Tuesday, February 24, 2004. Dr. Richard Chait, "Governance as Leadership: Getting the Most Out of Your Board of Trustees."

MS. BRIZINDINE: Good morning, everybody. We'll get started. It's been a wonderful program thus far. They have done a fabulous job, and today will be no exception.

But in honor of Billy Collins and Transitions, I have a morning poem for you. This is from Robert Hershon, called "Sentimental Moment," or, "Why Did the Baguette Cross the Road?" And this is in honor of our own transitions personally in our life, as parents and grandparents and daughters and sons.

Don't fill up on bread

I say absent-mindedly

The servings here are huge.

My son, whose hair may be

Receding a bit, says

Did you really just say that to me?

What he doesn't know

Is that when we're walking together

When we get to the curb

I sometimes start to reach

For his hand.

Thanks.

MR. BRATEK: Since September 1996, Dr. Richard Chait has been a professor at the Harvard Graduate School of Education. From 1985 until then, he was a professor at the University of Maryland, and prior to that, he was the Mandel Professor of Nonprofit Management at Case Western Reserve University and associate provost of Penn State University.

For the past decade, Dick's research has focused on trusteeship and governance. His publications include "Improving the Performance of Governing Boards," "The Effective Board of Trustees," "The Work of Nonprofit Boards" in the Harvard Business Review, "Charting the Territory of Nonprofit Boards" in the Harvard Business Review. And in January 2001, he started with Barbara Taylor and William Ryan a project on governance futures, funded in part by the Packard Foundation to generate new models of nonprofit governance.

As many of you know, he has served as consultant to the governing boards of many independent schools and a number of state associations, as well as Independent School Chairs Association, and the NAIS Leadership through Partnership and NAIS New Heads Workshop.

Dr. Chait is a director of Board Source, formerly the National Center for Nonprofit Boards, and a member of the executive committee of the board of trustees of Wheaton College in Massachusetts, is a former trustee and member of the executive committee of the governing boards of Goucher College in Maryland, and Maryville College in Tennessee. He holds a BA in history from Rutgers University, an MA in history and Ph.D. in educational administration from the University of Wisconsin.

Please welcome Dick Chait.

DR. CHAIT: Good morning. It's a pleasure to join you this morning. I have been sworn in by the court reporter, so I plan to tell the whole truth and nothing but the truth to the extent that I understand the truth about trusteeship.

And I feel no pressure whatsoever from the round of applause to recognize all the wonderful speakers who have come before. It doesn't bother me in the slightest, because, as I mentioned when I was in New Jersey this past fall -- and this is a true story -- I had an experience that really ratcheted up the pressure. I had the good fortune to speak to the NJAIS on three occasions, but when I returned for the second occasion, at Princeton Day School after about a three-year hiatus, I was on my way through the parking lot to the assembly hall. It was a Saturday morning and I was dressed in a suit, and most other people were dressed casually.

This very warm, well-intentioned gentleman sidled up next to me as we walked in and he said, "By chance are you the guest speaker?"

And I said, "Yes, I am."

And he said, "You have got a major problem."

I hadn't even set foot yet in the assembly hall. I said, "What's the problem?"

He said, "Well, about three years ago -- maybe it was two -- we had the most dynamic enlightened, informed, humorous speaker we have ever had, and no one has been able to hit that mark since."

And I said, "Really? Who was that?"

And he looked me in the eye and he said, "His name was Richard Chait."

And I said, "He was really good, huh?"

And he looked right at me and he said, "That guy was unforgettable."

I don't know quite what that means. I would have loved to have seen the gentleman's face when I was introduced, but it didn't happen.

Then not too long ago, I had another occasion. Maybe this is someone whose aura will ring familiar. I was introduced by a trustee, a kind of gruff-spoken, but I think underneath it all warm gentleman. But I was meeting with his board, which numbered about 40 people.

And he said, "We've asked Dr. Chait to speak to us today about trusteeship." And he said, "I told Chait his job is to talk and our job is to listen. But those professors from Harvard -- you're done way before they are."

So I hope you're not, but here's the game plan. What I'd like to do is divide the morning into two parts. In the first part I'd like to talk about what I think I know about governance. And some of this will have a familiar sound to you. Some of it will have a familiar note, although I have tried to add more and more nuances based on the experiences that I have had, in fact, with many of the people in this room. This is sort of what I think I know about governance and the implications that has for the concept of governing.

And then after the break, what I'd like to discuss is what I know I think. I'm a little less certain, but this is the evolution of the work that we have underway now and will culminate in a new book that will be out later this fall called Governance as Leadership. And this is a chance to take that for a spin drive, test-drive, before we put the book into its final-final form and begin to negotiate the movie rights. We're putting in a whole chapter about wardrobe malfunction to bring it up to date and extend the relevance to today's society.

My guess is, I will seem relatively sane, even reasonable, before the break, and then, mysteriously enough, after the break you'll say, "The chap seems slightly off center."

And what happened over the break we'll leave to one's imagination. But anyway, that's what I would like to do. And in both cases, I will leave with my host, Linda Gibbs, a hard copy of the slides and I will also make available an electronic copy of the slides if anyone so wishes, and I'll try to make sure that we leave time in both sessions for questions and answers as we go along.

So let's embark on the first proposition, which is: Why you make a difference. I'm tempted to say at the outset that most school heads get the boards they deserve. And if you think about that, that's a pretty sad and somber thought. Although most seem to be quite enthusiastic about the board that appoints them and their perspicacity and wisdom and insight to make a very prudent selection to see genius when genius arrives, then the board sort of reverts to some micromanagement mania.

But there are at least five reasons why I think you matter, and matter enormously, to the board. The first is that you do shape the attention of the board and the agenda of the board. You really are the key filter, positive and negative. You are the key filter for the board. It's the cues and clues to which you decide to pay attention that often surface for the board of trustees. And if you mute some cues and clues and accentuate others, the board will come to have a different attention set than would be otherwise the case.

You're also the one who frames the problem that the board has been asked to help to resolve. And as I'll say in much greater length after the break, he or she who frames the problem has basically determined the solution to the problem.

Second, you are the primary source of information for the board. You can present that information, you can withhold information, distort or skew information, in a way that affects how boards view issues. You can starve the board of information, or you can stuff the board with information. And both extremes create their own particular side effects. But it's that information that shapes impressions and agendas and assessments.

Third, you really are the regulator of the channels of communication. You have the greatest sphere of influence over whether those channels are broad or narrow, whether they're intermittent or regular, whether they're structured or unstructured. You're not the sole source of information and the sole regulator of the channels, but more than anyone else, you have the capacity to adjust the dials of communication and to change the frequency and the channel and the strength of the signal that the board receives.

You can also create, neglect, or obstruct board cohesion. The degree to which you make special efforts to see that the board works well together, becomes more harmonious, more collegial, more congenial is often in the hands of a head, to help weave the fabric of the board together.

On the other hand, you could move toward a hub-and-spoke arrangement, where you're the hub and each trustee connects to you, either primarily or only to you, and in that sense have the advantage of being what once would have been called the switchboard and now would be called the server on the network of governance.

You model the behaviors of either openness or resistance to change and criticism. If the board senses that you're defensive, the board is likely to be equally defensive. If the board finds that you're relatively resistant to change and to new ideas, then the board may return that in kind.

Finally, and not insignificantly, it's very difficult to have a successful chair with an unsuccessful head. So the degree to which you practice good governance will help the chair, in turn, become an effective leader of the board. And of course, the converse is also true. It's very difficult to be an effective school head, vis-a-vis governance, if you have a board chair who's incompetent or indifferent.

So you matter enormously in this equation. You're probably the single most important element of the equation, and it's one reason why at least I will not work with a board unless the chief executive agrees that this work should be done, because I think most chief executive school heads can subvert the process if they're determined to do so, and they can also enhance the process.

So it seems to me that you have eight levers that are available to you to improve the quality of the board. And you can use these levers independently, or you can use them in synchrony. I want to review what those eight levers are and the particular role that you might play in them.

This is really very daunting. Would you tell my wife I love her and get it on the record?

THE REPORTER: You just did.

DR. CHAIT: I think that would really help a lot. I'd like to have that when the proceedings come out. No question about it, she really is fantastic.

Okay. So what's the first lever here? The first lever is how we conceptualize what a board does. And again, after the break, I'll say more about why I started to question this, but for the moment, I do not want to question why we think of boards in terms of roles and responsibilities. But that's generally the way we conceptualize governance: What are the roles and what are the responsibilities?

We'll talk after the break about why that has some pretty severe limitations. But for the moment, if we think about the canonical set of roles and responsibilities, here's the list. And these six bullets, I would submit, encompass almost every single variation of what a board's expected to do at a school. And some may be more explicit than others, but somewhere subsumed in this list are all the standard roles and responsibilities of a board and this is what we drill and train boards to do, to focus on performance related to these six roles.

As a sort of midpoint in the evolution of 20 years of thought about governance, I have come to think that there's another way that doesn't supplant these roles and responsibilities, but rather supplements this list, another way to think about governance. And that is to think of it in these terms. That most of all, what we want a board to do is to serve as a strategic asset that provides a comparative advantage to the school.

This is a language and vocabulary that most trustees grasp, because when trustees think about the role of a board, we ask trustees to maximize the value of the assets of the school on a basis of return to stakeholders. So we think about the assets of the school, we think about finances, endowment, facilities, faculty, quality of leadership, quality of reputation. And what a board does is work with management to try and maximize the rate of return on those assets.

But the board always seems to conspicuously exclude the board as one of those strategic assets that ought to be maximized. So we think about how we can outspend, outsmart, outwork, outmaneuver the competition, but rarely does a board say, "Can we outgovern the competition? What can we do to be a smarter, better board that creates some form of competitive advantage for us?"

The second way to think about what we want from a board, particularly in terms of outcomes, is that we want a board that works with management to determine what matters most to the school over the long run. To take that long-term view, and to work with management to sift and winnow through the wheat and the chaff -- and I grew up in New Jersey, and I actually have never understood which you're supposed to eat. I'm assuming you're supposed to keep the wheat, because I see Wheaties at the market, and I don't see Chaffies at the market. So sift and winnow through the wheat and chaff. You keep whatever it is one is supposed to keep and develop these focused concerns of the board on a very few issues.

Third, what boards do not do well is provide a safe, secure, sympathetically critical venue for you to think aloud, for you to share what keeps you awake at night, share the unsolvable problems, the dilemmas that you face, the trade-offs, and to do that in an environment that invites support and consultation; not an environment that's always focused on assessment, evaluation, and your capacity to solve problems so much as your capacity to raise problems.

Finally, I think boards need to understand, particularly in schools, that a key role of the board is to exemplify, to personify, and embody the very values and behaviors that the board and others want the school to exhibit.

For example, if you would like a school to be a model of diversity, one would expect that the board would be quite diverse. If one wants the school to weigh heavily on the side of performance accountability, one would expect that the board would have in place mechanisms to hold the board accountable for performance.

