares his knowledge as a featured speaker at conferences around the world.
Read the Transcript
Allison: Welcome back to the Deliberate Leaders podcast. I am your host and executive coach Allison Dunn, I am pleased to introduce our guest today we have with us Bob Arciniaga. He is founder and Managing Partner of Advisory Board Architects, which is a global firm that leverages expertise and proprietary systems to help build and manage fiduciary and non fiduciary boards, both private and public based companies of all sizes. Small debate is the general sense. Bob, thank you so much for joining us here today
Bob: Allison, what a pleasure. It’s so great to be here. I’ve heard so much about your podcast, I’m really, really excited.
Allison: Thank you. I love to kick these off with a deliberate conversation. What would be your number one leadership? Tip our listeners?
Bob: Ooh, that’s a great one. Well, my belief is leadership is really driven by action. And so if leaders really want to be to be considered as someone they should follow that other people should follow. I think they should lead with action. And, and not as much words, as many words, what’s let’s just do and, and, but let’s do it together.
Allison: I think that’s I think it’s a fantastic tip. I am a person who believes action is really important. And then congruent with, you know, what you’re about. And often as board members, especially since that’s our topic today, that you have to show action that you’re also going to expect your board members in the companies inside also follow with. So that’s a cool tip. Thank you. So, today, our topic is high impact leaders create high impact boards. And that is what you do help companies create, correct?
Bob: Yeah, we focus on only high impact boards. And maybe it’d be helpful for me to find that, because I was saying there’s a very specific definition. The traditional or standard board model that we that we’ve, we’ve all experienced in some way, unfortunately, is primarily focused, especially these days, on compliance and reporting. And in many cases, you know, that’s not necessarily what the owners and the executives really need a board for, they want a board to collaborate with on their biggest pressing strategic issues, and avoid the report out sessions that many boards tend to fall into, based on the traditional board models.
So we built a whole a whole system and methodology backed up by our technology and our people, that allows boards to move away from the traditional board processes, and focus on a new paradigm of how board should function in the future. So that boards are actually providing the impact that most CEOs and owners really want from their boards. And by the way, what most board members really want to add value to.
Allison: No one wants to sit at the table and not feel like they’ve contributed over, I suppose you know, what is? What is the size of which a company should decide to create a board?
Bob: It’s kind of a loaded question. So thank you for putting me on the spot have a look, I think at first you need to define what kind of board you want. Right? And if you if you have to have a board, in many cases for fiduciary purposes, then then that’s a certain way to go. And you may need to have certain fiduciary protocols and those types of things.
However many privately held companies and especially fast growing ones, they don’t necessarily need to have independent board members in a fiduciary capacity. There’s no rules or regulations usually that dictate that. So the only reason that a fast growing company would want to add independence in that type of setting, whether it’s fiduciary or non fiduciary advisory board or fiduciary. The only reason you’d want to do that is if the normal In a high impact work model anyway, is if the board members were going to help the team and the organization achieve their strategic initiatives faster than they would have otherwise. That’s really the only reason in my mind in my world, where a board really creates that high impact and value that most owners want.
Allison: Right? And who doesn’t want that?
Bob: Unfortunately, there’s a lot of boards that are more of a half, two, because that’s what’s mandated. This, that’s not to say that they can’t be fully optimized and create greater value. But there’s always going to be a perception, or at least a portion of the process that’s got to be dedicated to things that may not create the most enterprise value as possible.
Allison: Okay, so I think that that actually helped outline someone who may not have a board already, like the things that they would, you know, take into consider, consider creating.
Bob: And when it comes to creation, because you asked a good question, I think it’s less around the sides. And it’s more about mentality, right? Yes, is the CEO or the owner, open to understanding and listening to a group of outside experts that should be there to help them expand their business or accelerate their business model faster than they would in that could be a company at, you know, $5 million in revenue? It could be a company at 500.
Bob: We could also be a company of 500 1000s. I mean, it could be it could be I will tell you this, we’ve seen boards, for very, very large organizations, that, for all intents and purposes, the CEO doesn’t think the board adds a tremendous amount of value to them. They don’t use it for that. And honestly, the board members don’t, most of the board members feel exactly the same way. They don’t feel like they’re adding a lot of value, but they’re there, because it’s a fiduciary capacity they have to be. So we call those have two boards versus want to work.
