Ep779: Tony Fish – Be Brave to Ask the Unsaid Questions

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Quick take

BIO: Tony Fish is a neuro-minority and a leading expert on decision-making, governance, and entrepreneurship in uncertain environments. His 30-year sense-making and foresight track record means he has been ahead on several technical revolutions.

STORY: In this episode, Tony talks about his newest book, Decision Making in Uncertain Times. How can we become more aware of the consequences of our actions tomorrow?

LEARNING: Ask better questions.


“It’s only through conversations with people like you, Andrew, that I can refine my questions. I love all the people you put on the show because they helped me articulate better what I think I’m optimizing for.”

Tony Fish


Guest profile

Tony Fish is a neuro-minority and a leading expert on decision-making, governance, and entrepreneurship in uncertain environments. His 30-year sense-making and foresight track record means he has been ahead on several technical revolutions. His enthusiasm and drive are contagious & inspiring, especially for wicked problems. He has written and published six books, remains a visiting Fellow at Henley Business School for Entrepreneurship and Innovation, Entrepreneurs-in-residence (EIR) at Bradford School of Management, teaches at London Business School and the London School of Economics in AI and Ethics, and is a European Commission (EC) expert for Big Data.

Tony was a guest on Ep261: CEOs Can Defraud a Business in Very Hard to Detect Ways. In this episode, Tony talks about his newest book, Decision Making in Uncertain Times – How can we become more aware of the consequences of our actions on tomorrow?

The unsaid questions

Tony struggled with how to ask better questions. He says there are two forms of questions. There are questions that we all ask, such as how are you performing? What are you doing? How are you feeling?

Then there’s a pile of what Tony termed the unsaid questions. He says that we don’t ask these questions because, politically, we can’t ask them. We emotionally feel we’re not able to, especially if we don’t know the person well enough or when somebody tells us not to ask that type of question. The trouble with a board is that if members don’t ask the unsaid, they won’t be able to discharge their fiduciary duties. Therefore, we need better frameworks to find questions we didn’t know we needed to ask.

So, how do we ask those questions? Tony has a whole book on how he does it. When the book gets shared, other people will read it, and they’ll come up with better questions than he has.

Principle versus risk

According to Tony, when a board starts, it has all these principles outlined and tries to uphold them. But you realize later on as a board that you can’t manage principles. What you can manage is risk frameworks. But you can’t manage risk rating frameworks without rules. So, you create rules that allow you to manage risk. After creating the rules, you become managed against the free-risk framework you believe in because it aligns with your principles.

However, over time, the rules stop working, and those rules have to have another rule because there’s an exception to a rule. Tony says that when a new rule is created, or a new procedure or methodology comes along, a board should go back and question if that rule is aligned with its purpose, not whether it is helping the board manage the risk framework better.

Over time, you’ll have your purpose clearly and start seeing a massive drift between what you believe you set up and what the risk frameworks and rules allow you to manage. Tony’s challenge to boards is that every time a new rule is created, it should go to the board, and the board should make a judgment call on whether that rule is aligned with its purpose.

Role of a board

According to Tony, a board needs clarity on the tasks, the processes, the strategy, the purpose, and the North Star. It’s easy for boards to focus on tasks, processes, and strategy, but they find it difficult to focus on purpose and North Star. Most times, people only question whether they’re doing the right thing. He adds that a board has to be guided by data, rules, and regulations. But then it has to be directed by the values it wants and the organization’s values, which then comes back to the principles. The issue most boards face is that others’ values, principles, and behaviors are far more instrumental in a board’s values than they ever realized.

Then you’ve got a fundamental issue: Too many people end up on boards without board training. The untrained board members end up replicating management meetings as board meetings, believing that’s what they should be doing.

How to set up a board

Tony believes that everybody follows an S curve. When you’re in the different phases of going up the S curve, you need other types of governance. However, many people don’t transition as they go up the S curve.

When in a particular phase, try to find the board that can do the next part, not the current one. And therein lies the difficulty for so many board members because they want to do what they’re good at and, therefore, stay in their comfort zones. This curtails the ability of the company to scale. What the board should be doing is asking: what do you do? Where are the transitions? How do you go about thinking? What are the processes and procedures? What skills do you need at the different layers as you go up?

About the book

Tony’s book contains ten short frameworks. The idea is not to explain everything but to help the reader peel back the layers of the falsehood that they think they know what they’re doing, yet they haven’t got a clue. Tony wants you to make better choices and decisions by asking better questions.

The book is most accessible on Amazon, where you can purchase it in hardcover, softcover, or Kindle. You can also get a free PDF copy at www.peakparadox.com/book. If you want to reach out to Tony, he’s on LinkedIn.


Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers, and welcome to my worst investment ever stories of loss to keep you winning. This is your podcast host Andrew Stotz, from a Stotz Academy, and I'm here with a returning guest, Tony fish, Episode 261. That was all the way back in 2020. And the reason why I've got Tony back here is because of his most recent book decision making in uncertain times, how can we become more aware of the consequences of our actions on tomorrow? And I just, maybe we'll take a quick couple seconds here and just give us something exciting that we're going to get out of this discussion. And then I'm going to go back to your bio and talk a little bit about you. What would you say, for the listeners? Like, oh, I don't know if I'm gonna stick around for this conversation. Tell them why.

Tony Fish 00:53
Tell them why I think it's no matter how we articulate a problem or challenge opportunity, this undeniable, truth persists, which is uncertainty and permeates every facet of our lives. And because it's omnipresent, and it's indifferent to how we frame particular problems, we've got to unpack the complexity, which lies behind it and knowing most of us haven't got the frameworks to do it. So what I've been trying to do is provide frameworks not that they're the answers, but they help people who want to go and wrestle with this stuff.

Andrew Stotz 01:27
Well, I'm really looking forward to going through it. And I've been through part of your book, and I already am, like, impressed, but I just want to mention that you were episode 261. And you told the story about how a CEO defrauded the business. And that was a fascinating one, because you were, I believe, chairman of the company at the time. And that was a fascinating story. So for those people that want to learn more about Tony's worst investment ever, you can go to Episode 261. We're in fact on episode 778. Nowadays, so we're almost at 800. We just keep plowing away. Now give the listeners another reason to stay on. This book has gotten just recently out. It's gotten 29 ratings so far on Amazon with a 4.9 rating. And I asked my guests these days to summarize, you know, what they bring to the world in as short a words as possible. And what Tony does is he helps directors, executives, leadership and teams ask better questions, so we can collectively make better decisions and achieve the desired outcomes. Let me take a moment and introduce you to the audience. Tony is a neuro minority and a leading expert on decision making governance and entrepreneurship in uncertain environments. His 30 years since making and foresight track record means he has been ahead on several technical revolutions. His enthusiasm and drive are contagious. And I can attest to that, and inspiring, especially for wicked problems. He has written and published six books remains a visiting fellow at Henley Business School for entrepreneurship, and innovation. And he's an entrepreneur in residence at Bradford School of Management. He teaches at London, Business School and the London School of Economics in AI and ethics and is an European Commission expert for big data. Tony, take a minute and just tell us what the heck's going on in your life. Anyway, since the last time we talked, you've obviously been busy with the book, but tell us any other interesting things that are going on in your life.

Tony Fish 03:31
So I'm working on several things the book in so many ways. The reason I write books, particularly in this isn't the reason lots of people write books, I write books, because I want to reach the end of a story. And the reason for reading the end of the story is then you can articulate what you're thinking. And I really struggled with this simple phrase, which is how do we ask better questions. And there's two forms of better questions. There's questions that we all ask. And they're sort of like the set questions, or you know, how you're performing? What are you doing? How are you feeling all that stuff? And they're really great. Then there's a pile of what I termed the unsaid questions. And we don't ask these questions, because politically, we can't ask them we emotionally feel we're not able to we don't know the person well enough, or actually, somebody tells us not to ask that type of question. The trouble is with a board, if we don't ask the unset we're actually not able to discharge our fiduciary duties. And therefore, we need frameworks, better frameworks, how to find questions we didn't know we needed to ask. And when we you know, and I love what you're doing, because the worst possible investments come up. Not usually because we made the wrong choices. It's usually because there was questions we didn't realize we had to ask. So how do we ask those questions? And that's what I've the whole book is about is how do I do it? And he's not just how I do it is basically, when the book gets shared, which is a big part of this is other people will read it, they'll come up with better questions than I've got. And when we start to share those questions, kind of, we're gonna hit something really useful.

Andrew Stotz 05:13
You know, when I was young, my mom used to say, just because somebody else jumps off a cliff, that means you're gonna jump off a cliff. No, she was trying to teach me that, you know, don't succumb to peer pressure, just because people are doing it doesn't make it right. Now, I can say that we are in a very different age now, where young people in particular are afraid to ask questions and to speak out. And I've talked to many, and I've seen the case. And it's a shocking situation that I think we find ourselves in this world that it's a case of being politically correct. It's also a case of what I would call kind of a media or social media mob that can really come after someone and do serious damage to that person's life. And so therefore, we're not even really asking the questions. And I'm just wondering, before we even get into the questions that we want to ask, how do we deal with this? I mean, like, young people are going to rise up in companies, and they're refusing to ask the questions, what happens to the society, what happens to companies, what happens to boards?

