Workshop: Board Review ICANN Meeting - Cairo Monday, 3 November 2008 -- and your proposed solution, I think, doesn't solve those problems. Thank you. >> And I think that -- >>COLIN CARTER: I think that's a very fair question. I would say to you, in reply, though, that our experience is that larger boards are less accountable than smaller boards. There's a very strong behavioral model that can be made for that. I personally believe, although I'm not (inaudible) on this, I'm not impressed with executive committees as a way of dealing with large boards, because that (inaudible) on the board, which is a denial of the (inaudible). But having said that, we absolutely agree that if you've got 50 people around the table, 100 people around the table, 200 people around the table, you get bigger and bigger (inaudible) on representation. I think that you will comes at a cost. And the cost has not been assessed accurately at the moment. And we would encourage -- and (inaudible) tradeoff, the tradeoff between numbers and effectiveness. (inaudible) back on a conversation which leads to other solutions, which are a better answer to the tradeoff. There are tradeoffs everywhere in the way the board is constructed. The main one in the corporate world, which (inaudible) is corporate boards, as you would know, have to be independent. The tradeoff is that they know less about the business. And the (inaudible) is the tradeoff between independence and understanding have gone very much to one side of that -- that tradeoff. Your tradeoff and one of the trade offs here is the size of the board. Our judgment is the size of the board precludes its effectiveness in very important ways. There may be -- in reducing the size of the board, if you feel that there's a sacrifice in representation beyond a point that's acceptable, then there might be other solutions to that as well. >>PATRICK SHARRY: Susan. >>SUSAN CRAWFORD: This is directed to our consultants and also to people who are commenting on this, because I hope there's a lot of public comment on this. And I'm aware of the risk of falling into some kind of is/ought fallacy, that because the board is the way it is, it should remain that way forever. But I think what we're trying to tell you is that the division is not between nonprofit and for-profit, but that, rather, when you face ICANN and its board, you could go through two different doors. One is the policy development door. And the other is a management of a company. It is a company, with more than 100 employees and a very large budget. So you face these two different doors. And we're not saying to you that you failed to capture the difficulties of that second door, its management, but that the report may not reflect the uniqueness of ICANN in respect to that first door. And, for example, just this week, we have had a lot of policy recommendations coming up -- this is on David's point -- from the GNSO that have been the subject of a good deal of staff shaping, let's call it. And one of the functions of the board in this setting is to talk to all the people in the ICANN community, find out how they feel they've been affected by this. And, yes, second guess. Do a little (inaudible). Now, that can be troubling if what you feel that the board is then doing is interfering with the management of a business. But it's not necessarily troubling if what the board is doing is checking the development of policy, that first door. So the original function of the ICANN board, (inaudible) was to check whether in fact a consensus existed in support of a particular policy. Now, that function has grown into a very large business as well. And the challenge that I'm trying to describe is to take on board those of your recommendations that make sense with respect to that first function, as well as the second. So, you know, perhaps it's right that we should have a more corporate-like board that meets less frequently, they get slender financial reports, does some nice hobnobbing with other similarly sophisticated people. That isn't the way this board has grown up. And I, for one, think that it would be a mistake to focus solely on that aspect of ICANN. And I'm not saying that's all you did. But there is much more to this policy development function that I think you're hearing from us is not adequately reflected in the recommendations. Thanks. >>COLIN CARTER: I think you're preaching to the converted. And I think you are mistaking maybe our writing (inaudible). But we have always understood (inaudible) board is primarily overseeing the policy development process, but also increasingly, being responsible for business with 100 people in it. That's one of the reasons, for example, why we -- and most of our recommendations, actually, we believe, we believe will actually help the organization be more effective at that first door that you talked about. In any number of ways, like the average tenure. The whole point there is how can people, how can the board, with such short tenure really carry out its policy development role? And so we make some recommendations in that area. We think the board probably spends too much time on detail, because you (inaudible). But the big policy questions are more (inaudible) not being addressed properly. The survey confirms that. It's not our -- it's what the survey says. Paradoxically, one of the problems that we have is that when we say fewer committees and fewer (inaudible) meetings, the immediate reaction -- we get this in the corporate world as well, is that (inaudible) -- we actually believe the recommendations mean the board will spend more quality time on the things you're saying are important. That's what we would like you to (inaudible). Now, we may have