I have been watching the leaves on a potted plant go a little yellow in recent days. Something is not right; the plant has been suffering, clearly—but why? Had I been over- or under-watering it? Or have I applied the wrong amount of fertiliser? After checking with sources more knowledgeable than me (a book in my library, but also Google), the penny dropped. The plant had become root-bound, a victim of its own success. Simply, the pot had become a constraint. The resolution? A bigger pot, to provide space for the plant to thrive once more. Now, we wait. Boards and companies are analogous to the pot and plant in this illustration. The pot holds the plant and provides space for it to thrive and grow. Sometimes, a new pot is the change needed if the plant is to thrive. And so it is with companies: sometimes changes are needed at the board table to reinvigorate decision-making, steerage and guidance. Whereas plants tend to droop, go yellow or otherwise signal poor health, tell-tale signals that it might to be time to make adjustments in a boardroom tend to be visible too. Examples include:
While this list is far from exhaustive, it is indicative. Notice many of the signals (that a director is out of their depth or no longer fit to serve) tend to be behavioural. But how might any shareholder or supernumerary know the real situation given boards tend to meet and operate behind closed doors? Something might seem to be amiss, but what, and who? A governance assessment (note, not a board evaluation) can be a useful tool to assess the effectiveness of the board and the governance 'system', and to diagnose any underlying problems. These should be conducted annually, by a credible independent assessor. Recommendations emerging from such an assessment need to be taken seriously. Boards that dismiss evidence-based recommendations out of hand, or make cursory adjustments only (the "sweep it under the carpet and hope for the best" tactic), should take a good look in the mirror. The response is itself a clue—defensiveness tends to confirm that all is not well. When something doesn't quite seem right, check it out. Directors serve at the pleasure of shareholders, and replacement is always an option. Often, it is a very good option; sometimes, it is the best option. Normally, a simple majority is all that is required to both appoint and remove a director. To give the director the benefit of the doubt is rarely the best option. Finally, if a decision is taken to remove a director, act on the evidence quickly, but do so quietly.
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Over the past couple of months, I have been deeply embedded in a pro-bono advisory engagement, and fulfilling several speaking and capability-building assignments—to such an extent that my writing has languished. Progress on Boardcraft stalled, and my last blog entry was back in May. But now, with those commitments in hand, I have surfaced to draw breath, scan the vista, and to begin writing again. Starting next week, I will pick up my pen (keyboard!) once more, to share my thoughts and observations on corporate governance, the board's role in driving organisational performance, and other topics that catch my attention. Expect a new muse some time on the first Monday of each month. As we get going again, may I ask a favour? Please tell me what you want to know about (as a comment to this post or via private message) and I'll do what I can to respond. This is a genuine offer to explore anything of interest—except if it is illegal or immoral, of course! For now, have a great weekend. See you Monday!
Questions of where we came from, why various things happened or evolved as they did, and what we can learn from them to guide us as we live our lives fascinate many people—me included. From neo-lithic henges and stone circles, to the development of more recent industrial-scale enablers (notably, the wheel, the printing press, manufactories, the motor car and the Internet), man has long been fascinated with history, innovation and possibility. When we ponder historical developments and innovations such as the examples noted here—and other foundational things like language, writing, mathematics, ethics and civics—we gain insight to apply in our daily lives or use as a springboard to try to make new discoveries. This maxim applies personally, in family and social groups, and more broadly in society—and if we ignore it, it may be to our peril. The idea of learning from those who have gone before us is applicable in organisations too. How else would individuals and teams know what to do? This is what learning and development departments organise, and why professional development programmes exist. In the realm of boards and boardwork, relevant questions include three I have been asked most often over the past two decades: What is corporate governance; what is the role of the board; and, how should governance be practiced? That these questions are asked so often suggests directors (at a population level) lack the knowledge needed to be effective. Helping directors and boards govern with impact is a calling for me, so when Mark Banicevich invited me to explore the history of corporate governance—well, make a fleeting visit across a few high points in the Western context—I jumped at the chance. Hopefully, the commentary is helpful. Do let me know whether you agree or disagree with the various perspectives, and why, because I’m no Yoda (use the comment section below, or contact me directly). Life is a learning journey for me as well! Several times in the past year, I have been asked for advice, even to intervene, in situations where relationships between board members have become strained, or shareholders have fallen out—with each other or with board members—over differing expectations around returns and/or succession. Each situation has been both complex and demanding, for they involve people and human emotion. The following vignettes are illustrative of the types of things that can go wrong and the ensuing behaviours of various actors:
As is typical in board and shareholder matters, options are many and resolutions are far from clear cut. What options might a capable independent director consider in such circumstances?