Tony Fish 06:23
Yeah, so I wrote a piece, just the other week actually on diversity. And I was really interested in what I'm interested in, in my data side is ontology, so the structure of data. And when we come to diversity, that's we humans, the reason we struggle massively is because we have eyes. And our eyes are basically connected to our brain. And our eyes make some very, very fast, rapid judgments on. Effectively, the color of the person sat in front of you, the sex of the person sat in front of you, and the age, but the person sat in front of you. And we're able to do that because of our eyes. And therefore, we have a series of biases based on our experience, which means that the diversity because our eyes is really hard. If you go back to my piece of thinking around data, data becomes way more interesting for computers, particularly because they look at words, not vision, in the most part, particularly things like large language models. And if you can get from an individual, a bunch of writing, instead of the eyes, seeing color, what the voice of the individual through their language and narrative starts to give them is an understanding of their perspective of race. Instead of the eyes, seeing particularly gender, what the narrative starts to give you is orientation. And instead of what the eyes see as age, what the language and narrative gives you is maturity. So actually, machines will be far better at removing or basically encouraging ability to have diversity, because they're not going to make the judgments the eyes make. So we have diversity by the ontology of eyes, and diversity by effectively the ontology of data. And I totally agree, what you just said, is, the young actually start to look at narrative. They are actually much more interested in ignoring what the eyes say, and much more interested in some of the subtlety that comes through. So I'm quite excited at some of the next generation. But yes, they are, they are facing difficult times.

Andrew Stotz 08:44
And that all makes a lot of sense to me. But one of the questions I always go back to in time is there was an advertisement in for butter. I think it was in America, it said, It's not nice to fool Mother Nature. And I think it was saying butter is better than margarine. I can't remember exactly what it was. And, you know, sometimes I wonder, we are we are we're always kind of working to go away from a state of nature. Because I guess that means we're developed. But sometimes I start, I wonder, is that? You know, is that the best way? I don't know. And I've just been thinking a lot about it. I thought about it because I was in China, and I saw a guy in a restaurant. And he sat pretty close to me. And he spit on the floor of the restaurant, you know, just grotesquely. And I and I had to try to I wanted to try to put it into my, into his framework or into a different framework that I had. And my framework that I started asking was, well, I mean, you could argue that that's kind of closer to nature of the way that we were. I've read like the Mongol empires and all that stuff. And you know, it's pretty, you know, just like that. And then when I thought, you know, in England as an example, you know, people are trained to go so far away from that to be very, very, you know, formal in their interactions. And I kind of thought, you know, what's more natural? And I was just thinking about that way. But I'm just curious, curious what your thoughts are?

Tony Fish 10:22
Yeah, in a way, it's a great observation, because we have this idea that nature is also conscious. And then one of the examples I often use is the moth that has ours eyes on its back. And if you look at the moss with AORs, eyes on its back versus the actual owl that would want to eat that moth, it's incredible. The eyes on the back of the moths, wings are identical. And at the same separations, and you'd sit there, and the question that comes up is, did the moth think, Oh, I know a great defense mechanism, I'll put a pair of that ours eyes on my tails. And that will stop me being eaten. No, what happened, there was a random mutation. And that random mutation had an advantage. And the advantage was, it probably gave a nanosecond more to the moth to get away, as the owl came in, or the owl doubted for a second, and the moth could do something. And that error that thought that mutation became an advantage and carried on going forwards. And suddenly, it looks like one way we can look at the moths eyes, it was conscious and did something about it, which is complete lie. And actually was the moth is still completely unaware. It has a pair of ours eyes on its back. It doesn't know. And so we look at nature, and we try to a morphotypes, we tried to put feelings onto nature to try and justify how we do it. And we're going through this with data and AI right now, where actually data full of errors can create advantage. And that for most people is a real struggle, exactly how we've come about, we basically it doesn't matter if you use the word error, or fault or mutation, they're the same thing. They're they're a change from one generation to the next. And because we have errors, we are who we are. And we think like we do, yet we want to try and move away from that. And actually your example of one person doing something we make judgment. And the question I always go back to is why have we been given that judgment? And does that judgment given us an advantage? And they're the things I think we need as a society to talk about.

Andrew Stotz 12:51
But you know, I want to I'm sure there's some things that you want to get across related to the book, and you're welcome to communicate those. But I'm pretty much interested in chapter three. And the title of chapter three is our KPIs, the nemesis of innovation. And I think, you know, we have a world that really has bought into KPIs. And I'm just curious, like, what do you mean by that? And what are your thoughts on that whole? System? Yeah.

