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    MediaWorks: a gross failure of governance?

    Accountability Ethics Governance Leadership Performance
    MediaWorks, a broadcasting company that owns several radio, television and internet brands is doing it tough, this week especially, to the extent that the wheels appear to be falling off. Consider these recent events:
    None of this augers well for a company that is struggling to maintain mindshare and marketshare against the national broadcaster, Television New Zealand. A blind man can see something is wrong, badly wrong.
    ​My sense is that the spotlight needs to be shone on the board. After all, it is the board that holds the ultimate responsibility for overall company performance and the various contributory pieces including culture; values; strategy; and, the performance of the chief executive. That the company has been struggling for a couple of years or more, and seems to have been (blindly?) experimenting with programming options suggests that the board doesn't have a good grasp on things. ​
    Sadly, MediaWorks is not the first company to trip in this way, and it won't be the last.
    Several years ago, I studied another company with a successful track record that, unexpectedly, began to fail. Though operating in a different sector of the economy, that case (sorry, I can't disclose the details) had similar characteristics to the MediaWorks situation. The board had hired a sanguine chief executive to craft and implement a new growth-based strategy. The board gave the chief executive plenty space to operate, to such an extent that it did not scrutinise the chief executive or company performance adequately. Ultimately, the strategy was flawed and the board only worked that out when a staff member blew the whistle. The board had been gamed—it had been asleep at the wheel. To its credit, the board's response was strong: it released the chief executive and many directors resigned as well. Shareholders were briefed, and they were invited to recruit a new board and 'start again'. Within six months, the company had a new board and chief executive; its 'reason for being' (core purpose) was revisited; a new strategy was developed to achieve the purpose; and, resources were adjusted to suit. The company got back on track and it continues to perform well to this day.
    Perhaps it's time for the MediaWorks board to also respond to the signals, by looking in the mirror; reigning in the culture of hubris and excess that seems to have pervaded the company; and, making some much needed adjustments. The fish rots from the head, after all.
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    What is going on with New Zealand's largest company?

    Accountability Decision Making Ethics Governance Leadership Management Performance Strategy
    Picture
    After several years of paying high milk prices to its farmer-suppliers, Fonterra has hit hard times. International demand for milk products has slumped. On the supply side, prices paid to farmer-suppliers have tumbled. Some have said the problem is primarily related to changing demand especially in China, whereas others have suggested that Fonterra is complicit having stimulated supply to 'feed' its massive processing plants. To make matters worse, Fonterra has started losing farmer-suppliers to its competitors and it seems to be exercising "considerable discretion" with payment terms as well. 
    The latest commentary, an interview on Paul Henry's breakfast show today, lay out some of the challenges in plain English. Click here to watch the video clip. (disclosure:  James Lockhart is my doctoral supervisor, but had no prior knowledge of this interview.)
    The situation, which has been brewing for a several years, is messy to say the least. Other companies including Tatua and Open Country Dairy seem to coping much better. This begs several questions including whether the Fonterra board and management are actually in control; whether the corporate strategy is sound or not; and, whether the company has the financial and managerial resources to respond effectively. While I'm nowhere near close enough answer these questions, the old saying "where there's smoke there's fire" seems to apply.
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    Institute of Directors' Annual Conference: A miscellany of observations

    Conferences Governance
    Some three weeks have now passed since the Institute of Directors' Annual Conference was held at the salubrious Langham Hotel in Auckland. I attended this year for the first time, and did so with an open mind having heard mixed reports about previous editions. Some 450 experienced and aspiring directors, media, consultants and Institute staff attended the one-and-a-half day event.
    Some general observations, in no particular order:
    • The conference was well organised but it was large, loud and expensive. Sessions started on time and the catering was 'on the money'. In contrast, the wall-to-wall screen that spanned the front of the room was a bit over the top. Yes, delegates could see the presenter, video clips and any slides used during presentations, but at what cost? If the goal was to stage an event with 'big name' presenters, the organisers succeeded in the minds of many. However, if the goal was to host a conference for directors, to share experiences and knowledge to enhance board effectiveness, then other less showy approaches may have worked as well.
    • Four specialist workshops were offered in addition to plenary sessions. These covered the digital director; corporate reporting; planning for intergenerational wealth; and, health and safety. Run twice, delegates had the opportunity to select two of the four workshops, one of the first day and another on the second morning. The workshops I attended ran more like a panel discussion than a workshop with relatively little participation from the floor.
    • The two 'best' presentations by some distance were delivered by Dr Kirstin Ferguson and Dr Jane Cherrington. Dr Ferguson, an accomplished company director from Australia spoke on 'safety governance' using findings from her recent doctoral research. She spoke about real issues that directors need to grapple with, director responsibilities and introduced a helpful framework to assist directors determine whether the company is operating a safe workplace. Dr Cherrington spoke about the human side of governance. She asserted that values matter because they provide the moral compass for decision-making; and that companies need to know why they exist (their purpose). Without these both in place and lived in the day-to-day activities of the company, the dominant logic (profit and greed) takes over. I couldn't agree more.
    • In contrast, some presenters delivered thinly-veiled promotional pitches. Mr Alan Joyce (CEO of Qantas), for example, spoke about his role turning around the airline (with liberal use of the personal pronoun throughout) and the airline's strong promotion of LGBT 'rights' (although this was veiled within a diversity narrative). Leaving the diversity agenda aside, several people told me privately that they would rather have heard the board's perspective. One questioned why a CEO might be invited to speak about themselves and their 'successes' at a conference for directors. I suggested they ask the organiser, and lobby for more presentations from directors in future.
    • Another brickbat. Sponsored baristas served hot fresh espressos during breaks between sessions. However, the queues were very long and, annoyingly, the service was not available during sessions (despite quite a few delegates meeting informally in the trade stand and networking area).
    • A bouquet. The organisers scheduled long breaks, thus allowing plenty of time for networking both to make new acquaintances and chat with colleagues. This seemed to be appreciated by many.
    Overall, the mood of the conference seemed to be upbeat. However, I came away with mixed feelings. Apart from Drs Ferguson and Cherrington, the conference delivered little in the way of critical analysis or case study examples to help directors do their job better. Similar conferences that I've attended overseas make learning a priority. They schedule research streams (peer-reviewed papers discussing emerging trends); plenary panel discussions; 'live' case studies; and, half-day highly interactive workshops on sector- and subject-specific topics of direct relevance to smaller groups of directors. The ICGN Annual Conference stands out as a great example. I hope the organisers see fit to consider 'bulking up' the conference programme in the future, both to broaden the appeal of the conference and to deliver additional value to the delegates—especially directors of smaller entities. The Institute should also consider scheduling its Annual Meeting within the conference programme, to ensure higher levels of participation. I for one would make attendance a priority if these elements are added.
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    Breaking three weeks of silence

