Musings

This is Musings—a collection of my thoughts on governance, strategic leadership and boardcraft; our place in the world; and other topics that catch my attention. Feel free to comment and share, as you see fit.

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Much has been written in recent years about the governance of organisations, boards and directors. Many different views have been expressed. With it, different understandings of the function of boards have emerged. In some quarters, 'governance' has become a panacea for all manner of organisational ills. Others speak and behave as if the board is a beating stick to 'keep the executive honest'. Relatively few have held true to the original concept (kybernetes: to steer, to guide to pilot). Consequently, it is little wonder that some new board members can be unclear about their role. 
The task of governance includes decision-making that affects the long-term future of the organisation. In other words, strategy and strategic decision-making. While the plethora of understandings abound, the question of how NEDs and board members ensure they stay strategic remains.
​I had the honour and privilege of hosting an on-line forum recently to discuss this question. A large community of UK-based board members gather every week to discuss governance matters of interest.  A summary of the discussion that I was involved with has been posted here, on Storify. Enjoy!
If you have any questions, or want to explore matters further, please get in touch.
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One of the enduring challenges that directors face every time they meet together as a board concerns decision-making. How do directors make smart decisions when 1). they often lack crucial information, and 2). the environment is fundamentally both complex and dynamic? The answer lies in the group of directors' (the board's) ability to make decisions, as one.
Why so? Legally, the board is a collective of directors. Individual directors make contributions to discussions and debates, but not decisions. It is the board that makes decisions. This transition—from the singular (individual directors, contributions, inputs) to the collective (the board as one whole, decisions, outputs)—occurs when directors meet (i.e., in board meetings, when the board is in session). If the transition is to occur well, all of the directors must be actively engaged their work—working together towards the decision, as one. 
Group decisions are much harder to make than individual decisions. Reaching agreement can be a minefield, especially if information is missing, trust is low or if directors are more interested (sometimes covertly) in pursuing multiple agendas or representing constituencies rather than acting the best interests of the company (as the law requires).
How can boards get past this challenge, to make effective decisions on a reasonably consistent basis?
Recently, CGMA (Chartered Global Management Accountant, a joint-venture between AICPA and CIMA) tackled this question head on. Their report has just been released. You can read a copy of the executive summary here, or the full report here.  ​The authors make eight key recommendations for effective group decision-making:
  • Build greater trust
  • Value the non-financial data
  • Extract relevant data
  • Promote collaboration
  • Incentivise the medium- and long-term, too
  • Engage external stakeholders
  • Review the outcomes
  • Be patient
I commend this report to you, especially if effective decision-making has been a challenge for your board over the past year or so. Share it with your board colleagues and ask the chairman to schedule a discussion at an upcoming board meeting. If nothing else, you'll bring the expectation of effective decision-making out into the open. Or, the board may find that some behaviours or expectations need to be adjusted, and that a formal board review is appropriate. The discussion may also expose some larger but hitherto hidden issues including that the board may not be clear on the purpose or the strategy of the organisation. If this is discovered, some external advice and assistance may be in order. 
Regardless of the discussion and the outcome,  I suspect it will time well spent.
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The much storied Yahoo Inc. continues to consume column inches (or, pixels if you consume your news online). From bold beginnings, Yahoo has endured a mixed career as an Internet search engine business. Current chief Marissa Mayer has had her fair share of headlines as well, including some stinging criticisms over some of her management decisions. Now, with a proxy fight looming, Yahoo has issued this release, which has been reported by Ronald Brausch on Dealpolitik (and no doubt others). 
The release and associated commentaries make interesting reading, especially for students of corporate governance, strategic management and firm performance: For example, the release implies that ownership of the new strategic plan lies with the CEO. Consider these two statements:
  • Maynard Webb (Yahoo chairman) is quoted as saying, "The Board is committed to the turnaround efforts of the management team and supportive of the plan announced today."