Tony Fish 13:21
In a way, each of the chapters was born out of frustration. And one of my frustrations eternally is that in startup world, in entrepreneurial world, in early stage growth companies and scaling companies, you don't tend to have many procedures and processes, methodologies reporting. And you're eternally trying to align your purpose, what you're trying to do with how you go about achieving it. And that's a really useful way of saying we want a certain outcome, we're going to use our data to find a methodology effectively to have efficacy, Am I doing the right thing to get the output that I want? As you pass certain bits of scale? And particularly, therefore, you're entering to enterprise level and large corporate level? What tends to happen is efficacy gives Why am I doing the right thing to efficiency and effectiveness? Can I make the assumption I'm doing the right thing more effective and more efficient. And we've introduced these whole measures across the organization, basically out of scientific management. And the idea very much is what doesn't get measured doesn't get managed. And we, at the board, particularly then tried to get everything to green, because if everything's green, we believe it's right. And that's a you know, that in that many ways is a lie. So we have these KPIs that are all green, but it doesn't actually tell you if you're doing the right thing. All it does is give you a False level of, of ideology. And there's so many things that happening in organizations where the measure itself doesn't make any sense. And I, quite often that the point of the chapter is to challenge people to say, the KPIs that we particularly have, how are they aligned to the incentives that people have. So if you give people a certain incentive to do something, it's pretty evident that the KPIs will align to those incentives. But then you've got to challenge as a board director, or as a leader, does that mean I'm doing the right thing. And that's where the friction start to come. So the nemesis of almost innovation becomes the KPI. Because innovation will never be doing the right thing as far as the organization's concerned because it that's about effectiveness, effectiveness and efficiency. Whereas doing the right thing can be where is that next product to your, you know, your great thing is, how do we make better investments, we make better investments, not by repeating what we've done before, but by doing something a bit new. So that's what the chapter unpacks and gives some framing and questions about how to question KPIs.

Andrew Stotz 16:15
Yeah, and I think I'm my big thing is about individual KPIs. Because, you know, at a division level, or at a company level, let's say, at the highest level, there's nothing wrong with having goals and things that we're shooting for. But the hardest part of any business, particularly when it gets older, is getting people to work together. And when you incentivize people individually, to pursue individual targets that are tied to compensation. If you just put at least one hand behind your back, when it comes to trying to figure out how to get everybody working together, and going in the same direction, and I'm just curious, like, from your experience, at the board level, from, you know, this book and other things that you've seen, what, what is the optimal way to get a large enterprise moving in the right, you know, in in a direction and in somewhat unison?

Tony Fish 17:14
So, the chapter you picked up there was chapter three, is a joyous chapter, I really enjoyed writing it. The couple of chapters on his chapter six, Chapter Six starts with humans want principles, society demands rules, and businesses want to manage risk? And kinda like, your question is, I think, brilliantly insightful, because it is one we all struggle with. But we seem to be in Atlanta an unresolvable place, that we can't work it out. What chapter six provides is a framework of thinking and saying, when we all start, we have these principles. And we all try to do these principles. But what we realize as a board is you can't manage principles. So what we can manage is risk frameworks. But we can't manage risk rating frameworks without rules. So what we do is we create rules, which allows us to manage risk. Brilliant, that's easy. And when we start to create our rules, we are managed against the free risk framework that we actually believe in, because it's aligned to our principles. However, over time, what happens is rules don't work. And the rule that somebody created has to have another rule, because there's an exception to a rule. And I'm, I have to confess, I'm one of the complete nightmares, because I find every way to break every single roll or push the limits. So I'm one of these individuals who means that companies create more and more rules. But what a board should do when a new rule is created, or a new procedure or new methodology, or even some of the heuristics that come along, is they should go back and question is that role actually aligned to our purpose? And we don't we say is that role, helping us manage the risk framework better. So then what we do over time is see a massive drift between what we believe we set up and we've got these purposes set out clearly, and actually what the risk frameworks and the rules allow us to manage. And that creates that tension in us, which we know we want to do that, but we're unable to do it because of this. And therefore, the challenge I put up to boards is, every time a new rule is created, that rule should come to the board, and the board should make a judgment call. Is that role aligned to our purpose?

Andrew Stotz 19:38
Alright, one of the things I just thought while you were speaking was the idea that, you know, thank God for small business and startups and all that because when you just think about the complexity that a large enterprise board is dealing with, as just, you know, it's just unbelievable, and it's just, it's impossible to be able to really manage it. You know, you know, in a way, like you could with a smaller company or something like that, that's why I'm so much against collusions between governments and businesses. I see, you know, the regulatory frameworks that I've seen come up from governments. And then you just see that the large companies embrace these, because they have the manpower to deal with it. And small companies don't when I was young, we had something called students in free enterprise. And I haven't seen you know, I'm I'm a little bit afraid that capitalism is on a back foot right now. And I'm just wondering, you know, like, is it possible to really rejuvenate a board or a large enterprise? Or are there limits to that?

Tony Fish 20:44
100% There are, but it takes energy and effort. And I think there's a subtle difference between so many boards have lost their sight of what the board was for. And board work is different to management work. And board work is not management. And we have created things like KPIs and everything else. In fact, our dashboards and our board packs, and board packs have become very orientated to what, you know, a phraseology I often use, which is the set the things that we like to do, which are easy executive oversight, how much is expenditure? Where's our finance report? Are we on our KPIs? That's not really board work. But so much of the board is taken up with the finance report, and then taken up with a pile of reporting, which kind of like he's just oversight, it's not really massively values as a piece of board work. When he does help with compliance, he does help with oversight. And it is part of the whole procedure and package. There's then the expected stuff, which is also said that the board which is about the committee's and what the committee's report on, we've become. And I say we generically as boards are extremely good at focusing on the said, what we've become very poor at because it's hard work is the onset. And the onset is the questions we should be asking. But we either don't feel empowered to we can't. The CEO, CFO, chairman, CEO, access means that the power plays out, which means you culturally can't ask those questions. But more importantly, is the unknowns, which is why I focus on uncertainty on a board should be asking the questions, which nobody else is asking, and to discharge your fiduciary duties, that's absolutely critical. So we've, I think, to rescue boards, you know, we've got to go back and said yet the set is important, but it's only half of the board meeting. Whereas at the moment, the said is 100%, of board meetings.

