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    Have you seen the poppies?

    Societal Wellbeing
    My wife and I had the opportunity to see the poppies at the Tower of London first-hand in early September, as the display commemorating the soldiers that paid the ultimate price in World War 1 was being prepared. This is what we saw:
    Picture
    Picture
    As impressive as it was at the time, the display then is not a patch on the moat today, now that all 888,246 poppies have been "planted". The poppy had huge significance for the allied soldiers on the Western Front. It continues to be significant for their descendants. I am looking forward to visiting the commemoration again, on Monday 10 November—along with a great many others, I suspect.
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    The Imposter Syndrome: Are you a director or a "director"?

    Governance Leadership Performance
    Do you know the difference between a book and a "book"? Here's a clue. Books have substance, they are helpful and meaningful. In contrast, "books" are that in name only: testaments to the ego of the author or publisher whose name is printed on the spine. That is not to say that "books" are not popular: the distinction is one of value.
    I had not given this distinction much thought before. However, having read Beam's article, I found myself pondering the question in the context of boards of directors. As with books and "books", the distinction between a director and a "director" is not initially obvious. "Directors" are quite likeable people. Many carry an aura of authority. However, the distinction—one of style over substance—becomes rather stark if you look more closely at some of the behaviours:
    • A propensity to 'collect' board appointments, and to volunteer one's status in an overt manner
    • A lack of commitment to invest time and energy to understand the business of the business, or to think critically about the issues raised in board papers so that meaningful questions can be asked in board meetings
    • A tendency towards highly vocal contributions during board meetings, or silence
    Do you recognise these indicators in any of your colleagues or associates? Sadly, I suspect more directors than some would care to admit would fit in the "director" category, if they were honest with themselves. And what of yourself? Am I director or a "director"? The corollary is perhaps even more important: What, if anything, I am going to do about it? These are important questions for all of us to ponder.
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    If directors get serious about strategy, what are the consequences?

    Governance Leadership Management Performance Strategy
    If you listen carefully, you can hear it. A drumbeat, almost inaudible at first but getting louder now, has been beating a new tune in corporate boardrooms: that directors need to get serious about strategy. If the recently published NACD Blue Ribbon Commission's report is any indication, the era of boards meeting to review past performance and satisfy their compliance obligations (as their sole responsibility) may be drawing to a close. 
    While I was initially non-commital, the BRC should be applauded for its report, and the NACD congratulated for having the courage to commission it. That the BRC has produced a set of strong recommendations is great news for shareholders, the markets and other parties interested in effective corporate governance and the achievement of great company performance outcomes. However, the recommendations are not without consequences: 
    • Directors will need to become more active in learning about the business of the business they govern. That will mean spending more time in the market; more time in the business; and, more time reading and critically analysing information from a wide range of sources. 
    • Directors will need to become adept at strategic thinking and more comfortable with the strategic management process. This may mean that the balance of expertise around board tables needs to change; from legal, compliance and accounting towards innovation and strategy.
    • Directors will need to revisit whether independence and distance (between the board and the Chief Executive) is actually the best basis of board practice. History—actually, the agency theory—has taught us that independence and separation are good, even though no one has produced any research to demonstrate that independence drives performance. If these recommendations are embraced, collaboration may become the order of the day.
    • Alpha-male and queen-bee CEOs may well be threatened by the board encroaching on 'their space'. However, there is no suggestion here that the board should take strategy away from them. The paper I presented in Boston (copy on the Research page) earlier this year discusses this.
    These consequences will place downward pressure on the number of boards that any given director can sit on at any one time, without doubt. Three concurrent board appointments is probably a reasonable maximum for any one director, and possibly two if one appointment was a chairmanship. However, that may introduce a whole new set of concerns, not the least of which might be requests—from directors more interested in earning than serving—to shareholders to increase the size of the directors' fees pool! Notwithstanding this, I hope directors and boards take heed of the calls to action—for they are beating loudly now. 
    Finally, my current research work, and experience in practice, suggests that the calls to action make very good sense. They are likely to lead to better company performance outcomes—but if they are followed.
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    Research update: labouring away