If the board thinks total quality management and continuing quality improvement are wonderful ideas for management, there ought to be some application of those ideas in the boardroom. If the board wants a school to be civil and caring and communal, then the board cannot be disagreeable and disruptive in a nasty way.

If the board wants the school to be at the edge of technology, we can't have a board that says "Oh, no, no, no, don't send me a PDF file. I can't deal with that. I don't do technology. Give me that three-ring notebook. That's what I need."

So we're looking for ways in which the board can mirror what we want from the institution. And I think those are four important roles for a board that do not get expressed as succinctly or as visibly when we focus on the traditional set of responsibilities.

So what can you do? First, I think you should talk about, speak about, and portray your board as a strategic asset. When you talk to the board about the faculty of the school, about the facilities, about finances, in terms of a strategic asset, add the board to the list. Try to focus on the board and have the board create a mental image or a self-image as a strategic asset on the part of the board.

Second, you can emphasize the indispensable, rather than fungible, roles of a board. I am increasingly of the view that this matters enormously; that, first of all, what's important about governance is what only a board can do. There are certain aspects of what we subsume under governance that others could do. We could outsource facilities management. We could outsource construction. In a certain sense, we outsource audits. At least we have external auditors. You can think of a number of functions performed by a board that an outside agent could perform. It might have cost attached to that, but there's also cost attached to a board. It just doesn't show up in the balance sheet.

But what's important is: What governance does a board do? And much more importantly, the most significant governance is the governance that only this board can do. Not a board, but this board.

There are two ways that I think you can help your trustees think about this. These are both sort of mental exercises. One would be to ask your board to imagine a board swap. The board of school A is swapped with the board of school B. You now have their board, they now have your board. And we're going to assume for argument's sake it's a revenue-neutral swap. Okay? Okay. Give the same amount of money, the same level of support.

What did you lose when you swapped boards? I bet you did not lose much in terms of financial acumen, endowment management, construction oversight, and a whole range of other activities, because the board of another school is probably more or less just as gifted at that.

So what would be lost if we swapped schools? And I think what would be lost is that the new board would not understand the values, traditions, histories, beliefs, assumptions, preferences of the school that you had. And therefore, they wouldn't be able to make the kind of leadership decisions -- not the management decisions, but the leadership decisions -- that we would expect.

The second exercise, which you should find even more gleeful, is to invite your board to think about what would happen if the board of trustees ceased and desisted from all operations for three years. Aside from the unbridled euphoria that you would feel as a head, what else would happen? What would not happen because this board did not meet, particularly if we could stipulate that the school would have an operating budget and that it would be in compliance with the law?

It's what would not happen that is the most important part of governance, because if it would happen anyway, why do we have the board? So I invite you to encourage your board to think about what do we do that's irreplaceable and nonsubstitutable? That's where we add the value. Not because we can monitor or invest or oversee. Lots of boards can do that. In fact, there is an organization -- and it's quite an interesting one -- in California that is a financial management board for more than a dozen nonprofits which are so small and nascent that they're not able to attract the quality of trustees to provide that financial oversight and acumen. So this group is essentially a financial board for 12 to 15 nonprofits. What does the board provide that is absolutely indispensable beyond the resources that are available?

Third, remind your board, particularly when they misbehave, that they are the exemplars of organizational values; that we ought not tolerate in the boardroom what we would not tolerate in the classroom. And sometimes when trustees misbehave and they become unruly or self-centered or disruptive, we have to ask, "Now, how would you propose that we handle that in the classroom in light of the values of the school? Is this really a sensible way to proceed?"

I had that experience once on the West Coast where I went to meet with a board and unbeknownst to me, members of the board were not on speaking terms with each other, which the head took as a good thing. Separate problem altogether. But it was only when I glimpsed the school's value code that was plastered on every classroom wall that I had the leverage to say to the board, "Wait a second. Civil, caring, respectful, and we're unable to talk to each other? So we ought to tell the third-graders that that's really BS. It doesn't work when you become an adult. It's cute when you're a child, but it's irrelevant when you're an adult."

So have them understand that what they do licenses the behavior of other people. And if they feel that they don't have to attend, they don't have to be prepared, they don't have to be dedicated, committed, then it's reasonable for teachers to assume the same.

And finally, you can encourage boards to do the kind of self-study that leads to improvement, to try and see if their board senses a gap between performance and potential; whether trustees think too much value is left on the table, that the board is underutilized and members of the board, either individually or collectively, are underutilized, and ask trustees if they're intellectually engaged in the work. And if not, how do we create more meaningful work?

And more meaningful work usually distances the board from micromanagement. There are really very few people who join school boards to micromanage. They may do that, but that's not the motivator. No one thinks, "Gee, I could be on this board and I could have significant influence over what we serve in the cafeteria. Car pools really need to be reorganized. Maybe I can do that."

I mean, that's not why they join the board. They devolve into those activities for other reasons, but try to help them see that they're there because this is an opportunity to do intellectually meaningful work.

Okay. So much for roles and responsibilities. Now we move on to the question that all trustees ask themselves. "Are we making an impact?" Bay at the moon, grumble from the back. Do we make an impact? Of course, that starts with the agendas that we develop.

How do we decide where to allocate time and attention? Typically this has been a management function. Management has generated the agenda. It often becomes overloaded and very short-term, and regrettably, there are a number of trustees who think that the longer the agenda, the better the agenda. They want a kind of governance punch list and they get a sense of fulfillment when we go through that list of to-do tasks and we complete them, one after another.

Instead, I would encourage you to develop with the board a sense of a very limited agenda that focuses on a very, very few issues. And I know some of you, perhaps many of you, have heard this anecdote before, but I want to repeat this, because it seems to stick in people's minds, and because we're in the South; those two reasons.

We had done this book on improving performance of governing boards and were just delightfully happy about it. I was out in San Francisco and I turned on the nightly business news. Lou Dobbs was interviewing James Barksdale, the CEO of Netscape at the time. And Barksdale, in one sentence, took away all of the joy I had in this new book, just punctured any sense of pleasure that I had, because he reduced our book of 170-some pages to one sentence and his one sentence was better than our book. Okay? This is not a good thing if you're an author. This does not lead to appearances on Oprah to tell the tale that can be told in one sentence, and it was especially nettlesome because he wasn't even talking about trusteeship.

Dobbs said to him, "I don't understand. How can you possibly lead an organization, a company, where technology changes, platforms change, alliances change, uses change? It just doesn't seem to me that it's possible to lead and create a charted course. How do you do that?"

Barksdale, who is a Mississippian by birth, with his wife gave $93 million to the University of Mississippi to try and cure illiteracy in his home state. So via New Jersey, this Mississippian said, "Well, Lou, I'll tell you. Pretty much the main thing is to be damn sure that the main thing is really the main thing."

Now, that was wisdom. And ironically, he described trusteeship in one sentence. It really is the work of a board to make darned sure that the main thing is really the main thing. And if you can't figure out what the main things are, you cannot govern. You can oversee, but you cannot govern. Governance is not about the less significant, the trivial. It's about the main things.

So what you need to do as a head is help boards understand the items that you would nominate as the main things, and then be receptive to the proposition that you may have some only partially correct. You may have omitted others because we all have blind spots, and the board may be able to contribute some. Yes?

SPEAKER FROM THE FLOOR: The main thing for me right now is if you could stand either to one side or the other of the screen.

DR. CHAIT: Yes, I have trouble doing that politically, as well. Why don't I move to the far right? Because we seem to be headed there anyway.

So you have to help the board understand what you think these issues are, the whales in the pool, which is a metaphor I invented because I was working with an aquarium board and I wanted them to identify with the proposition.

But it really is the case that absent your guidance, there are trustees who will find in a microscope paramecia and algae and microbes which they mistake for humpbacks. And it's because they don't grasp the larger world of education, and you have to help find it.

Remember, you have to be receptive to the proposition that you have some blind spots, but together to find where those whales might reside, and then to design together with the executive committee or other appropriate body -- some have an agenda committee -- an agenda and a time budget that speaks to these main issues.

I think you need to do that on an annual basis. "These are the three issues we can reasonably tackle over the next 12 months. If we don't spend 75 percent of our time on these issues, we've missed the boat. These are the important school issues, and if we fail to address these issues, we will not have governed."

And then you need to educate trustees on the profession of education and the business environment that they face. Trustees know a great deal about very little, and it's an inverted pyramid. What they actually know the most about tends to be less important. So they know a great deal about fund-raisers. They know a great deal about basis points and endowment management. They know a great deal about financial leveraging. They know a great deal about construction management. They know very little about education. And there are some school heads that say, "Yes, and let's keep it that way."

But I think they have to know enough to be responsible participants in the dialogues and discussions about what matters and what we're going to do about that. I don't know what the issues are at any particular school, but it seems to me that in general, a responsible board needs to understand from a school head why people come to work, teach, and stay at this school. And why do they do it for less money than they could earn in the public sector?

My wife teaches at an independent school, and that's a question I ask her all the time. And if we can get an answer to that, I'd be very grateful. What is the relationship of class size to educational outcomes? What do we know about that? Is it mythical? Is it factual? Apropos of today's assembly, do girls learn differently from boys? What does it matter whether we have girls in the school or boys in the school, one, the other, or both? What difference does that make? How do we gauge the quality of the work that we offer?

What are the effects of charter schools? What are the effects of changes in public policy toward support of independent education? What is the faculty mind-set? What is the value of diversity in an educational setting, and how do we know that?

You have to choose the issues. But you cannot expect trustees to make a substantial contribution to governance from a base of ignorance, any more than any one of us could become members of a corporate board, have no knowledge about the industry, banking, aeronautics, defense, consumer goods, and say, "Well, gee, I eat Cheerios. Why can't I be on the board of Kraft Foods? I know all there is to know. I know what foods I like and what foods I don't like."

It's not enough. So we have to help the trustees know enough to know what the main things are. Not enough to be the experts, but to be able to separate out the issues that are significant from those that are not.

I think it's to your advantage to say to the board, "When you evaluate my performance, I'd like that evaluation, at least in part, to be based on the centrality, complexity and quality of the question or problems that I present, rather than to be judged on solutions and performance."

And that may provide an incentive for you to present to the board some of the more difficult issues on which the board could actually contribute.

The third lever is structure, and I was happy to have a conversation with several of you just before we started who have undertaken a restructuring of your board. How do we organize to do the work? I think we're all familiar with the traditional approach, which is to try and create a governing structure that exactly mirrors the organizational structure that you have in the school. So you have a line officer in finance, in development, in admissions, in head of upper school or lower school or head of both schools, and each one has the opportunity to couple to a committee.

What happens? We have now taken a governance mechanism and rationalized that mechanism against the management structure. We've asked each of our line managers, none of whom has transcendent authority over issues that cross areas, to work with those committees, and then we scratch our heads and say, "Why did they micromanage? Why do they delve into administration?"