Allison: I like the distinction. That’s actually. So I would, I would say like, you know, I, I recognize that there can be a lot of overwhelming feeling for CEOs with everything that they already have on their plates. And so why is it important for leaders to focus on maximizing the boards that they do have? And how can they do so? So if they have a have to board like, how can they convert?
Bob: Great, good, great question. First and foremost, stop reporting to your board. Okay, start leveraging and collaborating with your board. So big, big difference, it sounds trivial, it really isn’t. The processes are completely different. For example, in most, in most board settings, the traditional board setting, which is changing, thankfully, not just because of what we do, but others is recognize this as well, is very much focused on putting a PowerPoint presentation together, sending it out to your board members, and then the CEO and the team presenting the information.
Well, that’s, that’s a history lesson on what’s happened in the past, that’s not focused. Now. We’re trying to explain it in such a way that hopefully, we can have discussions about the future based on that information. But because of the reporting nature of it, and the presentation nature of it, unfortunately, we spend a lot of time rehashing things that are already know, rather than focusing on the things that we could really use the board and leverage the board for to help us think through what’s next. What’s the future hold? How can instead of being historians, how can we be futurists on the board? Right? How can our discussions focus on the things that are going to drive the most enterprise value? If you really think about it, even in my own business, all of our businesses, we have a number of strategic initiatives. Right? A lot. We’ve got to do a lot of things and there’s always this long list of things that never ends.
It’s easy to get rid of one another one pops up, it’s like Whack a Mole. However, if you really press most organizations, I think you’ll find I know we have that there’s usually one two or two, maybe three or four at most key drivers of the enterprise value of the future. It’s not 20 things it’s usually one or two big He thinks, right? In our mind, why would you leverage a board for anything else other than discussing those things that are going to drive the most enterprise value to your organization? Because this is what that group is for. It should be rather than just saying, here’s what we did last quarter, what do you think? Right? As if we didn’t already know whether the results were good or bad? Right? Yes.
Allison: Right. So for those who are listening, and already have a board that may be more on the half, two versus the want to scenario side, or those that are listening that would want to consider building a high impact board? What are some of the skill sets, or relevant things to help build that enterprise conversation?
Bob: Great question. So most people think that a resume of work the past skills of a person are based on their, where they’ve worked and their titles and those types of things. And we would say actually, we break it down into two key variables, what we call quotients, the data quotient and the technical quotient, the technical quotient is their expertise. But we look at it quite a bit differently within our within our mathematical modeling, because we predict Mathematically, the level of strategic impact that a board member or board candidate will have on a board before they’re invited to join up. So we take out all the sub Yes, we take all the subjectivity out. And we focus purely on how their experience can impact the strategic initiatives of the organization.
So on the experience, side or technical question, what we focus on is, how is their experience and what they’ve accomplished in here’s the really important part, what they’ve had to overcome to accomplish. So the failures to write, how does that relate to what we as an organization are trying to do in our strategic initiatives, remember those one or two or three things, if we focus on those things, and we’re, let’s say, we’re trying to build, I’m just gonna use this as an example, a new SAS model for our business? Well, you are going to want to talk about that for some time to come because it’s not just, oh, we’ll have a discussion, we’ll present it, the board will say go for it. And then we forget it. Right, this is going to be an ongoing thing. And it’s going to really drive our enterprise growth in value in the future. So I want people on my board that know that almost all exclusively, not necessarily, but they have deep expertise. They’re exactly what we’re hoping to do in the future. And I want to learn from them. I want to present to them our ideas of what we’re going to do, and I want to hear them help us expand or influence our thinking around those things. Right. So that’s the technical piece.
