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    Ideas: Reading to relax and recharge for the journey ahead

    Language Readings
    Have you ever arrived at the completion point of a major project, breathing heavily (as it were) having expended much mental and emotional (even physical) energy on the journey, only to find yourself twiddling your thumbs and wondering about the challenges that lie ahead? While some folk are anxious to move on quickly (those defined by busy-ness or a fear of idleness perhaps?), others happily use the time to read—both to relax and to recharge the mind for the journey ahead.
    I have been happily working my way(*) through the following books since completing the doctoral dissertation on 1 June. I commend them to you and, if you choose to open the front cover, trust you gain much enjoyment from the experience.

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    Why things matter to people, Andrew Sayer.
    Sayer shows how social theory and philosophy need to change to reflect the complexity of everyday ethical concerns and the importance that people attach to dignity.
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    Akenfield, Ronald Blythe.
    This modern classic gives voice to the inhabitants of a rural village in Suffolk, England, was an early and shining example of what an oral history could be.

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    Half man, half bike: The life of Eddy Merckx, William Fotheringham.
    A biographical narrative of cycling's greatest rider. On the bike, Merckx had an insatiable appetite for victory. Off the bike, he was sensitive and surprisingly anxious.
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    Russian Roulette, Giles Milton.
    An historical account of how British spies thwarted Lenin's attempts to destroy British India, the intrepid activities of which led to the formation of MI6.
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    The price of inequality, Joseph Stiglitz.
    Stiglitz discusses the social impacts and causes of inequality, and the economic and political impacts of what appears to be a growing problem.
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    The fish rots from the head, Bob Garratt.
    Garratt's much acclaimed book, considered a classic by many, clarifies and integrates the roles and tasks of directors, and includes a programme to help them develop the skills and approach required to do their job well.
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    To the edge of the world, Christian Wolmar.
    A fascinating history of he construction and operation of the trans-Siberian Railway, including its impact on Russian society and relations with neighbours.
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    One summer: 1927, Bill Bryson.
    A narrative of the reckless optimism and delirious energy that characterised America in the summer of 1927.
    (*) This is very much a work-in-progress. As of 4 July, the 'score' is four books down and four to go, and several new research and board practice ideas to boot!
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    Directors: Are you paying attention?

    Accountability Decision Making Governance Performance
    This call might not be popular in some quarters. However, emerging research appears to suggest that attentiveness (by way of active engagement in board practices, and strategic management tasks in particular) is crucial if directors are to have any hope of making a difference to the future prospects of the company they are charged with governing.
    If teamwork and effectiveness in the boardroom is important to you, it is likely to be important to your colleagues as well. Does your board have an established protocol on such matters? If not, a good starting point might be to schedule a discussion at an upcoming board meeting. 
    The board is the ultimate decision-making body in every company—it holds the mandate to optimise company performance in accordance with the wishes of shareholders, and it is the shareholders to whom the board must provide an account for their actions (or inaction). This is a weighty responsibility, especially when you consider the plethora of internal and external factors that can affect company performance. 
    Yet some directors seem to be more interested in collecting appointments than in adding value. Things can change in the blink of an eye. Consequently, directors need to be attentive (by guarding against distractions, tiredness and having too many irons in the fire especially) if they hope to fulfil the responsibility delegated to them by shareholders.
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    On Nike, Knight and changes at the top: Power games

    The appointment of a new chief executive to succeed a successful founder is a complex challenge. The question of whether Parker will remain President and CEO if and when he becomes the chairman is unknown. To vest that much power in one person is a huge call. Another factor is whether the successor measures up (we could be about to witness another Microsoft–Ballmer scenario). The alternative—an external appointment—is not without risks either (remember John Sculley's time at Apple?). Whether Parker is the best man for the job or whether the long-term interests of the company and shareholders would be better served by an outside appointment remains to be seen. Whichever way the future of Nike unfolds, the story is likely to  be intriguing and, as a result, provide fodder for scholars of board practice and organisation behaviour to refine their ideas about leadership, corporate governance and value creation.

    One of my sporting heroes(*), Nike co-founder Phil Knight, has announced his intention to retire as chairman of the Nike board. From humble beginnings (selling shoes from the back of a car), Knight grew what can best be described as a sporting goods empire. Now, Knight wants Nike President and CEO Mark Parker to succeed him as chairman. Is this a good thing? Clearly, Knight has been instrumental to the company's success to date. But what of the future?
    • The demands of running a successful company are quite different from chairing a strong and effective board of directors. Will Parker make the transition effectively?
    • Knight wants his man, Parker, to become chairman. While any person has the right to make suggestions, this level of influence (Knight is effectively anointing his successor) suggests an inordinate level of power and control in bound in one man. What do the other directors think? Do the other shareholders have a view?
    • More generally, if one man holds sufficient power to 'make the calls', is the Nike board an effective decision-making body, or is it simply a puppet?
    (*) The first pair of running shoes I ever owned were emblazoned with the now famous swoosh. My track coach convinced me that my 1500m times would drop if I ran in shoes. I was living in the USA at the time (circa 1979), and the Nike revolution was just getting underway, so I bought two pairs—one to train in and one to race in. Both pairs of shoes were great: they looked good and I felt great wearing them. And my times? Let just say all of my PBs and best race results (on grass, cinder and Olympic-grade tracks) were achieved in bare feet!
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    Is it time to accelerate your company's success?

