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    Reading: On train wrecks and determinism

    Readings Societal Wellbeing
    The recent spate of train, bus and plane crashes in Western Europe, Canada and the US has, understandably, precipitated a series of articles by reporters, journalists and others. Some have reported the facts, while others have sensationalised the events, provided a human view, or speculated the causes of these disasters.

    Amongst the articles I have seen, one stood out because it raised some interesting bigger questions—of jumping to conclusions in some deterministic sense; of shoddy reporting; and, dare I say it, of cultural prejudices. I commend the article to you—perhaps to stimulate your mind as you take time out to enjoy a coffee—because it highlights the power of the written word to influence the way we perceive reality.
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    The value of long service on Boards: redux

    Governance Management Performance Societal Wellbeing
    A couple of weeks ago, I posted some thoughts about long service on Boards. My conclusion then was that ten to twelve years was a reasonable upper limit on service, beyond which the value of one's contribution starts to fall away.

    While the context of that post was corporate boards, the value question also needs to be asked of elected local body officials—Mayors and Councillors—for they hold a governance mandate. I raise this because an article published in the Dominion Post today highlighted the issues of long service and the need for 'fresh blood' in the Wellington City Council. The average length of service is twelve years. One Councillor has spent 27 years on Council. While some of the longer-serving Councillors were quick to defend their long stints, I couldn't help but get the feeling that occupancy in the role and advocacy of single issues (not to mention fees earned), had become more important than performance and public good in a number of cases (click here and here for examples).

    This latest example reinforces the opinion I expressed two weeks ago. Performance and contribution should always prevail over longevity and status. I hope the candidates and voters bear this in mind in the run-up to the local body elections this October.
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    Project management: why can't we get it right?

    Management Performance Research Societal Wellbeing Time Management
    Many years ago, when I was just a few years out of university, I heard an alarming statistic: that most projects (70% or more) were delivered late, cost more and provided less than originally planned. Some were never completed at all. I recall discussing this with my then colleagues and associates, because it seemed like an important problem that needed to be solved. My colleagues said that new systems and processes were being developed, and that this would alleviate the problem. 

    Fast forward a generation... Many systems and processes have been introduced—including MS-Project, PMP, Prince2, PMO and others—but have the expected gains been achieved? Sadly, they have not. As a recently published KPMG report indicates, most projects are still late, cost more, provide less or fail outright. On this evidence, little has changed. Much time and effort has been spent developing and promoting new systems—and millions of dollars are still being wasted.

    So, what's gone wrong, and why haven't things improved? In my view, most project management systems and processes have failed to deliver any material gains, because they do not address the vagaries of the most crucial factor: people. A more holistic approach is required. Rather than spend more effort refining systems and introducing yet more processes, attention needs to turn to the people factors. The research literature is replete with information to guide a new generation of people-focussed effort. However, until someone takes up the challenge—to deal with the motivational, behavioural and other psycho-social factors—I suspect the wastage will continue.
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    On change-friendly CEOs and the preservation of reputation

    Governance Management Performance Research Strategy
    I posted a link to an interesting article about change-friendly CEOs on LinkedIn earlier today. The posting seems to have struck a chord with several correspondents—both on LinkedIn and via direct message—so I thought some additional comments would not be amiss. 

    One correspondent suggested that interest in recruiting 'change-friendly' CEOs is nothing new, that advertisements have called for such attributes and capabilities for many years. I agree, because I've seen many similarly written advertisements as well.

    So why is the Heidrick & Struggles report news? I suspect it's because there is a yawning gap between desire and reality: advertisements call for one thing, yet recruitment processes and decisions prioritise something quite different.

    In my experience, many directors—particularly of larger, widely-held companies—seem to be more interested in preserving their reputations than in embracing change. They tend to make 'safe' choices that don't rock the boat too much. Rather than making choices that will enhance the company's future position, directors often make safer choices, to minimise the chance of failure and any resulting damage to their reputations. Protecting against failure can be smart, but when the mitigation of risk results in staying within safe harbours, the only loser is the company itself. How can a company succeed in a competitive market if it does no innovate or change in response to changing environmental conditions?

    The Heidrick & Struggles report is timely. It demonstrates that people are now talking about the right things. But when will Boards and shareholders take note of such reports, and adopt a more positive approach to recruitment, corporate strategy and company growth? Soon, I hope.
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    What corporate governance can learn from earthquakes

    Governance Management Performance Research Societal Wellbeing Strategy
    New Zealand endured a swarm of earthquakes earlier this week. The largest, at 6.5 on the Richter scale, caused damage and disruptions in Wellington. The CBD was 'shut down' for a day while damage was assessed and the area made safe. Thankfully, no one was seriously hurt. This morning, reports emerged that at least one heritage-listed building was too badly damaged for tenants to return. This highlights an interesting dilemma. We strive to preserve (and in some cases occupy) the past—hoping for the best—yet we need to plan for the future, lest unexpected events cause serious consequences.

    There are striking parallels between heritage buildings and corporate governance. Most directors know they are responsible for maximising company performance, yet most boards spend the majority of their time monitoring historical performance—looking backwards!
    Just as it is very difficult to drive safely if you spend most of your time looking through the rearview mirror, boards cannot hope to govern effectively if they spend the majority of their time reviewing reports and financial results. A glance to check progress should be sufficient. Directors need to take heed of this and change their focus, lest they inadvertently miss danger signs and run off the road as it were. Emerging research (including my current doctoral research, and an earlier project) suggests that time spent considering strategic options, developing strategy and making strategically important decisions—together with the executive—is time well spent.

    The earthquake event this week provided a wakeup call to building owners and occupiers in Wellington. An admiration of the past is not always the best option. Modern structures are needed to support modern society. Perhaps the experience gained through the earthquake can catalyse a change in the boardroom as well—from monitoring the past to planning for the future. Or am I hoping for too much?
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    Is long service helpful or is it a hindrance?

    Governance Management Performance Research
    An article that was published the Wall Street Journal this week—highlighting long service on corporate boards—has got me thinking. The author, Joann Lublin, provided a list of 28 directors who have served at least 40 years on a company board. That's right, on the same board. Gosh, that's seriously long service.

    In the last 40 years, much has changed in the business world including at least one oil shock (1973); a major stock market crash (1987); the emergence of the Internet and on-line commerce (mid-90s); and, a global financial crisis (2007–08). Yet through all of this time, some 28 men have continued to serve as directors on the same board.

    Is such long service helpful, or is it a hindrance? Superficially, we tend to applaud long service. It can be very helpful, particularly when difficult decisions need to be made. Long-serving directors are more likely to be able to draw on some prior experience—in terms of the situation, the decision made and the resultant outcomes—to help them make a more informed and appropriate decision this time around. However, things change, so experiences from years ago may not actually be that helpful in today's environment. Also, long serving directors can (and often do) become stale, and, as they do, their decision-making has a tendency to become more reserved.

    It is my view that a mix of fresh blood (for innovation) and longer-serving directors (for experience and continuity) is crucial to effective decision-making. Nobody is indispensable, despite appearing to be so at certain times. Ten to twelve years service is a reasonable upper limit, beyond which the value of one's contribution falls away. I found myself getting stale after eight or so years on a board that I served on during the 2000s, despite the organisation consistently exploring new innovations and strategic options. Based on this experience, how directors can continue to be effective contributors for three or four decades is beyond my comprehension. While I don't support compulsory upper limits on service, perhaps it is time for Boards and shareholders to look at their recruitment and appointment policies—for the good of the organisation and its stakeholders.