Because we've created a shadow cabinet. We've created sidewalk superintendents for each of our subordinates, whose purpose now is to oversee the work of the people we oversee. I think there are probably better ways to do that so that we don't have a structure that drives the strategy.

Right now the structure of the board is the number-one driver of the way in which we organize and present work to be done. It's how the board is structured, and it does favor micromanagement. The newer approach is to actually try and figure out the school's imperatives, strategic imperatives, and then organize around that set of activities.

So what you might do as the head of school is link a streamlined structure not as a matter of convenience for you, not as a way for you to aggregate power, but rather, as a way to say to the board, "This will liberate the board to have greater impact and broader participation, because I have extricated, I have uprooted you from the minutiae of management that resides in these committees, and asked you instead to organize around issues that really matter and are truly consequential."

You can encourage the board to experiment with the idea, to take small measured steps, merge two committees into one. Try to differentiate between policy committees that might meet on an ongoing basis and operational committees that might meet only on a business-necessity basis. So the physical plant committee will not meet unless we have capital construction in excess of $3 million. Below that level, we trust management to do the work and to report on that work.

Otherwise, you are left in this untenable position where, on a fixed calendar, you have to create fraudulently seductive work for committees. You have to delude the committees to believe that on a fixed-calendar basis everyone has an equal amount of important work to do in the same time frame. And sooner or later, trustees come to realize that's just not possible.

One of your colleagues described board committees as caged felines. They pace back and forth, waiting for that piece of red meat that you're going to throw on a quarterly basis. And then when you throw lettuce, they get angry. You don't have a meaty, substantive issue to put in front of them.

So propose some real-time strategically driven tasks for the board to do. We do it: Capital campaigns, strategic plans, and of course, most of all, searching for a new head.

Gene was kind enough to mention I was on the board at Wheaton College, and literally this weekend, as a member of the search committee, we concluded the search. We've identified and offered the presidency to someone. And as far as I know, the committee has no more plans to meet. We're done. And in fact, the gentleman who's likely to be the new president I think would be quite unsettled if he learned that we set up a standing search committee. "Yeah, we did this so well, we found this to be so important, that we've decided we're going to meet on a regular basis every quarter."

And so we've seen this now work where boards have said, "Let's have real task forces do work on community/school relations, on high-stakes test scores, on athletics at the school, on market position in the larger world of independent schools, on technology. Let's do the work and let's go out of business."

I think another way you can be helpful is to wean your staff from tightly coupled committees, because a lot of line officers in schools take great comfort in the fact that they have a trustee militia, and that if you as a school head fail to understand the importance of their domain, they have this retinue of soldiers whom they can call upon -- subtly, to be sure -- but they know how to blow the trumpet and rally those folks, and so they just subtly say -- suppose you have a CFO -- to the finance committee, "I'm very pleased with the strategic plan. I have no idea how we're going to fund this. It probably is going to result in an operating deficit budget. We have a great head of school, and we have a great head of upper school, both very ambitious, almost idealistic. You know, I admire their ability to think detached from reality."

So that (making a sound like a trumpet) -- how do you write that -- then the finance committee comes loaded for bear.

And the converse is true. "Of course we can provide a better education. There is just no way I could get that past the green-shaped bean-counting CFO we have."

Then the education committee is all rallied. They're much more subtle than that, because they're not from New Jersey. But they find ways to bring that to bear and get another bite at the apple.

There are some ways you want to wean them from this, and say, "No. Look at the issue we have, and as a management group, let's figure out how we can coordinate and integrate our agendas so that when we talk about student financial aid, it's in the context of diversity; when we talk about employment, it's in the context of diversity; when we talk about facilities, it's in the context of diversity. Because diversity is one of the key issues." It could have been technology or any other issue. Affordability.

Fourth lever. Information. Simply put, you don't want to provide the board with all the data all the time. There is a strange kind of eating disorder that seems to occur. We either starve the board or we overfeed the board, and we go through these cycles. The less they trust us, the more information we give them. It goes up and down.

I think, very simply, we need to give them governance information, not management information. That means that it's information that's replete with more meaning. It's replete with more meaning. It is strategic. It's graphic rather than narrative. Trustees respond much better to pie charts and graphs and bar graphs and line graphs than they do to narratives. And it's comparative. It tells us something about something.

What you can do about information is, one, work with the board to ask, what are the life signs of the school? What are the critical performance indicators, what are the vital life signs of the school? If we can agree on what they are, we can agree on a set of parameters that are going to define acceptable conditions. We do not need to discuss those issues on a regular basis. If the burn rate on the budget is within parameters of the capital campaign, is within tolerances, if placement of students into four-year colleges is where we want it to be, we don't need to stop the car, pop the engine, open the hood, and take out the dipstick. It's a waste of time. We're where we thought we needed to be.

And in fact, it usually leads either to a misuse of time or to absolute fiction, particularly around issues of college placement. You know, trustees raise questions to which there are no answers, and then we provide the answers anyway. "Last year three kids got into Yale, but only four kids got into Stanford. This year it's the reverse. Why is that?" You make up something. You have no idea. I know you have no idea, because I school and educate the folks who make these admissions decisions, and they have no idea. It's the way it was. El Niño. That's the answer. Tough year out there. A lot of applications got lost.

So if you can get them to agree on that, you just don't need to keep watching, to keep discussing. You just drive along. And it's okay.

But you want to give them interpreted information. What does that mean? That's what trustees need to understand. They don't need the market survey, don't need the test results, they don't need faculty evaluations. They need to understand in a distillation, what does this mean? What does this tell us that we did not know before? That's what a board needs to understand.

Convey the information through active learning. I'm going to take a wild guess that for most of you, you're at a school where you champion active learning. Is there anyone who advertises passive learning? Is that your niche? Okay.

So remember, I said we want to mirror in the boardroom what goes on in the classroom. But most of what happens in a boardroom is passive learning. We get one report after the next report, and we don't engage trustees.

But there are a lot of ways we could engage trustees. We could do a case study. We could take it out of the newspaper. There have been several delicious independent school case studies in the newspaper, and New England is particularly generous in the contributions we make. If that doesn't suit you, Boston University would probably do just as well. But you can find institutions where you can learn from the case, from the simulation.

We've had wonderful success where trustees were asked to read redacted files of prospective students and decide whether these students should be admitted, as an exercise where trustees were given three or five finalists for a teaching position, and said, "We're going to invite one to the school to interview. On what basis would you choose that person?"

That's active learning. Just this past weekend, I watched a panel of trustees talk about what they have learned about fundraising over the 90-some collective years of experience they have had as trustees of nonprofits, and how it could be applied to this organization of which they were a part.

Site visits, particularly in major metropolitan areas, if you want to show the board what a 21st-century library looks like, or a language learning laboratory, or a new form of space for communal activity, or a new approach to a science laboratory, whatever the instance may be. Or a conversation through a site visit with the Secretary of Education for the state. Or maybe never with the Secretary of Education for the state. But someone who is in a policy-making position. That might help.

Having a panel discussion. Engage trustees so that they have information not just that you have provided, but information that they generated through their own engagement in the learning process.

And finally, you can do all you can to encourage the chairs of your committee to curb trustee appetite for operational information over information of a personal interest, and I'll talk, just before we conclude this session, about ways in which you create the norms to make that less likely.

(Cartoon) "Don't sit there. Everybody who's ever sat there has died of boredom."

I usually alternate this. I have another cartoon that I just adore, which has characters like this, and they're kind of all looking under the table, and the secretary of the board is saying to someone, "They're looking for the hidden agenda." So meetings have a life of their own.

When the board meets, usually it is rather formal. It is a rather unvaried format. You try and do as much work as you possibly can in a relatively brief period of time, mostly through one-way communication, mostly tell-and-sell. "This is what we want you to do," in effect. "This is what you need to know and this is what we want you to do."

And committees and management report on basically cooked issues. In fact, the idea is that it all comes rather nicely packaged and no one's, quote, surprised by any of the outcomes, least of all the board chair or the school head. In fact, as one chair said, boasting to me, "We write our minutes before the meeting." And I kept thinking, and why would I come to this meeting? "Press 1 if you agree with resolution 6." And that's all you need to do.

We have to find a way in which we change the relationship between form and function.

The new approach obviously is that the form follows the function. And so meetings now vary, and you can be pivotal as the architect of your board's meeting. What you have available to you that is not true of hospitals, symphonies, social service agencies, so-called disease agencies, lung or cancer, is that you are all educators. You all know about curriculum. You all know about pedagogy. You just have to apply that concept to board meetings. What's the curriculum of your board meeting? What's so important that everyone needs to know it? What do they need to read in advance? What questions should they ponder? What should they discuss? When we get together, how can I create a pedagogy that produces active learning?

You should be able to showcase in the boardroom what goes on in the classroom. If the boardroom is an utter bore, it's not unreasonable for a trustee to conclude that the classroom is not much better. This is an opportunity to showcase what we can do at a school.

So thematic discussions. A board meeting that's dedicated to one topic and multiple aspects and facets of that topic. Breakout sessions as brief as 15 minutes. Here's the question. Subdivide into groups of four. Come back with a response.

Joint committee meetings to get at larger questions. Education hours. I mentioned earlier the need for trustees to understand the world in which we operate, so spending 45 minutes to an hour having trustees understand the competitive position, admissions decisions, why teachers choose to work here, how we evaluate teachers, science education, education of girls. What do we know about the subject?

Setting aside time for you to talk, for you to just ruminate aloud, for you to reflect about what keeps you awake at night, is a very, very useful purpose to a board meeting. Having some extended discussions. Put the issues in priority order, assign time guidelines to them, and use what I think now everyone understands a consent agenda to be, it's just a parliamentary device to package a whole set of routine, nonexceptional items and vote the package at once. Quarantine the germ of trivia, do not let that germ escape, and move forward.

And written reports rather than a lot of oral reports, both from the head and from the committee. How much time would be saved if you were in a position to say, "I sent you my report. I assume you read it. Next item on the agenda."

And if you don't do that, what's the behavior that you have reinforced? Not to read it.

One reason I have to leave swiftly this afternoon, regrettably, is that tomorrow at 8:00 in the morning I have to teach. What if I walked in and said to the students, "I'm going to take a guess that you didn't read the assignment, so let me tell you what the case was all about." I just walk in and the first thing I say is, "What would you do if you were the provost of the University?" First words after, "Good morning." Sometimes not even that.

Okay. So what can you do? Help your chair make sense of the board meeting and the architecture of that meeting so that he or she can help the board make sense of it. These are the learning objectives of the meeting. This is the teaching plan, and this is what we need to get accomplished. Provide the kind of executive summary that says in a nutshell, this is what the issue is about, why it's strategically significant.

In fact, let me just hang a footnote here. Several boards that have moved some distance from standing committees have used a very interesting test. They require each committee every two years to report to the board as a whole the most important strategic contributions we've made to the institution in the last two years and what we will achieve in the next two years if we're permitted to continue. And on that basis, these organizations decide which committees will live and which shall die.

