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    Is it time to think about a Young People Board?

    Diversity Governance Guest Post Leadership Research
    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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    Does the term 'corporate governance' need a spring clean?

    Governance Language Research
    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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    On the DNA of high performing businesses

    Accountability Governance Leadership Performance
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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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    On democracy, morals and business performance

    Accountability Ethics Governance Leadership Performance Societal Wellbeing
    Image description
    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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    Accountability. Is it too much to ask?

    Accountability Decision Making Ethics Governance Performance
    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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    Ten #strategy musings that generated much discussion in 2015

    Governance Leadership Performance Strategy
    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.