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    Navigating fog: The board as your compass

    Accountability Change Corporate Governance Decision Making Leadership Performance
    I had the very good fortune to be in Boston recently, a brief visit to respond to a couple of enquiries ahead of the main reason for visiting the US East Coast, which was a keynote contribution at the International Corporate Governance Network annual conference in New York. When told Thomas Doorley III, the founder and now emeritus chair of Sage Partners, of my travels, he was quick to suggest we should meet up.
    Tom is a generous man. We have known each other for nigh on a decade now. I always come away from our conversations feeling enriched having sat with him and listened. So, when he spoke of his new project, a podcast series entitled, "Navigating the fog of change", and asked if I would sit with him, an affirmative response came easily.
    Our conversation, which explored the role of boards in times of great change, including the critical 'compass' role, is now available on the Sage Partners' YouTube channel.
    I'd be gratified if you would listen in. It'll cost you 29 minutes, that's all! And, once you've listened, if you have questions or comments, please feel free to reply below, or get in touch with Tom or me. ​
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    Who controls your board’s agenda? Who should?

    Accountability Corporate Governance Decision Making Effectiveness Governance Performance
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    I had a fascinating conversation yesterday, with an esteemed board chair I have known for some years. Our wide-ranging exchange saw us dip into several topics of mutual interest including family and my recent 'elevation' to grandfather-hood; an upcoming advisory engagement; the importance of ongoing education for directors, especially in relation to 'soft skills'; techniques to chair a board meeting well; and board agendae.
    During the flowing conversation, Robert (*) said he had recently chaired a meeting in which a couple recommendations within what he called the “QuarryGroup Report” (a board/governance assessment that I completed last year) were to the fore. 
    Referencing the recent meeting, Robert said the agenda was packed, and that management had put up many papers to support the agenda items and ensure directors were well informed on what it deemed pertinent matters. He added that the meeting agenda was too full for meaningful discussions, let alone informed decisions. When I asked how he handled the situation, he referenced the QuarryGroup report. He said three items stood out as having strategic implications for the business and decided that is where the board should spend its time. He spoke with several directors after the board pack was issued and, in board alone time immediately prior to the meeting, confirmed the three items would take precedence. Through this action, Robert asserted control over the board's meeting. Management had proposed an agenda and prepared papers based on what it had thought important, which is OK, but Robert and the board had a different perspective.​
    Some readers may wonder about Robert's actions. Is it reasonable for a board chair to propose ignoring items or altering an agenda? Surely, management understands the key issues that need attention better than the board?
    I suggest the guiding principle to inform a response is this: The role of the board is to govern (to steer, to guide, to pilot). And, if the board is to have any hope of providing effective steerage and guidance, directors need to understand their role, and they need to apply their minds to the major issues and opportunities that lie ahead and make decisions accordingly. For this, the board needs to drive the agenda and ask management to prepare reports accordingly. Research shows that if this does not happen, the likelihood of the board influencing the performance of the company is low.
    When I asked Robert how compliance reporting and historical performance was handled (the board's 'control' role), he calmly said, "That is what committees are for." I smiled, for I was in agreement.
    What are your thoughts on this? Does the principle described hear apply everywhere? 
    (*) name changed.
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    Netflix: What went wrong?

    Accountability Corporate Governance Effectiveness Governance Leadership Strategy Tough Questions
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    Over the years since it was founded by Marc Randolph and Reed Hastings (in 1997), Netflix has been at the forefront of entertainment and innovation. Initially a rental service, the company introduced a streaming option in 2007 and, as they say, the rest is history.
    The company has also garnered attention for its innovative approach to corporate governance—one based on proximity more so than distance. I wrote about it several years ago. The approach, founded on governance by walking about and pragmatic reports, ensured directors were adequately informed to make smart decisions. 
    But that was then. Now, eight years on, things have changed somewhat.
    Jay Hoag, a venture capital investor, was voted off the board recently, after pressure was applied by Institutional Shareholder Services, a data analytics and proxy advisory firm. It turns out Hoag missed three quarters of the board and committee meetings he should have attended. Given the Netflix board usually meets quarterly, it follows that Hoag attended once per year. Quite how anyone can contribute well if they don't attend meetings, is beyond comprehension. 
    That shareholders have taken a stand on the matter is laudable. Well done ISS, for bringing Hoag's absenteeism to the attention of shareholders. But other questions remain:
    • What confidence can shareholders have if the board only meets quarterly, and in directors who  seemingly turn a blind eye to chronically absent colleagues?
    • What of accountability and board effectiveness? When was the last board/governance assessment completed, and was it any more than a cursory exercise?​​​
    If boards are to have any hope of governing with impact, all of the directors need to be appropriately engaged (capable and​ present). Ideally, the board should adopt a robust governance framework too, to expedite effective steerage and guidance. How does your board stack up in this regard?
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    On complexity, pathways and outcomes