Andrew Stotz 22:52
You know, I would love to go back and just help the listeners to clarify even what is the role of a board because I describe it for my own coffee business that I co own with my best friend Dale, and he runs the business as a CEO, Managing Director, and he's, and I'm not an employee of the company, but we meet all the time to go through things, and we're pretty much equal shareholders and majority shareholders. So but what I described my function is, is his function is growth, my function is risk. You know, he's just, I mean, he's got to have that optimism, he's got to have that excitement. He's got to be pushing the envelope as hard as he can to get the growth. And on my side, I'm constantly looking at, you know, wait, what, what about this? What about that? What about, you know, this goes wrong and that type of stuff. So I like to say growth is for the management and risk is for the board. But that's a pretty simplistic thing. Maybe you can describe, you know, what is the true function of a board.

Tony Fish 23:59
We would be here for a very long time, this would become probably the most controversial podcast you've ever done. Because whatever I said, there'll be a lot of disagreement, because everyone has an opinion, in a way. What you said about managing growth and risk is a beautiful way of describing a large chunk of what board work is about and trying to differentiate the two. I go through quite a lot in the early chapters, and particularly the opening chapters about the board agenda. Because it is such a big topic, and there's a lot written on it. And in fact, one of the previous books I wrote was all about just this, but the board needs clarity of the tasks, and the processes and the strategy and the purpose and the North Star. But it's very easy for boards to focus on tasks, processes and strategy. Boards find it very difficult to focus on purpose and Northstar and all we see at Most times is that we only question if we're doing the right thing and what's guiding us once every blue moon, we're actually board work shouldn't be once every blue moon, it should be much more often. But the board itself has to be guided by data. But it also has to be guided by the rules and regulations. But then it has to be directed by the values it wants, and the values actually of the organization that then comes back to the principles. And the issue most boards face is that others values and principles and behaviors are actually now far more instrumental in what your values are, than we ever realized. And that's part of the whole ecosystem, thinking that you are not alone person just doing a piece of business. With a coffee shop, people will question your ethics. Now, your ethics and their ethics can be completely different. And the question is, do you want to serve their ethics because you want them to buy the coffee? Or do you want to serve your ethics, and actually have no customers. And these things are really difficult really, for people to manage. Then you've got who sets and how the board agenda is set. And so much of board agendas are set around trying to do that said piece, because it's dead easy, and we love doing it. And actually, for most executives have come up and reached a board, they see it as a pinnacle. And then they want to provide oversight because they think they know how to do it better. Not realizing that that is not the purpose of a board. And they we have a fundamental issues that too many people end up on boards without board training. And because we don't do board training properly, we end up just replicating management meetings as board meetings, but believing that's what we should be doing. So yeah, a bit of frustration from me on a topic which needs much discussion.

Andrew Stotz 26:51
Okay, so let me ask you another tough question. In my one of the courses I teach at university here at Sasson at Chulalongkorn University, which is a executive education program, one of my students is just, he's growing his business so fast. And it's very impressive their medical clinics, doing, you know, it's just expanding very quickly, his revenues, you know, really growing fast, his profitability is strong, he wants to list on the stock market. So that's a big goal for him, he doesn't have a board yet. He and I talked a little bit about that. But given all that, you know, now, what would be one or two pieces of advice for him or anybody else that's got a growing business, and they want to set up the board. Maybe it's small in the beginning, you know, it doesn't have to be super, super formal. But what would be some of your tips to apply?

Tony Fish 27:50
Chapter five in the book does this very topic. It's called the revising the S curve in an age of emergence, which is a bit of a long way of saying, everybody follows that S curve, which is what we're doing, when you start to overlay governance. And effectively I use governance as a synopsis of board work on top of the S curve. People, when you're at the different phases going up the S curve, you need different types of governance. And what a lot of people fail out is they don't transition as they go up the S curve. And when you're in a particular part, you're actually trying to find the board who can do the next part, not the current part. And therein lies the difficulty for so many board members, because they want to do what they're good at. And therefore they like to stay in their comfort zones. And therefore, they actually start to prevent the ability of the company to actually scale. And I've seen it so many times, which is why I use the S curve as the ability to scale. And as you start to emerge because of what you're doing, you have to work and the whole chapter is about, what do you do? Where are the transitions? How do you go about thinking? What are the processes procedures? What are the skills you need, at the different layers as you go up? So don't just join it to chapter five. There's no right and wrong reason, in all of this. And I think that's the beauty about dealing with people, which, you know, goes back to something you said earlier, Andrew, this is people and if we don't understand it's all about people, we will fundamentally fail. And

