A seemingly small—but ultimately quite significant—statement emerged from the corporate governance sector this week. The CEO of one of New Zealand's larger companies went on record when announcing the company's annual result. He stated that his directors must act in the best interests of the company (not the shareholder).

Meridian chief executive Mark Binns said the company would take time to evaluate the situation but would ultimately come to a decision that was in the best interests of Meridian Energy Limited. ''The obligations of the directors are very clearly set out in companies law and the Companies Act, that is to act in the best interests of the company.''

This was a refreshing statement, because most directors and executives (in New Zealand) incorrectly believe their role is to act in the best interests of the shareholder. Research conducted in 2010 by Dr James Lockhart indicated that the majority of directors in New Zealand simply do not understand their legal obligations. The New Zealand Company Act is quite clear: directors must act in the best interests of company. Well done, Mr Binns.

Like hundreds of millions of viewers around the world, I have been watching the Olympics on television over the last week or so. Cycling, weightlifting and athletics are the sports that capture my imagination. The technical skill and mental capabilities of the athletes astounds me. How do they move so fast, throw so far, lift so high? In most cases, years and years of preparation go before a single moment, an opportunity to excel, to win.

Winning is important to competitors, and to nations. You just have to look at the response of those athletes that expected to win but didn't. At what point does winning become an unhealthy obsession? Winning needs to be held in context. Is the ultimate goal to vanquish others, to prove a point, or to fully realise one's one potential?

I get asked this question two or three times most months. Like any social institution, companies are complex and their success is subject to many variables. As far as I am aware, there are no cookie-cutter models that reliably deliver "point and shoot" type results. However, there are things company owners can do to increase the chance that their company will be successful. One of these is to establish a governance board. I'd like to suggest that a first board (or any board for that matter) can offer considerable value in three areas:

• First: strategy. Strategy is now widely (but not universally) accepted as a major role of the board. Owners are typically very busy, and they often can't see the wood for the trees. Also, many are not that good at generating or considering strategic options. A couple of carefully selected board members with well-developed strategy and critical thinking expertise can be really helpful to help understand the environment and set an appropriate course to navigate.
• Second: monitoring. Again, owners/shareholders are very busy! A board will help determine whether the company is performing to plan or not, and help sort out any remedial actions that may be required.
• Third: connections. Gaining access to resources (capital, skills, customers) can be a real challenge for smaller business owners. Directors can help in this regard, because most have a wide network of contacts and are happy to make introductions to secure access to much-needed resources.

These comments are offered in the context of owners of smaller companies becoming comfortable to "let go"—to open the financial records, to reveal the inner workings of the company, and to invite others to contribute to the generation of ideas and strategic options. These are all big hurdles for many owners. Yet they are hurdles which, if vaulted, can have big payoffs, through increased performance and a more sustainable future.

How does one get started down this path? Talking to people with experience is the best option in my opinion.  I am a strong advocate of professional bodies and organised networking groups. They are a good source of information, real-life stories, and, importantly, potential directors. Many of these groups schedule events where more experienced directors, researchers, business owners and CEOs to share case studies (good and bad), to help inform owners that might be considering an external board.

One final point. As an owner or shareholder you hold the control! You decide whether to establish a board or not, and you appoint the directors. And if things don't work as expected, you can (and should!) make changes.

How confident are you when it comes to grammar?

• Do you think an apostrophe was one of the 12 disciples of Jesus?
• Or a semicolon is a regular colon with an identity crisis?
• Do you scatter commas into a sentence with all the discrimination of a shotgun?

If you struggle with grammar, you may well be doing yourself a gross disservice. Kyle Wiens, lays it on the line in this article. He won't hire people with sloppy grammar. Whether you are looking for a job, working on a report, or simply tapping out an email communique, poor grammar may see your goal missed or your message overlooked. 

How well to do contribute in your work environment? Most of us rate ourselves fairly highly, but we all have blind spots. Today, Jessica Hagy offered some simple truths to help us lift our game. She suggested we all need six people around us, to challenge and encourage us to perform well.

Thanks Jessica, your thoughts were a timely reminder for me as I continue to wrestle with my doctoral research. 

The role the judicial system plays in the governance ecosystem—dealing with fraudulent directors, company failures and company liquidations—eats me up. So much value is lost through inappropriate boardroom behaviours and decisions. And shareholders are left to pick up the pieces (and in far too many cases, bury them). Commonsense tells us that it is far better to avoid danger than pick up the pieces afterwards. But how can and should boards improve their performance to avoid fraud or failure events?

Carly Fiorina, an experienced director and previously CEO of ICT giant HP, wrote an interesting piece today. You can read it here. She made some insightful observations:

• Too many Board members serve too long
• Too many board members go along to get along
• Dominate voices and cliques can reduce decision-making quality
• Some board members don't understand the business
• Some board agendas are too full

• Conduct self-assessments and performance reviews
• Institute term limits
• Make board appointment process transparent
• Make board (and particularly decision-making) processes transparent
• Shareholders should hold board accountable (through questions)

While Carly's comments reflect her US-centric experience, most of the observations and antidotes are equally applicable in other countries, including New Zealand. Notice most of Carly's antidotes relate to process and behaviour, and not to director competence (competence is addressed in antidote one only). Carly's call to hold boards accountable is on the money—because boards hold the ultimate responsibility for the performance of the organisation. 

In my experience, the challenge most boards face in this regard is one of implementation. How does one implement an effective governance framework that improves the prospect of good company performance and holds directors accountable? The recently updated The Four Pillars of Governance Best Practice (published by the Institute of Directors in New Zealand) provides a very useful starting point. This document provides useful best practice guidance and a clear code of practice—all aimed at helping directors and boards avoid the sort of carnage (and the expensive involvement of the judicial ecosystem) that we read about far too often in the newspapers. I commend it to all directors and CEOs.