    Conferences Governance Phd Speaking Engagements Time Management
    This musing is a little more personal and introspective than most written here. It has been written in the spirit of one of my core values: openness. I hope you allow the indulgence.
    In recent days, three people have contacted me because they had noticed that Musings had 'gone quiet'—they had noticed that no new articles had been posted for three weeks. I was blown away, that people had even noticed, let alone reached out. They wanted to know whether everything was OK and if was I still writing.
    The short answer is 'yes, I'm fine'. The reason for the three weeks of 'blog silence' (is that what one calls the blog equivalent of 'radio silence'?) is that I've been very busy. Several demanding priorities saw me fully committed elsewhere (I won't bore you with the details, save to say that big task included making sense of some seemingly contradictory information related to a crucial aspect of my thesis). Then, an unexpected delay to one project resulted in me being overcommitted for a few days. As a consequence, something needed to give, so I temporarily stopped writing articles for Musings. That's all.
    The craziness of the past three weeks has passed, meaning normal transmission can resume. Top priorities in the short term are to tidy up the remaining loose ends before resubmitting my doctoral thesis; respond to several speaking and advisory enquiries; travel domestically and internationally to fulfil client and conference commitments; and, to write some new Musings articles (first up, a summary piece on the recent Institute of Directors Annual Conference). I'm looking forward to it.
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    Would you like to learn more about #corpgov and board effectiveness?

    Conferences Decision Making Governance Leadership Performance Research Speaking Engagements Strategy
    Are you based in or near London or Paris? Do you want to learn more about board effectiveness, corporate governance and how boards can exert influence from and beyond the boardroom?​ ​If so, please read on.
    In a few weeks I will be visiting London (24–31 May) and Paris (1–4 June) to speak with directors and trust board members about board practices, board effectiveness and emerging trends in corporate governance; share the results of my latest research; attend meetings; and, to present a paper at the EURAM conference.
    ​If you have a question (perhaps along the lines of these ones below) or a request and would like to take advantage of my proximity, please get in touch. I'd be delighted to hear from you and to schedule a meeting. ​
    • Do you want to increase the effectiveness of your board?
    • Would you like to know about my latest research on boards and firm performance?
    • Do you have a question about boards, board practice, corporate governance or a related topic?
    • Do you want to explore how to apply some of the suggestions I've shared on Musings?
    • Are you looking for a speaker to address an event or conference sometime in the next 12 months?
    If you've answered 'yes' to any of these questions...you know what to do. I am at your service.
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    Does good governance require a fresh approach?

    Accountability Governance Leadership Performance Tough Questions
    I've been pondering this question for quite a few years now, since reading a seemingly endless stream of articles about the global financial crisis of 2007–2009 published in the popular press and academic literature. Curiously, many authors identified the board as a source of failure (of corporate governance), yet few if any have offered positive contributions to put corporate governance back on the tracks. This apparent void was one of the motivations of my doctoral research quest. 
    However, from time to time, articles do stand out, because the authors speak out. Their comments may not be popular, but take a stand they do. Recently, the ICSA recognised one such author, Ruth Keating, who openly asked the question in a recent essay competition. Two sentences towards the end of her well structured and very readable essay say it all:
    “Corporate governance can do better, and with significant investment, capital and jobs on the line, it must. Good governance requires a new approach, because governance has become a formality to be satisfied rather than something which can be hugely valuable."
    My hope is that, by openly asking the question (as Ms Keating has) others might join the debate. One outcome could be a new understanding of corporate governance and a genuine commitment by the board to add value. Who knows where this might lead, perhaps even to a new normal, whereby boards expect to exert influence from and beyond the boardroom. If that is achieved, a new dawn might not be too far away.