Andrew Stotz 29:33
can I take away from what you just said that the advice would be to accept that no board appointment or no board member would be a permanent it would be you know, be comfortable with this person may help us in getting funding in the beginning of our business, but they may not be good at let's say Systemising the business to really scale and, and then somebody who's really good at Systemising your business to really scale may not be good at the corporate governance stuff that's necessary once you bring it into the stock market and you know, then you may have another need from a board member as m&a and really making sure that you got someone that now you've got a cash pile you're trying to expand, then you may need international expansion. So is that what you're saying is the steps, you know, that type of thing. So

Tony Fish 30:23
I think what you've just done is much more management, as opposed to board. Who's a yes, taupe? In Totally agree. Yeah. Where board skills are the ability to ask the question. So where you talked about risk in your own world with the coffee, those aren't about risk. And so often Board Papers come up, and a board meeting is opened, and they basically read the resolutions, and they close the board meeting. And that doesn't articulate actually, what board work is about it is not the ratification of a preset paper, before the paper was even written. The board must be asking, Are we doing the right things. And we don't often get as boards, particularly in large companies, choices presented to us. And the choices that are presented may not be the right choice. So the question will always come back from the board, have we actually got the right choices on the table? Before we even decide to go and do something, then you can go and find the right skills? Because that's a management problem. That's not a ball problem, the ball problem is to keep going and saying, Have we got the right purpose? Have we got the right Northstar and have we got the right skills coming in, to be able to carry on going, I'd often use it as I like the governance has always been done the analogy of the boat. And, you know, have we got the boat that's heading towards North Star, which was always very good. And then over sort of history, we learned that actually just having the boat going to the North Star is not good enough, we need to check that the person who's guiding the boat towards the north star has the capability of doing it. So that's the next one, then we had to check that the capability of the vessel were all in going towards the north star with the person who's actually leading us towards North Star. Still assuming we had the right star. What we've, I think discovered in the last 1015 years is that to feed all the people in the safe vessel being guided by the right person, we basically just dragged nets in the back bottom of the sea to collect all the fish. And what that meant is the people following us have no food. And so now we've got to say is okay, how do we sustainably keep the right vessel with the right people going to Northstar? So we don't disadvantage the people following us. And these are some of the challenges that boards are now facing is that you can't just think that having your Northstar and getting there at any cost is actually a sustainable way for you as a company to behave. Because the kids will come in and go. We don't want to work there. And we don't want to buy your products. So we're starting to see this transition in the way people are going hence the reason what questions should we be asking?

Andrew Stotz 33:15
I'm just curious, because you've talked about the questions that aren't asked and you know the unasked questions and maybe it is one of the unasked questions, the idea of how do we do this in a sustainable way? What would be some other examples of you know, some pretty simple and obvious honest questions that you've seen in your experience, yet

Tony Fish 33:36
one of the ones I like and it goes back to where you started with this, this chapter around KPIs. And it's a great way the problem is if you go and challenge people's KPIs, fairly much everyone gets defensive. And the reason we get defensive, we have a psychological term called paradigm attachment. And so you have a particular paradigm which you believe in, which is the assumptions which got you to where you are the experiences we get you are, and you now have a favored model. And if somebody challenges that model, you're so attached to it, that you become immediately defensive. So if I wander into an organization or to a board and I say, Oh, how good are your KPIs? The reality everybody in the management team will fold up. And if I also went and asked, Hey, Andrew, what's your incentive and bonuses, Andrews back goes straight up, go. I'm very good. Thank you very much. So I'm not gonna answer the question. So we can't know there's a bunch of questions we need to ask around KPIs and incentives, but we don't know how to ask them. So the question I've sort of been working on and it's still in progress as I go through iterations with board reviews, but I now ask, what is the health of our objectives? And when we start to talk about the health of our objectives, or the health or wellness of our objectives, suddenly it's less controversial, because we can now review each of them and go, Is that healthy and delivers wellness for the individual, the organization And our ecosystem, etc, etc. And that starts to remove it as a judgement of it good, bad or indifferent, because we've moved the phraseology. So, yeah, one of the better questions we should ask as an unsaid is, what is the health of our objectives?

Andrew Stotz 35:14
Excellent. Um, I feel like I, I didn't ask the last question very well, because I went off talking about what I saw, as, as you said, management functions, which I really appreciate that feedback, because that helps me to understand, but I still feel like I, because of that I didn't really get an answer for my student. And I'd love to just get, again, you know, an answer from you about, what would be a couple of tips for someone who is, you know, is setting up a border, it's thinking about that from from, you're seeing it from every angle that you've seen it.

