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    Ten days in the UK & Europe: A snapshot

    Accountability Corporate Governance Diversity Family Business Leadership Research Strategy Value Creation
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    I have just arrived back in New Zealand, from ten days in the UK and Europe. My meetings with directors, advisors, academics, students and directors’ institutions had two primary objectives: to listen and to share. The listening aspect was to gain firsthand knowledge of issues and opportunities; the sharing aspect to provide updates on the craft of board work and my experiences as a practicing director.
     Learnings (a few immediate observations, in no particular order):
    • Directors say they are finding it hard to distinguish between signal  and noise—that which is material to monitoring and verifying performance and progress, and that which is, essentially, argumentation from stakeholders asserting preferences with only tenuous associations with sustainable performance.
    • ESG remains 'hot', although everyone I asked said the marketplace was fracturing. Acolytes are becoming more assertive, especially in their expectations that companies prioritise net zero, climatic change response, and equity above all else. Others are less convinced, as they are yet to see any increase in company performance or alpha. The gap between the groups is growing too—adherents have started using the 'anti-ESG' moniker, in an effort to claim the high ground. Detractors have not been silent either, saying the discourse needs to move away from what they describe as ideological fervour to pragmatism and common sense. 
    • Increasingly, directors are questioning whether quarterly board meetings (common in Europe) is actually a good idea. The directors I spoke with said they find it really difficult to keep up with compliance matters, much less contribute well to strategic items. The power balance leans reasonably strongly in favour of the CEO too.
    • Calls for optionality to be removed are becoming more commonplace. (Optionality meaning all directors of companies of substance should be required to be professionally qualified, in the same way as doctors and lawyers need to achieve and maintain a relevant professional accreditation.)
    • Geopolitical turbulence is front of mind (greater in Eastern Europe than Western Europe). The situation is exacerbated by economic headwinds and energy security concerns (think: gas and electricity supplies) despite Europe emerging from a mild winter. The UK and France (in particular) are also struggling with high inflation, strikes and, in France, a proposal to raise the age of retirement. Given the uncertainties, many leadership teams have shortened their strategic horizons and some have become quite defensive.
    • The Credit Suisse bailout by UBS unfolded before my eyes—I was in Zürich the day after the failure. Like many other failures, this one came as little surprise to insiders; the company has endured scandals and criticism for some years. (My early assessment: the board appears to have been asleep at the wheel.)
    • Directors continue to struggle with what corporate governance is and how it should be practiced. Sadly, the confusion observed during this trip is as widespread as in the past. Directors' institutions have a critical role to play, to clearly and straightforwardly assert what corporate governance is and, critically, what it is not. 
    Amongst it all, there were some gems:
    • ​Several directors spoke passionately about their work, and how efforts to engage more actively, with an underlying sense of purpose, is starting to make a difference.
    • Researchers are moving focus, from quantitative studies using public data, to trying to get inside boardrooms to observe boards in action (ie: the practice of governance).
    • Advisors to General Counsels, CEOs and SME founders have recognised a different conversation is needed to appeal to boards and directors. I was pleased to offer a few insights and suggestions.
    • I had the delight of delivering a guest lecture to forty or more researchers and students at Leeds Beckett University. The Q&A was fascinating—a candid exchange with people passionate about helping boards govern well.
    Several followup visits are now being planned, to advise, assess, educate and speak on topical board and organisational performance matters. If you want to discuss a matter of interest, or check my availability to assist, contact me for a confidential, obligation-free discussion.
    The headline picture, showing a derelict property in Soho, London, is analogous to the state of governance in many places in Europe: structurally sound but outwardly messy.  
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    Picking an adjective...

