This article has been updated on 1/2/2023 to include an 8th test, The Statistical Test
The Question Substitution Test
I observed management when presented with a very difficult question would answer a simpler question which is closely associated with the original question. This phenomenon was presented by Daniel Kahneman in Thinking Fast and Slow. It is not necessarily that management is deliberately misleading the Board but a subconscious behaviour. By way of example, a Director may ask ‘are we paying employees what they are entitled to’? This is an accuracy question with many parts. The response is invariably yes! We have reconciliation processes to ensure that people are correctly paid. This response is to a very different question. What is really being answered is that people are paid in accordance with the timesheets provided and the information held on the system as to their entitlements. This is an answer to a precision question.
In fact, a recent client hired a management consulting firm to verify that employees were being paid in accordance with their entitlements and it was discovered that a group of employees were paid precisely but not accurately.
Those who have taken media training will recognise the above is similar to their behaviour training. They are trained not to accept the premise of the question but to pivot to the answer they wish to provide. Politicians are masters of this skill. That deliberate action is similar in action but different in intent.
I have restated the other six tests here for completeness.
The Trust Test
Is there Smart-Trust between the Board and management such that management is confident to raise difficult issues early? Does the Smart-Trust extend down into the project team? The critical word here is SMART. Smart trust is the intersect between a high propensity to trust and a strong basis of trust. This means the Board must do appropriate due diligence using the 4 Cores of Credibility (Integrity, Intent, Capability and Results) to establish that trust is warranted. It is not acceptable to trust because “we have a good management team” if the initiative is outside the normal course of business. Management may pass the test regularly on BAU matters but do they pass it on this type of initiative? The common failing here is that the Board assumes that Management can do it and have put in place what is necessary to achieve the initiative.
The A-B Test
What are the alternative interpretations of what I am hearing or seeing in this report? This question opens the door to probe and validate that the scenario presented is the true scenario or is an alternative scenario more likely. You may expose some weakness to be resolved which is a gift to management if Smart Trust is present otherwise it may be seen as interfering.
The Triangulation Test
Is the information presented consistent with other sources of information (including but not limited to my personal experience)? Again an opportunity to probe more deeply. A word of caution here. It is possible that the report is framed in a language to pass the triangulation test and not trigger a reaction from the Board. It is therefore necessary for the Board to have multiple sources of information for large strategic initiatives. Superior executives understand this need and cultivate multiple channels for the Board. These executives understand that the Board is there to serve the greater good of the business and how to facilitate that outcome.
The Statistical Test
What is the external, historical performance of this type of initiative? An example of this could be “70% of large Mergers & Acquisitions fail to meet their business case.” What makes us think we will succeed? The external information anchors the organisation to important facts rather than just internal opinion. Be wary of management comments that this initiative is different or the devil is in the detail. This does not mean that the initiative should not go ahead but the Board understands the real risk profile of this type of initiative. (taken from Noise, A flaw in human judgement, Daniel Kahneman et al)
The Assumption Test
What assumptions need to be true for this observation to be logical? Are those assumptions still valid? At what point would the assumptions fall away? What actions need to be taken now to confirm or otherwise the assumptions? These questions are important to overcome the tendency to focus on task rather than objective of the initiative. This is especially problematic at the project level. Many project managers see their role as delivering to a defined scope and not the planned business outcome rendering the business assumptions as irrelevant in their mind.
The Complete Picture Test
Is what is reported the complete picture on this initiative? For example big change initiatives that have a large technology component often report on technology progress and not the preparations to effectively adopt those changes. the consequence is that important activities are not addressed in a timely manner jeopardising the project delivery.
The Murphy’s Law Test
What could go wrong from here? This is similar to the concept of a premortem. The objective is to identify necessary actions to prevent that negative outcome and keep the project on track. Understanding these potential outcomes gives greater context and meaning to the reported information.
By applying these tests effectively, the Board is better placed to provide effective governance over management and mitigate much of the risks inherent in transformational initiatives.
If this is of interest to you and your organisation Tony Sattout Consulting offers a 2-hour workshop titled PROJECTS IN THE BOARD ROOM. The workshop offers an effective framework to breakdown a Board strategic initiative, establishing an appropriate mindset and utilising the seven tests described above to improve Board decision quality. This is wrapped around a case study.