    Decision Making Governance Management Performance Speaking Engagements Strategy
    If any of these questions triggered a thought in your mind, then perhaps we should talk. I will be in the UK in 1–11 September (for speaking engagements including the results of my latest research). If you would like to learn more about board practice, corporate governance, strategy and value creation, please get in touch so we can schedule a discussion. I'd be glad to learn about your business and understand how I can help. 
    • Are you eager to realise the potential of your UK-based business?
    • Do you have a robust strategy in place to drive the future success of your business?
    • How is your board of directors performing? 
    • Would you like to see more value from your board?
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    Corporate governance: Is it time to return to first principles?

    Governance Research
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    Thirty years ago, the term 'corporate governance' rarely rated a mention. However, an awareness of boards and corporate governance has grown in the minds of the general populace as a steady stream of reports—of corporate failures, scandals, moral failures, hubris, incompetence, judicial investigations and sanctions—have been published in the popular press. In fact, the term has entered the lexicon to such an extent that it is routinely mentioned and all manner of faults are attributed to it, even though it is rarely defined. FIFA, HSBC and now Renault F1 are recent examples. Further, the systemic response to each 'wave' of corporate failures has become quite  predictable: The introduction of hard law (statutory regulation) and, in the case of publicly traded companies, stricter codes of compliance. The goal of such measures is to prevent reoccurrences.
    While well-intentioned, the costly actions of legislators and code writers have not led to any discernible improvements in corporate behaviour or performance. Consequently, some groups have become quite vocal; the reputation of boards and business more generally have become tarnished as a result. Worse still, the research community, which has been studying boards for forty years or more, has yet to propose any credible explanations of how boards could or should work. That this much effort has been expended without 'success' (excepting a raft of spurious correlations) is a travesty of justice. It also points to a deeper problem. Our underlying assumptions could be wrong.
    The evidence suggests that less is known about boards, board practice, director behaviour and corporate governance than what most of us have assumed to be the case. This is not good! However, all is not lost, for two pathways to knowledge seem to be available. One option is to continue to use existing tools and techniques in pursuit of a deterministic 'truth' about boards (assumption: on the right path, just not there yet). The other option is to take stock, on the chance that the contemporary understanding of ownership, shareholding and control; and popular conceptions of board practice and corporate governance are actually founded on a less-than-firm footing. But that would mean putting popular models and ideas to one side, which could be a bitter pill to swallow. Which is the best option then? Might a return to first principles be necessary? I'm starting to think so. What do you think?
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    What makes a CEO succession plan appropriate?

    Accountability Decision Making Ethics Governance
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    Succession plans are an appropriate tool to mitigate risks associated with the departure of a key executive. However, they are not normally this prescriptive ("chairman...has taken over as CEO in accordance with the company's succession plan"). To name the chairman in the succession plan does not seem to be appropriate. It is hardly in the best interests of the company. What about other executives or an external candidate? While directors filling roles temporarily—and even gaining a permanent appointment—is not without precedent (Ralph Norris at Air New Zealand being one notable case), the decision of the Coalfire board to pre-empt a contestable process seems to be somewhat short-sighted.
    An appropriate chief executive succession plan usually outlines the process by which the board will approach the task of filling a vacancy, including how decisions about the appointment of an acting chief executive will be made and how the board will work with the acting chief executive in the interim. However, smart boards go further than this. They work hard to identify potentially suitable candidates from amongst the executive often many months (sometimes years) before the vacancy occurs. The Coalfire case is unusual in that the chairman was named in the succession plan. One presumes this decision was made when the board thought the chairman was the best and most suitable candidate. However, that decision was made at some point in the past. Whether the chairman continues to be the best candidate does not appear to have been tested. I wonder what the shareholders are thinking just now (*). 
    (*) My condolences to the family and friends of Rick Dakin at this time of his unexpected passing. This muse reflects on the decison-making and succession planning practices of the board both before and after the event of his passing. It is not intended to lessen Dakin's impact on the business nor the magnitude of his loss.
    Of all of the roles within a modern corporation, the role of chief executive probably ranks as 'the most important'. Although the board carries the ultimate responsibility for the performance of the company, the chief executive is the standard bearer—they hold and cast the company's vision. The chief executive is also accountable to the board for the implementation of the company's strategy. Consequently, the role is crucial to the long-term performance of the company—an unexpected departure can leave a company floundering while a replacement is sought.