got it (inaudible). And, ironically, I think you're all seeing us as trying to press a corporate model on you. And, believe me, one of the few reasons we spend time talking about corporate stuff is we were asked in this long list of -- the terms of reference, I think we were asked to talk about bench magging stuff. So feel free to ignore that and (inaudible) on the logic of what we are (inaudible) -- believe me, we believe that policy development is one of the major responsibilities of this organization. And we're trying to think (inaudible). But we're not (inaudible). >>DENNIS JENNINGS: Dennis Jennings. I have served on many boards over the years, both small and commercial companies more recently. But in the past, large, representative boards. And what I've come to the conclusion over 20 years, that the idea for a representative board, that is, a board comprised wholly or largely of people who have the representative function, this role doesn't work. It's (inaudible). And what you need for a board is a small board of interested, well-informed, even expert, independent individuals who take their responsibilities seriously. Most recently, I was asked to chair a governing board of the Irish center for high-end computing, which was a representative board. And after meeting once, I asked them to absolved themselves (inaudible) replaced by a five-person oversight board of interested, expert, and independent people, and that is functioning extremely well. So I think one of the core messages that comes out of the report is the need for that sort of board. Having said that, I recognize that if -- (inaudible) university community who feel they have to be representative at the board level. And this, in my experience, is a mistake. They have to be represented through some channels to get their views heard. And the board has to be able to listen. But to have representation on the board disables the board. And we will have to address that properly for ICANN, which is totally unique. There is no benchmark we can go to. That's why ICANN exists, is because there is -- there is no place that we can run to to run this. We invented this structure that is fully global, international coordinating body. And it is (inaudible). That's my experience, and that's my advice. >>COLIN CARTER: Well, representational boards do have a potential for -- I understand there's a reason for them. But, obviously, one of the (inaudible) is the people who -- board members might see themselves as having a little more (inaudible) loyalty to the organization rather than to the whole board. That's one thing that can become a poisonous element. But more importantly, one of the problems that I've seen in representational boards is, they start off with a representation carved out to (inaudible) at that point. But as the industry changes and as the world changes, you actually need to have new bodies represented. The people who are controlling don't want to give up their slice of the power structure. And so you actually find, over time, that the very representation that is embedded in the initial design becomes a poisonous element and stops the organization from responding to the needs, which is one of the reasons why we threw in a suggestion which we know has no chance of being accepted, but which you would be much better off if all the groups who want to be represented on the board could get their leadership together, and, together, elect a board who they are confident will represent the interests of the whole. That is a much better and more responsive, and, ultimately, a higher integrity board structure than having a board just strictly comprised of people representing currently-observed constituencies. Now, that's an issue for the future that Dennis and I -- your experiences were (inaudible). So that's something that I think we could discuss at some stage. >>PATRICK SHARRY: Now, on the speaking list, I have Bertrand, and only Bertrand. Which if that's right -- are there any others who would wish to speak? I'm also conscious of the hour. >>COLIN CARTER: Patrick, Patrick, Patrick, one of the advantages of having a big board is we've actually got quite a few people here listening to this today. [ Applause ] >>PATRICK SHARRY: Okay. This is not -- we'll have Bertrand. Can we get a mike to him, please. And to Harald. Take that mike to Harald after Bertrand. >>BERTRAND DE LA CHAPELLE: Thank you. Once again, I want to apologize if I have been a bit sharp earlier. And I will carefully read the document. I couldn't agree more with what Susan Crawford has said. This distinction between the two functions, which is fundamentally the corporate oversight of an organization, administration, operation, is one clear function. And as the organization grows, this will become bigger and bigger -- this task will become bigger and bigger. The second task, which is the policy part, there's another distinction here that has to be taken into account. It's policy-making and policy steering. The originality of a multistakeholder process is that the oversight body that the board -- has the responsibility mostly to make sure that the consensus-building process has been perfectly followed, according to the bylaws, according to the PDP recommendations for each supporting organization. Like it was said in the GNSO reform, the goal was for the GNSO reform to move the councils away from the so-called legislative role, into the policy development process driving mode. I think it's probably the same with the board. And one of the important elements is to make sure that everything has been taken into account and that consensus is being reached. When there's no consensus, it is the last resort when a decision is needed. But