    Governance Phd Research Research Update
    It's Labour Day in New Zealand: notionally a statutory holiday to recognise and remember the struggle (fight?) for the eight-hour work day. While it's a worthy marker peg in our nation's history, I've never really subscribed to the notion of an eight-hour work-day nor a 40-hour work-week. Blame it my farming heritage or madness if you wish, but I think in terms of working until the work is done. Today is no exception. The thesis writeup is very much to the fore of my mind every day of the week just now.
    In the last seven days, I have been working on the Discussion and Theory Development chapter, hoping to assemble a cacophony of ideas into the first complete draft. A couple of days were really slow going, but the great news is that the first draft is complete (save a series of diagrams)! Having laboured away on this chapter for a couple of weeks, I can now look back and see that, while the distance has not been great, some of the insights that have emerged could be quite significant in the overall scheme of things.
    I also received three pages of notes, suggestions and comments from my second supervisor during the week: her review of two chapters that I'd asked for feedback on back in August. While the slow turnaround has been frustrating, and some of the comments quite 'left-field', the overall tenor of the commentary has been helpful. Thanks Kate.
    Where to from here? The DTD chapter needs more work (this week's job), as does the Conclusions chapter (next week). Once these two pieces are done, the focus will move from creating content to refining that which has already been written—a significant milestone, in my mind anyway! 
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    Are investors too easily satisfied?

    Governance Leadership Performance Strategy
    Accounting firm PwC has just released its 2014 survey of investor perspectives and board performance. You can get a copy here. The survey findings indicate that investors are generally happy with some things and less so with others. Here are the top points:
    • Investors are happy with the way boards assess strategy, oversee risk and maintain board expertise
    • Investors are not happy with the assessment of director performance, shareholder engagement or management incentive schemes; and they would like to see more diversity in the boardroom
    • The top three risk concerns are cyber risk, climate change risk and KPIs relating to risk management
    The report makes good reading. In all likelihood, it provides an accurate summary of what investors currently think (or at say they think—this is a survey after all). On the flip side, the most surprising and, frankly, most disheartening news is that investors are most interested in visible attributes (gender, composition, et al) and activities (assess, oversee) of boards. These findings suggest that if the board conforms with certain structural and composition 'requirements' and that boards do certain things, then investors are happy.
    My experience—gained as an investor, a company director and a corporate governance researcher—tells me that the top priority for boards should be company performance. However it is not mentioned in the report. The only item that comes close is the satisfaction in the way boards assess strategy—and yet most boards that I've observed or sat on spend most of their time monitoring and controlling the Chief Executive! Do investors, who typically do not attend board meetings, really know if or how boards assess strategy?
    From these findings at least, it would seem that company performance and value creation (growth) is not that important to investors. Is that the reality? If it is, then investors are too easily satisfied. However, if investors are interested in company performance (I think they are, they probably just didn't say so in the survey), then they need to appoint directors whose top priority is to drive business performance, in order to assure a positive return to the very investors that put them there.
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    Research update: paper everywhere

    Phd Research Research Update
    This is the second of my soon-to-become regular updates written for folk who have asked to be kept up to date with my PhD write-up. I have provided updates irregularly in the past. However, I recently made a commitment to provide an update every week, in response to several requests to do so.

    The week gone has been characterised by paper: lots of it, everywhere. As mentioned last week, my focus has been on the discussion and theory development (DTD) chapter. This is the piece of the thesis whereby the various threads and ideas that have been mentioned elsewhere are brought together—hopefully in a cohesive and coherent manner. As a digital immigrant, this process involves a pen and a keyboard: yes, I rely on pen-and-paper to augment what I do with computers. While the word processor is my go-to tool when writing new material, my default approach to reviewing and editing material is to print copies and mark them up with my trusty Waterman Expert rollerball. Thus the paper. I also have three piles of dog-eared research articles—each about six inches high—that receive periodic attention as I build arguments and refer to prior research work.

    The biggest challenge this week has been to assemble my thoughts and ideas into a logical structure and sequence, and then to write material into each section. The process is quite easy to describe. However, it is somewhat harder to implement. Ideas can flow at any time of the day or night, so I have taken to writing when the ideas flow rather than when my schedule says I should write. It will be interesting to see what effect the change has on my productivity. I'll let you know.

    My hope had been to complete the DTD chapter—to a first draft form anyway—by the end of this weekend. However, I have adjusted the structure of the chapter three times in recent days, and have opened up the conclusions chapter as well: the result of which has meant quite some re-work. I'm hoping to break the back of this work and re-work cycle in the next few days because, when I do I can start on the assembly and integration process, of pulling all of the chapters together. While there is some short-term frustration that things are taking a little longer than expected, I'm convinced that the extra effort being put in now will make the thesis easier to read later. Fingers crossed.