183. I fought it, and it won (Condition #31: Laws)

Let me talk about Canadian boards for a second. We indoctrinate our boards with the phrase “you owe your primary fiduciary duty to the corporation.” It’s factually correct, concise and memorable. Problem is, on its own it’s substance-free. Think about it. What the heck does it mean to have a duty to the corporation? Whether you’re a Canadian or not, take a second to think about what it means to you. When asked, many people offer that they think it means you are responsible to look after the long-term survival of the corporation. Some people will say its about taking care of the people inside the corporation. Some people say it’s about keeping shareholders happy. But if we pause on any of those things it becomes clear pretty quickly that none of them are exactly right. For example, if we had to prioritize the long-term survival of the corporation, then we would never take any big swings that might have big downside, and if we went out of business or sold the company wouldn’t that mean that we were in breach of our duty? Anyway, what I’m saying is that understanding the actual spirit and substance of the law matters *a lot* in boardrooms. Not just to make sure we don’t mess up too bad, but also to give us clarity about what exactly it is we’re supposed to be doing. In the end, even though the law isn’t a condition that we can cultivate directly from the boardroom, it is a condition that should inform our cultivation of other conditions. Including the rules that we set voluntarily, which we’ll get into in the next episode.