  • ​Brausch writes "I think the board continues to support Ms. Mayer’s plan to turnaround Yahoo...".
​These statements raise a really interesting question. They imply that control lies with management. Does ultimate responsibility for firm performance not lie with the board of directors? Why has the board chosen to stand a little aloof from this? Are these statements simply examples of sloppy copywriting within Yahoo and on Brausch's part, or does control over the company strategy actually lie with the CEO?
While I have no doubt that some investors are keen to gain partial or complete control of the company (as Brausch reports), the commentary suggests that a more pressing challenge needs to be addressed if Yahoo is to become great again. The question of whether the board or the CEO is calling the shots and, therefore, is actually in control needs to be resolved, and quickly.
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A word of warning for business leaders and academics invited to speak at conferences run by an organisation called WASET (World Academy of Science, Engineering and Technology): Give the organisation a wide berth. WASET appears to be a genuine organisation that runs conferences but, if the many comments on the Internet are any guide, the conferences are a front for a scam of some sort.
I nearly got caught out. In early January, I responded to an invitation to submit an abstract for consideration at the 15th International Conference on Corporate Governance in Singapore. (I had been looking for a suitable conference to share an important aspect of my research on corporate governance and strategic management. The conference seemed OK, so submitted a half-page abstract.) A few days later, notice of abstract acceptance arrived, together with a request to submit the full paper for review. All good so far. But then...
​Two emails arrived today. One was an invitation to attend the conference. The other was notice that my paper has been accepted onto the programme—despite no paper having been submitted, much less reviewed! This didn't sound right. A quick search revealed many pages of blog posts and comments from people asking if WASET conferences are a scam, whether the conferences are fake, and other similar questions.
The decision to back out came easily.  Luckily, no intellectual property or money changed hands.
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Roger L Martin, a respected professor at Rotman School of Management and co-author of Playing to Win, has put the cat amongst the pigeons, with this commentary, itself a response to this widely circulated article. The authors of the original article reported findings from a study, which showed that only eight per cent of leaders are good at both strategy and execution. Martin contends that most leaders who are very effective at either strategy formulation are also very effective at execution. Quite a different view. Two different perspectives. Who is correct?
As with any report involving statistics, context is crucial. If you consider all leaders (as Leinwand, Mainardi and Kleiner did), only eight per cent are "very effective" at both formulating strategy and executing strategy. However, if you only consider only those that are "very effective at strategy", fully two-thirds are also good at execution (Martin's point). Thus, both authors are 'correct'. But which commentary is more helpful to leaders and those intent on achieving business success?
The shocking statistic is that just sixteen per cent of leaders are "very effective" at strategy formulation or execution or both. Turbulent times demand outstanding leadership, both to determine strategy and to ensure it is executed with excellence. Poor, neutral and even "effective" contributions have little chance of moving companies toward their goals if they are competing against "very effective" leaders. Consequently, 84 per cent of leaders will be found wanting (notice the Pareto Principle?). Rather than debate statistics, it may be more useful to move the discussion to discovering how to move more leaders into the "very effective" sector.
Another perhaps more important question—for boards of directors in particular—centres on Martin's assertion that strategy and execution are the same thing. Can the two tasks can be distinguished? 
Strategy formulation and execution are two of the four pillars of strategic management (development, approval, implementation and monitoring). My research suggests that business success is dependent on two things: having a clear sense of purpose and an effective strategy, and great execution. The former is an important task that boards and managers should work on together and the latter is the domain of management (only) once strategic decisions are made by the board. However, some flexibility is required because things change. Decisions and adjustments are required from time to time. If companies are to react and respond quickly, strong leadership is crucial to avoid mayhem. So where does that leave Martin's assertion, that formulation and execution cannot be usefully distinguished? What is your experience?