All the other stuff, I would maybe kind of put secondary to that, as far as you know, what companies they worked at, you know, do they have strategic expertise, who doesn’t? Right? At this level, those other things, I would really focus instead, mostly on that piece that’s going to drive the most value. There’s a secondary piece, though, that most people kind of leave to the end and hope this is gonna work. And that’s what we call the data corrosion, or the it’s really a cultural piece. Are they the type of person that’s going to walk in and dictate or tell you, this is what you should do? This is how you should do it. And, you know, if you’re not the CEO, the type of CEO your team does not have the type of culture that responds in that manner. You know, honestly, regardless of their experience, it’s not good fit.
Allison: It really does. Yeah, we even tell board candidates that go through our training programs, you are not there to dictate. We can’t stand the word, Director. You actually don’t direct anything. When’s the last time a CEO is directed? Okay, sales learn, they adapt, they learn, hopefully. And they succeed, right? And so what I need is I need a group of people that aren’t going to challenge everything. I’d say, necessarily, right? I don’t need people that are going to agree with me either. And I don’t need people that are going to dictate what I should or shouldn’t do. What I really need are people that influence my thinking. I need influencers not in the traditional, or the new social media sells. But I need influencers and people that know how to speak to me, not talking to me.
Bob: Yeah. And there are big differences with that massive difference, and it’s a big skill set. But it can be learned, it actually can be learned. The problem is, here’s the unique thing. Most CEOs in their CEO roles, don’t do it that way. Right, they’re not. We’re not really trained that way. Right. And so sometimes our CEO skills actually don’t equate to being a great collaborative, what we call a board leader, rather than a board member.
Allison: That’s a great distinction, too. So like you’re saying, like, Director, we don’t direct anything. And we’re not just members. We’re leaders.
Bob: Yeah, we’re leaders, right? Yeah. Yeah.
Allison: Fantastic. I, I would love to maybe have you share, either, you know, from your business experience, or those from maybe some of your clientele that you work with? Can you share an example or two of the enterprise type of solutions? I mean, I know you use software as a solution, as an example. But some of the results you can expect from an high impact board like and how long does it take to get those types of results?
Bob: So you mean transitioning a business model based on your based on your boards? And? That’s a great question. I mean, I have a lot of stories I can share. But I always find it best to share a personal story of our own experience. We drink our own Kool Aid, we have a board, like the Hair Club for Men guy, I’m the founder and a client at the same time, in my area, but both. And I’ll tell you, our board has been instrumental in the growth of our business, I mean, instrumental, we would not be here now. Maybe not ever, if it hadn’t been for them. And I’ll never forget, it was a year before COVID. Right? Our business is doing great. Our issues were we couldn’t scale past. And so I went to the board thinking they were going to tell us you need to hire people faster, you need to develop more training programs, whatever it was, you need to hire a better, you know, a real CHRO.
We help the organization grow through people. And our board influenced my thinking and my team’s thinking by saying, You guys are focusing on the wrong thing. How can we scale our business without people? And that’s when the whole technology piece came up. I’ve never built a technology company. I barely know how to use my email. I’m a technical idiot. I you know, I just, I just everything, everything technical I touch it breaks. So nobody lets me touch anything. So I’m, how am I going to build a software? You know, how am I going to transition our business? And it was, what was great about it is the first step in the process is having the board influence your thinking into something that’s potentially drastically different. And if they told me, Bob, you have to build or you should build a SaaS model, I would have said, No, you don’t know what you’re talking about. We’re not doing that. That’s a waste of our time. Why are you on our board? I would have been having those kinds of discussions. But the way they said it, and then my openness to Okay. I don’t not sure I bind this one. Okay. But let’s assume I did. What’s step one? What do we do first? Right, and how do we move this forward? And really, what I told my board is, give me the business case of why we should do this. And when they related the business case, to me, everything resonated. Like that’s exactly what I wanted. For the vision of my business, right. We all have, I think a lot of us have visions of our business. We don’t necessarily know how we’re going to get there yet. But we have this grand vision. And as long as things fit within the vision, boy, it’s free. realistic, right? But you just got to show me how it fits within the vision. And that’s what my board did. And they influenced my thinking to the point that three years later, by the way, we launched our newest company, which is the SAS offering of our, of our service company, a advisory board architects. We launched board ology, in November of 2020. in under a year, yeah, we did. We did it in about a year and about a year. Okay. But it was a, it was a real focus. And, you know, you know, even though COVID was a tragic thing for all of us, and a very difficult thing for, for a lot of us to deal with.
