I met Ram Charan years after he left my alma mater, Northwestern University’s Kellogg School of Management, and embarked on his global trek to counsel business leaders. I immediately appreciated his unique ability to communicate strategic and practical wisdom — developed over years of studying and teaching management — in a way that made sense and could be applied in my business. His gentle nudges, and his use of the Socratic Method, made me think more expansively about situations and opportunities. Reading Owning Up is like conversing with Ram. In the excerpt you are about to read, he explains how to raise the “altitude” of any discussion in a nonthreatening matter. Meetings need not be tedious or boring. And at a time when they are bombarded with data and struggle to convert it into actionable information, executives can adopt Ram’s advice to board members in order to communicate more persuasively as they seek to protect their companies or find new growth avenues. The ability to use questions to illuminate vital issues and avoid micromanaging is a particularly valuable skill in these regards.
— Blythe McGarvie
Excerpted from chapter 13 of Owning Up: The 14 Questions Every Board Member Needs to Ask
The difference between micromanaging and appropriate questioning is not always a bright line. What really defines micromanaging is not whether a director is digging into details. It’s really a question of which details and for what purpose. Is the director making a small point, like nit-picking expenses? Or is the director drilling down into details that help reveal a higher-level issue — detecting a structural change, getting at the root cause of a problem, or questioning the effectiveness of a process?
Asking questions of an operating nature is not in itself micromanaging, as long as the questions lead to insights about issues like strategy, performance, major investment decisions, key personnel, the choice of goals, or risk assessment. Probing a decline in gross margins, for example, can easily be seen as nitpicky in some circumstances. But in industries like office supplies or personal computers, where gross margins have taken a beating over the last ten years, directors might be trying to discern whether the decline is symptomatic of a fundamental shift in the industry and therefore whether the strategy has become obsolete. The key lies in the analytics of working backward to link the operating details with strategic issues.
For a mobile phone operator, subscriber churn rate is an operating detail with very strategic importance. The board of a telecommunications company that approves a multibillion-dollar project to lay new cable has a stake in knowing how the implementation is going. The project’s success might depend heavily on assumptions management made about attracting and retaining targeted high-revenue customers. The board will want to dig into details about how many customers are willing to pay a premium for voice, video, and text combined. Are a sufficient number of customers coming on line on schedule? What percentage is staying with the company? What is the monthly churn, or turnover, in customers and what is the average customer bill? These operational details are an important lens for tracking the execution of the strategy and gauging whether it is working. These items materially affect the business going forward.
When a director picks up on a small point and challenges it for the sake of showing who is right or what could have been done differently, or when a director attempts to make a decision about operations, or individual people, it’s fair to say that person is micromanaging. This typically happens in the area of the director’s expertise and is driven by a personal need to demonstrate superior subject knowledge.