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Much has been made of the value of board 'going digital' in recent years. Many software-based systems have been produced including offerings from Boardpad, Diligent, Boardpacks and Board Management, amongst others. The benefits of these systems are reasonably self-evident: improved coordination and management of board reports, reduced administrative costs and improved security, not to mention far less weight to carry to and from meetings.
However, 'going digital' is not without its challenges. Some perhaps less credible claims have been made about software-based systems for boards, leading to misplaced optimism. Take the promise of increased engagement for example. Glance around the table at your next meeting. How many directors are listening intently, fully engaged in the discussion, and how many are covertly checking their devices for messages? Engagement with devices and systems has certainly gone up, but what of engagement between directors and with the topic at hand?
In my experience (hundreds of board meetings over the last fifteen years, as a director or an observer), the task of direction is a full-time commitment requiring total concentration, especially if the board is large and/or the topic at hand is complex. It's a tough job, with a hidden twist to boot. While directors attend board meetings, they don't make decisions—boards do. If directors are to do their job well, they need to express their opinions and concerns; ask questions; debate topics; listen carefully (to hear both what is being said and what is not being said); and, depending on arguments raised, they may need to gather more information and modify their opinions. Messages on electronic devices can wait.
​While computer- or tablet-based board productivity systems can improve the administrative aspects of board meetings (and greatly so), directors cannot afford to be at their beck and call. They provide no substitute for discussion, debate and collaboration as directors meet together to carefully consider important matters and make decisions. Let's not forget that.
[Postscript: Technology and devices are appealing. I get that. I'm happy to support the introduction of any system that improves director effectiveness. The challenge for directors is to learn how to use systems well, so they can concentrate on what they are actually there for—to make decisions.]
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Board rejuvenation is often considered and discussed, but statistics on boards member ages show little progress. The general public thinks a board of directors is a set of relatively old people. Common sense and corporate governance approaches lead one to think that the introduction of new ideas from younger generations would surely be a company asset.
Age diversity within a board is unquestionably desirable, but will one or two younger directors be enough? Probably not. In fact, except in exceptional cases (mainly in new technology fields), board members will probably be least 35 years old—hardly 'young' any more—by the time they have acquired the experience needed to be a skilled board director. Also, younger leaders often have full-time jobs, so will there be sufficient candidates available anyway? Recruitment of younger directors may be difficult and generally will not be enough to ensure that potential contribution from truly young people will be brought to the boards. How then to proceed ?
One approach to solving this problem might to be create a Young People Board, under the leadership of the official board—a 'shadow cabinet' of sorts. With slightly different goals, some municipalities use this approach. A Young People Board could be composed of 18 to 25 year old volunteers—a similar number of members as the official board. Recruitment could be for three-year terms (with renewal of one third every year). The aim would be to achieve multi-faceted diversity.
Periodically (say three times per year), the company board would invite the Young People Board to consider a topic discussed by the official board. The Young People Board would meet to debate the topic and develop proposals. Many ideas would emerge as young people naturally consider new technologies; social networks; data protection; ecology; ethics; and, international perspectives. Each year, a half-day meeting would be scheduled with the official board, to receive presentations and debate the topics studies by the Young People Board .
The Young People Board formula would be light, without any significant expenses or time commitment from the official board members. However, the process would enable official board members to be positively confronted with new ideas coming from truly young people. They may even retain some ideas for implementation!
Members of the Young People Board and, indirectly, their friends and relatives, would derive benefits including learning about the company activities, its executives and, importantly, the 'corporate governance' world. Through the process, the company may identify young talents for later hiring. The company could use this approach to improve its image, especially among young people.
Many speeches and writings advocate innovation. As one dwells on this, the realisation that innovation applies not only within technology areas, but also in organizational processes and the social domain. The Young People Board is a concrete example of this type of innovation. Is this something your board can support? If so, please contact Guy Lé Pechon at Gouvernance & Structures.
