Boardroom fallout and team dysfunction
Before you plot revenge, dig two graves. Japanese proverb.
Just down the road from our offices in Cheltenham a board room fallout has been playing out over the last year - much of it in public. Julian Dunkerton founded the retailer Superdry in 2005. He is a former market stall trader. The company has experienced phenomenal success. In fact, I am wearing a Superdry sweatshirt as a I write this article. Dunkerton resigned and left the company in 2017. He, along with co-founder James Holder retained a 28.5% shareholding. Last week following a bitter and acrimonious campaign to be reinstated to the board, he was successful. He scraped home securing 51.5% of the votes. Four directors including the Chief Executive, Euan Sutherland and Chairman Peter Bamford and two non-executives resigned and left immediately. Four other directors will leave in three months. This is all a matter of public record as the dispute came to a dramatic conclusion at the end of a shareholders’ meeting last week. The dispute was primarily about strategy. Dunkerton argued that it was a mistake to extend the brand into categories such as childrenswear while reducing choice in its core business of jackets and hoodies. Sutherland in turn blamed Dunkerton for an underwhelming Autumn/Winter range last year.
Boardroom level disagreements happen in organisations every day. This is true for the private, public and third sectors. In some ways passionate discussions are a sign of a healthy organisation. The moment individuals feel that they cannot express how they really feel about a topic, without fear of retribution or reprisal is the moment that people should become concerned. Constructive controversy involves deliberative discussions aimed at problem solving. Intellectual conflicts can be constructive, motivating people to seek new knowledge to accommodate other’s perspectives.
Much of my own work takes place at board level. I create environments in which it becomes possible for critical, vital and important conversations to take place. I consider it a vocation.
The scenario played out at Superdry could have happened at your organisation. The issue about whether the company should have ventured into childrenswear in preference to hoodies is beside the point. All organisations have issues that crop up from time to time that will divide opinion about what is considered right or wrong. Failure to have mechanisms in place that allow disagreements to be nipped in the bud can lead to dysfunction. A useful model I draw on from time to time is ‘The Five Dysfunctions of a Team’ model by Patrick Lencioni (2002). The model can be particularly useful when discussed as a group. I often invite members to self-rate and indicate where they believe the organisation to be.
The five dysfunctions are:
- An absence of trust among team members: This stems from an unwillingness to be vulnerable within the group. Team members who are not willing or able to be genuinely open with one another about their mistakes and weaknesses make it impossible to build a foundation for trust.
- Fear of conflict: Where there is a low level of trust within the team, they have become incapable of engaging in unfiltered and passionate ideas. They resort instead to veiled discussions and guarded comments.
- Lack of commitment: Without having aired their opinions in the course of passionate and open debate, team members struggle to buy in and commit to decisions, though they may feign agreement during meetings.
- Avoidance of accountability: Without committing to a clear plan of action, the team hesitate to call on each other’s actions and behaviours that are inconsistent with trust values.
- Inattention to results: This is occurring as team members put their individual needs (such as ego, recognition for clinical advancements and career development) above the collective goals of the team.
As you read these descriptors, you would have no doubt been reflecting on your own team. So……………? Is your team dysfunctional against these criteria? If the answer is yes, to two or three, the sooner help is sought the better. Failure to address the problem/s might not mean a revolt at a shareholders’ meeting. Instead it might mean that patients’ needs are not adequately addressed or that a charity supporting vulnerable workers becomes unable to provide the support its funding is supposed to allow.
In the Superdry case, one investor made a particularly insightful comment. Andrea Gallo Novillo from the Spanish Bank BBVA explained via email to Euan Sutherland that “the team believes that Superdry will face a period of uncertainty regardless of who will lead the strategy from now onwards”. She said further that “if Dunkerton were to lose, he would keep on pushing until he gets what he wants, which would result in you and your team not being able to focus on strategy”. Gallo recognised that an ongoing dispute becomes a distraction which will ultimately impact on shareholder value. The dispute had contributed to the company’s share price falling by four-fifths to £368m in a little over a year. It isn’t only boardroom colleagues who would become less productive. People talk. It is inevitable that colleagues at lower levels in the organisation also become taken up with the spectacle. Suddenly you have large swathes of the organisation focused on the fallout rather than business objectives.
The dynamics of disputes vary from organisation to organisation. If we ever needed an example of the business case for conflict resolution principles, we have one right here.
 Lencioni, P. (2002). The five dysfunctions of a team: A leadership fable. San Francisco: Jossey-Bass.