restaurant board of directors

Don’t Be a Boardroom Mushroom

They say the best way to grow mushrooms is to keep them in the dark and feed them manure. Some restaurant boards are relegated to the same regimen.

While it is essential for the restaurant board of directors and executive management teams to nurture a harmonious and balanced relationship — and this is how it works in most of the best-run businesses — there are also instances of an organizational culture where board members become complacent in being treated like mushrooms (kept in the dark and fed a shovel-load of manure that masquerades as meaningful answers to serious strategic questions). 

Finding the balance between a contentious and complicit discussion at the board-level can be challenging to get just right.

It has steadily become even more challenging in the face of heightened corporate governance concerns and risks that have been consistently elevated for the last two decades. However, it’s complicated even further by just how fast disruptive forces are emerging that require board-level attention; coupled with the fact a board has limited time (and, often, attention span) yet the complexity of some of these issues demand more technical understanding than can be represented on the board or executive management team. 

What happens, naturally, is that those heavy board binders become checked luggage and the need to streamline and simplify a message often leads to an over-simplification of the strategic issues, management responses, and a decoupling of decision logic. Over time, this drift in understanding of the underlying root symptoms and causes leads to a more serious misalignment that requires dramatic course correction (you’ve seen this recently with C-suite departures, activist investors making a stink, boardroom fights spilling out into public view, enterprise values of once strong companies evaporating like deflating rafts, etc.). 

So how can a restaurant board of directors and management team find the right balance between placating and abdicating?

Any meaningful relationship and endeavor worthy of significant effort starts with asking great questions and caring about the answers. It requires a shared understanding about where things have been, where they are, and where they are headed (in consulting-speak, we call this historical state, current state, and future state).

In terms of a restaurant board of directors and an esteemed executive management team navigating complex issues — ranging from topics of corporate governance to emerging consumer dining behaviors; from shareholder returns to the sizzle of the steak; from the implications of 5G technology to the merits 3G’s zero-based budgeting strategy — the stark new reality that must be embraced is that simplification is something the marketing department must achieve (with external messaging), not something to aspire to (for internal meaning) in a board-level discussion these days.

Many of the questions are familiar, but the answers (even if they are the same, too) should be proven out to be based on updated intelligence, assumptions, and corporate calculus. 

Here are 10 questions for the modern-day restaurant board of directors and executive management teams:

  1. What are we all thinking about but not talking about as the senior-most leaders of the company?
  2. How will the consumer and competitive landscape change in the future? How are we preparing?
  3. How did the consumer and competitive landscape change? How well did we predict it previously?
  4. Are we doing the right things with strategic capital allocations (dividends, buybacks, tech, etc.)?
  5. If we were to obsolete ourselves, how would we do it? How would we catapult past competition?
  6. If you were chairman/CEO for the competition, what would you do to bring us to our knees?
  7. Are we in the right markets with the right brands and formats? How can we better optimize here?
  8. What should we acquire, divest, create, grow, and shrink in terms of our portfolio? Any M&A?
  9. What’s happening both inside and outside the business in terms of reputational signals?
  10. Is there another voice or point of view we should hear-out here that we can invite in the next quarter?

The best questions a board could ask themselves (one-on-one, not in a group dynamic):

  1. What questions are we not asking that we should be asking?
  2. If we could change anything about our recorded past or predicted future, what would it be? Why?
  3. Which authorizations or approvals have we been hesitant to ask about?
  4. What are we underfunding or underinvesting, both in terms of current business and potential?
  5. What complaints and criticisms do we hear most often that others are afraid to discuss?

