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    Public consultation: OECD Principles of Corporate Governance

    Governance Performance
    The OECD is partway through a process of updating its Principles of Corporate Governance document. The current document dates from 2004. In the decade since, much about the way boards could, should or actually do work seems to have changed (although whether business performance has improved as a result of these changes remains an open question!), so an update makes good sense. A public consultation process opened on 14 November. It remains open until 4 January 2015.
    The link to the OECD's call for submissions is here. I intend to make a submission and encourage you to do so  if you are knowledgeable of corporate governance, board practice and business performance matters. The submission address is dafca.contact@oecd.org.
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    ECMLG2014: Closing reflections

    Conferences Governance Management Performance Phd Research
    The 10th European Conference on Management, Leadership and Governance is over. The conference organiser, Academic Conferences International, and the host, VERN' University, did a great job hosting the event in Zagreb, Croatia. I now have returned to London, ahead of some meetings with researchers and business people before flying home later in the week. Some reflections on the conference:
    • Conference numbers were steady when compared to the last couple of years. However, the quality of the papers, and the quality of the questions and informal discussions was up on recent years.
    • Notwithstanding the generally high standard, several papers should never have been accepted on to the programme. The session that I chaired was one of those that suffered in this regard: one speaker mounted a personal crusade on the topic of corruption. He vehemently rebutted questions and comments from the floor during question time even though those asking the questions and making the comments had supporting references (and the presenter did not). I hope the organisers work a little harder on the review process in the future, to ensure this type problem does not occur again. It lowers the tone of the conference unnecessarily.
    • The divide between what researchers know and what practitioners think they know is wide. It seems academic researchers continue to be quite cautious in terms of their approaches to knowledge creation, and practitioners are quite cavalier (making claims without any robust supporting evidence). This is particularly apparent in the corporate governance space, where practitioners are quite happy to claim a causal link between various structural responses (women on boards, number of independent directors) and company performance, even though the research community has produced conflicting evidence in each case.
    • Personally, I was able to test several aspects of my current research, both in the paper that I presented, and informally over food and drink. The feedback was really helpful to the refinement process. Also, I received several approaches to collaborate on some projects in the future which is quite exciting.
    • I was pleasantly surprised at the state of the Croatian economy, the openness of the people, and the general condition of Zagreb. The Berlin Wall came down 25 years ago, signalling the fall of communism in central and eastern Europe. While the Croats have embraced western ways in the cities at least, they seem to have done so without losing their rich heritage. The resultant meld appears to be quite rich.
    Sharp-eyed readers will notice that I have not reflected on my own paper, or on the session that I chaired. The reason for this is straightforward. It's pretty hard to offer anything approaching an objective critique of one's own paper, and the prospect of making comprehensive notes (to inform the blog summary) when also chairing the session is 'too hard'. If you would like a report on the session or my paper, or would like any other information about the conference, please contact me.
    Next year, the conference is being hosted by the Military Academy in Lisbon, Portugal. I met Luis and Carlos when they announced the location and the date (12–13 November 2015). They are great guys and, if the professionalism and commitment they demonstrated in Zagreb is any indication, the 11th edition of the conference promises to be a fantastic event.
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    ECMLG2014: Boards need to start valuing information as an asset

    Conferences Governance Leadership Research
    Nina Evans, of University of South Australia, presented an interesting paper on the importance of information as an asset to business. In so doing, she commented on the difficulties that managers often have in justifying the effective management of information assets.
    Information assets are intangible resources used in business including all tacit and explicit knowledge and information that is generated by, held by and used by the business. Information assets can be stored in a plethora of forms including in a person's mind; in hard or electronic format; and, on computers or in libraries. They are one of just four classes of asset (and therefore, levers) that managers have available to drive business performance (physical assets, information assets, human assets (people) and financial assets).
    Evans suggested that if information assets are managed well, then operating costs can be significantly reduced, and business credibility can be increased. However, many managers treat information assets as being within the domain of the information technology department of businesses, and technical people often like to 'control' access. Further, while executive managers and boards often ask about the status of the other asset classes, they rarely enquire about the status of the information assets of the business. She went on to suggest that several barriers exist:
    • Lack of awareness of the value that information assets can deliver
    • Poor enabling systems
    • That information assets are highly contextual—that a piece of information might have high value today but low value tomorrow
    • Poor management and communication capability within the technology teams (particularly the CIO), to demonstrate how the effective management of information assets can enhance the achievement of business strategy and company performance
    Evans closed by sharing the results of some preliminary quantitative analysis work. She said that companies that manage their information assets well stand to gain at least $20,000 per employee per year in direct operating benefit. This means that a 1000-person company can expect to add at least $20,000,000 per annum to its bottom line, if the information assets are managed well. If this is correct, this is huge! Nina Evans and I had a preliminary conversation after her talk. It would appear that a collaborative project, to combine Evan's work with my board performance research, may well generate some useful guidance for boards and executives in the future. Watch this space!
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    ECMLG2014: The importance of values to performance (day 2 keynote)