this steering role is an important role. Obviously, when I read the report, it was probably not in your mandate to even raise the question of whether those two functions should be distinguished, for instance. And I know that there are people in the community, and I considered the idea interesting to explore, who believe that there might be two different roles, one that is more note-taking and proper control of the function of the machine, and the other one that would be more in the direction of policies and provisions. On that last point, to finish, according to what Dennis was mentioning, in terms of the independence and accountability and representation. On that last point to finish, according to what Dennis was mentioning, in terms of independence and accountability and representation, it is sort of a vicious circle and a conundrum. At the moment, I believe that we have attention within the actual board, because of the way it's composed in its mission, between its independence and the accountability that should remain for each elected board member to the constituency. It would strengthen accountability that somebody elected would become unaccountable. But at the same time, we want the board, and I speak on a personal basis here, the board to collegial. Something that defines or helps define what the global interest is. Steering the public policy interest to make sure the private sector, sectors of all sorts, and civil society actors, nonprofit, whatever, are combining themselves to identify a global public interest is, in my view, the main function of the policy development process and the board. How this is combined with accountability requires probably a different notion of accountability than just the represented democracy type of accountability which is bringing the type of problems you raise. So I want to raise this point of the distinction between the supervision of the machinery and the policy supervision, and the second element, the policy (inaudible) and policy steering. >>COLIN CARTER: Can I just make a quick comment on that? And obviously to pick up Susan's question again, and it comes to the scope of the project. You were doing the board review. One of the things we established, we actually mentioned in there, it's clear from the responses, neither the directors nor the (inaudible) tall succeeding well in both the development of the policy and the implementation of the policy. Now, in our view, that's a bit like doing a board review at General Motors and saying they are struggling to make good cars. It takes you out of the scope of the project. The board, given the circumstances and complexity of what you have got, does a pretty good job, but all our recommendations, I want to be really clear, all the recommendations are actually designed to help the board do that better. We actually have a difference of opinion as to whether 20 people sitting at the table can do that better than 12. But we think that's one of the things we've suggested that if we were, in a sense, directing where the board would put its priorities, one of the things that comes out of this committee that we think is really important is what is the meaning behind the responses that say the board is struggling because we thought the policy development stuff is core business of the organization. >>PATRICK SHARRY: In terms of speaking, we have Raimundo, Harald, Thomas and Peter. I am conscious of the time, so beam keep the comments very brief, and if you can, Terry, perhaps make one response at the end if you think that's appropriate. >>RAIMUNDO BECA: I also have experience in the board in various (inaudible), and it's very, very typical in the case of the ICANN board is that if ICANN has the problem of legitimacy. And it's not only the machine that makes policies, because maybe we are very, very good at making policies, or very bad at making policies, but if we don't get our legitimacy from other stakeholders, because the main legitimacy comes now from (inaudible) with the D.O.C. And we have to work as a board to obtain legitimacy from the most wide stakeholders in the world. And that means a minimalization of (inaudible) governments and governments, we do not agree among them. And this is a very particular situation. And the constitution of the board and the way the board works should be, in my opinion, related to how to obtain legitimacy. And I'm not so sure I saw this key word in the review. >>PATRICK SHARRY: Thanks, Randy. Harald. >>HARALD ALVERSTRAND: I will try to be brief, noting the time. My name is Harald Alverstrand. I have been a board member for a year. One thing I was thinking when I read your recommendation or your suggestion about having a representative body that (inaudible) the ICANN structure contains the legitimacy of the structure, the ex-board members, it's called the NomCom. So I'll toss this out to the community as a challenge, because I think the ideas we are thinking about, I'm not sure it's practical, what changes to the nomcom process do we have to make in order to make it acceptable to have NomCom elect the whole board. >>PATRICK SHARRY: Thanks, Harald. Tops. >>THOMAS ROESSLER: Thomas Roessler speaking as somebody to has (inaudible) a number of different perspectives. One was the point Harald just made. Nominating Committee is an important piece of the situation. One side of the Nominating Committee that is not easily visible off of that committee is a mechanism that the larger community needs to hold individuals on the board to account. That is not something that would ever be visible outside the committee, but it maps back to you know of your recommendations. The Nominating Committee has to have a much clearer idea of what goes on in