Okay, back to the executive summary. What's the link to strategy? What are the questions we want people to think about and make? And then start with those questions. And I know it's not everyone's natural instinct, but try to allow the conversation to move of its own free will. You might with the board chair facilitate the discussion, draw contrasts, draw comparisons, synthesize from time to time, do internal summaries. But the goal is not to give a virtuoso performance that everyone just sits back and listens and watches and does not contribute to the conversation.

Try to be open to persuasion, suggestion, criticism. If no one's thinking is changed at the end of a meeting, why did we meet? I think the same way about classes. If I don't leave class with some different thoughts than I entered the class, I'm very, I think, self critically harsh. I must not have had a very good class, because I walked out of the room with the same set of thoughts that I went into the room. And I certainly hope students are able to rethink, recalibrate, reconceptualize, reframe issues as a result of our conversations.

So you have to be able to loosen the reins of conversation a little bit and engage the trustees. There are so many different ways to do that, and they're all familiar to educators. We can appoint discussion leaders in advance. These are all things that one or another board does. A silent start, where you say, "Before we start this conversation, we're just going to sit in silence for 60 seconds, so everyone can frame for themselves what the issue is and what you might say if you're the first one to speak," so that no one is without advance notice.

A one-minute memo is, I think, a very clever device that got picked up from another organization. At the end of major conversations, they provide trustees with a sheet of paper and say, "The last 60 seconds we'd like every member of the board to write down what you would have said next."

And then it's collected by the board chair and the CEO and it's summarized and returned to the trustees. So no one leaves suffering the pain of an undelivered remark, which can be very painful. Good ideas are not discarded for want of having been articulated.

Here's another example I thought was very powerful. I mentioned to Linda that I had the good fortune to work with an independent university board here in the southeast at the time of presidential transition, and I had, obviously, advance notice, but the president announced that she was departing, and she left the room. Then there were just the trustees and me, and the question was, "Now what? We've got to get a new president."

Well, what we did, we gave each trustee an index card. One side was lined, one side was blank. On the lined side we asked each trustee, "What question would you ask of the board if you were a candidate for the presidency?"

And on the other side, "What question would you ask a candidate as a member of the board?"

Everyone answered that, we collected them, and we randomly redistributed the cards, so now no one can begin to associate the source with the value of the idea. Certainly I have been in those situations where I raised my hand, "Oh, that's Chait. I know exactly what he's going to say. Academic airhead. Here it comes. Watch this. Hard-nosed Wall Street types will discard that."

Or someone will sit there and say, "Oh, that's interesting. I think he gives $10 a year to the organization. Let's listen really closely." And meanwhile, on the board, somebody who gives $10 million.

Or you have got a situation where somebody's unconsciously saying, "I don't listen to women. That's coming from an African-American. Let me dial down the volume a little bit here, because I don't really want to listen to that. I know where she's coming from."

So you level the playing field. We collected all the cards, and what we ended up constructing is what you would imagine: A set of questions that the search committee was going to ask the candidates that was representative of the whole board. And then when we got the questions that each trustee said, "This is what I would ask if I were a candidate," I broke the trustees randomly into small groups and said to the trustees, "You know, you're going to have to answer this question," and I gave them some of the questions, and said, "In ten minutes you have to tell me what the answer is to this question, because the presidential candidate might ask it."

My point is simply this. It makes for a more active meeting, it makes for more engaged trustees, and we get better value from the board's presence.

Then summarize the take-aways. Don't let the board off the hook. I think too many CEOs are dysfunctionally polite about this. Say, you know, "Over the last hour I have received conflicting information. That's my take-away. You want me to do things that are just not mutually compatible. I can't do it. Absolutely unclear. Or if I understand what you're saying, what I ought to do Monday morning is X. Is that what you had in mind?"

Don't let trustees just think, "Well, we aired the issue. It will be great to see what she does." And then they come back and say, "That's not what I had in mind."

Okay. Six. Channels of communications. How do you interact with your constituents? What do you want the board to do in this regard? You obviously don't want trustees to be independently appointed agents of investigative journalism or independent prosecutors. What you need to do is structure the opportunities for the board to have conversations with their stakeholders. Maybe that's open forums or multiconstituency task forces where you have nontrustees on the committee, sometimes interviews with key stakeholders as you're trying to reach a decision on an issue, meeting with members of the community as you contemplate a new facility, meeting with members of the faculty as you contemplate either a new facility or even a new curriculum.

Then propose a mechanism to mainstream what we have learned. How do we bring that into the boardroom to form a community of practice or some communal learning? What are the mechanisms we're going to use to bring all that in?

Arrange events for trustees to learn and explain. I know college boards that go into dormitories, who go into academic departments. I know trustees that meet with college guidance counselors to understand what it is the college seeks. But create these opportunities for trustees to meet with teachers.

A simple exercise based on four or five experiences seems to work every time. Trustees seated over here, faculty of the school seated over here in like numbers. We have an opening conversation, then pull a partition and the faculty on one side, teachers on one side, and the board on the other side.

You ask the board these questions. Why do you think teachers come to work here, stay here? What do they find most meaningful about working here, and what do they find most difficult about working here?

And you ask a teacher, why do you think these people serve as trustees? Why do they stay as trustees? What do they find most meaningful, what do they find most difficult?

You open up the curtain and compare the answers, and you find out a lot about each other, find common threads of interest, dedication, commitment to the school. In the faculty you find out that trustees are really quite interested in the educational experience of students and not just in financial management. The trustees find out that the teachers are interested in professional autonomy, quality of colleagues, flexibility of work load, and not some get-rich-quick scheme that lured them into the larger academy.

The more we put trustees at the boundaries of the organization, the more accountable they will be. One of the insights I think that we've developed over the last five years in our work is that trustee accountability rises in a direct correlation to the distance from the boardroom. It's in the boardroom that trustees are least accountable, because they're all trustees, and they're not going to call one another.

But if you have a few trustees who are assigned to go and meet with college counselors, prospective donors, prospective teachers, and make the case for why this is a great school, then they're not able to say, "You know, I'm on the finance committee. We have a fantastic balance sheet. I just can't tell you a lot about the quality of education." Or, "Yes, I'm on the education committee and I don't understand, is the school financially sound? I don't know. I really don't know how to read financial statements. We have a committee that does that."

Put trustees in a position where people say, "Wait a second. You are this board. You're not just a trustee. You know, you speak for this board. You can't exempt yourself."

Imagine if you were a stockholder in Exxon Mobile and you said to someone, "Are we making money?"

And the director says, "I don't know. I'm on the compensation committee."

"Heard you had a little accident up in Alaska that cost a few pennies in settlement."

"I don't know about that. I'm really kind of focused on research and development."

That won't work.

Okay. This was sent to me, literally sent to me by one of your kids. "You want to know what my board looks like? Here it is." It was sent to me by a school head.

How do you get a more cohesive board? The old approach is just get a collection of superstars. The new approach is, we want to build a board. How do we do that? What role can you play?

First you can try to influence recruitment by having some profile. Not just of trustee expertise and demography, but of some personality traits or predispositions. Are these people more comfortable with consensus? Are they comfortable with collegiality? Are they respectful of the values of the profession or the values of the school? Can they live with group process? Or do they want to be sort of self-made entrepreneurs turned loose in the school? You can nominate candidates and cultivate these candidates so that we have a richer pool from which to draw.

You should be the number one champion of a statement of expectations or statement of mutual expectations and a codification of the unwritten rules for the board.

The orientation is not simply to the school. It's to the board. So what role do we play? Can I contact the staff directly, anytime, anywhere? Ask for any information? What constitutes conflict of interest? What constitutes confidentiality? Does that mean I can tell one person at a time in a hushed voice, or does it mean something more than that? What constitutes acceptable levels of participation and attendance? How much money am I supposed to give to the school? What is the effect of being on the board and pupil placement of the children I have in the school? What do I do with grapevine information? What should I do if I have concerns with the way the board performs?

I saw just this weekend an absolutely exquisite example on one issue which was about admissions to the school. It was just a wonderful, wonderful letter from the CEO of the school, endorsed by the board chair, that said, "Here's the relationship between being a trustee and advocating for admissions and advocating for pupil placement. And this is how we live as a school."

So if you can get the school to agree, I don't want to go as far as to call it a code of conduct, but let's call it an explicit set of tacit norms for how we're going to behave as a group.

And then you can provide a lot of the social cohesion. You can connect trustees so that they form multiple relationships and multiple alliances and connections, either through social events, by recognizing personal events in their life, connecting them to trustees who have comparable interests, by providing directories that help people come to understand not just who else is on the board, but what they read, where they travel, where their children go to school, where they dine, anything that would help connect them.

A glossary would be another way to do that. Give people a common vocabulary about the school. I remember working with a school here in the South and the head of the school said that SACS was coming. And I looked at this one trustee and I could tell the trustee was thinking, I would have preferred Nordstrom's, but it's kind of nice that Sak's -- why they would only be here for a couple of days, I haven't figured out yet. Maybe it's a trunk show and they're going to move along.

Get into the glossary and look at it.

When you have a chance, emphasize the orientation to the board with the chair, here's how we work as a family, as a group, as a team.

Touch base with trustees. I think it's nice to have an intranet web site that's accessible only to trustees on a code basis, where you can put a lot of data, the trustees can look at, where they can converse with each other. I've actually seen committees that are meeting electronically and doing quite well.

Follow-up phone call. "I know this was a concern to you." Anything that helps people see that they're connected.

I think it's to your advantage to have a strong governance committee with the same caliber of people that you would associate with the finance committee.

I would suggest you have your board meet now and then in executive session to discuss its performance without you present, and they simply will not do it with you present. And it's to your advantage to create that opportunity for them.

Try to discourage your executive committee from being preemptive or exclusionary or mistaking themselves for the board. Be the one to say, "Well, we might want to vent that issue with the rest of the board," and always pressure the issue of orderly leadership succession within the board just as I think would be the case within the school.

Last one. The last lever you have is performance review. It traditionally doesn't happen. The board, at best, gets a self-assessment. Every five years the trustees fill out an NAIS self-evaluation. You might ask trustees if you could do that. "You're going to set my salary for next year? Here's my self-evaluation. No need for any other data. I have a pretty good grip on how well I'm doing. I wish there was something stronger than superlative on the chart, but I went with what I had."

It's not enough. Self-evaluation is useful, but I'm not quite sure it's enough.

So you need to model this behavior, show an interest in both formal and informal feedback, make use of performance appraisal, help the board understand how it has made you a better head to be evaluated, and it will make for a better board.

Introduce, if you haven't already, fast feedback at the end of the meeting where you collect an index card, rank on a Leichert scale, 1 to 5, how well the board has done on various dimensions in that meeting. Then incorporate those changes, show that it does make a difference.