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Have you noticed how 'corporate governance' has pervaded the modern lexicon? The term is used in all manner of contexts nowadays. Some are appropriate and some less so. I wrote about this last year, off the back on a comment made by Rob Campbell. Here's a couple of fresh examples that I've heard used in the last sixty days:
  • ​That "more women are needed in governance". The speaker probably meant more women are needed on boards, to govern. The subtlety? Women are people and boards are structures, whereas corporate governance is a mechanism through which and by which boards act. I doubt more women are needed within the mechanism! Rather, more women are needed on the board, to activate the mechanism more effectively, in pursuit of desired performance objectives.
  • "We'll get governance to look at that", and the variant "That will need governance approval". The two different executives (same forum, I was the facilitator) meant that the matters on the table needed to go to the board for consideration. 
Both of these examples might sound a little contrived, but they are not. All three phrases were spoken, spontaneously and in my hearing, by capable and well-intentioned people. The people in the room knew what was meant, I think. However, these three vignettes set me thinking. Is our usage of the term 'corporate governance' starting to change—away from the original intention (describe the functioning of the polity, i.e., the board of directors) to something different, or have we become somewhat lazy in our usage? I'd be interested in your views on this one!
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What makes a successful business successful? Can success be pursued, or are great outcomes largely a matter of luck? Success, it seems, is dependent on companies doing a rather small number of things consistently well. Jim Collins (Good to great), Colin Campbell-Hunt (World famous in New Zealand) and others have studied this question and produced some great insights.
Recently, business advisory firm KPMG, added their view. The KPMG study revealed eight 'DNA traits' of high-performing enterprises, as follows (click image on right for a larger version):
  • Pivotal leadership
  • Attitude
  • Strategic anchor
  • Investment and resource allocation
  • Customer intimacy
  • Capable people
  • Connection and collaboration
  • Deployment discipline
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This guidance is as applicable to smaller companies with big dreams as it is to more mature companies wanting to defend against competitors or push on to the next level. Did you notice that a having great product or a killer app—often lauded as being 'the crucial difference'—does not rate a mention? This point has interesting implications for strategic management, and strategy development in particular. While good products and services are important, leadership, people (customers and team), smart decisions and a sense of purpose are far more significant moderators of business success.
If you'd like to discuss the implications of these observations for your board or your corporate strategy, please get in touch. I'd be more than happy to be a sounding board.
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As 2015 gives way to 2016, many people will be reflecting on the past and looking to the future; thinking about what was and what might have been. I'm no different. One of the books I've been reading while pondering the past and the future this week is The Servile Mind by Kenneth Minogue. A friend recommended it—he wondered whether the commentary might be applicable to directors and boards. My response, having read half of the book so far, is an unreserved 'yes'! Here's the note on the flyleaf:
One of the grim comedies of the twentieth century was that miserable victims of communist regimes would climb walls, sim rivers, dodge bullets, and find other desperate ways to achieve liberty  the West at the same time that progressive intellectuals would sentimentally proclaim that these very regimes were the wave of the future. A similar tragicomedy is playing out in our century: as the victims of despotism and backwardness from Third World nations pour into Western States, academic and intellectuals present Western life as a nightmare of inequality and oppression.
In The Servile Mind: How Democracy Erodes the Moral Life,​ Kenneth Minogue explores the intelligentsia's love affair with social perfection and reveals how that idealistic dream is destroying exactly what has made the inventive Western world irresistible to the peoples of foreign lands. The Servile Mind looks at how Western morality has evolved into mere "politico-moral" posturing about admired ethical causes—from solving world poverty and creating peace to curing climate change. Today, merely making the correct noises and parading one's essential decency by having the correct opinions has become a substitute for individual moral responsibility.
Instead, Minogue argues, we ask that our governments carry the burden of soling our social—and especially moral—problems for us. The sad and frightening irony is that the more we allow the state to determine our moral order and inner convictions, the more we need to be told how to behave and what to think.
Humbly, I commend this book to all directors who want to govern well and make a difference in 2016.