I’ll tell you, one of the one of the benefits, at least for our business, which, you know, looking back on, it was good for our business, I don’t know that COVID was a good thing at all, but that are good for our business, in that we had the time at that point to really focus on how would we do this? Right. And, and so I remember I got COVID, I got, I got COVID fairly early. In, in, in the, in the process. I think it was March or April 2020. And I remember, once, yeah, when I was finally first through the scariest part, the first three weeks, I remember I couldn’t I didn’t really have a lot of energy, but I can at least have a phone call a day. And all I was doing was talking to our different board members about how can how would this work? So we’re now we’re here. So how do we make how do we move this folder, and on all those resources started coming together, and my team was great. And they started helping, you know, helping put those things together. And next thing, you know, we’re building a software platform, which I had never envisioned.
Allison: Your board, had you identify, you were asking how do we scale this? And they said, how do we scale it without people, which is obviously even, you know, with the human capital? Crunch is the word I’m going to add? You know, what a brilliant strategy, and you’re able to get off the ground. And that’s impressive.
Bob: Yeah, yeah. Yeah. Yeah, but, but it took a lot of going back and forth with the board, it really did initially take that open mindedness to say, I need to look at this. I may not agree with it initially, I may not even like the idea initially. But I need to look at it. And I need to look at it from an inquisitive perspective, not from an opinionated perspective.
Allison: I love that. That’s a fantastic, thank you for sharing your bet. As we’re kind of wrapping up, I as a as a facilitator of, of things, I know that facilitating a board can be just a very challenging skill sets to have. So what tips do you have? For our CEOs? Are people considering building a board that they can facilitate it in a more engaging way that does tap into the talent of the people around them?
Bob: Good question. Let me let me put it this way, I don’t facilitate my board meetings for my with my board. Okay, when you think of facilitation, and EBA, I always tell our team, our expertise is board effectiveness and board efficiency. But our passion is human collaboration. You put humans from different backgrounds, different experiences, together and focus on something to solve. And you give them the processes in which to do that. Amazing things can happen.
Now, unfortunately, I think for a CEO, especially like myself, I’m too close to my business. This is this is personal for me, this is everything for me, right and so and my team to they’re very close to the business, and it means a lot to them. And so, for me to facilitate the meeting, I’m biased. I’m going to push the meaning sometimes unbeknownst to subconsciously I may push the meeting in certain directions because I wanted to know that it was my business, right? Where if I have somebody that have to Bringing an independent facilitator. It’s a very different discussion, usually. But the facilitator has to be focused on really driving that collaboration. And when things are going off the rails, they match it back. I always tell our team, our managing partners when they’re facilitating board meetings, and I’ve always done it this way for our clients is, we should be noticeable. But at the same time, we shouldn’t be there. In other words, people should notice that our facilitation tactics, at times move the meeting in the right direction where we wanted to end up.
But actually, we actually played even though we might have played an active role in that we didn’t play an active role in any of the discussions. We didn’t provide any content, we didn’t provide inputs, all we were doing was tracking measurements within the meeting, to ensure that that collaboration was happening at a high level. And if it was starting to drop down into, you know, tactical things or reporting, or people were going off on tangents that were taking us off to the off of the objectives that we were trying to achieve. We were we would be there to pull it back. For some board facilitation is really, really complicated. And you need people that really understand that. But I would not recommend that most CEOs do that for themselves.
Allison: I think the best tip you have given today is that they don’t do it for them. That’s fantastic. Love it. What, what would be so I guess final question. What would be your advice to executives who are thinking about joining boards or becoming a board member? What should they be thinking about to set their expectations of the impact they want to make?
