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The importance of board deep dives

Rather than being seen as interventionist, deep dives should be seen as critical when a board is approving unfamiliar and high risk projects.

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Many people view board deep dives as intrusive and beyond the traditional remit of the board. But deep dives are an important part of a board's toolkit and can actually be incredibly helpful for both the board and management.

They are most valuable when a company is engaged in doing something outside the normal scope of its business. If a board member has special skill in a particular area, a deep dive allows them to look into the project in more detail and report back to the board. They can spend time looking at the structure, goals and execution plans to form an opinion on whether it will be money well spent.

Rather than being interventionist, the deep dive gives management the benefit of that depth of expertise, and other board members an opinion they can rely on.

If a project is unfamiliar, board guidance is necessary

Sometimes companies undertake major projects that they just don’t do everyday. I recently conducted a deep dive for a company that was engaged in a technology replacement project, where it was apparent that they hadn’t done anything like it for 20 years. There was no corporate knowledge about what things were important to focus on and no other way for the board to satisfy itself that the substantial sum of money at stake was being properly spent.

At the management level, I could ensure that they understood not just the technology aspects of the project, but also the softer components that needed to be delivered. They weren’t just implementing a technology project, they also had to deliver change within the organisation. At the board level the discussions then focused on what the measures of success should be - the project didn’t just need to be on time and on budget, it needed to deliver the outcomes it was designed to deliver.

In this situation, the deep dive wasn’t interventionist, it was essential. Rather than seeing the board involvement as an intrusion, management was actually grateful that we were willing and able to share our experience.

Day-to-day operations are rarely the subject of deep dives

A deep dive would generally be too intrusive if it involved the day-to-day operations of the company, but there is one exception to this - where the risk profile is very high.

For example, Lendlease does very large construction and engineering projects and we have a board subcommittee that looks in detail at the largest of those projects. The purpose of this is to make sure that the board understands what we're committing the company to. Sometimes we’re also able to add value to a transaction, in others there's nothing we can think of that hasn't already been factored into the project.

Deep dives give the board and management comfort

Most boards I’ve sat on have certainly been much more comfortable about an issue when a deep dive has been completed. In some circumstances, it may even be arguable that a board would be neglectful if it didn’t conduct a deep dive.

To put management at ease, it’s important for the board member to be scrupulous about not exceeding their remit - proper protocols must be observed. Management must know about the deep dive and have the opportunity to be present at all times. This process may mean some nuances escape you, but this is unlikely if you’re an expert in the space and know what you're looking for.

Of course, the very nature of a deep dive means that you may find out things that haven't necessarily surfaced at the board level. But the deep dive is not about finding things that have been deliberately hidden, it’s about getting a deeper understanding and focusing in on the issues that are important to the project. Ultimately, deep dives give the board and management the opportunity to work together in the best interests of the company when the stakes are high.