    Conferences Governance Leadership Management Performance Research
    Jadranka Ivankovic, a Croatian businesswoman and VERN' University scholar, opened the second day of ECMLG 2014 with an important message: that values, and a strong values-set, are often the difference between success and failure in business.
    Speaking from an informed point of view (as a member of the Management Board of Podravka, a food manufacturing company), Ivankovic provided a timely reminder that the best strategy and management systems alone provide no guarantee of business success. Rather, successful business performance requires hard (management: plans, systems, actions, results) and soft (leadership: attitudes, values, culture, behaviours) expertise, at least.
    Ivankovic outlined how Podravka went through the process of creating, adopting and embedding a set of values in the very heart of the company. Something like 500 of the 5000 staff were directly involved, in focus groups; in informal discussions; in presentations and in communicating and championing the adopted values once they were agreed by the board. She suggested that the most successful companies are values-driven, and that if a company truly values its values set, there is actually only one boss: the values!
    While Ivankovic's message was not ground-breaking per se, it provided a timely reminder that businesses are actually constructions of people, and that without committed people, aligned to a common way of thinking, behaving and acting, then business success can be only but a dream.
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    ECMLG2014: Enterprise Architecture, a bridge to business performance?

    Conferences Governance Leadership Performance Research
    Marco Halen (Aalto University, Finland) is an interesting character. Like me, he came to research after a successful business career—in his case via information technology. He was the CIO of a major company before he embarked on a PhD recently, and his subject expertise is enterprise architecture. 
    Marco's paper was enlightening. He said that enterprise architecture is not well understood, but that those that do have a view think it has or is something to do with the IT department. From my very basic understanding, enterprise architecture is something that is discussed amongst IT-types and that it lacks any real credibility beyond the technical departments of companies.
    Halen asserted that enterprise architecture (EA) can be valuable to business, if it is reconceptualised as a bridge that spans between corporate purpose and strategy, and technology and information systems. However, any move towards effectiveness requires leadership. The CIO, who is commonly the 'owner' of EA, needs to work hard to reposition EA from an IT framework to a business framework; one that exists for the sole purpose of supporting and enabling strategy implementation.
    The unanswered question is how? The board and the executive of most companies are busy people. Proposals to implement yet another framework are unlikely to gain any tangible traction or support unless they demonstrably advance the business towards the achievement of its goals and objectives. Halen implied that the CIO needs to take a deep breath, learn a new language (of business); begin speaking in terms of strategy and performance; release EA to business executives; and reposition the EA experts as service providers to business (cf. fiefdom builders and cost centres).
    Halen's preliminary work is interesting, in that it provides a solid base from which to develop some alternative models; do some empirical research; test some ideas; and, potentially, improve business performance. If EA can be reconceptualised as a bridge as Halen proposes, then it stands a chance of becoming adopted more widely as a useful management tool. If not, the most likely outcome is that EA will be consigned to the scrap heap of esoteric ideas that have emerged from the IT department—solutions looking for a problem. I look forward to seeing how Halen develops his ideas.
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    ECMLG2014: Boards and private SMEs—beyond "one form fits all"

    Wafa Khlif (Toulouse Business School, Barcelona, Spain), led an interesting discussion which examined the diversity of board configurations of SMEs based on their task performance. She commenced by identifying characteristics of SMEs, and used a two-dimensional model based on owner proximity, director proximity and manager proximity. Using the analysis of SME data from 186 French companies, Khlif and her colleagues identified four important tasks of boards (performance oversight, leadership assessment, strategy role, service role) and as many as nine states of boards ranging from legal fiction, through coach and watchdog and up to a full-functioning board (that might behave in a manner not dissimilar to the board of a publicly listed firm).
    Khlif's conclusion was that a diversity of board portfolios is a reality in private SMEs, and that SME boards may move 'up' or 'down' what is, in effect, a continuum of states depending on the prevailing context that any given SME board may find itself at any given time. The challenge for SMEs is to identify the state that is most relevant to the current context, and to govern and to lead effectively accordingly. Boards need to correctly and realistically assess themselves, in terms of current state and effectiveness—neither of which is straightforward! I can see many possibilities for an insightful piece of research to emerge from the intersection of Khlif's work with Pearse's work and some direct observations of boards in action.