Bob: Great question. So two things that I’ll share. One. Most people I speak to, and that my team interviews for board opportunities, we place a lot harder, usually about 150 200 a year globally. So we place a lot of board members. A very common thread that we see. Most of them think they’re really good at this. And we don’t doubt that they won’t be someday. And we have a training program. However, we need them to be that way. minute one, meeting one, day one. So we have to retrain a lot of their bad habits. Remember, I was saying earlier, what made you a good CEO or good executive may not make you a really great board leader. You really want to enhance those skills. And the skills I’d be focused on is how are you an influencer? Influence usually comes not from giving advice. And it doesn’t come from challenge. It comes from questions that are open ended, not leading. And it comes from what we call the stall protocol of communication we call a campfire. But it’s a way to share stories without giving advice. So if you can master those two skills, boy, you are going to be really, really good at this really quickly. So that’s number one, enhance your skills.
The second piece that I would recommend to people is more of a tactical thing. The most powerful question that any board member can ask in any boardroom at any time, regardless of situation or anything else, is a very simple question that never gets asked or rarely gets out. So I shouldn’t say never. Would it be helpful? Would it be helpful if I get this for you CEO? Would it be helpful if I did this for you and your business owner? Okay, you’re doing too?
It’s a compound question. You’re doing two things with that one. First and foremost, you’re asking for permission to help. Most many board members think that if I have, if I have something to offer, then it’s needed. And normally it is, but not always. And it’s good to just say, look, would that be helpful? And if the CEOs or the team says yeah, that would be great, then you know, that’s going to be useful. Allow them to say actually, no, and in that way, it will save you time. You don’t have to worry about that. Okay, but they may say but that won’t be helpful, but if you could help So with this, that would be great. Awesome. That’s what I’m here to do. And that’s the second piece of the prompt out. And that is, I’m here to help you. I’m not here to judge you. I’m not here to oversee you. I’m not here to, to I’m not here to do anything but support you and the team getting to the goals that you want to get too fast. You’ll become a instant board leader, if you start doing those things.
Allison: Wait at those are too. Those are too small. And that’s, that’s fantastic. I said last question. But I actually have one more question. I think when, when someone’s evaluating the number of people to have around the table, giving them guidance, is there like, like a range that you believe is an ideal sweet spot for board size?
Bob: Yeah, two ways to answer that. One in general, okay. It’s not our data, but it but I would don’t take my word for it, go look for yourself, and, and your listeners should go look for themselves. In studies on human collaboration. Most studies around human collaboration that I’ve seen anyway, the data I’ve seen shows that at around nine to 10, human beings, collaboration starts to fall very, very quickly. And it rapidly falls, the greater use, the more people you add into the equation. Okay, it’s there’s a lot of politics that start to come in and different, different things, I guess, from a human from human nature, that start to derail collaboration, rather than venture collaboration that most organizations want.
So if you include your team, and your, your CEO, and all these people, it doesn’t leave a lot of room for independent board members. Right? So, so eight to 10 is usually the magic number that you want in a boardroom. But even that, we recommend, at least our data shows this is already that you don’t want more than four to six independents that dominate the meeting. And when I say dominate, I really do mean dominate. We’ve seen the optimal board results from a board meeting. We call it an ADA 12 rule 88% of the total time of the meeting is spent with the independent board members or leaders, whether their fiduciary on the independent board leaders speaking in the meeting. That means only 12% of the time. The CEO, the team owners, the non independents are speaking only 12%. Oh, that’s in a lot of the horses sheets, it’s reversed. But that’s the process because it’s that report out mentality, right. But if you eliminate the report outs, then you can achieve a 12 tunable.
Allison: Thank you so much for the guidance that you’ve provided today through this podcast. What would be the best way for folks to either connect with you or find more information about your software as a solution or your advisory? Opportunities?
Bob: Yeah, thank you. So advisory board architects with an s.com or board ology board. ology.com. Those are our two, our two companies board. ology is the SAS model and ABA advisory board architects is the is the full service model. So those are the two I see your cat in the background going to type those in right now. Show Notes Happy, happy to speak with her. And you can see we have videos and stuff that explain a little bit more about high impact boards and how they might be beneficial to your business.
Allison: Fantastic Bob. I’ve thoroughly enjoyed our conversation today. Thank you so much for joining us.
Bob: Oh send it was a real pleasure. I appreciate