These are questions of commitment and duty. Directors need to not only recognise this, but consider options amidst ambiguity, and work within the constraints of the law and what is ethically acceptable. Essentially, these questions ask how far a director is prepared to travel, how hard they are prepared to work, how long they might prepared to wait before enough is enough. Are they prepared to make decisions that may be unpopular or even unpalatable, because such decisions are in the best interests of the company? Will they go to the ends of the earth, so to speak? Or does the preservation of reputation rank more highly than acting in the best interests of the company—essentially, will they bail when the possibility of reputational damage arises (as several directors of Wynyard Group reportedly did just before the company failed several years ago)? Directors would be well-advised to have asked themselves these questions before they accept an appointment. They should also be prepared to act (step away) if the thresholds they set themselves are surpassed, or if they no longer have the expertise or courage to act. Of the directors you know, how many possess the wisdom and maturity to act diligently, in the best interests of the company?
Boards, and an oft-mentioned but mysterious concept—governance—are topical. Daily, it seems, these terms feature in our newspapers and on social media, usually because something has gone wrong. And when it does, the chattering class is not slow to react. Typically, the targets of their comments are the board and management of the organisation. That seemingly strong organisations suffer significant missteps—or even, fail outright—on a fairly regular basis is worrisome; the societal and economic consequences are not insignificant. What can be done? Recently, the inimitable Mark Banicevich invited me to discuss boardroom success and failure, and to offer guidance that boards wanting to lift their game may wish to consider. Hopefully, our discussion is helpful and enlightening. Regardless, I welcome questions and comments, either here or send me an email. This is my second conversation with Mark (the third will be published in May). If you missed the first, you can access it here: Governance around the world. Recently, I had the great fortune to sit with Mark Banicevich, a business leader, to record a set of three fireside chats for his Governance Bites series. Mark was keen to get my take on several topical aspects of boards and governance. The first of the three conversations is now available to watch. (The second and third conversations in the series will be posted in April and May.) In this conversation, we explored board work in various jurisdictions, noting differences and similarities along the way. While a 20-minute whistle-stop conversation is hardly sufficient to do the task justice, I do hope it encourages you to explore further, and is a catalyst for some conversations. And, may I ask... is the commentary helpful or not? What do you agree or disagree with? I'd be glad to hear your thoughts, either in the comments section below, or directly, if you prefer. As regular readers know, I read widely; topics I explore span (in addition to core themes of corporate governance and strategy) include philosophy, neuroscience, business, history, military strategy and more besides. I usually take notes, as an aide memoire for later reference. Some articles are memorable, others less so. This one recently-published article piqued my attention because it reminded me of a question I face most weeks: "What do you do?" Most enquirers expect to hear a job title or a profession, to enable them to 'position' me, which is fine if the 'job' is a well-known profession or vocation, such as a doctor, teacher, plumber or lawyer. But what about a director, or an advisor? Is offering a one-word response helpful? Might it enlighten or obfuscate? For those who understand the roles of director and advisor, one-word descriptors are adequate. But for others (the majority, even most?), the response is more likely to an awkward smile, as if to say, "I wonder what one of those is or does? Does he mean a company director, a movie director, an orchestra conductor, or something else?" or, "What is an advisor? It sounds like a fancy name for a consultant." What an unhelpful interaction! Clarity and simplicity are vital if we are to communicate effectively. And the effectiveness of what we utter—whether our message got through—is determined by the listener not the speaker. With this in mind, I try to read the person before answering. If they appear knowledgeable of business matters, I tend to say I work with boards, sometimes adding that I help them see around corners and govern with impact; an advisor. But if not, I say I'm a troubleshooter who works with business leaders, or something along those lines. One thing I never say: I'm a consultant—they are people who make decisions and implement things for others. I don't. Rather, I ask questions to gain insight and make suggestions. Whether the client takes up the advice or not is their decision. So, returning to the headline question. The words we utter: do they matter? Yes, they surely do, if we are to communicate well.
