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    New VW CEO wants a new strategy. Why?

    Accountability Decision Making Governance Leadership Performance Strategy
    An interesting development hit the press today: Matthias Mueller, the incoming chief executive of Volkswagen AG, reportedly wants to embrace a new strategy for the beleaguered group. That an incoming chief executive wants to put his mark on the business is not particularly newsworthy, it is commonplace.
    The interesting piece is the board's response. Will it entertain a new strategy, or will it assert its authority as the top-most decision-making authority? The challenge for the VW board is to decide whether the existing strategy is satisfactory and well-implemented (notwithstanding the scandal relating to the US market emission standards), or whether the company's strategy is flawed.
    Given the strong financial performance over recent years, the more likely of the two options is that the strategy is OK. If this is correct, the board's decision becomes a straightforward assessment of power. Who is in control, the board or the chief executive?
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    Stepping beyond the summer of (boardroom) malaise. But how?

    Accountability Decision Making Governance Performance Research Strategy
    Image description
    In recent months, news of another round of corporate scandals (Mintzberg thinks 'syndrome' is a better descriptor) have dominated our newspapers and Internet news feeds. All seem to be failures of corporate governance: HSBC, FIFA, Toshiba and, most recently, Volkswagen. While failure is nothing new, why have these failures occurred and why now? What's happening (or, more probably, not happening) in our corporate boardrooms at the moment?
    While each case is to some extent unique, an interesting pattern starts to emerge if we stand back a little and take a holistic view of several failures together: a well-regarded business, with both a strong trading record over an extended period and great brand equity commensurate with its public reputation, hits turbulence leading to failure or scandal. Questions are asked, investigations follow, significant irregularities are exposed and fingers are pointed. Eventually the spotlight is turned onto the board. All roads lead to Rome, after all.
    The seemingly steady flow of failures has seen a great malaise descend over the business and investor community during the northern summer. Measures developed to reduce the incidence of failure (including the OECD corporate governance principles and various in-country codes) have not had the intended effect. Indeed, they have rung hollow. To the casual observer, the situation seems to be bad, possibly hopeless. However, glimmers of hope are starting to appear.
    In the past six weeks, I have asked all of the director groups that I have spent time with for their opinion—as a litmus test of sorts. A strong majority of the 350+ directors across several countries (England, Eire, USA, New Zealand and Australia) say things need to change. Most think that current conceptions of board practice and corporate governance are not helpful if the goal of business is value creation; and that strategy needs to feature more prominently on the board's agenda. While most of the commentary is anecdotal, it is consistent with emerging research.
    Could this small sample of emerging and established directors of mid-size businesses be the vanguard of change? I've begun exploring ideas with several boards—on the assumption that the answer is yes. However, this is a case of the more the merrier so please get in touch if you want to 'join the party'.
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    Volkswagen emissions debacle: portent of a bigger problem?

    Accountability Decision Making Governance Leadership Management Research Strategy
    News that Volkswagen AG has been systematically pulling the wool over the eyes of its customers, regulators and the stock market has resulted in a predictable and rightful backlash this week. The stock price has plummeted, the brand reputation is in tatters and the chief executive is gone (albeit with a stellar severance package and not before attempting to deflect blame towards others).
    The crisis raises all manner of issues, and many different levels. That the board apparently knew nothing of the problem is a bitter pill to swallow. Why not? Was the board asleep at the wheel, or was something else amiss? That it then made all manner of comments heightened the concern.
    Once the emission cloud settles and people gather to understand the root cause, the folk at Volkswagen could do far worse than to look in the mirror—and specifically at how corporate governance is practised. That the two-layer board structure lacked knowledge suggests either ignorance (the board was asleep) or collusion. Neither option covers the boards in glory.
    Might this sad case take us closer to a tipping point, of finally admitting the extant conception of corporate governance (a compliance framework of processes and controls, predominantly) is conducive to neither long-term business performance nor value creation? And, if so, will action be taken to embrace new conceptions of corporate governance, board practice and value creation? For the good of all stakeholders and society more generally, I hope the answer is yes.
    Are you troubled by the Volkswagen experience? If you want to explore new conceptions of corporate governance that are informed by robust research and real-world experience, and test their applicability in your boardroom, please get in touch. I stand ready to help.
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    My doctoral research: progress, finally!

    Governance Phd Research Research Update
    Several weeks ago I reported, with a sense of frustration, the seemingly slow progress towards the examination of my doctoral research. The lack of any visible progress since the beginning of June has engendered a sensation not unlike a phony war. However, that changed late last week. Some sixteen weeks after the thesis was submitted for examination, a date for the viva voce has been set. I have been called to meet the examination panel on 22 October 2015. 
    That a date has been set is good news: I now have a target to work towards. A meeting has been scheduled with the panel convenor (1 October) to understand the process and, importantly, the expectations of the examiners. From there, preparations will start in earnest. The most pressing priority is to re-read the thesis from cover to cover—all 341 pages of it. It'll be interesting to see how much I can remember, given I haven't opened the document since the beginning of June!
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    "Involve the non-executive director in strategy"

    Accountability Decision Making Governance Performance Research Strategy
    The board's involvement in strategy has been hotly debated in some quarters in recent years, especially as the focus of attention for business performance has moved from the chief executive to the board. Is strategy the domain of management, or of the board?
    Thankfully, the extreme options (strategy is totally the responsibility of management or imposed by the board) are no longer widely supported. The discourse seems to be coalescing on the more collaborative options of a board-led, managment-led or a joint development process—although the merits of which one of these is 'best' continue to be debated.
    Once directors and managers understand what strategy is (check the graphic), a decision to actively involve the board seems obvious. If the purpose of the board is to ensure the long-term performance of the company, in accordance with the wishes of shareholders, why wouldn't the board roll up its sleeves?
    An increasing number of commentators are now nailing their colours to the mast on this point. For example, this article, published in Director (the Institute of Directors' magazine), recommends that all non-executive directors (NEDs) should be actively looking at all strategy options and be making strategic decisions. I couldn't agree more, but would add that all directors (not just NEDs) should be involved in the process, together. While this recommendation demands more of directors, emerging research seems to suggest the approach is not without merit.
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    Corporate governance & board performance: emerging research

    Conferences Decision Making Governance Performance Phd Research
    Are you interested in the latest developments in board and corporate governance research? If so, you might like a sneak peek at two new papers, both of which have practical implications for board research and boards in action. The full papers will be presented at two leading corporate governance conferences in Europe in November.
    Summaries of conference presentations will be posted here during the conferences. Use EIASM15 or ECMLG15 in the search field to go directly to the postings. 
    If you are interested in attending the conferences or want to know more about them, follow these links to the EIASM and ECMLG conference pages. If you want more information about my research (including its practical application in boardrooms), please get in touch.