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History is littered with many stories of corporate successes and, sadly, almost as many failures. Why do some companies perform well over the long term while others become abject failures? Is it, as Jim Collins remarked in Good to great, a matter of luck, or is some other factor at play? While luck and environmental factors can be influential, I suspect there's more to it. A common thread that seems to weave its way through many of the success (Ford, GE, Johnson & Johnson, Xero, Facebook) and failure stories (Pan-Am, Enron, WorldCom, Satyam, and Toshiba, amongst many others) is captured in the title of this posting: Accountability.
All directors hold, by law, a fiduciary responsibility. In Australia, New Zealand (where I live) and many other commonwealth countries, that responsibility is to the company. In the USA, it is to shareholders. Tellingly, it is never to self (despite some directors behaving as if it was!). If directors are to serve shareholders (who appoint them) and also the wider stakeholder community well, moral fortitude ​is a requirement, as is competence and engagement.
The role of the director is one of service; of acting (read: considering information and making decisions) in the best interests of another party; and, ultimately, of being accountable for decisions made. Consequently, directors cannot afford to be asleep at the board table, nor be selfish in decision-making. Performance, accountability and ethics needs to take precedence over reputation and prestige.
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Alongside corporate governance and board practice, the topic that occupied most of my time in 2015—as an advisor, facilitator, researcher and writer—was strategy. The numerous enquiries and  discussions suggest that boards are starting to acknowledge that an involvement in strategic management in some form is appropriate. And not before time: boards are responsible for company performance, after all. 
Of the hundreds of articles published on Musings this year, strategy and strategic management received almost as much attention as corporate governance. These ten articles in particular stimulated plenty of discussion—and some folk sharing some strongly-held views as well!
If you want to discuss any of these postings (or ask a question about a related topic, or request some assistance), please get in touch. I'll do my best to respond within 24 hours.
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The topic of corporate governance—that is, the functioning of the board—has generated much interest in the business community and beyond in 2015. From failures and successes, to emerging ideas and beyond, corporate governance has been front of mind for many throughout the year. Looking back, over 150 articles on corporate governance were added to Musings during the year. Here's a list of ten musings that generated the most discussion in 2015, in no particular order.
The top ten #strategy list will be posted on Dec 26.
If you want to discuss any of these postings (or ask a question about a related topic or request assistance), please get in touch. 
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As a director, where does 'risk' feature in your considerations? Is risk something that gets close attention only when a major proposal is being considered around the board table or when a significant and unforeseen problem occurs? Away from major events, is risk something associated with a register of items (that receives cursory attention)? And whose job is it to identify and manage risk in a company, anyway?
Should boards rely on management to report both accurately and well, or do boards need to probe? If boards wait on management, as happened at the Christchurch Council a few years ago, the board is entirely dependent on the propensity of management to report risks both accurately and in a timely manner. If they do, well and good. If not, the consequences can be dire.
Boards have a duty of care to ensure resources are applied well and that expected results are achieved. Verification is a crucial—to ensure projects are on track, that expected outcomes are being achieved, that material risks are being identified and that satisfactory mitigations are established. ​To monitor is insufficient.
To remain silent and to rely on management reporting (only) is to abdicate one's responsibility. Take this current case, a project that has been allowed to run 100 per cent over budget. What got in the road of objective scrutiny? Hubris, ineptitude, incompetence or something more sinister? Might this problem have been avoided if hard questions were asked early on? Directors need to remember their fiduciary duty. The priority is to serve the company, not self. 
Directors need to be as cunning as foxes, checking and probing from several angles, in case a problem lies in wait. The best time to ask probing questions is 'now', before it's too late.
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It seems a question I posed last week, which asked whether our understanding of corporate governance might be flawed, struck a chord. Many readers replied via email and LinkedIn, and two picked up the phone to discuss the matter further. The general tenor of the feedback was supportive, which is gratifying. However, one person said they were confused by the corporate governance rhetoric. They suggested that an analogy might be useful, to help them (and others) make sense of various claims and counter-claims.
