Research context

Board decisions are critical to the success and failure of a company. A longitudinal study observing the interactions of board members over thirteen years of three venture capital backed biotechnology businesses appeared appropriate for the following purpose of

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meeting the specific aims of this research as follows: To understand the individual phases of the sensemaking process; to assess the effect of faultline activation and strength on the promotion of sensemaking and to observe outcomes in the form of decisions made or decisions delayed, through the role of the Chair. I sought to gain a rich understanding of the board directors’ strategic decisions, and interactions between board members which affects board decision outcomes and processes as well as the sensemaking process involved in decision-making. To balance the need for depth and some breadth, I chose three cases. The close similarity of the three companies allow for the meaningful comparison of processes; they are all from the same industry, founded during the same year, and all raised multiple rounds of venture capital funding to build their businesses in medical markets. The board members represented several stakeholders, in particular entrepreneurial managers and investor directors, providing the environment to observe responses and interactions of individual board members, and director subgroups when presented with adverse deviations from warranted business plans.

In each case, I identified two episodes of sensemaking following an identified adverse deviation. The episodes start with a business-critical issue which requires a change in strategic direction and a new set of objectives. Such deviations are part of the journey of an entrepreneurial venture and are often in response to downside surprises, such as an unexpected drop in sales, which the investors have the right to investigate with a view to making changes to the company. These deviations are deemed of such severity that they may, if left unchallenged, result in failure. In each such episode, after the cue of the adverse deviation (the sensemaking trigger), I observe sensemaking as a process shaped by context, language and behaviour as well as power and politics. Hence six episodes were selected when the companies deviated substantially from plan, two episodes reaching a consensual board decision, two episodes reaching a forced board

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decision in which some board members disagreed or agreed reluctantly to support the board decision, and two episodes where consensus was never attained. Although there were many minor deviations, these periods represent adverse deviations, which if not addressed, had the potential to become catastrophic failures.

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Table 3.2: A description and duration of the six sensemaking episodes

Several stakeholder groups (entrepreneurial managers, investor directors and investors, and independent director groups) make the environment suitable for sensemaking and sensegiving behaviours, especially where the groups can attempt to gain influence in numbers (Allmendinger & Hackman, 1996). The board members were observed throughout the lives of the companies and interviewed during periods of adverse

Company sensemaking episode number Episode length Sensemaking trigger (Adverse deviation) Sensemaking episode (Description of the journey) Final board decision Medco (1) 21 months Missing a key revenue target which was called

for by the warranted business plan Time between rejected acquisition, through a period of missed sales targets to change of board Forced decision Medco (2) 48 months Missing further key revenue targets called for by the warranted business plan Lack of sales leading to administration No decision / Indecision Pharmadev (1) 9 months

Did not meet its breakeven point at the agreed

time

No commercial traction, leading to

new team and strategy Consensual decision Pharmadev (2) 36 months Insufficient growth demonstrated by a missed revenue target. The company put up for sale Scientists excluded from commercial negotiations and eventually possible sale collapsed No decision / Indecision

Drugtech (1) 2 months Toxicology result

not expected

Change of administration of drug from systemic

to a topical route Consensual decision Drugtech (2) 36 months Unexpected board meeting pronouncement by investor directors Cessation of clinical trial leading

to sales process

Forced decision

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deviations agreed by at least one subgroup of directors or one investor director. Subsequently board decisions were made as a unified course of action, a forced course of action, or not made, ending in terminal failure. These periods of divergence away from an agreed course of action to a tipping point resulting in convergence towards an agreed course of action, or alternatively failing to reach a consensus, are periods where sensemaking is likely to be considered as an engaged process. The studies of processes such as sensemaking and sensegiving involve observing and interpreting individuals and groups of actors’ constructions and accounts. This calls for a qualitative method (Isabella, 1990; Gioia & Thomas, 1996) with the potential to compare situations across similar case studies of comparable organisations. This study meets these criteria where both retrospective and real time sensemaking dynamics are observed.

