“The Best Leaders Have Seen All These New Challenges As An Opportunity”​

John Donovan, the former CEO of AT&T Communications and a veteran board director, shared smart insights with Adam Bryant and David Reimer.

Reimer: What were some early lessons you learned as a director? 

Donovan: When you join your first board, it’s by definition a new function and probably a new company. There’s so much you have to learn, and there’s not a lot of guidance because so much is on-the-fly. You’re joining a team where everyone has the same title, and figuring out your exact role is a really complex dynamic.

People often take on one or two personas at the outset, including the strong silent type or the class clown. You’re either reserved or you want to be in the middle of everything. And just as with teenagers, neither of those is the right personality to carry through your life.

By the time you’ve served on two or three boards, you start to ask more questions up front, such as, What do you need me to do and how does that fit with what I think I can contribute and what I want to do? You should never set yourself up to be joining a hot tub party because while that may sound like a ton of fun, it’s also a ton of risk and liability and bad things happen if these things aren’t really clear on the front end.

Bryant: Given all the disruption and uncertainty over the last two years, how can directors help management think three moves ahead in a limited planning environment?

Donovan: The best leaders have seen all these new challenges as an opportunity. It provides a clean sheet of paper to address something that needed a new approach. An important part of navigating these challenges is the skill of scenario planning.

For me, the planning process has always been the fun time to play the what-if games. What if we were to have more money to invest? What if we had less money? What if our competitors got weaker? What if they got stronger? Those are the kinds of questions that shouldn’t make you freeze just because an unexpected event created a total surprise.

An important part of navigating these challenges is the skill of scenario planning.

Anybody who complains that all of a sudden they got handed this amazingly bad situation and now they are frozen because of it just didn’t do their homework. Because that level of uncertainty can and does sit in every industry and in every company’s horizon every year. The winners are going to be people who have thought about it.

That’s why I’m a big fan of spending time asking yourself hard questions that are strategic, even philosophical. I like to use the phrase “where the rubber meets the sky is where the advantage comes in,” because you should think about the high-level strategic questions, but you should be operationally sound, as well.

Reimer: That mindset of constantly game-planning different scenarios can be a challenge for a lot of leaders and directors.

Donovan: You basically have to fire yourself and all your people every year mentally, and then rehire them for what’s required for the next set of challenges. Too often companies stagnate. Most of the time, it’s because something changed, and the playbook that got them there is not the playbook that’s necessary to go forward.

Those are the kinds of things that boards have to challenge themselves on — do we have the right leaders for what we need to do next? Those are tough calls because you may have A-plus people doing A-plus work, and then you have to tell them that they’re not what’s needed to go forward.

Bryant: So how do you build that thinking into the talent pipeline? 

Donovan: One way is to make adaptability the primary trait you’re looking for in everybody, and you exercise and nurture that ability. Somebody may be described as innovative or creative, and those may be accurate characterizations. But they also have to be adaptable to change in a lot of different contexts.

Another approach is to have a deep enough bench with all the different skills you might need down the road, so you can choose the right person for the moment. And it’s a point that I often make when I’m talking with younger people. You have to have the right set of skills in the right company at the right time and the right window. That’s just the luck of timing, and nobody’s going to be perfectly suited for all jobs at all times.

And scenario-planning is also a part of career-planning. For example, I will say to younger folks that you should have a life plan, but your life plan shouldn’t be thrown off guard by having, say, a really bad boss who doesn’t like you. If your plan is so narrow that you can’t survive a bad boss, then you’re not doing the planning right. So you’ve got to be able to outlive a bad boss or a bad situation and still be on your life plan.

Reimer: We often find that succession planning at many companies is built on the legacy business, which means that their talent needs and assessments are often backward-looking. What is the director’s role to shift that conversation so that management is looking further into the future?

Donovan: Providing some context that’s additive is an important objective that everybody should have. And for directors, I would say that if the company’s plans don’t look or smell right, don’t assume that it’s because you don’t have the level of detail that the leadership team does.

I used to always tell folks who worked for me — the engineers in particular — that there’s a level at which you know everything and I know nothing, but bringing me down to that level where I give up doesn’t make something smell good up here. We have to meet somewhere where you change the odor without me giving up because I don’t know the details.

It’s the responsibility of management to make it understandable to the board.

And that’s really important for board members because many get very quiet when either they don’t know the language or they assume there are some details that they don’t understand. It’s the responsibility of management to make it understandable to the board.

If you’re confused, probably others are confused, and so it’s okay to say, look, that didn’t make any sense to me or you need to either take the acronyms out or I need a tutorial on the acronyms. A lot of people are a little hesitant and so they all sit around equally confused and no one’s raising their hand.

All this ties back to the talent strategy. Management may be presenting a plan that makes perfect sense in their context, but it is the role of directors to ask questions that change their perspective.

Bryant: Another leadership challenge these days is making sure there is no gap between the company’s words and its actions, because employees are asking more demanding questions to have a voice and a vote in company policies. How do you think about that?

Donovan: You have to be able to point to values to guide your answers, and if your values aren’t clear enough, then you have nothing to point to. You can’t just make in-the-moment judgments. They really ought to point back to a set of values that say this is what we stand for and that a particular question or answers aligns to one of them.

You have to be able to point to values to guide your answers.

A lot of companies are finding that maybe their value statement is either not comprehensive enough, not clear enough, or doesn’t delineate the kinds of decisions that it needs to inform. And employees are entitled to call that out when there are those gaps.

But we are also at time in our society when people skim more and understand less, and they confuse opinion with science and facts. We need to call out those moments in companies. Companies have to have the courage to say to employees who hold onto certain opinions despite the facts, look, we’re probably not a good fit for you.

Reimer: What were some other influences for you that shape how you think about the director’s role? Because there are moments when you need to lead, and there are moments when it’s better to hang back and let others drive the discussion.

Donovan: When I was studying various religions, I came across a saying that has guided me in a lot of different contexts. It said that leaders have to play their role to its fullest extent. And you have to be aware of that balancing act. Have I done more than was necessary with the power that’s been vested in me? But also, did I do less? And if you aren’t thinking about both dimensions as a board member, you’re probably not having the right amount of influence.

It’s about finding that point where your influence and your power are appropriately wielded in concert with a number of other people. Having experience in teams helps. And having the humility to have the answer emerge without you speaking is a really important element of it. As a director, a comment you made at a dinner six months ago can produce a good result today, and you have to be able to take great satisfaction and pride in that.

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