The best analogy that I know of is parliament (House of Commons, House of Representatives, Congress). When the House in session, Members meet together in the debating chamber to speak, debate and make decisions on various issues. Most people would agree that this is governance in action—parliamentarians working as a collective, presumably with some purpose in mind. But is this the extent of governance, or does the scope reach beyond the debating chamber? Take the following examples. Are these closely related activities governance?
  • The preparation of draft legislation.
  • Officials who enact decisions and statutes. 
  • Parliamentarians meeting outside the House, to promote points of view and test ideas.
  • The election of parliamentarians.
Few readers would have difficulty in giving these activities their correct names: drafting of statutes, implementation, lobbying and selection. None of these activities are governance. Intuitively, we know that the governance of our country only occurs in one place, the debating chamber, and even then only when the House is in session. ​Assuming the analogy is fair, why is the scope of corporate governance viewed so differently by so many?
Is this analogy helpful? If you know of another that works well for you, please feel free to share it, so we can all learn from the exchange.
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This muse is the second in an occasional series being written over the holiday period entitled Tough questions about boards. The first muse considered the question of board size. This one looks at board commitment, by asking the question:
  • How many directorships is it 'reasonable' for a competent director to hold at any one time?
The number of concurrent board appointments is a touchy topic for some directors, especially those who think in terms of turning and contributing 'on-the-fly'. How any director can expect to make meaningful a contribution without reading reports and thinking critically about the matters at hand well in advance of the actual board meeting is beyond me. I've written about this before. Then, I suggested that four concurrent directorships (of mid-cap publicly-listed or privately-held companies) was a reasonable upper limit for any director that hoped to make a meaningful contribution to board discussions, decision-making and, ultimately, company performance.
The feedback at the time suggested the commentary struck a nerve, and that change was coming. Now, two years on, I'm not so sure. A conversation with a colleague earlier this week leads me to believe not much has changed. The colleague recounted a conversation he had with a director who off-handedly said that ten boards was her working maximum. "Beyond that, things get a bit hectic", she apparently said. Imagine that: ten boards! She must have a big brain to hold the details of ten companies, and know something about time management that most of us don't. However, that director is not alone, ​if the stories in this article are any indication. 
Why do boards and shareholders continue to ask busy people, including so-called celebrity directors, to join their boards when there are literally hundreds of highly competent director candidates (with sufficient space in their diary to learn the business well and make a meaningful contribution) available to choose from? Have they/we lost sight of why boards exist and of their role in value creation? On the evidence above, perhaps we have.
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​One of the enduring questions of my career as a board advisor and company director is this:
  • When and how did our predeliction for the term 'corporate governance' emerge?
​My father was a company director, of a large processor in the dairy sector for fifteen years. He hadn't heard of the term until six months before he retired in 2001, when a young director who had recently joined the board started using the term. To that point, my father thought that directors governed and provided direction, and he was not alone.
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A search back in time reveals that Eells (a researcher) was the first to use the term—in 1960—to describe the functioning of the polity (the board). Then, silence reigned until 1977 when the term appeared in HBR and subsequently in 1980 in academic journals. Yet since 2000, when the term entered the public's consciousness (perhaps as a result of media reports of hubris, incompetence, moral failures and fraud amongst directors), usage has exploded.
​Today, the term's usage has become so commonplace and distorted that a correction is needed.
​Corporate governance--the act of steering, guiding and piloting—describes what boards [should] do when in session. It does not describe and is not a proxy for the board itself, nor any other party or activity outside the boardroom. Regulators (to set rules), proxy advisers (lobbyists on behalf of shareholders and other interests), and shareholder meetings (communications) are all important, but none is corporate governance.