    Accountability Capitalism Corporate Governance Effectiveness Governance Performance Value Creation
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    When aiming to achieve something in business, is it better to be good, or effective, or both? ​Should boards for example pursue good governance, or prioritise effectiveness? And, are these qualifiers mutually exclusive, or can a board claim both? These 'challenge' questions have beset contemporary boards of directors, more so as various stakeholders have sought to impose their expectations and ideological preferences onto corporate values, purpose, strategy and decision making.
    If these questions are to be considered and answered well, agreement on the meaning of the adjectives is necessary. To wit:
    • 'Goodness' speaks to benevolence and decency—of doing the right thing. It conjures an ethical or moral motivation, of acting in the best interests of someone else. 
    • 'Effectiveness' is about producing an effect or achieving a goal, result or outcome.
    Instinctively, good governance sounds attractive. It satisfies a human condition; of doing the right thing and acting in the best interests of someone else (a particular stakeholder interest, for example). But what if doing the right thing has the effect of compromising the competitive position of the company; the achievement of agreed performance objectives; or, potentially, the viability of the company? And, what might be considered good by one person or group may not be upheld elsewhere. Turning to effectiveness, the threshold is more objective—either the goal is achieved or it is not. But, what if the pursuit of an agreed objective results in environmental or social harm, or some other negative consequence?  That is not acceptable either.
    Given the extremes, some sort of balance is needed, in the same way that every board must ensure conformance requirements are satisfied (compliance, value protection) and performance objectives are achieved (value creation). If this is reasonable, should a different adjective be used, to more adequately describe the value of the board's work?
    My recommendation: drop goodness and effectiveness, for one (at least) is highly subjective and has become emotively charged (think, what ESG has become), and the other focuses more on the goal without necessarily considering unintended consequences. Ultimately, in extremis, neither is sustainable without the other. Instead, boards should pursue enduring impact.
    Boards that strive to be effective in role without incurring social or environmental harms are more likely to exert a positive and enduring influence beyond the boardroom (that is, have impact). As a result, they should be well-regarded by shareholders and legitimate stakeholders as well. The Strategic Governance Framework offers insights to boards intent on realising the full potential of the companies they govern.
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    Ramping up, for the year ahead

    Accountability Boardcraft Conferences Corporate Governance Family Business Performance Productivity Speaking Engagements Value Creation
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    And with little more than a blink, January 2023 is, nearly, done. January is, for me, a time to relax, reflect on the year past, spend time with family and friends, read and get ready for what lies ahead. 
    In the last ten days, things have started to ramp up again: international calls, my first board meeting for the year, and local enquiries—all indicators that minds are turning to board work and the pursuit of sustainable performance once more. ​Soon, I shall be travelling again too, in response to requests to discuss corporate governance, board work, and the role of the board in realising organisational potential.
    After a good break, I not only feel ready for what lies ahead, but excited at the opportunity to help boards and directors, academics and regulators grapple with some complex issues. The first three trips for the year are scheduled, as below—and planning is already underway for several more in the months to come.
    While events and engagements are being loaded into the diary daily, some gaps remain, mainly in Singapore and England. So, if you want to take advantage of me being in your neighbourhood, best to get in touch soon! If you want to talk or meet, but the timing doesn't suit, let me know anyway—there will be opportunities later in the year.
    Dates
    Location
    6–9 February
    Melbourne and Sydney, Australia
    12–15 February
    Singapore, Singapore
    13–25 March
    England, Scotland, Romania, Switzerland, Czechia
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    The power of story, to influence decision-making

    Accountability Corporate Governance Decision Making Effectiveness Performance Value Creation
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    The claim, that a picture is worth a thousand words, is widely known. Pictures are valuable because they capture one's attention, often evoking memories of significant or special events (as real of imaginary as they may be), or of possibilities. Indeed, the phrases 'every picture tells a story' and 'the picture tells the story' encapsulate the essence of pictures—they tell stories. But visual images are not the only means of stimulation and sharing ideas. Words are important too, especially when the ideas they convey are presented as a story.
    Over the seasonal break, I have been delving into a selection of books, in search of stories and ideas. The very practice of reading is, I find, a powerful enabler—to provoke, gain insight, form opinions, and learn and build knowledge about all manner of things. I have also gone back through the Musings archives and re-read many older posts. Several that piqued my attention were re-posted on LinkedIn (check my feed) to share with a new generation of readers. To my great surprise, many of these re-posts garnered considerable attention and engagement. That some ideas continue to be relevant is gratifying. Thank you to readers who have engaged with those posts.
    Notice the mechanism at play: hearts and minds are captured through 'story'. Pictures and words are important without doubt, but they are, simply, delivery channels: two of four mechanisms (the others being aural and kinesthetic (experiential)—together, VARK) to communicate the message.
    Information and its effective delivery is crucial in organisations too; board work in particular. In such situations, stories can be incredibly influential for informed decision-making, a precursor of all that follows:
    • Managers: The next time you need to prepare a board paper or proposal, think 'story'. How is the central idea conveyed? Is the document simply an assemblage of business case numbers and words, or does the paper tell a story? Is the proposition linked explicitly with the company's purpose and approved strategy? If it is, the likelihood of it being considered in a positive light (and approved) is higher than any straightforward statement of facts.
    • Directors: You stand a greater chance of influencing your board colleagues if you use 'story' to convey ideas, especially if the perspective being offered is somewhat different from others already shared and explored.
    As managers and directors, the way we present and consume written reports, and ask and answers questions, is material to informed decision-making. Ultimately, the board's provision of effective steerage and guidance to achieve the organisation's strategic goals depends on it. Such is the craft of board work. ​With this in mind, what refinements might you consider to lift your game in 2023, and lift the effectiveness of your board?
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    Reading through the seasonal break

