© Not to be reproduced or distributed without the express permission of the author. Richard Chait Harvard University California Association of Independent Schools 1/27/07 © Not to be reproduced or distributed without the express permission of the author.

2 GOVERNANCE AS LEADERSHIP Effective boards…  Offer a strategic asset and comparative advantage.  Add value/derive value from meaningful participation in consequential discussions and decisions.  Macrogovern more than micromanage.  Model behaviors trustees expect school to exhibit.  Harness individual talent to collective effort.  Provide leadership as well as stewardship.  Ensure intergenerational equity.

3 GOVERNANCE AS LEADERSHIP What’s the Problem? Classical DiagnosisProblem of performance ResponseCodify board’s role, clarify tasks. ObjectiveDo the work better. Reframed DiagnosisProblem of purpose ResponseEnrich the job, engage the board. ObjectiveDo better work.

4 GOVERNANCE AS LEADERSHIP  Emphasize modes, not tasks, of governance.  Think and work in three different modes.  All three serve important purposes.  Value added increases as board:  Becomes more proficient in more modes;  Does more work in third mode;  Chooses appropriate mode(s) of work. Core Concepts

5 GOVERNANCE AS LEADERSHIP Fiduciary: Type I Strategic: Type II Generative: Type III Governance as Leadership

6 GOVERNANCE AS LEADERSHIP Type I: Fiduciary Mode  Board’s central purpose:  Stewardship of tangible assets  Board’s principal role:  Sentinel  Board’s core work:  Ensure efficient & appropriate use of resources  Ensure legal compliance & fiscal accountability  Ensure accountability  Oversee operations  Select & evaluate CEO

7 GOVERNANCE AS LEADERSHIP Type II: Strategic Mode  Board’s central purpose :  Strategic partnership with senior management  Board’s principal role:  Strategist  Board’s core work:  Scan internal and external environment  Resolve priorities  Review and modify strategic plan  Monitor performance

8 GOVERNANCE AS LEADERSHIP What Is Generative Thinking?  Makes sense of circumstances.  Invites prior questions and alternative hypotheses.  Places perceived problems/opportunities in new light.  Finds and frames new problems and opportunities.  Concerns values, beliefs, and assumptions.  Spawns policy, strategy, and decisions.

9 GOVERNANCE AS LEADERSHIP Opportunity to influence generative work declines as issues are framed and converted into strategies, plans, and tactics. Opportunity for Generative Work Plans, Tactics, Execution Strategies, Policies Where Does Generative Thinking Occur? THE GENERATIVE CURVE Sense-making Problem-framing Time

10 GOVERNANCE AS LEADERSHIP Generative Fiduciary Strategic Align rewards with priorities Understand assumptions of new generation Modify pay plan & hours The Generative Curve Opportunity for Generative Work Time

11 GOVERNANCE AS LEADERSHIP Generative Fiduciary Strategic Compete on amenities Reconcile social purpose and business model Approve new fitness center The Generative Curve Opportunity for Generative Work Time

12 GOVERNANCE AS LEADERSHIP Generative Curves Opportunity for Generative Work Time

13 GOVERNANCE AS LEADERSHIP Trustee involvement lowest where generative opportunity greatest; trustee involvement increases as generative opportunity decreases. Typical Board Involvement Curve Generative Curve Opportunity for Generative Work Time The Generative Dilemma

14 GOVERNANCE AS LEADERSHIP GenerativeStrategicFiduciary Board’s purpose Source of leadership for organization Strategic partnership w/ management Stewardship of tangible assets Chief role Sense makerStrategistSteward Core work Find and frame challenges, reconcile values and choices Scan environment, shape strategy, create comparative advantage Set mission, oversee operations, deploy resources, ensure compliance Conducive process Inclusive conversations Task forces, ad hoc work groups Standing committees Power base Ideas, insightsTechnical expertiseLegal authority

15 GOVERNANCE AS LEADERSHIP GenerativeStrategicFiduciary Board’s purpose Source of leadership for organization Strategic partnership w/ management Stewardship of tangible assets Chief role Sense makerStrategistSteward Core work Find and frame challenges, reconcile values and choices Scan environment, shape strategy, create comparative advantage Set mission, oversee operations, deploy resources, ensure compliance Conducive process Inclusive conversations Task forces, ad hoc work groups Standing committees Power base Ideas, insightsTechnical expertiseLegal authority

16 GOVERNANCE AS LEADERSHIP Values Mission Beliefs Markets SWOT Image Cost Space Legality Generative Fiduciary Strategic

17 GOVERNANCE AS LEADERSHIP Separate Perspectives

18 GOVERNANCE AS LEADERSHIP Comparative Perspectives

19 GOVERNANCE AS LEADERSHIP Integrated Perspectives Generative Strategic Fiduciary

20 GOVERNANCE AS LEADERSHIP State of Readiness  Wear “tri-focals.”  Be on the lookout for generative landmarks.  Situate propositions on the generative curve.  Do business “a la mode.”

21 GOVERNANCE AS LEADERSHIP Look upstream. Look downstream.  Decide what to decide  Engage in sense-making  Frame problem/opportunity  Suggest what staff should ponder  Decide what to do  Engage in decision-making  Solve problem/opportunity  Ponder what staff suggests Generative Strategic Fiduciary

22 GOVERNANCE AS LEADERSHIP Look backward. Look forward.  Make meaning of the past  Review actions to uncover goals  Discover emergent strategies  Shape organizational saga  Learn lessons  Make policies for the future  Set goals to guide actions  Design deliberate strategies  Leverage organizational saga  Apply lessons Generative Strategic Fiduciary

23 GOVERNANCE AS LEADERSHIP Looking Backward  What best explains recent successes or setbacks?  If we are what we do, then who are we?  How have we reconciled tradition and innovation?  What’s been this organization’s theory of change?  Where has there been resistance and why?  What’s the storyline that drives the product line?  How are we smarter as board & organization than a year ago?

24 GOVERNANCE AS LEADERSHIP Catalyze. Analyze.  Raise introspective questions  Consider hypotheticals  Encourage collegiality  Promote robust discourse  Raise operational questions  Consider realities  Encourage congeniality  Follow parliamentary procedure Generative Strategic Fiduciary

25 GOVERNANCE AS LEADERSHIP Catalytic Questions  What should we worry about?  What keeps Head awake at night?  What keeps trustees awake at night?  Whom would we serve in what ways if money did not matter?  What do we do peers would not and why? Vice versa?  What’s good for mission, bad for business? Vice versa?  What would we do differently as a for-profit?  On what list, yet to be devised, would we want to rank #1?  What will be this board’s legacy?

26 GOVERNANCE AS LEADERSHIP Organize to discern. Organize to decide.  Facilitate learning community  Tap collective wisdom  Plenaries drive committees  Craft the question  Sustain standing committees  Tap individual expertise  Committees drive plenaries  Call the question Generative Strategic Fiduciary

27 GOVERNANCE AS LEADERSHIP Rules of Engagement  Macro-governance  Partial control of complete perspective  First guess upstream  Fusion of thinking  Micro-management  Complete control of partial perspective  Second guess downstream  Division of territory NEWOLD

28 GOVERNANCE AS LEADERSHIP  Empowers the board.  Engages the collective mind.  Exploits board’s assets.  Enriches board’s work.  Enhances board’s performance. Governance as Leadership The Payoff