3.3 Method

3.3.1 Case study design

I include an outline of each of the case studies later in this Chapter. I take my lead in choosing a multiple case design from the text – Case Study Research Design and Methods (4th _{edition, Robert K Yin – Sage, 2009). “The rationale for multi-case designs} derives directly from an understanding of literal and theoretical replications. The simplest multi-case design would be the selection of two or more cases that are believed to be literal replications, such as a set of cases with exemplary outcomes in relation to research questions asking how and why. Selecting such cases require prior knowledge of the outcomes, with the multiple case inquiry focussing on how and why the exemplary outcomes might have occurred and hoping for literal replications of these conditions from case to case” (59).I use inductive analysis because of my aim to “systematically generate

theory grounded in specific instances of empirical observation” (112). This contrasts to the mainstream methodology stemming from Popper’s (1968) critical realism theory where “inductive verification of theory is disrupted” (112). I concur with the argument

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presented by Johnson & Duberley (2003) to combat Popper’s critique in that the deductive testing of theoretical prediction requires that the researcher possesses a priori both the conceptualization and operationalization of the behaviour of actors. To do this, researchers need empirical evidence. I believe after considering other methodologies, that this method is the most useful to answer the research questions posed earlier. Having spent thirty years in this industry, I had already identified that decision-making takes longer when there is dissention between board subgroups. This may seem obvious, but what is not obvious are whether there are discrete phases that the board progresses through to reach paralysis of decision-making or indecision.

As well as employing a multiple-case design, I seek multiple sources of evidence (see Table 3.3) as this allows for the addressing of a broader range of historical and behavioural issues (115-116). The most important advantage presented by using multiple sources of evidence is the development of “converging lines of inquiry in a process of

triangulation and corroboration” (116). By seeking multiple sources of evidence from multiple sources, the following applies: “Any findings or conclusions from case studies

are likely to be more convincing and accurate if based on several different sources of information following a corroboratory mode” (116).

Patton (2002) discusses the benefits of both data and investigator triangulation. Data triangulation encourages the collection of information from multiple sources aimed at corroborating the same fact or phenomenon and overcomes the potential problem of construct validity because the multiple sources of evidence essentially provide multiple measures of the same phenomenon (116-117), which applies in this study. A case study investigator needs to know how to carry out the full variety of data collection techniques (e.g. archival, semi-structured interviews, case study design etc.) and in this case as I have been the only investigator, there is no variance in technique. I also take a longitudinal approach to inform how certain conditions change over time.

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3.3.2 Reflexive methodology

I am not isolated from the research design and methodology, in that over three decades I have observed and been curious around questions concerning board composition and board dynamics, which has assisted the design of the research study in this thesis. I have made these observations from a privileged position of board membership, sometimes as CFO, CEO, Chair and non-executive director, representing both an industrial expert and the investor. These positions have enabled the observation of both behaviour and language in varying board scenarios, where failure has commenced through the triggering of an adverse deviation from the written and adopted business plan. I would argue that this element of autoethnography is beneficial to conducting this research, through the access to rich data from semi-structured interviews from board directors, which would not be available to the general public through archival material alone. I have understood the culture of the environment in which the research is conducted and bring all of this understanding and experience to bear in designing and conducting this research. I am aware of potential bias, and have ensured that interviews and archival data are taken from differing subgroups of board directors; the entrepreneurial managers, the investor directors, the Chairs and on occasion, the investors themselves. I concur with the view presented by Ellis, Adams & Bocher (2011):

Autoethnographers recognise the innumerable ways personal experience influences the research process. For instance, a researcher decides who, what, when, where and how research decisions necessarily tie to institutional requirements, resources and personal circumstance. A researcher may also change names and places for protection (Fine, 1993), compress years of research into a single text and construct a study in a pre-determined way. Autoethnography is one of the approaches that acknowledges and accommodates subjectivity,

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emotionality, and the researcher’s influence on research, rather than hiding from these matters or assuming they don’t exist

In adopting such a reflexive approach to the methodology in this thesis, I trade access to influential board members and their views with their requirement for confidentiality and anonymity whilst ensuring any patterns and themes are exhibited across all the case studies. I obtain rich data and often inaccessible data to unconnected researchers, with which to draw conclusions that are useful in informing the extant literature and assisting practitioners in managing the board process. These data sources are included in Table 3.3, along with the companies from where the data are extracted from director language and behaviour, during and outside of board meetings.

I add further detail of my methodology by including the adopted semi-structured interview protocol and a sample interview transcript within Appendix 2. The interviewee who gave the sample interview has sanctioned the use of the semi-structured interview for this purpose. The use of semi-structured interviews allows for deviation from the protocol where the interviewee desires to elaborate on issues which they consider worthy of further comment. This enables the capture of rich data, which provides for more informed discussion and conclusions.