I was party to a fascinating conversation on Friday evening, with a gentleman—in the full sense of the word—in the lobby of a comfortable hotel in Lisbon, Portugal. The gentleman, a learned business professor, advanced in years but razor sharp of mind, was asked to comment on the Portuguese political situation, particularly as it related to the recent election and the selection of a new Prime Minister.
After a considered pause of some twenty seconds or more, and the repeated stroking of his furrowed brow, he responded. Speaking in somewhat broken but ultimately capable English, the professor said "Aah, the situation is interesting, very interesting. We have many challenges; Portugal needs strong leadership."
The professor went on to describe several challenges and difficulties, including that the highest polling party lacks the numbers to nominate their leader as Prime Minister and govern by majority. A complicating factor is that the President of Portugal will soon complete his term. The situation is unstable. If it cannot be resolved quickly, a coalition of minor parties including an extreme leftist party may try to usurp power and turn away from the gains made in recent years. The professor suggested that the main casualities will be the economy and the wellbeing of the people. The small audience of four leaned in as the professor spoke, enthralled by the palpable intensity of the situation.
The parallels and lessons for companies, and boards in particular, are stark.
Boards that are not united in purpose cannot hope to lead the company they are charged with overseeing effectvely. Similarly, chief executives without a clear mandate to lead risk stasis. Those that run agendae in variance to agreed priorities or strategies put the future prosperity (and, potentially, the viability) of the business at risk.
In society, democracy has it benefits, but only to a point. When a group of people—be it the electorate, a group of executive managers or a board of directors—can't agree, the organisation can't hope to compete effectively or make progress towards value creation goals. As with the Portuguese election result, such situations in business are not sustainable. Strong leadership is required, from the top, to break the deadlock.
As we parted ways, the professor graciously invited me to return to Portugal, both to spend more time with him and to share insights with business leaders. If the quality of our brief exchange is any indication of what might be possible in a wider context, I look forward to that day, and very much so. Thank you professor.
Thoughts on corporate governance, strategy and effective board practice; our place in the world; and, other things that catch my attention.