    Corporate Governance Director Development Readings Research Teaching
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    I have the good fortune of meeting many hundreds of people every year—aspirational and established directors, board chairs, executives, journalists, shareholders, MBA students, doctoral candidates, lobbyists, regulators, policy analysts, conference organisers, and more besides. Sometimes, contact is fleeting; sometimes it is enduring, as we work together to gain insight, educate, or tackle a difficult problem.
    One question that keeps coming up (besides the big three, namely, what is corporate governance; what is the role of the board; and, how should governance be practiced) is, "How do I stay current and relevant?"
    The answer is straightforward. I read, a lot.
    Every morning—well, at least six days a week—I dedicate 90 minutes or more, to check newsfeeds, blog posts and emails that have arrived overnight. The primary goal is to ensure I have sufficient awareness to engage well with colleagues and clients on topical matters. Some people call this continuing professional development. I prefer a simpler description: reading to keep up.
    This commitment is, I find, a bare minimum because it does not afford space to read widely and think deeply about ideas, perspectives and the human condition. For that, I read books; sometimes in the evenings, but most often on flights and during holiday breaks. Why? Because I have time to think and mark (in pencil in the margin if a physical book, or electronic bookmark if an e-book) specific points to investigate further.
    Several people have asked what I'm reading. Here is a list of books either under way or to be read this summer break. Notice only one is directly linked to my board and governance work. That is intentional. Reading widely means, to me, reading beyond normal boundaries to discover new ideas and ways of thinking about things.
    This list is a selection of the books awaiting my attention. If you read, I'd love to hear any recommendations!
    Enlightenment Now
    Steven Pinker
    The Matter with Things
    Iain McGilchrist
    The Evolution of Corporate Governance
    Bob Tricker
    On Certainty
    Ludwig Wittgenstein
    SOE (Special Operations Executive)
    M. R. D. Foot
    Seven Pillars of Wisdom
    T. E. Lawrence
    Nine Quarters of Jerusalem
    Matthew Teller
    The Unbroken Thread: Discovering the Wisdom of Tradition in the Age of Chaos
    Sohrab Ahmari
    South
    Sir Ernest Shackleton
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    Regulatory interventions to drive better outcomes: A bridge too far?

    Accountability Corporate Governance Integrity Sustainability Tough Questions
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    The practice of corporate governance has garnered much attention over the past couple of decades; curiosity about boards growing each time news of a corporate failure and serious misstep becomes public. While those with axes to grind are quick to jump on their hobbyhorses, failure studies indicate that suggestions of hubris, malfeasance, narcissism, ineptitude, incompetence and poor engagement are not without basis.
    More recently, a wider group of so-called stakeholders and claimants have raised their voices, arguing that companies are having a negative effect on a range of social and environmental concerns. The ESG initiative, established in 2005 to put pressure on boards to report their activities and performance more fully, has become a movement (even an industry for personal and professional gain in the eyes of some). 
    On the weight of evidence presented in the media, it would be easy to conclude that practices of companies, and the system that underlies modern commerce—capitalism—are detrimental to sustainable life and wellbeing. Firing shots at boards and companies is easy, because they are visible and command media attention. But are such responses justified? What if the assumptions and motivations that underpin investor, regulator and activist critiques are flawed, or the bases for regulatory interventions ill-advised?
    Some companies deserve criticism, of course. They should be called out and held to account. But many (most) operate within their means. Unsurprisingly, the boards of some reputable companies are reportedly pushing back on the expectations of some institutional investors, which, they say, have become over-prescriptive and formulaic. Alongside, some boards say new disclosure reporting rules being introduced, by the FSB Task Force on Climate-related Financial Disclosures (TCFD) amongst others, are counterproductive—for they add costs without any apparent benefit.
    Together, this begs an awkward question: Are the actions of some, who claim to be acting in the name of sustainability and a fairer society, actually an attempt to exert power and control for their own purposes? And, if so, are current attempts to establish regulations to enforce certain practices on companies reasonable or are they a bridge too far? It is little wonder that relationships between some boards and shareholders are starting to fracture, and society is becoming tribal.