the (inaudible). Sometimes the communication channels function in mysterious and good ways, but that's clearly what it should be. There is an important need here. Whether that need is actually for people with the gravitas of the chairman and the president participating in that collaboration is not the question. That's a little bit as the chief executive (inaudible) in the Supreme Court. You really don't want do that. The second point is there is a third goal in the organization, that is the operational world. ICANN operates or oversees the operation of unique points of failure in the Internet's infrastructure. It does that on behalf of an Internet community that, by itself, is a mythical beast. But there is -- actually, this is out there. We don't know what it looks like. It is out there. And we are pretty sure that it is not just some combination of (inaudible) documents. So to some extent, one of the problems we need to solve here is how can you keep the party that operates these critical failure points accountable, functioning, under control with (inaudible) organizational machinations. That's not easy. And that's not a benchmark point. A benchmark being point that you need to keep in mind here. Third point, turnover in policy process. Sometimes I think that can be a good thing. I spent many years on WHOIS policy. I cannot say that the turnover at the GNSO council level or the board level had an impact on that. I would be careful saying it's really bad thing when people on the board do not follow these processes for getting (inaudible). Sometimes people (inaudible). This is a community which (inaudible). About it is also a community where people cycle through roles and cycle through different positions in the organization, and that in turn creates a certain affinity for topics, it creates closeness and knowledge of the issues, which might very well cancel out some of the (inaudible). So that is something I would like to see addressed in the detail. Finally, the question of policies. I looked it up in the report and the question that you asked was whether the board contributes effectively to the development of policy and strategy. And that is a question that in many ways makes me puzzled, particularly when you interpreted it early on as the (inaudible) as if the board of (inaudible) GM (inaudible). The compromise, as everybody thinks back, is likely the one most stable. We are in compromises here. So I think there is a little bit of carrying that and understanding what the question really tells us and what the answer to the question that we really gave really means in terms of the role that the community in the broader sense expects to the board to take. >>PATRICK SHARRY: Thanks, Thomas. Last words here, and beam get quick responses from Colin and tree. >>PETER DENGATE THRUSH: I wanted to put a couple of thanks on the table, I think. I wanted to begin by saying that the board subjected itself to this process voluntarily. The bylaw that sets up their obligation to have reviews of the SOs and the A.C.s to not include a requirement that the board be reviewed. We chose to be reviewed, because we regard the review process as essential to the health of the board. The second thing is I think you have done an excellent job, and I agree with many of the recommendations in the report. I think it's very well researched and very well written. I think some of the focus and discussion today comes about because of one's perception of the role of ICANN and the constant reference to the policy development process is just one of the focuses. And as Thomas has eloquently explained. We've worked very hard to make sure that ICANN does not make any poise for the ccTLDs, except in very rare and narrow cases, and we have yet to see one. And the range of relations to the address organization is very narrow. So some of this policy focused discussion comes from people who are here today because they are focused on the policy development in the GNSO. And far more than that is what we tend to call the IANA function, which is shorthand for all those points that Thomas was talking about, managing critical infrastructure and critical points of failure. And the other function that we have is really the regulatory function, and some of those really have to be looking at enforcement and perhaps really as commissioners rather than as the board. We do have a company secretary, his name is John Jeffrey, and he is appointed every year in public, because we are also a corporation, we do have to have corporate practices. We do need to keep our U.S. tax-free status, we do have to comply with rules of corporations in California. So a big chunk of what we do is very close to the heart of the corporate forms and corporate rules. And finally, we don't have a representative board. People are talking about having a representative board as though it were a good thing. We don't have one, and everyone who comes to the board realizes that wherever they came from, they have to leave that behind and take up the role of becoming a director, and exercising fiduciary responsibility. So Colin and Terry, I thank you very much for the report. Thank you for doing this session. Thank you for subjecting yourselves to the ICANN process. We appreciate it. And we look forward to much more from you in the next couple of months. Thanks. [ Applause ] >>COLIN CARTER: Thanks, Peter. We have really enjoyed the work. And I don't think I can do justice to those last couple of questions and I'd be happy to talk afterwards. I think people probably want to get away. But they are really important issues, and ones which we would like to understand a bit more in any case. So thank you. >>PATRICK SHARRY: Thanks, everyone.