Disseminate best practices. Have a conversation with the board about what five other schools do to evaluate their board's performance. Or even invite trustees of another school to speak with your board about how they evaluate their own performance. And then encourage the more systematic periodic reviews from time to time.

But most of all, tie it back to this insistence on performance accountability across the school. If we don't have performance accountability in the boardroom, the teachers, the staff, can smell that hypocrisy, and it undercuts other efforts I undertake.

Last words. Don't mistake process for substance. You can change process all you want. You can have all these clever devices and parlor games and pedagogical razzle-dazzle. But if you don't have meaningful work for the board, we're not going to have good governance.

Do not manage the board. I hear that so often. "I have to manage the board. I have to co-opt the board."

Well, do you want to be managed? Do you want to be co-opted? Do you want to be manipulated? "I have got to get the board to buy in."

Well, when are you buying in to somebody else's ideas? I mean, what if the teachers said, "Well, what we really need to do is get the head to buy in. We'll make her think it's her idea."

That's what most people think of as buying in. I have an idea, I'm going to try to trick you into something, think it's your idea, and then you'll buy in.

So you don't want to manage the board. You want to work with the board, educate the board, but you're not responsible for its performance and they're not there to be managed by you.

Third, don't try to solve the problems of crazies. Almost every board has its outliers. Almost every board, no matter how fine a sieve, allows now and then some outliers to come in.

We need terms for trustees. They're like the ADD or ADHD equivalent. We need language to describe trustees who just kind of don't realize they're in a group setting. You know, they don't play nicely in the sandbox with other trustees. I don't know what those words are. But it is not your problem. And if you make it your problem, you know what? It becomes your problem. And I'll tell you this. It's not a problem you can solve. In some people, it's ingrained.

And the last thing the rest of the board should do is say, "Well, the school head says we have got a problem trustee. Let's go to work on it." Just keep saying to the head of the board, "You have got a problem. I have got my problems, you have got your problems. This is your problem. I don't deal with that."

I don't think you get anywhere with it, and you let the board off the hook. It is your responsibility to try and tap all the talent of the trustees. Get all these bright people on the board. Don't leave any value on the table.

And finally, gratuitously, just remember the board works with you, the board does not work for you.

What would you like to talk about? We'll take about five to ten minutes for comments, questions, statements of disbelief. If you weren't tracking with this, you probably don't even want to come back for the second session.

MS. HALPERT: I want to know what you suggest a head should do if the disruptive dysfunctional board member happens to be the president of the board.

DR. CHAIT: Freshen up your resume. Check the real estate market.

I do think it's the single most difficult problem of all, but it is a solvable problem. If you have regular feedback from the board as a whole that suggests the quality of the meetings is not substantial, that trustees are excluded from important considerations, that they're mystified by committee assignments or appointments to chairs of committees, that helps surface the issue.

And in fact, in an evaluation, I think it's a very good idea to ask trustees, what do you think of the quality of leadership, lay leadership?

And maybe to take just a moment, I think when it comes time to select a new board chair, that the more you can have a transparent participative process where trustees are asked, what are the qualities we need in a board chair? What are the issues we want a board chair to address? Who on the board has those traits and abilities? And if you're one of those people, would you be prepared to serve?

That creates more of a process. But if you can get beyond the fact that your ability to work with the chair is compromised, and get the board to answer the question, are there ways we could work better if the leadership of the board were to change behaviors? And look, somebody may be absolutely intransigent, and under those circumstances, frankly, you have got to wait. But I think most board chairs are responsive to collective criticism.

SPEAKER FROM THE FLOOR: Dick, on the same note, I have found that when I have had a difficult president, sometimes working with the executive committee to get them to work with the president really makes a difference.

DR. CHAIT: Right. And I think that's terrific. And if you can institutionalize the idea, one way to do that is if you can help the board ask you every year, when you have your evaluation, what did we as a board do in the last year that was most valuable, and what did we do that was least valuable? So you at least have some way to communicate to the board. Here's how you have been helpful. Here's how you have been a hindrance.

SPEAKER FROM THE FLOOR: I have a question. I guess it's historical. My image as a young person in school was that once boards treated heads somewhat more deferentially than they do now. I wonder if your research indicates that boards are different today than they were in the 1960s and 1950s.

DR. CHAIT: Yes, absolutely, though I have only read about the 1950s and 1960s, even though I'm in my 50s and almost 60s.

There is a sea change underway, and there's somebody in the front row who will speak to this someday in her memoirs about other roles that she plays in life. I mean, in corporate America.

First of all -- and I don't want to appear to be some omnipotent, omniscient sociologist -- but just generally, authority has been questioned for the last 50 years. That was the launch point of the 1960s, was "Question authority." So it's true of all institutions.

But particularly in the wake of the kind of scandal we've had in the corporate sector, the household names like Enron and Tyco and WorldCom and Imclone and Adelphia have produced a response, but they have changed the way corporations think about governance. The notion of the Henry Ford or Andrew Carnegie or Sloan from General Motors being participative and democratic and working with a board -- it's just a chuckle. You can imagine, even with a Jack Welch or a Lou Gerstner, walking into a boardroom and saying, "Wait, wait -- I read something that an academic wrote." No. "I don't care. My name is Welch. I run this board. I run this company."

But today, there's a sense that a good board is independent, independent-minded, inquisitive, aggressive, not deferential, and has a heightened legal fiduciary responsibility, in the best sense, to challenge management, and I guess, you know, in the worst sense to second-guess management.

But I don't think we will see very often the at least stereotypical notion of the great white father, independent school head for 35 years, who now rules in an iron-fisted way. Those days are long gone.

We see that with students. That is, as professors. I called on this student in class and the student sent me a note after class that said, "I paid to enroll in this course, not to participate."

I thought, not this class. And you know, I had a conversation with him, perfectly lovely person. But the student said, "Look, this isn't any different than a movie. I paid for the ticket, I come when I want, I leave when I want."

"No, you have a communal responsibility in this classroom, and this relationship is different than you have with the projectionist in a theater. You and I are going to have a somewhat different relationship."

So yeah, I think you have to gird yourself that when it's played out in its most objectionable way, it's going to seem like a short choke collar. And when it's played out in its best way, you're going to actually feel that you have people in the trenches with you who are going to take the bullets with you.

Let's take a break, and I'll see you at 11:00. (Break.)

MS. LANE: Will you please gather now and let Dr. Chait get started?

I have some information for you all that you might want to hear, if you would come in and get seated, please. Those of you who are signed up for the boat trip, I wish to reassure you that it is, in fact, taking place. It's an enclosed boat, so even if it does start to rain, you'll be well protected.

The boat is scheduled to leave shortly after Dr. Chait finishes, and will leave from the river side of the hotel. You will get right on the boat right there. So do come down as quickly as you can.

If, unhappily, you are leaving early -- I hope that's not the case -- would you please leave your evaluation forms on the registration table. That's the blue form in your package.

We are circulating a sheet of paper for you to put down your name and your e-mail address if you would like to receive Dr. Chait's talk electronically, and we will arrange to have that happen for you.

I think that's all. Time to turn it over to you, sir.

DR. CHAIT: We will begin, because I think better that some of you conclude that I missed the boat with my remarks than you miss the boat because I started too late.

I just would like to say a few words of introduction. Basically, this is a work in process, and this is an opportunity to take a design car for a test-drive. It's about the third or fourth time that we have had it out on the highway, but it is the essence of a book that will be to bed by May 15th, called Governance as Leadership, but literally the ink is not dry and we haven't finished, but I want to share with you the direction we're headed.

This came about from a conclusion on our part -- that is, the two colleagues and I who worked on this together -- that basically we've always thought of trusteeship as problematic with respect to performance, that there's somehow a problem of performance with boards, and the symptoms that we see most often are disengagement on the part of trustees, dysfunctional group dynamics, domination of a few over the many, spotty attendance, perfunctory participation, micromanagement on one end, a rubber stamp board on the other end.

All are symptomatic of problems of performance, and basically the dominant instinct has been to say, if we can only better clarify and codify the board's role, if we can only get the responsibilities more clearly established.

We have come to the conclusion that a better way to conceptualize this is not as a problem of performance but a problem of purpose; that we have not yet identified a purpose to governance and trusteeship that will solve the problems of performance.

So this has led us to think about trusteeship not so much in a recalibration of what's the role and responsibility, but rather, what are the different mindsets of governance or the different modes of governance?

The easiest way to explain that is by analogy. All of you who are school heads operate in multiple modalities. There are times when you function as an administrator. There are times that you are a strategist, a visionary, an organizational politician, an intellectual leader, a symbolic icon of the organization. You have multiple ways in which you perform. And no one could be an effective leader if they just performed in one way. And performance in those ways is unrelated, in a certain sense, to your formal roles and responsibilities.

That list of roles and responsibilities does not say a lot about how you act as a leader. It simply says that at the end of the day, you'll have a balanced budget, a defensible curriculum, a constructive and supportive educational environment, and a sound reputation for the school.

But how do we get there? And in fact, I think if any of you have subordinates who cling to a position description and cling to roles and responsibilities, it's a certain precursor that those people will not work for you much longer. "Well, it's not in my job description. That's not one of my roles, not my responsibility." You try to take that basic idea and extrapolate it to trusteeship.

And we came to the conclusion that there were three basic types of governing, and that boards need to do all three types well. And of course, with the kind of insight and panache that you would expect of three people based at Harvard University, we've called this type I, type II, and type III, and then we put some words onto that.

So here is, in a sense, what it looks like, and I'm truly, truly grateful to you to have this opportunity literally to think out loud. If any of you for a moment stop to think about how sausage is made, it's not pleasant, but it tastes good in the end. This is how books are made. You think aloud.

SPEAKER FROM THE FLOOR: I have a suggestion. A, B, and C.

DR. CHAIT: Well, okay. We didn't want to grade them. That was the issue. So we went with I, II, and III.

So we have these three mental maps or modes of nonprofit governance, and each is reflective of a different set of assumptions about how organizations work, what leadership entails, and each, therefore, emphasizes a different asset of governance.

I cannot stress enough that all three types of governance are absolutely important. One is not better than the other. One is not somehow intellectually superior to the other. These are three modes just as you would say a good school head is an administrator, a leader, a visionary, a politician, a shaper of culture. You wouldn't say, well, one is more important than the other. The value the board adds will come as the board becomes more proficient in each mode and as it does more type III work. And the reason for the emphasis on type III work is it's work that traditionally boards do not do, whereas they do the other two types of work.

So type I is what we actually did label the fiduciary mode. This will be familiar. If we think about the fiduciary mode, the assumptions that underlie this are that organizations are bureaucracies. They have order, they have structure, they have rules, regulations, and procedures, and basically they have a clear purpose with defined inputs and outputs. That's the mental model that gave rise to the notion of the bureaucracy and the notion of agent principal as oversight.

