The quality of evidence a board possesses is crucial. This is the forum where the future of the organisation is moulded and critical decisions shaping the entity’s future demand an openness of conversation, embedded in a culture of trust. Worryingly, few boards achieve this status.

To be clear—a board’s purpose is to provide oversight and scrutiny of the organisation’s assets, so that greater value is realised and a sustainable future is secured. Each board member needs to be clear on their oversight function and contribution, as this defines their own, and the collective board’s value.

All of this is shaped by the quality, integrity and scrutiny of the evidence placed in front of the board, as well as each member having the confidence needed to raise difficult questions and concerns.

Nobody wants to be the ‘negative voice’

Often the major problem is that no-one wants to be singled out as the ‘negative voice’ in the boardroom, and so play it safe by opting for the ‘everything is great and just getting better’ mantra.

Questions and issues that are deemed too sensitive, although fundamental to the organisation’s future progress, are often smothered and lost. It then becomes easy for inferior quality decision-making to become the norm.

As the boardroom is the unique environment where the very identity of the organisation is shaped, the dynamics and interactions between members significantly influences the effectiveness of governance.

Board decision-making is heavily reliant on socio-psychological processes, especially those related to group participation, scrutiny of the evidence quality, information exchange and critical discourse. Unfortunately, many boardroom interactions don’t foster constructive dialogue, which causes directors to hesitate voicing any dissenting opinions.

The two key reasons behind this are doubt over the integrity of the evidence being presented and a lack of willpower to systematically scrutinise relevant data.

The result of all this is dysfunctional dynamics, where critical issues that impair decision-making are left unchecked. Such dysfunctional dynamics can become ingrained in the board’s customs and practices, leading to unspoken but established rules about ‘how we get things done around here’. Poor quality evidence and limited scrutiny lead to a lack of mutual support.

It is incumbent on board directors to navigate through these dynamics, particularly during episodes of damaging and conflicting ideas, and diverging viewpoints.

The need for mutual support

Board members effectively need a ‘safe space’ forum, which allows them to express ideas, concerns and questions, and to take risks and admit mistakes, without any fear of negative consequences. This approach ensures a sharing of diverse perspectives, and continually addresses the necessity for scrutiny and integrity of the primary evidence needed to make effective decisions.

The clarity of strategic focus, or the ‘what?’ and the means to achieve that strategic direction—the ‘how?’—need to be in tandem.

Integrity of evidence principally refers to the data informing the ‘what?’ This is rational financial numbers, or trends that can be integrated with contextual planning to direct effective engagement with multiple stakeholders, who may hold contrasting interests.

From a trusted data source, the ‘what?’ involves selecting the right strategic direction. The ‘how?’ involves a deep delve into the data, its sources and relevance, and the position being adopted by the C-suite and other critical stakeholders.

Addressing the integrity of data is dependent on board-member-experience. Make time to openly ask:  “Is there anything that doesn’t seem right with this proposal?” and “What assumptions are we making?” This creates a necessary and safe space where board members can feel that their contributions are being given due consideration.

Setting the tone for integrity

The chair’s contribution to fostering open dialogue and ensuring all voices are heard is critical.

By modelling inclusive and respectful behaviour, acknowledging their own mistakes, and showing appreciation for diverse viewpoints, the chair shapes the culture of the boardroom as supportive and open. Board members can then speak openly and without fear of reprisal or embarrassment.

For decades, Macquarie Bank, Australia, endeavoured to grow a culture of transparency and diverse perspectives and the then chair of the bank coined the phrase ‘interrogate the data, never the person.’ Deep scrutiny of the proposals that were submitted to the board became embedded into the organisation’s culture.

On one occasion, the bank CEO championed an intricate proposal for an acquisition, only for the board to send it back for further refinement. When the CEO was asked, “Are you fed up being rejected for the third time?”, the immediate response was: “Absolutely not. Weaknesses in the proposal will now be put right. I am grateful for such a diligent board.”

For the CEO, the integrity of the evidence and the scrutiny applied were interwoven and fundamental to the organisation’s success.

A shift from shared assumptions

Product-service systems (PSS) is a challenging and transformative endeavour, demanding a shift away from shared assumptions, values and beliefs that frame the board’s understanding about core tasks of value creation.

Directors who experience a high level of PSS are likely to consider themselves as being viewed as positive and helpful in determining resolutions to the challenges at hand. In particular, a PSS mindset champions the following:

A shared understanding of goals, rules and roles: Improved clarity concerning goals, rules, and roles aligns board members and reduces misunderstandings. Establishing clear norms and expectations around communication and behaviour fosters a collaborative environment.

Diverse perspectives: A psychologically safe environment encourages board members to bring their unique perspectives to the table. Diversity of thought is essential for enabling the board to explore a broad range of solutions and strategies.

Evaluation and improvement: Regular board evaluations and a commitment to continuous improvement help to maintain standards. Issues are addressed promptly. Implementing regular feedback helps to identify and address issues that may hinder PSS.

Respecting individual contributions: Recognising and valuing individual contributions motivates board members to participate actively. Staying with the ‘interrogate the evidence, never the person’ mantra permits the active sharing of unique insights.

Fostering a learning culture: A safe environment encourages continuous learning and development. Members feel more comfortable to explore and seek feedback and there is a willingness to support board members who ask for input and guidance. A positive attitude to calculated risk, and margin for permissible mistakes becomes natural to the board’s operation.

Improved organisational resilience: In a psychologically safe boardroom, members are more likely to report issues and risks early. This proactive approach allows the organisation to address potential problems before they escalate.

A product-service system is built by encouraging open dialogue through the setting of clear expectations and guidelines.

Prioritising PSS enables boards to enhance their effectiveness through better scrutiny of evidence, which in turn enables improved decisions and contributes to the organisation’s long-term success.

It is up to the chair to establish such a scrutiny mindset in the boardroom. However, by adopting an underlying culture of PSS, the practice leads to the enhanced integrity of evidence, which is fundamental to sustainability in an increasingly complex and competitive world.

Andrew Kakabadse is professor of governance and leadership, and Nada Kakabadse is professor of policy, governance and ethics, both at Henley Business School.