Rob Campbell, your call to address this misunderstanding is both timely and most welcome. Directors institutes, business schools and consultants should take note, lest the expectations of the market, regulators and shareholders—not to mention directors themselves—wander further away from their original purpose, which is to pursue business performance in the best interests of the company and on behalf of shareholders.
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What is the 'perfect' size for a board of directors? The debate has waxed and waned for years. Shareholders, nominating committees, researchers and boards themselves have asked a range of questions as they have tried to address the conundrum:
  • ​How many directors are required to get the work of the board done?
  • What is the ideal balance between quality and quantity?
  • At what point does cost become a burden (vs. value)?​
Answers to these questions have proved to be elusive. The reason? Context. Every situation that boards need to consider is, to some extent at least, unique. Consequently, a broad range of skills and expertise is needed in the boardroom, to address different issues that come up at different times. A configuration that works well for one situation may not work well elsewhere. Consider these vignettes:
  • What about a small board of three or four directors? One small board that I was on (four directors) was great at making decisions quickly, which was helpful for the fast-moving context within which the high-growth company operated. However, we really struggled when one director was absent. On several occasions, we found ourselves reaching for external help because vital skills were not present at the table. The board discussed the matter at length. A decision was made to petition the shareholders for a larger director's fees pool, a cheaper and more effective option that paying external advisors for assistance. Sadly, the petition was never presented: the company was acquired soon thereafter.
  • What about a bigger board, to deal with a range of complex issues? Last year, I was asked to evaluate a board with eighteen (yes, eighteen) directors. When they were asked about board meetings and board practices, the directors said that meetings "took forever", that group dynamics were "overly complex" and that several directors were "passengers": clues that something was wrong. After further discussion, including the desire to move in a new direction (purpose and strategy were MIA), one of the recommendations to emerge was to ask shareholders to consider reducing the board size to nine directors, via a 24-month transition period of fourteen directors. The recommendation was accepted, and both board effectiveness and company performance improved as a result.
These two cases demonstrate some of the typical challenges faced by small and large boards. While the best answer to the title question is 'it depends', a sweet spot does exist. Boards with between six and nine directors is about right—as Tracy Hickman reports—because board effectiveness seems to peak somewhere in this range. My research suggests bears this out. Boards with fewer than six directors have great dynamics and decisions are generally made quickly. However, small boards often struggle to deal with an array of strategic options, decisions and monitoring tasks. In contrast, group dynamics start to become unwieldy when the board size reaches double digits. Big boards are also expensive to run and the risk of passenger-directors increases markedly!
​If you'd like to know more about how to improve board effectiveness, or want to schedule a board review, please get in touch.
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Do you know why your company exists, it's raison d'etre? Can you provide a clear and succinct response to the question, or does the question leave you somewhat flummoxed? When I ask the question of others (it's usually the first thing I ask when leading a strategy development workshop), the most common response is a description of what the company does. But this does not answer the question! 
Most people (especially your staff, customers and suppliers) don't care what your company does, they want to know why. You need to be able to tell the story. This article, published by Harvard Business Review sums it up nicely. Here are some questions for your board to consider:
  • Does your company have a single, clearly-stated purpose?
  • Is the purpose consistent with the wishes of shareholders?
  • Is your company's strategy demonstrably linked to achieving the agreed purpose?
  • Has the purpose been communicated throughout the company?
  • Do people (the board, management, staff) buy in to it?
 Directors need to get their collective heads around these questions. It's a matter of leadership, and of accountability. Let me know if you need any assistance with this, I'd be delighted to help.