Leadership in these environments tends to be hierarchical, that where one stands in the organization chart matters most, and we talk about command and control, or chain of command, for example. But this emerges from assembly lines and factory floors and military precision. The whole idea of Frederick Taylor and Henry Fayol and others was to standardize, systematize, and have people get separated, segregated functions which, when put together, produced a car. But it was through the specialization and separation that they were able to do that work. And the leader is, therefore, the person at the top of the hierarchy, generally quite formal, quite hierarchical in nature.

The board's central purpose becomes a stewardship of tangible assets. The board is the steward or conservator of the organization's financial capital, its physical capital, and to a lesser degree its human capital. And the core work of the board is to oversee the operations of the organization and to ensure accountability.

But accountability is defined very specifically as legal compliance and financial integrity. That's what accountability means. And it is exceedingly important. Most of the governance crises today in the corporate sector are about fiduciary failure. It wasn't about loss of vision or strategy. It was about fiduciary failure. This is what has made Eliot Spitzer a household name, Sarbanes-Oxley household names, and some other people Post Office poster children of the Academy, marched in and out of court these days in handcuffs, you know, the perp walk.

So it is very important, and it's especially important in our business, because people choose to go to these schools based on trust, not based on knowledge. They trust us, because we're nonprofits, to do what's right.

To ensure accountability, we select, monitor and assess the head of the school. We ratify policies that come up through the process, and we conserve and expand the resource of the institution.

Fulfillment of these fiduciary responsibilities is what gives the school its legitimacy in the public eye and its accountability. It's what provides integrity to the organization at the most fundamental level. And once that integrity is stained, it's very difficult to recover. Just think of two examples, and I think that probably I need say no more. Arthur Andersen does not exist anymore because of loss of trust. And Putnam. What has happened when public trust evaporated?

The board's main role in this kind of work is as a sentinel. It's lonely work, it's the work of a night watchman. And that's what they really do is, they look and look and look, and they look for clues. "Huh-oh, there's a link broken in the fence. The door at the water gate is ajar. There's a hole in the fence. The lock is gone." They're looking for clues.

It's like when you get clothing and it says, "Inspected by number 12." That's tedious work, but at the organizational level, it's important work, because if the night watch person does not discern and see the problem, it's like the security at the airport. People get bored looking at those screens. But if they miss one, it could be disaster. It's the important work of a sentinel, but it's tedious work and it's hard to excite people about trusteeship, even though this is important. You're here as our sentinel. You're the night watchman.

The key question they're always asking is: What's wrong? Did we spot the problem? Did we detect the error? Does it smell right? Is there something amiss here? So the fiduciary, in a certain sense, looks for the exception, looks for the clue, the indicator that perhaps there's a problem here, we're not in compliance, this doesn't ring right. In the administrative world, it's the auditor, it's the character in the green eye shade, it's the people who look for the problems.

The group norm is that on other issues we defer to expertise. We don't think we're educators. We're not physicians, we're not musicians, whatever the case may be. We are here as the principal, and the agents do the actual work. How do we know if all goes well? Because it stands to reason. The dominant assumption here is that organizations behave rationally.

This is, of course, the foundation of early and modern economics, but not so much postmodern economics. We expect managers to be logical. We expect goals to be clear, problems to be solved. A bureaucracy assumes we have a goal or a purpose. We have technology to produce. We have ways to measure. We have outcomes, and everyone works on that loop. We don't complicate that with ideas about organizational politics, organizational culture, outlier personalities, or any external factors yet.

How do we decide? We reach resolution, literally. We pass resolutions. That's how we decide. We take a vote. It's orderly. And the performance metrics we're after are facts, figures, finances, management reports. Those are the data that enable us to fulfill our fiduciary responsibilities. We have to have the balance sheets, the audits, the compliance reports, the facilities reports, the reports from OSHA or EPA or from management. Those are the ways in which we know that the organization is in compliance.

The board members we seek in this environment generally are socially prominent. We want people who are financially sophisticated, and ideally relatively affluent so they can contribute resources. But most of all, the people on the board convey that we're in good fiduciary hands.

If you talk to foundations or prospective donors, ask yourself how often do they ask, "Who's on this board?" versus, "What does this board do?" Usually it's, "Who's on this board?" So we want people on the board that convey that sort of Mount Rushmorian sense of trust. Rock solid citizens of our community.

We organize our work in a way that we talked about earlier, which is focused on administrative functions, because we want to trail those administrative functions and make sure that they're executed properly. That's our work, as fiduciaries, is to be something of a supportive inspector to make sure the work gets done.

So our agendas, typical of a bureaucracy, can be standardized. They're generally report-driven, and our role is passive, except to the extent that as fiduciaries we watch to make sure that we're in compliance. Do the numbers add up? Is the audit clean? Are the facilities safe? Issues of that sort.

We have very little need to communicate with our constituents. When we do, it's rather limited and rather ritualized, and it's designed, again, to convey legitimacy. We meet with constituents. In a certain sense the board becomes the monarch. The monarch does not do a lot in government, but the monarch conveys a lot, and it gives a sense of continuity and legitimacy.

We don't have a lot of need for board education because when we are in this mode, we're focused on administrative operations and performance. So to underscore, it's important work, it's foundational work, it's tedious work, but it's work that provides the legitimation for the organization.

It's very important that the board do fiduciary work well. If the board does not, and you have the kind of scandalous behavior that we have seen in the newspapers of late, in both corporate and nonprofits, you don't start to say, "You know, I have a vision for WorldCom or Enron or Tyco." You have got other problems that you're going to deal with.

But why is that not just enough? Well, first because a school is more than a legal entity. I think we recognize that, that a school is also a culture. It's a political community. It's a dynamic entity. It's more than just a legal entity. So schools need boards to be more than fiduciaries or tacticians and compliance officers. There's more work to be done than simply the work of a fiduciary. And if we hold only to those narrow roles, ultimately trustees will die of boredom. It's just not enough to sustain the bright vibrant minds of trustees, and it creates what we call the substitute syndrome.

All of you are familiar with the life of a substitute teacher. Basically, truth be known, a substitute is there to maintain order and to maintain control. Any education that occurs is a bonus. Well, if we have a board that's just there to maintain order and control, crucial function -- we don't want the children loose without supervision -- but not a career. Not a lot of career substitute teachers by choice.

And governance extends beyond this internal fiduciary focus. So the key point, if I can make this distinction, is that type I governance is crucial, but you should not become frozen as a type I board. And if you become frozen as a type I board, and look at every issue as a fiduciary, then we're back to the old saw that if you're a hammer, everything looks like a nail. And it ingrains the way we think and think about that with management. "Oh, she thinks just like an accountant. Oh, she thinks or he thinks just like a politician. He thinks just like a manager."

So we want to get beyond this one mode and create not a type I board, but a board that does type I governing and does other things.

This takes us to type II, the strategic mode. And this will be most familiar to you because I think it represents the state of art of governance today. The big break-through starting with competitive strategy in the late 1970s is that we now realize that organizations are permeable, they're dynamic, they're open systems, they're not closed systems, that schools are subject to markets, they're influenced by external forces, they have to respond to the environment, to competitors, and they have to adapt rather than impose will on the larger environment.

And leadership in a strategic mode is more inspirational and visionary and analytical, and more informal than it is in a bureaucracy. If you go to the Motor Vehicle Department, you're not in search of a visionary. You sometimes get hallucinators, but you're not in search of a visionary.

And to quote one of the books that was influential in the way we think about this, McDonald's is the bureaucracy, and the local Italian restaurant is not. You don't want a chef at McDonald's to improvise. You're not after their capacity to develop new cuisine, to take a dare, be bold. You're in search of standardization.

But when you get to the strategic side, you want this visionary who can turn life upside down, if need be. The board's central purpose is not stewardship of tangible assets now. It's a strategic partnership with management. We are together on a strategic team. So your core work now is to look inside and outside. You're not just the night watchman. You're now out in the larger environment and you're trying to gain clues and cues and a sense of what the larger world, the competitive context, may bring.

Then you forge a strategy, you review it, and modify that strategy as need be. You do monitor accountability, but it goes way beyond compliance and conformance. Now we ask about accountability. Have we succeeded against the competition? Have we succeeded against the goals that we have set? Have we improved our marketplace position? Does the organization perform better? It's performance versus conformance.

The board's main role is as a strategic planner when they're in this mode, and we want boards to help us plan in a strategic way.

Can I just back up for a second? I just want to say one more thing about the nature of organizations that I overlooked that's important. We now no longer assume that organizations are just rational. We now assume that they actually are nonrational, which is different than irrational. They're nonrational. They don't always live by reason. And they create goals that are contested, that are unclear, that conflict, and we can all think about examples of an academic rigor versus the supportive environment or the notion we're going to provide a luxurious facility for a cost-efficient education, or that we're going to have an incredibly rich and diverse community that's all united, you know, as It's A Small World would have it.

If everybody behaved rationally in an organization, we probably would almost have no need for a school head. So it's good for you as a matter of business that schools are nonrational in a certain way.

Now I can, if I may, move along. The board's core work here is to scan the external environment, review the strategy, and monitor performance.

Okay. The key question becomes what's the plan rather than what's the problem? We're now asking, what's the plan? How do we get from here to there? I just want to footnote to ask you to hold, because it will help when we talk about type III, the discussion is not about what defines "here" or what defines "there." It's how do we get from here to there? We've already determined in some way what "here" to "there," in fact, means.

The group norm is generally congenial. There's a level of agreeable disagreement that we allow, but there's room for challenge in the environment. And we know it works because the pieces fit together. That's what strategy is. We get synergy. We get interactions, and we get leverage and we start to talk about one plus one equals three. We very rarely realize that one minus one can be minus two. The synergy has a downside that is as dramatic as the upside. But that's for another time and place.

How do we decide? Now it's by group process and by consensus. We're really not in search of a resolution. We're in search of a plan, in search of a strategy. We may vote on it at the end of the day. And the performance metrics are now very familiar to you. They're benchmarks, score cards, dashboards, balance score cards, best practices, a whole range of performance metrics now. But we're in the strategic mode that we want to look at that are different than the ones we looked at in the fiduciary mode.

The board members have type I attributes, but they add to that now some substantive technical expertise. We want to have lawyers and accountants and architects and educators and perhaps people from health care, whatever the case may be, because we want to draw upon that expertise to help us understand the larger environment and forge the strategy. We want these connections to the larger world of work.

The organizational arrangement and the agendas and the deliberative style, all that remains on this page, I'm going to vault over because it's essentially what we discussed in the first session. This is the state of the art at the moment. This is how boards work. We tend to have these variable formats, thematic participation. They're looking for empirical evidence to move forward. The information is very much as I described in the first session. So it's a communication with constituents and board education. So I'm going to vault over that because it's essentially what we discussed earlier.

So why not just stay at this moment where we're now all so comfortable? I think even in the not-for-profit sector we all feel, "I kind of got it now. I realize that there are fiduciary roles for a board and they have to provide that oversight and fulfill that role of public trust and I'm really comfortable with the language of strategy and management and the like, and so we'll just stay here."