Tony Fish 35:50
If we took it as early stage, and therefore you're going through scaling, and you're trying to build something up, so it's not a large enterprise, it's not stupid revenue, you're not in, you may or may not be in profitability. But that's only an accounting function anyway. The value, I think a board has is the levels of maturity, where you can just question everything, where people don't feel they're either intimidated, they can't ask, or there's some grounds, which they're not allowed to ask. And the individual themselves, they've got to put themselves forward and saying, There is no question off limits. And by doing that simple piece, actually, it doesn't matter who you bring onto your board, you're going to empower them to help you make better decisions. And it also removes your responsibility that you feel you have to make these better decisions. And actually, what it means is, you're going to do three things. Okay, the first thing you're going to do is you're going to go and find better choices. And some choices you may have ignored or not seen, are going to be questioned by others, which means that you're now going to have better choices on the table. If you've got better choices, guess what, you're probably likely to make better decisions. But what the board will Secondly, help you do, which is the third piece is help you make judgment based on what I knew, and what we decided, was it the right thing to do. And those reflective pieces, so you're off the board skills, they can ask any question, they're going to help you reflect. And the purpose of doing that is not to challenge you, but actually help you make better decisions, you will find finding people from completely diverse backgrounds who you trust, are going to be far better board members than somebody comes in and tells you, Oh, your KPIs wrong, you know, you should be doing this. And if people come in and tell you what to do, I would probably never take them onto my board. Okay, that's great.

Andrew Stotz 37:56
Um, one of the questions too, I've had in my mind a lot is, you know, a lot of times I, when I teach my finance class, I asked the students like, what's the function of a business as far as finance is concerned, and they say, maximize profit. And I explained to them, no, it's actually maximize, you know, the wealth and the wealth to maximize shareholder wealth. You are, there's two factors, factor one is the profitability and the growth of that profitability. And factor two is the risk to that profitability. So therefore, if you're growing profits at a very fast rate, by breaking the law, you're increasing the risk, and it may be a hidden risk. But if people knew that risk, they would discount those future cash flows much more significantly. And so there are, you know, other factors, but what one of the things that I have a hard time with is stakeholder capitalism, because it's hard to try to understand from a fiduciary responsibility, and like, Where does the obligation to society beyond following the laws? Where does that, you know, where is that line? I'm just curious, like, what's the latest thinking from you on that type of stuff.

Tony Fish 39:12
So you hit a car, like a rich vein of, of deep thought for a lot of people in law, and fairly much universal law and in company law, there is no fiduciary duty outside of the shareholders. So no law has been written today to say directors, you have to do good for society. So if you do want to discharge your duties, you're absolutely spot on. Now, morally and ethically, you may find that actually, that is an insufficient principle to go forward with which is where the roundtable wrote back 2019 You know, pure shareholder primacy as your sole objective is no longer good enough. And the maximization of profit was a complete bastardization of what our Milton Friedman actually wrote anyway, it was not his baseline emphasis. But over time, it's become a mantra, which a huge number of people have both been taught and subscribed to. So when you go back to paradigm attachment, we have a paradigm attachment to this ideology. And when somebody comes in attacks it, actually you're attacking the very principles of your education and everything that you believe. And because of that sustainability, ESG. And CSR has a fundamental problem. Same with stakeholder capitalism, that we are not engaging in actually what it should be doing for society. So we still have fundamental problem, there's a mismatch between where the law currently resides, and actually what companies are starting to do and starting to behave. But we are finding that and even through BlackRock and what Larry's recently been riding, again, the political political agendas that have overtaken particularly ESG are creating friction, particularly in boards, where people want to do something that's better, but are now finding that actually, they're not being enabled to ask those questions. So we are in a transition, and we're not quite sure what's, in a way, we're not sure how it's going to play out. It's going to be fraught, there is no doubt about it. Yeah,

Andrew Stotz 41:26
there's recently been a case of Tennessee, the government of Tennessee, against BlackRock. And their argument is there's been a misrepresentation of ESG. Because basically, what's going to happen, I think, eventually, is that every fund management company is going to have to have ESG funds and non ESG funds. But the argument from the state of Tennessee was that by committing at the corporate level to certain commitments that they've made about zero, you know, carbon net zero and those types of things, that you can't say that you're, you're misrepresenting, if you're saying that these funds are non ESG, given the commitment at the parent level, and it'll be interesting to see how that one works out. But But I'm just curious, like, Okay, so let's just take a young person there, they're coming up, and they're coming onto a board, and they understand their fiduciary duty, but you know, they, they have a belief in something, you know, it could be they want to see a particular lake be cleaned. They want to see 20 kindergartens in that area. You know, they want to commit to whatever that thing is, how does that person draw the line between doing the good that they want to do and they think the company should be doing versus the fiduciary responsibility? It's just is a little bit confusing, I think, when you think about it, yeah.