    Accountability Corporate Governance Decision Making Effectiveness Governance Leadership Performance Sustainability Value Creation
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    I have had the good fortune of time in South Africa this week, as a guest of GovernEx, a board advisory practice. To have been invited to interact with hundreds of directors, executives, academics and political leaders, to listen, learn, and offer insights has been invigorating.
    South Africa is a dynamic society. In the 31 years since nation-building was restarted (May 1994) much has changed. Black South Africans comprise over eighty per cent of the population; they now dominate the middle class. Efforts to build an inclusive society, whereby circa 63 million people can participate, have produced much fruit. But some cracks are visible: extremes (of wealth and poverty, in particular) remain; guidance introduced to enable and empower has become prescriptive over time; corruption is apparent in some quarters; and, in some cases, the pursuit of inclusion has delivered little more than a power shift, from whites to blacks. The situation is complex, of course, and hope springs eternal. But hope is hardly a strategy.
    South Africa’s political leaders have recognised the situation, and they are responding. The President, Cyril Ramaphosa, together with an entourage of business, community and sporting leaders, met with the President of the United States a few days ago. The G20 summit will be held in South Africa in late 2025. Business leaders have told me of their desire to move beyond various codes and constructs that have devolved to now impose more cost than benefit in many cases. Their question is telling: “Tick-box exercises for what benefit?”
    My sense is that great courage will be needed, if business leaders are to step beyond the pathways and structures that served the nation well in the early years but now seem to have become hindrances to further progress. Those I have spoken with this week are not without courage—and they have been excited to explore alternate pathways to secure better outcomes, amongst these the Strategic Governance Framework. The challenge now is one of deciding: whether and how to act.
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    Helping boards govern with impact, in the USA

    Conferences Corporate Governance Effectiveness Governance Performance Speaking Engagements
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    This is an invitation to US-based directors and chairs who want to move beyond cookie-cutter and tick-box approaches to corporate governance and board work: I'll be visiting the East Coast in July, and would be glad to meet to offer insights to help lift your board's effectiveness.
    One of the enduring joys throughout my life has been to serve. Whether it be confidential conversations with board chairs; advising boards or regulators; delivering keynote talks; leading director education workshops; or writing, the call to support directors and executive leaders in their efforts to realise organisational potential is compelling. 
    Already this year, I have accepted invitations to contribute in Southern Africa, Australia, Eastern Europe, and Central Europe. Now, I am delighted to add North America too. In July, I will return to the USA, to deliver a keynote at the International Corporate Governance Network conference.  
    Alongside the ICGN conference, I am available for private meetings with boards and ​directors based anywhere on the East Coast. The dates are July 14–16th, and July 21–23rd. 
    Yes, it will be summer, but what better time to take stock? To explore options, get in touch today.
    (*) The ICGN conference (July 17–18th, in New York) is 'the' conference for leaders across the institutional investor, sovereign and superannuation fund, and board/governance communities. This year is the 30th anniversary of ICGN's founding, an important waypoint to consider the role and impact of boards and shareholders; approaches to board work; shareholder and stakeholder interests; sustainability; enduring performance; and 'doing the right thing'.
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    Better truth or health?

    Accountability Corporate Governance Decision Making Family Business Governance Monday Muse Sustainability Tough Questions
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    The truth, they say, is a good thing, for it will set you free. This seems reasonable, even self-evident to many. But what is truth? Is it a thing (a fact) or a process? Is it deterministic or does it emerge? Is it absolute or relative? And, in a social context, is truth even possible or desirable?
    The pursuit of truth conjures the notion of a deterministic 'answer' to a question or problem, without worrying too much about (or even considering) the context within which the truth claim exists. Consider darkness. Does being unable to read a book on the patio at twilight mean it is dark? How might this expression of darkness compare with the darkness inside a sealed cavity into which light cannot penetrate? And what of degrees of truth? If just one instance is discovered to be false, does that mean the entire truth claim needs to be set aside? Complicating matters, something may be 'true' but unpalatable, such as, genocide or rotten eggs. 
    Now, consider health. What does it mean to be healthy? For some, maintaining a balanced diet and sleep pattern is sufficient. For others, health involves strenuous exercise and physical fitness. Yet others pursue mental health, a sound mind and great relationships. Is the threshold one of having food, shelter and security; or is a higher order of fulfilment necessary to be healthy? 
    And, how might health and truth relate to each other? Is truth a necessary condition for personal health, or are there situations in which truth might need to be secondary to health? Are truth and health even related? And what of truth and health in an organisational setting? Are the comparisons similar or different? Who decides and what factors should be considered in the decision process? 
    In the past two years, I have come face-to-face these types of questions on many occasions:
    • Observing a demanding board chair pressing hard to get her way, because, in her words, "I am right." (trading off a healthy discussion and decision process to secure her version of the truth, even to the extent of flouting directors' duties)
    • A family member receiving chemotherapy and surgical intervention following a cancer diagnosis. (accepting truth—cancer—but taking a tough option in pursuit of health)
    • A chief executive adhering to a strict interpretation of  employment law during a restructuring process, but in so doing delaying the process and exposing the company to viability risks.
    Selecting between two tough options is never easy. The 'least bad' option doesn't sit well in many cases. But as in life, decisions in organisations need to be made, more so in boardrooms. If boards are to provide effective steerage and guidance in pursuit of an agreed outcome, they need to roll their sleeves up, understand the options and make a decision. But with what reference point to the fore? Should boards prioritise being 'right' (legalistic, truth), or should they select options more likely to lead to sustainable outcomes (organisational health)?  ​If  boards are to govern with impact, the high road is, in most cases, the better option.