Well, the problem is that schools are more than strategists. They are also these strange cultures, these strange political bodies. We're very symbolic organizations, we're very value-driven organizations, and we're a peculiar kind of work environment. We're not as hierarchical. We're more lateral, more professional. We have a very thin membrane between the organization and the environment. It's as thin as one youngster in conversation with one parent, and that's pretty thin. And then the next day the phone call arrives and the trustee follows up.

And strategies we come to realize -- I think we all recognize -- are now more formal plans. We really overdosed on planning in the last 20 years, and we got so immersed in the process of planning and in the technology of planning that plans started to collapse of their own weight.

The key thing -- I may be slightly overstating this -- was to have a plan. If you had a plan, you were legitimate. "You guys have a strategic plan? We got a strategic plan."

"You got a strategic plan?"

"Our plan is 45 pages long. How long is your plan?"

"Yeah, but we have color-coded documents. Do you have that?"

"We have six tabs."

"We have three."

And then you shelve the plan. And the plan didn't always come to fruition because other things seemed to get in the way, and we realize now that strategies are more than plans. Strategies are intuition. Strategies emerge in the most unexpected way, as well as in the most deliberate and planned way. In fact, more and more schools of strategy, by which I mean schools of thought about strategy, suggested an emergent strategy is more powerful than deliberate strategy. "Strategy happens," as the bumper sticker would say. Well, at least in New Jersey, it says, "Strategy happens." You folks may have a more tawdry version of that.

And so we want trustees to be more than strategists. We want them to bring those other ineffable qualities like wisdom, insight, and gut feeling that are also part of this nonrational approach.

And then too much trustee talent goes untapped and school boards leave too much value on the table if we say, "You're just a fiduciary and a strategist."

Okay. So here's the moment where those of you say, "Hmmm. So far I'm sort of with this guy, and what happened?"

This is what happened. We think there is a third type, or a third mode, of governance that just has not yet been fully fleshed. And it is a mode which we have called generative, but it's really a mode that gives rise to the title of the book, Governance as Leadership, and in a strange way -- and I don't want to overstate the case -- but in a strange way, here's what's happened.

In schools and other nonprofits what has happened is that leaders have emerged. I bet very few of you, if you had a checklist, would say in a rank order how you would see yourself, the first one, "Oh, bureaucrat, definitely." You'd probably reject that. You'd even reject "administrator," which 30 years ago your predecessors may not have rejected. Even "manager" has now a slightly negative cast.

What are you? You're leaders. You're visionaries. You're leaders. So as you have become leaders and recognized what leadership entails, boards have been left behind, and they have been left behind to do what? To do management. Why do they micromanage? Because we have yet to move the board into the theater of leadership. And better, I think, on the whole that they be leaders than they be managers, or that they be a source of leadership than a source of management.

My colleague Bill Ryan, in terms that we all agree are a little too negative, has suggested -- but it's a useful shorthand -- that leadership has been hijacked from the board. It's not a phrase that we're going to use in the book, but just to sort of give it edge and punch, that's a little bit of the argument.

So what's the difference in this third mode? Okay. The first big difference is that the organization now is not just not consistent. It is nonrational. It has all of these contested goals. It has unclear technology. Think about it. Somebody says to you, "What's the single best way to produce an enlightened student?" which is very different than saying, "What's the most cost-efficient way to produce a Honda or a light bulb?" "What's the best way to teach? What's the best way to learn? What is the technology for character formation and moral fiber?"

We don't know what that technology is, so the technology is unclear. Some of the goals are highly contested among our very constituents. And in higher education, at least these days, if you want the pinnacle paradox, it's student athlete. I mean, what are the goals here? They're contested. Are we there to provide entertainment to students two nights a week and on Saturdays in the fall? Are we there to do research, public service, to teach? These are all highly contested, which simply means it's eclectic and nonrational.

Now leaders are reflective. They're not just visionary or hierarchical. And the works of people like Warren Bennis or if you read Good to Great by Jim Collins, or Leadership Without Easy Answers by Ron Heifetz, the theme these days is that we have reflective practitioners or reflective leaders. These are people who think about leadership and want to build leadership within the organization rather than just be a leader themselves. And that's what Good to Great and Built to Last are both about as books.

So these are people who think about leadership and want to be reflective learners, reflective leaders, as they go along. And the board's central purpose, as I foreshadowed, is now to be a source of leadership. And what's important to underscore is that we do not suggest that boards are leaders. That's different. The school has one leader. But the school also has multiple sources of leadership. You certainly want leadership from the faculty. And do you ever want leadership from the board other than leadership in the capital campaign? That's the question.

So the board's core work becomes quite different. Now the board is engaged in what Ronald Heifetz calls adaptive work, work where values are implicated, beliefs, assumptions, traditions. There is no single right answer. There's no technical solution. This is not the fiduciary with the audit, or a problem with facilities, or a roof that leaks. This is not something where the development of an orderly strategic plan will work. These are places where we just have contested territory about the value propositions that we face. Do we want to be an affordable, accessible school and at the same time can we be excellent where we have the resources for excellence? Do we want to hold fast to our mission, or do we want to bend to our market? Do we want to use the best of business processes, management, or do we have certain service values that matter to us?

These are core value propositions that need to be reconciled, and it is this third mode or generative mode. We now manage accountability, rather than just monitor or ensure. And manage accountability means we have to decide, to whom are we accountable and about what? We make choices about to whom we will be accountable. We make choices about who matters in terms of accountability.

We try to discern the challenges and think creatively. Where are we? How did we get here? How did this happen? What does "here" mean? What does "there" mean?

I'm going to give you a couple of examples from outside the world of schools, deliberately. The NAACP found itself in social services businesses when it thought it was in the business of political advocacy for social justice. How did that happen? Is that where we wanted to be? How is it that certain nonprofit hospitals are undifferentiated in their practice from for-profit hospitals? Same level of indigent care, same level of support, support for research or experimentation. How did a school become intensely competitive when it espoused collaborative values? How did that happen? How did we get there?

I remember the day I worked with a college and everybody kept saying, "We're a selective liberal arts college."

I said, "No, you're not selective and you're not liberal arts. You are a college. Okay. So we don't leave go of that."

Part of leadership is what? It's making sense for people. It's making sense of events. "It's the economy, stupid," where someone helps you see things in a way that makes sense, and I will say a little bit more about that in just a moment.

The key question is: What's the key question? That's leadership. And I think you know that if you get to decide the question, you are more than halfway around the track on the answer, because the question determines in large part the answer.

So problems are not there to be solved or spotted. They're there to be framed. And the power to frame the issue is the power of leadership. It's when we fix in people's mind what the issue is that we exercise leadership.

Let me provide a couple of powerful examples. Let me take one from the larger society. In the early 1970s we defined the problem as historic racial inequity, and the solution was affirmative action. So we had goals and timetables and procedures and reports.

Then people came along and it became embodied in Ward Connerly in California, and we turned that prism and said, "No, this is reverse discrimination. And therefore, we need regulation against" -- so we have Proposition 209 and all the flurry about admissions.

But then it got framed once more, and it will get framed, I'm sure, many more times to come. This issue is not over in American society. It got reframed as diversity. And diversity meant that there were multiple benefits to multiple constituents of multiple parties in the environment. And therefore, the Supreme Court was able to say to the University of Michigan, at least with respect to their law school, "Sure, we fully support diversity."

But the power was the power to fix the way we think about the issue. Let's drop down a step to the institutional level. And these are real-life examples from schools. The issue presented to the board was that we have too much voluntary turnover of teachers. Framed that way, the board immediately and sensibly went into a fiduciary mode. Do we have the money to pay the teachers more? If we do have money to pay the teachers more, what salary system would be best? Across-the-board increments? Retention bonuses? Signing bonuses? Merit bonuses, group pay bonuses?

And they just dove into an issue of management, the pay scheme, because the issue got framed first as, We have a high level of voluntary turnover. Over time -- and by that I mean over the course of a couple of meetings -- the board and the head together said, "You know, that's not the right take on the issue. The take on the issue is: What attracts and retains teachers here? What would make this a great place to work?"

And it turned out that the answer was not more money. It was issues we alluded to earlier about autonomy, professional freedom, quality of colleagues, opportunity for expression, for impact, and the like. And so the board was then able to think with management in a leadership way, "How do we create that environment in which people want to work here?"

Second example. The presenting issue is: We need more school psychologists. Why do we need more school psychologists? Because more students want to see school psychologists. Why do they want to see them? Because the students are stressed. Is it in the budget?

Now we get the strategic mode. What do our competitors do? What's best practice? What's the appropriate ratio of school psychologists to number of students? Do we have the space for it?

Reframed, the issue becomes: Can we create an academically rigorous experience for students that's not stressful for teenagers? Because this school was hellbent to have an academically powerful experience for students that caused stress. Some of the stress was induced by parents who had a list of five decals that were on their Volvo wagons in terms of colleges, and so there was pressure there. But it's a very different way to reframe the issue.

One more that's a delicious example. It's from an art museum. An opportunity to buy the last available work of a 17th-century master, price tagged $50 million.

Fiduciary. Do we have the money? What would do it to our cash flow? Management investment: What's the opportunity cost? Go through that exercise.

Strategy. If we don't buy this piece of art, who will? What will be the effect on the competition? Is it consistent with areas in which we want to grow? I actually got to see this piece of art. I'm not a devotee of art, as you may detect. It was really small. I mean, I may be locked in a fiduciary mode, but on a cost per square inch, this little baby was not a whole lot bigger than my laptop here, and we're talking $50 million. But they went through the strategic part.

And then, in an unrehearsed way, a trustee just asked a new question. "Are we in the business of owning art or displaying art?"

What a question! They ended up not buying it, because they decided they were in the business of displaying art, and for $50 million they could display a lot of art in a lot of places around the world and simply not own this piece of art.

That's the power of framing that's generative. That's what you do, I suspect, if not every day, every other day. You think about the ways in which the problems you're presented by people who report to you can be reshaped, reframed, recast, in ways that in a certain sense create a more interesting problem (or more interesting definition of the problem), a larger view or larger window into the issue.

The problem for trustees is that almost always we invite them in at the back end of a technical problem and not at the front end of conceptualizing what's at issue. So there's such pent-up demand that when we uncage these felines and let them at the salary plan, everybody's got an experience. "I worked in a place that had that. Didn't work, didn't work. What you got to do is" --

"No, no, that won't work."

No. Back off. Get them in on the front. That's the act of leadership. It's to say, "That's the wrong problem." Or, "That's the wrong take on the problem."

So this is trying to figure out ways type III governs. Trying to figure out how do you get trustees on the front end of an adaptive problem and not the back end of a technical problem. Because on the back end of the technical problems is when you feel that they're micromanaging. Well, what else is there, if the problems have all been set and the solutions in a rational way have all been analyzed and defined?