Tony Fish 42:51
So the last chapter of the book is called Peak paradox. And the purpose of the peak paradox is, and he's not just young, all right. Some of those old farts as well are, have the same levels of dilemma going on. What paradox does is provide a for purpose, ideology, where you've got full pulling purposes. And we're all somewhere on the map. So one pulling purpose is you optimize for yourself, and you are the sole agency, you are sovereign, and the only person you're going to do good for is you. And there are a number of individuals around the world, we can point towards saying, yes, that's all they do. The diametric of that is we want everybody in society to have transparency, equality, equity, and everything. And therefore there's no differentiation amongst all of society, everybody is completely equal. That's one axis. The other axis is, I can only optimize for survival. If I've got enough food, water and reproduction, basically, we carry on going, versus organizations. So and this doesn't matter if it's a company, an organization, a charity or a government, you optimize for the outcome of that organization, I effectively shareholder primacy. So if you look at everybody, we're all on that map somewhere. And the idea of peak paradoxes, some people are right in the middle, and they cannot decide which one they're optimizing for. And because they can't decide which one they're optimizing for, they never escape all the conflicts and tensions that come across. Individuals have to make a selection of choices of where they want to optimize for themselves, and then find the team around them, which can equally live with the tensions and compromises that creates. And it's not that you're solely doing the right thing or the wrong thing. It's you as a team, are comfortable with where you are within the paradoxes and dilemmas that come along. And we don't spend enough time we The individuals understanding that you've got people on your team who are absolutely violently opposed to what you're trying to do. And therefore, they're disruptive. And it's not, they're a bad person, they just need to be put in a team where actually the compromises that teams making aligns to what they believe. And we, the whole idea at the end of it was to the young and the old, map yourself, map your team, map your company, and from that, try to make better decisions. So at the peak paradox website, I've done loads of examples of what it means. It's not easy. It's not something that you will do once, and it continually moves throughout life. But it's a way of helping us understand better, what drives us.

Andrew Stotz 45:49
Yeah, in fact, at europei, paradox.com, you've got some good diagrams, some great explanations there about this conflict and the peak paradox. In addition, I believe, at peak paradox.com/book, you can get access to the book, but also through Amazon, where I'll also have links to that in the show notes. But maybe, maybe I'll leave it to you to wrap up with some, you know, words of wisdom from what you've done with this book, and maybe thinking about what a potential listener or reader of this book is going to get. And as you said, when we talked before you turn on the microphone, the recording and said, it's not really a book, I mean, and I can see that you're getting that feedback in your comments on Amazon. So why don't you take it away?

Tony Fish 46:36
Okay, I'd say it's not a book, because the vast majority of books have a single idea. And the classic of that is something like crossing the chasm. And you take a simple idea, which actually could be one page, you could read it, but it's, it's probably about three or 400, with some value in the three or 400, as well, this book is not that it's 10 frameworks. Each framework could be a book, but they're not. They're 10 pages long. And the idea is they can't like summaries of books which don't exist. So they are, they're not. They're not trying to explain everything. But they are trying to give the reader the availability to say I've got lots of experiences, I've got lots of things, I don't want anybody to think like me, I want you to think like you. But if the articulations, right, you should be able to make better choices, and make better decisions through asking better questions. And if there's a question, I would leave it at the listener with this the question takeaway, say, what are you optimizing for? And then once you've answered it once, because you will answer it in two seconds, then ask it again. And then again, and when you've answered that seven times, give or take a bit, you're probably going to say, I haven't got a clue. That's when you want to come to this book. Because that's the purpose of the book is not to help you understand what you're optimizing for. But to help you peel back the layers of the falsehood that you think you know what you're doing, because I haven't got a clue. And it's only through conversations with people like you, Andrew, Hi, can I get a better refine? And I love all the people you put on the show, because they helped me articulate better what I think I'm optimizing for. So it thank you to you for all you do is brilliant.

Andrew Stotz 48:21
Yeah. In fact, as you said, crossing the chasm is, you know, very simple, simple. You know, here's how you get across this gap. And Geoffrey Moore was episode 519, talking a little bit about that, and you know, very impressive in what he's talking about in this space. But I think what you've done is created something that is more of a living document. Because it depends on the response of the reader, you know, and you're relying on the response to the reader. And I think that that's the thing that I find fascinating and where you're at. And that's the reason why I wanted to get you back on the show and share some of that. So let's just wrap it up by telling the listeners where they can find you and where they can find the book. I'll have links in the show notes, but just to remind them where to find you. And the moon. The

Tony Fish 49:17
easiest place to find the book, as you said he's on Amazon and it's on all the Amazon marketplaces and obviously that's purchasable, both in hardback and soft back and Kindle happy days. If you do want a free copy, you go to paradox.com/book, as Andrew said, be in the notes and you can download a free copy happy days. I'm not selling books to make money. You never do an easy one if you just want to reach out to me, I'm on LinkedIn, Tony fish. And if you're if you want you can go to Tony dot fish, or Tony fish.com and both all linked to me, so perfect.

Andrew Stotz 49:52
Well Tony, I want to thank you again for coming back on and sharing your experience. And there's so much it's variants that you have and it's interesting, particularly as businesses grow and how to really come up with some great solutions to board and governance and all of that. Ladies and gentlemen, this is your worst podcast Hosea Andrew Stotz saying, I'll see you on the upside down.

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Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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