Recently, I announced the findings of empirical research conducted over an eight year period. The aim of that research was to discover how many boards are fully aligned in relation to corporate purpose. The findings were staggering: five per cent of the participating boards—yes, one in twenty—were completely aligned in relation to corporate purpose. When asked, every director and executive had an answer, but only five boards (out of one hundred and three, to date) had one answer. How can any board do its job (make informed decisions, and provide effective steerage and guidance) if it has not first agreed on an objective (purpose) to work towards? Compare this situation with that of a plant. The example in the picture—echium vulgare, or, more commonly, viper's bugloss or blueweed—is as good as any. Echium vulgare, a native of Europe, is an introduced species in parts of north-eastern North America, south-eastern South America, and New Zealand. The plant is toxic to horses and cattle, but the bright blue flowers are very attractive to bees. And, despite the toxins in the plant, honey produced from the nectar is very tasty indeed! "So what?" you might ask. To compare a board and a plant seems a little odd. Yes, maybe, but please allow me to explain. E. vulgare, like all other plants, has a single purpose, which is to grow and reproduce. All the plant's energies are dedicated to this single goal, using the resources available to it. Nothing more, and nothing less. In contrast, many companies operate without an overarching and enduring goal, as the research mentioned above shows (save to make a profit). And that begs another question: how can any organisation realise its full potential without first establishing a clearly defined and achievable goal? 'Purpose' has become a hot topic in board, shareholder and stakeholder circles. Some have interpreted purpose to mean mission and vision: an overarching goal the company intends to achieve. Others have a different understanding—one that positions the company as a servant of society, as the question below illustrates: How can a company not be in the business of improving human health and making the world a better place? This question, posed by a US-based leadership consultant, positions purpose as a catalyst to influence or resolve an external societal or environmental situation. In effect, the underlying expectation is that the company prioritises something external and, most probably, well beyond the company's means and ability to influence, much less achieve. The difference between the two understandings is stark, as are the implications. Readers will, probably, gravitate towards one or other, and some may hold such strong views as to be offended by 'the other one'. And that is okay; shareholders and the board can strive to achieve whatever they want—such is their prerogative. What matters is that every board takes responsibility for answering the question, of why the company it is charged with governing exists. Essentially, "For what purpose?" Without this, the company will lack a North Star, and efforts to create a meaningful strategy, let alone allocate resources well and achieve high levels of performance, will be fraught. But, if purpose is clearly stated, and agreed and understood by every director and all key staff, the company will not only attain membership of a most desirable club—the Five Percent Club—the board will have established a robust foundation upon which a coherent strategy can be developed, resources allocated, decisions made, and the full potential of the company pursued. And that, I think, is a good thing.
A few weeks ago, while facilitating a board masterclass at Naivasha, Kenya, I had the good fortune to see some local wildlife at close range. Some people consider walking in close proximity to wild animals to be dangerous, for it may portend harm or injury, but others embrace the activity with open arms. Thinking, that well-spring from which ideas and insights emerge, innovations are birthed, and humanity progresses and flourishes, is similarly polarising. One of the things I have been thinking about recently is quite selfish: What direction should I take my writing in 2024? Musings is nearly twelve years old (first entry was in March 2012, which coincided with my doctoral research efforts, and sharing of conference papers and articles). While the longevity makes it a rarity, my motivation has not changed. It has been to share thoughts on corporate governance, strategy and boardcraft; our place in the world; and other topics that catch my attention. Apart from the introduction of 'boardcraft', a word I coined in 2020, this overarching goal has remained consistent since day one. From humble beginnings, when entries garnered just a few readers, the blog is now widely read. Over the years, many readers have been graciously engaged in a discussion about a topical matter, or asked for help to realise potential. And that has been wonderful, thank you. And, as you might expect, some entries have garnered high attention; others less so. Readers seem to prefer pragmatic guidance over provocations or calls to think more deeply about something. Recent examples of the former include writings on questions, chairmanship, and storytelling. Now, as we stand on the cusp of 2024, my hope is that Musings remains relevant and useful into the future. And with that, may I ask a favour? (Actually, provide an opportunity, to crowdsource Musings!) What topics and style would ensure Musings remains relevant and useful as it moves into its teenage years? Do respond in the comments block below, or send me an email. And, thank you in advance.
The end of 2023 is nigh; consequently, minds have turned to end-of-year celebrations, various secular and religious festivals, and, inevitably, reflections. Twenty twenty-three has been a standout year for me for several reasons, not the least of which have been many expressions of encouragement, support and endorsement as I have sought to help boards govern with impact. That I have had the opportunity to contribute is a delight. But more than this, the seemingly simple fact that directors, boards, shareholders, institutions and others invite me to advise, assess, educate, speak and otherwise provide counsel, is a great honour. Thank you to everyone who has sought me during the year and entrusted your situations to me. These are cherished interactions. As I sit back, in these final hours of the 'business' year, I have found myself pondering 'reach'. This, a response to a question from a friend who, knowing of my recent trip to Kenya, wanted to know how many countries I had visited in 2023. When I checked back, this is what I discovered:
Superficially, this sounds like a busy year. And it has been. But, I hasten to add these data are neither targets nor badges of honour. They are, simply, footprints: evidence of my travels as I have sought to help boards govern with impact over the past year. Looking to 2024, my intent is to continue to serve—subject to boards and directors wanting guidance, of course! For now though, my objective is more selfish: it is relax, read and recharge, in readiness for what lies ahead. Best wishes as you close out 2023, and turn the page to reveal 2024.
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