The group norm here becomes robust discourse. It's precisely because we have this plurality of perspectives that we want from trustees. But we don't want trustees because we need a lawyer, a doctor, a Realtor, a clergyperson. We now said we want people because they think like a lawyer, think like a scientist, think like an educator, think like a businessman or -woman, and it's because they bring that perspective. And if you accept this -- and I don't want to get sidetracked -- they think like a woman or think like a man, whatever the demographic characteristics may be, we're trying now to get this different angle of vision because we want to see the problem in as many dimensions as we can, and it gives rise to what most boards and most CEOs find a little uncomfortable, which is robust discourse. It suddenly seems like you're in a business school or law school classroom, and people are disagreeing with each other, and in part they're agreeing, and they're making arguments and building cases, because we're trying to get to a better understanding of an issue, not because we're trying to get to a decision on an issue.

How do we know? We gather the clues. Where do we spend? What do we reward? Where have we succeeded? Where have we faltered? Where did we fall? What do we do?

We grapple and perceive and perceive and grapple. So now we might ask ourselves some hypotheticals. What would we do if a donor gave us $50 million? Counterfactuals. What if we suffer the vulnerability of our own virtues? What if our strengths are our weaknesses and our weaknesses are our strengths? Thinking differently. In the most hackneyed way, what this is, of course, is thinking outside the box.

And the performance metrics now change. We're now asking whether we have changed our thinking about the issue in a way that we hadn't before. And so MIT decided that they would give away all their knowledge free. New paradigm.

If you follow the history of community policing, it used to be that the best way for police to do business was to ride two people in a car, and when they actually got out of the car, they would have to radio in that they were going off-duty, they were getting out of the car.

Today it's exactly the opposite. Now the police walk the beat and when they get in the car, they have to radio in that they're going to go off in the car somewhere. It's a different way to think about community policing.

So what have we learned? Have we seen the problem differently than we had in the past?

The board members are there to create now comparative advantage. And in the interests of time, I'm just going to touch very briefly on the notion that boards have lots of capital to contribute at 100 percent discount to market rates. That's why you have them there. Okay? You couldn't afford the thinking of this group, and in most cases we structure governance so that we don't get their thinking, or that we get their thinking on the lowest-level issue possible, an issue you could actually handle by yourself. If a roof leaked in the school, you'd ask the facilities committee. And if your roof leaked at home and assuming the school doesn't own the home, you'd call a roofer. But since it happened at the school, you call the facilities committee.

So we want to tap these forms of capital. Just let me give you one quick example of how to tap reputational capital. One of the schools that I visited with has board members introduce the school's values and culture to new parents. They're the ones who do the transmission of the DNA, because they have enormous reputational capital to do that. They're seen as one of us: Parents, objective parties.

We organize now as a community of learners focused on a strategy of understanding, which is different than trying to understand strategy, that we're really trying to develop a strategy of understanding. How do we know? We're being much more cognitive about it than we have been in the past.

We're real close. I don't think you're going to miss the boat.

The agenda is participative, meetings are very vibrant, and they're focused on this adaptive work. The questions that don't give rise to the easy answers.

It's informal and it's playful. Play is missing badly from the boardroom. "Oh, that's ridiculous. That will never happen. Why even think about that? That won't work."

I mean, just like somebody sitting around saying at Sony, "Hmmm. What do you think about portable music?"

(Raspberry.) "People stay home to listen to music. What are you? Crazy?"

Thinking about issues where you suspend the rules of play. I'll give you some questions to help do that, but we've got to get to a point. "Well, let's think about it. What if, or hypothetically, suppose that?"

"No. Where are the data? That's ridiculous. Is that line in the budget?"

And we're looking for these cues and clues, always looking for the exceptions, the paradoxes, and the confusion. Is anyone in the room a physician? No one is. Good, I'm going to say whatever I want to say, then. My sense is that a really good physician is always looking at the exceptional data. Oh, blood pressure is fine, pulse is fine. Your sugar levels are fine. Cholesterol is fine. Huh-oh. This is interesting. Your bilirubin is five times what it should be. What does that tell me?

In other modes we tend to say, "On the whole, this looks pretty healthy." So here we're sort of looking for: What are the things we don't understand yet? And that's what makes for leadership. What don't we understand? You don't develop new knowledge by saying, I don't understand that. We understand governance perfectly. But see, we have the right books, so it doesn't matter. I can keep going.

You have to talk to your constituents in a multilateral way, not to advocate or not just to explain, but this is how you learn. This is why Home Depot has its directors walk the floor of the stores, so they understand and they can gain some knowledge.

Obviously, the education of the board has to be continuous, it happens inside the boardroom and outside the boardroom. My favorite example happens to be from a university where once a year trustees meet with the superintendents of schools that send students to this university and once a year the trustees meet with the CEOs of the companies that employ the most students. And they have that kind of conversation because they want to learn, they want to become educated on how their products and services are viewed.

Okay. So let me just summarize.

What's different about this approach to governance? First of all, it's a different diagnosis. It's that limited purpose leads to limited performance, not vice versa; that the problem of performance is frankly that we haven't created a very interesting job for trustees; and that the job they have is worth doing, but it's a little hard to sell them that it's worth doing well. It's a different mind-set. It thinks of governance not just as stewardship, and not just as partnership, but thinks of governance as tantamount to leadership.

There's a different role for the board. We now see the board as a strategic asset, not a passive detached entity like mattress money. Now we want to put this asset to work and we want to get a handsome rate of return on it.

We have a different definition of leadership. Leadership is not, "Follow me." Leadership is not, "Follow the rules." Leadership is not, "It's in the plan." Leadership is not, "That's the strategy." Leadership is, "What are the problems we have? How do we make progress on those problems?" This is the definition of Ronald Heifetz.

It's a different way of thinking. It's more playful and inventive. We give release to logic and linear thinking. And again, I'm not an expert in the area, but all this Venus and Mars -- trusteeship was an invention of an era that was dominated by men, and men have always, as a whole, tended to believe that the highest form of thinking was to be logical and linear. And if you don't think in inventive playful, imaginative, nonlogical nonlinear ways, something is lost.

A different notion of the work. The board is now much more involved in shaping the problems that we're going to address and make progress on than prescribing the technical solutions at the end.

And I just have to pause to stress that this is one of the three types of governance. I am not saying the board does this all the time, every time it meets, 99 percent of its time it's in type III mode. "Chait, you're crazy, this is chaotic, nothing ever gets settled."

I'm only suggesting that as you parse these modes of governance just as you would think about your own work as a bureaucrat, administrator, leader, strategist, visionary, a symbol, whatever the case may be, that you recognize that this is an underdeveloped mode. These are the muscle groups that haven't been cross-trained in governance, but I'm not suggesting that this is the only work you do, like throw out strategy, throw out fiduciary. No.

Different practices. More retreat-like meetings, more teamwork, more of the technical work gets done off-line, the board is at the boundaries more often, and of course, the performance metrics have now changed substantially.

In type I, we're asking about audits, financial, facilities, compliance reviews.

In type II, it's benchmarks, score cards, best practices, market indicators.

Now we're asking, what have we added to the intellectual capital balance sheet? What are the lessons we have learned? What are the values we've clarified? Have we sharpened the vision? Have we reframed important challenges?

And now we ask different kinds of questions at times that we're in this mode, and here are just a set of what I think are absolutely delicious questions for conversation. What was our greatest success or greatest setback recently and how do we best explain each outcome?

I just worked with a college board that had the most spectacular five-year performance you could imagine. They went from X number of applications to 1.7X. Their board scores went up 100 points. Their admission rate went down. Their yield rate went up. Their tuition discount stayed steady. Every indicator worked. And when I facilitated a conversation and said to each trustee, "Write down why this college has been so successful in the past five years," there were about 40 different explanations. And then everyone was acting on their own explanation to extrapolate to what we should do in the future because they had never together said, "What accounts for this success? Or what accounts for this failure?"

On what list would we like to rank number one? This came from a school board with which I worked that was on the Worth Magazine list, but didn't think that was the be-and-end-all, and so then they started to ask questions about, "On what list would we like to be number one if we could make the list?" The list where the school makes the greatest difference in students' moral development? The school that has the most success in creating a facility with diversity. Whatever the case may be.

If we could start anew, what major change would we make? And of course, that's when the type I's on the board say, "Well, that's silly. We can't go back and redo this. That's a pretty silly question."

No, it isn't, because it's a way of learning about who we are. What do we know now we did not know before? And you could ask that about teaching. What do you know at your school about good teaching you didn't know a year ago? What do you know about learning that you didn't know a year ago? What do you know about character formation, moral development, and ask the board, what do you know about governance that you didn't know a year ago?

One trustee said, "One thing I know is, we don't want you to come back."

Okay. At least you learned something.

What did we know to be so that, in fact, is not? What did we take for granted? What did we assume that no longer is that, or, in fact, vice versa?

If what we do is what we are, who are we? Anytime a board even jitters toward a rewrite of a mission statement, this is the question I would ask, because mission statements can be rewritten now by computer. They take all of your mission statements, you all have the same words in them, and they can reconfigure those words and everyone will come up with a caring, communal, excellence, student-centered, supportive environment that's very attentive to development of the whole student in an ever-enlarging diverse, global environment, done in a way that's respectful of our financial limitations, but with an eye to affordability and access. That and we produce good learning and good citizens. Okay. What do you actually do and what does that say about who you are?

If there were a $50 million challenge to the one private school with the best idea to be a public asset, what would your answer be? Maybe there isn't one. But maybe that idea is something that you could ride at the school on your own budget or you could ride to a $5 million gift.

How would we look as a takeover target? What are our assets? What makes us strong? What makes us attractive? Why would someone want to take us over? Or what school would we like to take over? What evidence will confirm, five years from now, that the board's vision for the school was fully realized?

Now, I'm not suggesting that this be the stuff of every board meeting and that you re-examine every time. But some of the time, the board ought to be in this type III mode because these are the leadership-type questions, not the stewardship and strategic questions.

Here's what seems to be the payoff. You empower the board in the best sense. That is, they are doing more meaningful work in more meaningful ways.

You engage the collective mind of the board. You get all of these pluralities of perspectives brought together so that you're not the captive, frankly, of one trustee, of the wealthiest trustee, of the loudest trustee, of the most forceful trustee. But now you're getting the collective mind of the board and of the head wrapped around an issue. You get a much greater rate of return on the board's capital. Don't give bright people no-brainers. It makes no sense. If you have a no-brainer agenda, you have no-brainer trustees. It will go very easy, and they'll actually be challenged by the agenda.

It enriches the work of the board and it solves that substitute's dilemma. They're not just maintaining order anymore. And it will enhance the performance of the school.

So it seems to us that instead of thinking about role and responsibility, we think a lot more now about mode or mental maps of governance, forms of governance; that we elevate the purpose of trusteeship to include a role in leadership that begins to get at leadership questions. And that we frame the problems differently, and th