Intellectual Capital and knowledge sourcing in a governance context

Ingley and Mowbray (AUT, New Zealand) described research conducted to understand how the collective and individual ability of directors add value to organisational performance occurs. They reported that performance was enhanced when the Board and management worked together, and that effective knowledge sharing and intellectual capital appeared to be important contributing factors. They introduced the notion of a “third team”, whereby the Board and management (who normally work separately) work together in some way on particular matters. The work of the third team is defined by something Ingley and Mowbray termed “behavioural governance”. They asserted that new insights will come from an increased understanding of a complex mix of (primarily behaviourial) governance characteristics, rather than continued pursuit of individual characteristics.

Aspects of this study are consistent with prior literature that suggests behavioural characteristics are more important than structural characteristics. The study provided a useful basis for future research into the import of behaviourial and knowledge sharing factors, particularly of larger samples of company data. However, a working model or theoretical framework of the so-called third team may continue to be problematic, given the complex and dynamic nature of governance, and the (often) transient balance of power and divisions of labour that are often present in governance environments. Notwithstanding this, the research and addressed raised some very good possibilities for future research.

The keynote address was delivered by Richard Hames, a corporate philosopher. Notes and observations from Hames' address:

Leadership is changing and needing to change—in response to a major transition occurring in the world. We are moving from industrial economism (which has sustained the world for the last 300 years) and a new world order. Population growth is putting huge pressure on “life critical” systems, systems initially created to sustain order in our society. These included the economy, trade, production and distribution of food, cleaning drinking water, education, and the law.

The occidental lens, through which most world systems have been developed, is no longer valid. Systems are beginning to fail. Extreme events (weather, for example) are fundamentally changing life on the planet. The pressures being exerted and the emergent failures are now creating opportunities for change, particularly in the leadership arena.

The emergent change is that we are starting to exit the CEO (competitive business achiever) meme, and to enter a “community” meme, where shared purpose (collaboration) will begin to prevail over the accumulation mindset. Hames said the vehicle to lead through this transition are the “the five literacies of leadership”.

Hames’ talk was interesting, and the five literacies coherent. However, the talk seemed to assume that the CEO meme is inherently flawed (ie: selfish and subject to corrupt practice) and must be replaced. This troubles me. Cannot CEO and community memes co-exist? 

Later this week—on Thu 7 and Fri 8 February—I will be speaking at the International Conference on Management, Leadership and Governance in Bangkok, Thailand. I'm looking forward to the challenge of speaking to a learned international audience, and to learning from other speakers and researchers throughout the two days.

I plan to share session summaries, observations and insights here during the conference, so check back if you'd like to hear about current developments in the fields of management, leadership and governance.

I can't remember how many times I've heard company leaders, directors and, to a lesser extent, owners say they don't formulate strategy nor have a strategic plan "because everything is changing so quickly, any plan would be out of date". Statements like this are akin to saying we are too busy running (the company) to look where we are going or plan where we might head. Is this smart or is this dumb? I think the latter.

The problem with simply responding as the environment around you emerges—with not planning for the future—is that a competitor may do something that catches you completely off guard. To be caught flatfooted like this could spell disaster for your business.

A reasonable middle ground between a long, highly detailed strategic plan that probably won't get read or actioned, and no plan at all, is a succinct plan. I'll call it a smart strategy. A smart strategy has several defining characteristics:

• A smart strategy ties directly and explicitly to your company's core purpose. (If you don't have or can't describe your company's core purpose, sort that out first.)
• A smart strategy is succinct—no more than 3–5 pages in length. It should contain the company's core purpose, the strategies to achieve the purpose, objective measures (so progress can be monitored) and high-level actions required to achieve the strategies.
• A smart strategy takes a medium-term view. Five years is too long, too much can change (and probably will). Three is better. One year is too short (too tactical and operational).
  
• A smart strategy is built with the input of several key groups of stakeholders. The Board and management and selected customers and selected industry experts should work together. No one person or one group has all the answers. However, by working together, robust debate can take place and strategic options can be subjected to vigorous challenge.
• A smart strategy should not contain pages of SWOT tables, competitor positioning, product detail, organisational structure and names of key staff. This detail should be recorded elsewhere. It is input to the strategy, not the strategy itself.
• A smart strategy is read and reviewed regularly. The Board and management should sit down, together, and review the strategy every six months—to identify what's changed and what changes are needed. Flexibility is crucial—particularly in fast-paced, high-change environments.

I've seen this approach work well in many different organisations. If you'd like to explore how it might work for you, please contact me.