Jay Shaw, chairman of Praxonomy, speaks with Richard Levick, chairman of Levick, in this transcribed installment of the In House Warrior Podcast series.
Richard Levick: Good day. This is Richard Levick for In House Warrior, the daily podcast of the Corporate Counsel Business Journal, and with me today is Jay Shaw, chairman of Praxonomy. We're going to talk about an age when board meetings are held virtually entirely on Zoom. What are some of the best practices? Jay, welcome to the show.
Jay Shaw: Thank you. A pleasure to be here with you.
Levick: Jay, it's great to have you. We're getting you from Hong Kong today, and I'm sure you're going to get this first question, which you've never been asked before. What is Praxonomy?
Shaw: Praxonomy is not a medical procedure. Praxonomy is a word that I actually coined and trademarked in 2017. I was looking for a word that would capture the idea of taking best practice and applying it to senior leadership teams. So Praxis from Greek originally by way of Latin, meaning the application of theory, and “nomy” or “onomy”, just the ending for rules, laws, study of something. So, economy, agronomy, astronomy. I put the two together, and come to find out nobody had done such a thing before, which seemed ridiculous to me, so I trademarked it.
Levick: Well, now that we know it's not a medical procedure, we can continue with the show, because it was going to be a very, very short program. So, what's driving it? Who needs it? Who are you targeting? What is the primary purpose of the software, because I know it's got a number of different applications.
Shaw: The software exists to help, for the most part, Boards of Directors, but other senior leadership teams as well, organize their work and make the documents that they depend on easy to access, easy to use, with complete version control and roll back. And just shine a light on all of the nitty-gritty things that Boards have to do before meetings, during meetings, and after.
Levick: And what are some of the risks? You were saying before the show, many Boards, a surprising number of Boards are still using printed briefing materials. What are some of the problems of the last decade that this software is overcoming?
Shaw: If you talk about printed materials, it's amazing that more than 20 percent of listed Boards and major stock exchange groups around the world are still relying on printed board packs. So, obviously, a problem is killing trees, but we're-
Levick: Another percent of the companies are still using stone tablets. Is that correct?
Shaw: Exactly. Moses looking down from the mountain. But, the problems with that are one, they get lost. Two, it's almost impossible to update them all. If you have a big Board, if you have 12 or 15 members, each of whom has gotten a printed packet, the packet could be hundreds of pages for a big company. If changes need to be made, it's really hard to manage that. It's hard for the company secretaries or general legal counsel office to keep on top of that sort of thing. So, it's slow, it's bulky, it's not climate carbon friendly, and it's hard to manage after the fact. It's amazing, actually, to hear stories of companies that have lost printed materials. They simply got put in boxes and filed somewhere or other, and eventually taken into document storage and forgotten somewhere. And there are also problems with fires, on and on and on. So, it's not a perfect solution.
Levick: You've used the phrase, a single source of truth. Talk about some of the challenges that the use of your software overcomes because it provides this central hub.
Shaw: If you're a Board who's no longer in the age of the dinosaurs, if you stepped up from printed Board packs to file storage solutions, mass market ones or email attachments, then you've solved some problems, but created some other problems. You've created the problem of propagation around the world, actually, and all of the attendant security vulnerabilities that come with that. So, that's one issue.
But another issue, and this speaks to the single source of truth issue, is that if changes are made, and changes are almost always made in Board packs, then it is well nigh impossible to manage which version of a document any individual Board member might be working from at a given point.
So, with the single source of truth solution, the new version is uploaded, and there's rollback so people can look at the old versions if they've made annotations, or there are things they want to say on specific pages. But the newest version is always the one available until, of course, the meeting is done, the minutes are approved and the whole thing is archived. Then you have legal issues around document retention. And once it's archived, there is no making any further changes. That becomes the record for posterity.
Levick: Is this product just for publicly traded Boards?
Shaw: No. Publicly traded Boards are our target market, and we've optimized for them. But, we've also optimized for highly regulated industry companies. So, think manufacturing. Think aerospace, defense, public construction, and engineering. These are companies that are large, that might have thousands and thousands of employees, even though they're family owned, that have outside directors. They have non-executive directors who are not part of the ownership structure, and needs to comply with regulatory, and sometimes after the fact discovery, requirements. So, it's for high stakes leadership committee work, and that could be the Board of a publicly listed company. It could be the Board of a privately listed company. Could also be a large NGO. So, civil society organizations, especially ones that do humanitarian relief in multiple countries and take financial aid from governments or from the Bill and Melinda Gates Foundation, et cetera, et cetera, need to keep good records. So, this is part of helping them with their compliance requirements.
Levick: I think it's a great mission. And I know it's always a challenge for NGOs. What about the Coronavirus? How is that impacting Boards and what you're able to provide for them during this very challenging period?
Shaw: Do you know, last week my wife actually asked me to buy something for her here in Hong Kong where I'm living right now, and send it to her in Berkeley, California. And, I took it to the post office, and the guy behind the counter said, "You know this will take up to seven months?" And I said, "Really?" And he said, "Yeah, we're only shipping by sea now. There are no flights. There are no postal delivery flights anymore." And I thought, wow, what does that mean for printed documents for Boards of Directors who might be geographically dispersed? You can't necessarily depend on the kind of easy and cheap delivery that we used to depend on. So, that's a big difference.
I think what's happening now is more and more Boards, and annual general meetings, and extraordinary general meetings, companies are happening virtually, and the regulators are racing to keep up with this requirement. Many jurisdiction regulations actually say that there must be a live meeting, and there must be paper records, et cetera, et cetera, and it's just not possible now. It's not possible anymore.
So, for Boards of Directors, the idea of having Microsoft Teams, or Google Meet, or Zoom, or WebEx meeting is fast becoming the new normal. So, how do you organize that? How do you present for a meeting? How do you get them to sign resolutions? How do you get them to vote? All of these things have to be done online now, and the Board members have to be able to digitally sign documents, and for purposes of compliance and recordkeeping, the attendance of the Board members needs to be validated. Optimized, dedicated Board portals do things like that, and that's the direction Boards are heading in because of the pandemic in large part right now.
Levick: Jay, I have to admit though that the seven-month lag time to ship from Hong Kong to California is great news for my shareholdings and carrier pigeon companies. So, thank you for that stock tip today.
Shaw: Do you know that's how Reuters was started? Reuters actually started with pigeons from the war in World War I, and he had little notes about what was happening on the frontline, and he sends his pigeons off. That was the beginning of that news service.
Levick: Well, we will be doing the history of Reuters on our next episode. Today, within the 30 seconds or so we have left, what is the one key takeaway you want the general councils to be aware of from this episode?
Shaw: Well, I would recommend Counsel to take a hard look at the IT support that they have for Boards of Directors and senior leadership teams within their companies, within their organizations. And just ask themselves, is there a way to do this better and more cheaply than we do now? And take a serious and sincere look at it, because same old, same old isn't working right now.
Levick: Jay, thank you so much. Jay Shaw, Chairman of Praxonomy. I'm Richard Levick for the Corporate Counsel Business Journal's daily podcast, In House Warrior.
Published August 10, 2020.
