Twelve months on: living the dream
Today is an auspicious day (well for me anyway). Musings was created twelve months ago today. At that time, I wanted (needed?) an outlet through which new ideas, thoughts and reflections could be expressed as I began to grapple with the demands of a PhD.
When I set out, the goal was entirely personal: Musings was a vehicle to share my thoughts and ideas about governance, strategy and societal wellbeing. I had no idea whether Musings would make it beyond a few months (or a few entries for that matter!), or whether anyone would read the entries. I wasn't really bothered either. To my surprise, my motivation to share ideas remains intact, somewhere between 50 and 200 visitors view the site each day (that number is slowly growing over time), and quite a few people have either posted comments or contacted me directly.
Looking ahead, I plan to continue writing, because the process helps me refine my (doctoral) thoughts. The focus will probably narrow slightly (to strategy, decision-making and governance), as these topics start to dominate my thinking time (I've discovered doctoral research does that to you). One twist though: I'm going to move from writing for my sake, to trying to provide "value" to readers. To do this, I'd appreciate some feedback. Are there some topics or themes that you'd like to read about in the coming months? If so, please post a comment! In the meantime, postings will continue at the pace of 2-3 postings each fortnight.
The case of state-owned enterprise Solid Energy, the CEO of whom was a doyen of the business community, raises some interesting questions, as practitioners and researchers search for reasons for the "perfect storm" and the recent fall from grace:
Hopefully, answers to at least some of these questions will become apparent in the coming weeks, as the investigations proceed. We have much to learn from this case—both in terms of what happened, and in terms of how governance, decision-making and management could (should?) be conducted differently in the future.
In the meantime, one thing that has been puzzling me has been the response of the Board. Why did Don Elder, the former CEO, have to endure considerable criticism from the media, the public, former employees and the government (the shareholder and regulator) in recent days? Why was attention not focussed on the Board, and why did they not come forward? Surely the Board, as the shareholder's representative, holds the ultimate accountability to ensure the satisfactory and sustainable performance of the business?
The attendance of John Palmer, former Chair, alongside Don Elder at the Select Committee meeting yesterday provided some comfort. Helpfully, apologies were provided to affected parties amongst the conciliatory and defensive responses. However, many questions over the financial management of the company, and of how strategic decisions were made, remain. Hopefully, the various authorities and interested stakeholders will put their reputations, egos and agendas aside in order to conduct a proper investigation and learn from the findings. Here's hoping.
An interesting article appeared in the Financial Times about a week ago. I've been pondering it for a few days now, because it challenged my perception that Board composition has relatively little bearing on company performance outcomes.
The article reported the results of a comprehensive survey into US company performance in the decade 2000–2009. The results revealed that the prevalence of lawyers on Boards increased from 24% (2000) to 43% (2009)—and that the levels of litigation, malpractice and corporate risk-taking declined markedly—through the decade. The results are not that surprising, given the introduction of Sarbanes-Oxley and other compliance measures in the survey period.
On the surface, this study suggests that the presence of lawyers on Boards does make a difference in some areas (and therefore composition may matter). But what about the big question: Does the presence of lawyers lead to increased company performance? The study enhances the case for lawyers on Boards for their contribution to the risk conversation. However, this should not be misunderstood as providing evidence to link the presence of lawyers with increased company performance. Increased performance is dependent on innovation, the taking of risks and the making strategic decisions—all of which are somewhat of an anathema to many members of the legal community.
So, does Board composition matter when it comes to company performance? On the evidence provided by this study, we still can't tell—but I doubt it.
Thoughts on corporate governance, strategy and boardcraft; our place in the world; and other topics that catch my attention.