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​Nearly fifty chairmen, directors and company secretaries from around South-east Asia, the Middle East and Northern Africa gathered at the Ritz–Carlton Millenia Hotel in Singapore this week for The Boardroom Agenda conference. Delegates received presentations, shared stories and debated issues over two days (23–24 November), under the Chatham House rule. I had the honour of contributing to the discussion on the second day. Here are some of the takeouts:
  • Neal Cross, Managing Director and Chief Innovation Officer at DBS Bank provided a stirring keynote presentation to kick off the day. Disarmingly frank in delivery, his topic Fostering innovation in the boardroom was both challenging and well-received. Cross asserted that banks simply must innovate, and radically so, lest their market collapses around them as fintechs and large technology companies (read: Google, Amazon, Apple, others) eat the bank's lunch. He then outlined the DBS approach to innovation, which includes a three-day 'hackathon', whereby teams of staff are set up to create new product ideas. The resultant ideas are pitched to the board, and funding is provided to commercialise the best ones—entrepreneurship in action.
  • Raoul Chiesa, Board Member on the Italian Association of Critical Infrastructures delivered a wake-up call to delegates. Speaking straight off a flight from Europe, Chiesa, an expert of information security matters, summarised the history of hacking and the crucial need for boards to take information security seriously—all with some powerful (and quite alarming) case studies and real-world examples. Delegates were amazed at the scale of the problem and the material risk to commerce that 'the bad guys' present. The cyberthreat is widespread and poorly understood, especially in boardrooms. The message was clear: boards need to get up to speed, by receiving presentations and updates from experts; asking probing questions; taking a strategic view of risk; and, empowering the CEO to act.
  • The pre-lunch session took the form of a panel discussion and dialogue with delegates. I joined Ralph Ward at the front of the room. A wide range of topics were explored including the merit of codes of conduct; diversity in the boardroom;  the conundrum of balancing conformance and performance; confidentiality; conflict management; the conduct of effective board evaluations; and, the difference between so-called independent directors and independence of thinking. Delegates seemed to appreciate the candid responses from panelists, including recognition that no one-answer-fits-all; best practice often isn't; and that the work of the board can be messy.
  • After lunch, delegates attended one of two streams. I chaired the Board Insiders one. Dr Lim Lan Yuan, a Singapore-based business and law scholar and company director spoke first. He managed to squeeze forty years of experience into a thirty-minute talk. It was a sight to behold. Delegates were enthralled with his summary of how boards should work; how they actually work (or don't); the importance of a clear division of responsibility between board work and management activity; the importance of the board undertanding the business of the business, strategy and market trends; boardroom dynamics; and, anecdotes of associates that messed up (badly) and went to jail. That Dr Lim was able to move seamlessly between theoretical concepts, practical recommendations and real-life stories as he spoke helped the delegates gain considerable value from the talk. The only person who struggled with his commentary was me: Dr Lim covered off several of the points that I was going to discuss in the following slot. Consequently, a few on-the-fly adjustments were needed to extend the discussion to related areas of interest (see pic below). That the delegates heard similar stories and recommendations from two different speakers with different cultural and business backgrounds was hopefully encouraging—and supportive of the notion that 'good practice' is good practice almost anywhere.
  • The final session of the day was a 'deep dive', whereby delegates gathered around one of two tables to consider a table-question and to share experiences. One table was asked to identify factors that contribute to both good and bad dynamics in a boardroom, and the other was asked to discuss how a board should function in the event of a major crisis. The groups had 30 minutes or so to wrestle with the assigned question and then report back. The insights shared were great, and the good-natured banter demonstrated that the delegates had built a good rapport with each other. Thank you to Dr Lim and Curtis Chin who moderated the table discussions. You made my job of session chair very straightforward.
  • The conference was organised by marcusevans. Their people did a great job, both in the weeks leading up to the conference and at the venue itself. If you get the chance to work with them, take it.
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​I've come away from the conference with the impression that the quality of corporate governance and board practice in Asian and Middle Eastern economies is rapidly improving. Overall, the hunger to improve board effectiveness was plain to see, as was the desire to learn from those with experience gained elsewhere (if the many conversations, requests to return and business cards in my satchel are any indication). However, care must be taken to ensure that models and frameworks in use in the Anglosphere are not blindly implemented in this region. Such colonialism is unwarranted and patronising, and it may be culturally demeaning as well.

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