A few tips we’ve picked up on along the way (from experience that has shaped our view):

  • There’s a difference between diligence and discourteous distraction
  • Managing a restaurant board of directors can be like herding cats (if instead of cats they were tigers)
  • The shortest answer isn’t always the best answer, even if it’s the preferred response
  • Nuance can make a career and catapult an executive; it can also kill a company
  • A charismatic C-suite exec can charm a board and company into a hard nail coffin
  • Every quarter counts, but it’s not what should count most
  • Sometimes bad leaders get great roles (and great ideas get a bad rap)
  • Sometimes bad ideas gain enthusiastic consensus (but later fail on the logic and merits)
  • Corporate strategy can’t be the child of complacency; consensus needn’t be complicit

We’ve all been on the ‘right’ (even righteous) and the wrong side of these themes before in our careers. Many of us have had an exposure to the best and worst of politically charged environments, social chutes-and-ladders, and dealt with the consequence of distilling a career of experience down to a soundbite that either resonated or rang our own bells; scarred a psyche, scratched a reputation, or put a dent, for better or worse, in a worldview.  

A lesson taught early in my life and career is that while youth comes with the strong sense that issues are black or white, experience trains us that nearly every issue really resides somewhere in the spectrum of gray.

The questions here are about balance and harmony of a board and the C-suite (without sacrificing competitiveness of a company or surrendering its strategy to the social skills of a well-heeled executive potentially elevated for how well they smooth over the salient issues that deserve a deeper dive).

Dear Fox, how are things at the hen house? Great! Couldn’t be better. Here’s my report.

A board member basing decisions and authorizations on a 5-page summary is like a movie critic evaluating a film based on the trailer edited and screened specifically for critics (or a fox giving the farmer a report about how things are going down at the hen house).

The counter-point? Trust management. Champion their concerns and course of action.

For all of the talk of how boards should be more personally accountable, scrutinize, and search below the surface-level of strategy for true proof-points, the fact of the matter is that most executive management teams are really on top of things (as scared as anyone about getting it right and as desirous as anyone about sure-footedness in doing so).

Back to the Top: Balance

A restaurant board of directors that second-guesses every step of executive management runs the risk of teaching those entrusted with the enterprise of sheepishly (or sleazily) seeking to appease the whims of debutants and blowhards aroused by the force of their own breath. A board of directors that allows oversimplified explanations to suffice puts at risk not only shareholders but every stakeholder that has or is willing to sacrifice on behalf of a greater good.

What’s the right answer?

The right question and the right answer: are we doing our homework as well or better than anyone else in our class? Are we winning on merit or entitlement? Are we focused on the next quarter or how to achieve top-quartile performance years ahead (keeping up with or leapfrogging our competition and even our own capabilities)?

A company (and shareholders/critics) that measures performance quarterly is akin to a parent that decides the fate of an infant child based solely on how well it can walk today, without concern or consideration for how fast it might run tomorrow.

Every great contributor to a company and society is both a teacher and a student. The best boards of directors also exemplify this quality and characteristic — both teaching and learning; both global and granular in perspective and point of view; willing to keep things at a high-level but understanding that a rapidly shifting competitive landscape coupled by an oversimplification of strategic imperatives can make for a comfortable quarterly board meeting, but can cripple the long-term potential of a company.

The Beauty of a Board is Found in the Difference of its Individual Members’ Experiences and Perspectives

Differences, not similarities. Ultimately an alignment and consensus must be reached,  but that is best reached through respectfully challenging one another. The greater danger for most boards today is dismissiveness, not lack of decisiveness. Far too many board members are content to chase answers like skipping stones chase purpose  — four showy splashes and then sink from view and utility.

A board and executive team today must balance congeniality with competitive fortitude; mutual respect with mutual accountability; simplicity without oversimplifications; and must arrive at how to best deliver short-term gains while focused on achieving exceptional long-term yields and shareholder returns. Wow. It’s a lot. It’s little wonder why so few companies get it right. But, the ones that do, my how we all love to applaud their accomplishment (even if what it required wasn’t as easy to appreciate from above the surface-level view of their sacrifice and contribution)

About Aaron Allen & Associates

Aaron Allen & Associates works with leaders of global foodservice and hospitality companies on strategic issues related to growing and optimizing performance and value. Specializations of the firm include multinational expansion, system-wide sales building, brand and portfolio strategy, modernized marketing, industry trends, technology, and advanced analytics. Aaron has personally led more than 2,000 client engagements spanning six continents and 100+ countries for companies collectively posting annual revenues exceeding $200 billion.

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