Too much of a good thing: Limiting experts on boards

Experts, by definition, know a lot about the field or subject they´re experts in. They know more details and are more accurate. However, they have a harder time changing course or responding to new circumstances.  Cognitive entrenchment describes what psychologists observe when we gain deeper expertise in an area but also become less flexible in our thinking.

So, while experts have deep knowledge of their field, they can be reluctant to adapt to unfamiliar situations. In the interviews with CEOs and other directors on boards, the authors of the study found that experts may bring "baggage" or "habits" from previous roles to the table and may not look at a situation "with fresh eyes."

The result: that they fail to anticipate new threats from competitors or adapt to changing conditions.

2. Daredevil Behavior

It´s good to be optimistic. But when it comes to risky situations, experts show an overly optimistic attitude. They can become overconfident, buoyed by faith in their abilities and their experiences of past success. One of the bankers interviewed boasted: "Every deal is doable; you just have to know how to structure it."

At board meetings, non-banker directors (often high-status professionals from other fields) may require more thorough explanations than the domain experts to make a decision. Meanwhile, a seasoned banker might, for example, push to offer loans for construction based on positive past experiences rather than on current risk analyses as market conditions change.

Not to mention that experts are often granted especially strong authority on boards. Pressure to live up to high expectations may encourage them to hide any gaps in their knowledge, rather than to admit uncertainty or lack of confidence in their abilities. The potential result?  A rushed decision, taken with a poor sense of the real risks involved.

3. Staying quiet when you need noise

If domain experts are more likely to be rigid or overconfident at risky times, why don't the non-expert board members point this out? Interviewees suggest that conflict avoidance happens where experts dominate. One CEO observes, "where everybody respects each other's ego at that table... at the end of the day, they won't really call each other out."

No one would argue that healthy levels of disagreement help make effective, responsible choices at uncertain moments. The expression “devil´s advocate” has been around since Roman times.  More non-expert directors at the table can better challenge the entrenched experts' views.

A bank CEO with only a few experts on the board says, "When we see something we don't like, no one is afraid to bring it up because we are not stepping on anybody's toes because of their massive banking experience in the past."

(Reproduced with permission from IESE Insight)