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    Speaking engagement in London

    Accountability Conferences Decision Making Governance Performance Research Strategy
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    This is a brief note to advise that I will be in London next week, to speak at the ICSA Annual Conference. The conference is being held at ExCeL, London, over two days (4–5 July).  Programme details are available here.
    I'll be speaking on the first day of the conference, at 12noon. My topic is strategy, from the board's perspective. Here's the session summary from the programme:
    Good strategy vs bad strategy
    ​Often in business, boards confuse lofty ambitions, challenging goals and enticing vision with strategy. Good strategy encompasses these elements but also offers a compelling road map to achieve goals and overcome barriers to success. Here we look at some of the key points to consider when establishing strategy.
    Sound interesting? Come along, I look forward to meeting you.
    Note: I'll be in London Monday 3rd to Thursday 6th inclusive, with some free time both during the conference, and immediately before and after. Please get in touch if you'd like to meet up (day or night) to ask a question; discuss an aspect of corporate governance or strategy; learn more about my research on boards and business performance; or, simply have a chat over a coffee or a drink. I'd be delighted to hear from you.
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    Boards and strategy: taking in the long view

    Accountability Decision Making Governance Management Performance Strategy
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    During the last month, I have had the privilege of working with four different boards and management groups, helping them wrestle with why the company they govern exists (its purpose, or reason for being) ahead of formulating strategy to pursue the agreed purpose. All four engagements have been invigorating, revealing many insights and much passion (and debate!) within the assembled groups. 
    However, three troubling signs became apparent amidst the boards' commitment to the cause. These signs, which are not uncommon, have the potential to stymie the quality of the resultant strategy and management's ability to implement the approved strategy. The following comments highlight the issues:
    • A propensity for detail: Most of the discussions quickly devolved to specific examples and detailed aspects of the company's products, customers and staff: the perception being that more detail is helpful for effective implementation and to mitigate risk. This is not uncommon: strong leaders like solving problems. However, humans tend of overestimate their ability to predict the future, and boards and managers are no exception. Further, implementation is a task for management, to be actioned after purpose is determined, strategy formulated and resources appropriated. Also, a strong focus on detailed elements has the unwanted effect of taking the gaze away from the big picture, the wider context within which the company operates, and in so doing introducing new risk not mitigating it. Left unchecked, the resultant strategy is more characteristic of a detailed list of activities than a high-level, contextually relevant overview of how resources will be deployed to achieve the agreed purpose.
    • Confusion over the board–management nexus: The usage of the term governance over the last 15–20 years has become widespread (in both appropriate and inappropriate contexts). Usage has reached the point that 'governance' has become a panacea for all manner of corporate ills including poor company performance. The board–management relationship has become clouded, with the two parties claiming or denying tasks, often based on a poor understanding of what governance actually is. If the board and management are to work well together, a well-defined of division of labour is required, to allocate to tasks explicitly to the board, to management, or to both.
    • Shortening the horizon, to reduce the odds of failure: This sign is closely related to the first one. If those responsible for formulating strategy are not looking well into the future, identifying emerging trends and possible responses, they are doing themselves and their company a gross disservice. Audacious goals and Roger L. Martin's words are ringing in my ears: "True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success." 
    The temptation to embrace detail, confuse the roles of the board and management and shorten the view remain very real challenges for companies around the world. If boards are to fulfil their responsibilities well, a clear sense of purpose supported by a coherent strategy is vital—regardless of the company's size, sector or span of operations.
    The great news is that increasing numbers of boards are starting to realise that material benefits are available if they contribute directly to both the process of determining purpose and formulating strategy. However, boards have some way to go before the value they have the potential of adding is actually realised, if the evidence of the past month is any indication.
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    Update: Boards, gender diversity and company performance

    Accountability Decision Making Governance Performance
    The question of whether companies with gender-diverse boards perform better than companies devoid of gender-diverse boards has been debated with passion for many years now. The locus of much of the early discourse was women on boards. However, the rhetoric has matured in recent times. 
    Whether motivated by political, social or cultural ideals, the weight of opinion amongst consultants and practicing board members now points to a positive correlation between various diversity attributes (sex, gender and ethnic identity, inter alia) and company performance. But is this a reliable reflection of reality? Wittgenstein's aphorism provides a useful reminder that all may not be exactly as it seems:
    From its seeming to me—or to everyone—to be so, it doesn't follow that it is so.
    Recently, Katherine Klein, a professor of management at The Wharton School, reviewed the findings of rigorous peer-reviewed studies and meta-analyses, in search of a more complete understanding. Her conclusions, which include the following comment, paint a rather different picture from normative opinion:
    Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Nor do they perform worse. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all.
    Klein also discussed possible reasons and implications of her findings. Boards and nominating committees would be well-advised to read Klein's commentary, understand the nuances and contextual factors and, most importantly, debate the implications for practice.
    Postscript: Another review of the board diversity literature is available in my thesis (see pages 39–40). 
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    The importance of culture and technology to business success

    Accountability Decision Making Governance Performance
    "In our world now, the primary mover for reproductive success—and thus evolutionary change—is culture, and its weaponised cousin, technology."
    The words in this quotation, originally published in National Geographic (*), stood out when I first read them recently. They seemed to lift themselves off the page, as if to highlight their significance. The penny dropped when I realised the quotation is applicable well beyond the [biological] world from whence it emerged. 
    Take boards of directors for example. The quotation suggests that board effectiveness (and, by implication, company performance) is more likely to be influenced by board culture and appropriate technology than any static attribute such as a particular board structure, composition or governance code. This intuitively attractive proposition enjoys widespread support in the academic literature, and case studies of actual board experiences have been reported.
    Yet board and company failures abound, which begs an awkward question. Why do some boards continue to prioritise structure and compliance (with statutes and codes of practice) over culture and technology, especially when a stronger focus on the latter is more likely to lead to increased board effectiveness and, importantly, better company performance?
    (*) D.T. Max (2017). Beyond Human, National Geographic, April 2017, p.49.
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    Closure

    Accountability Decision Making Governance Phd Research Strategy
    Monday 8 May 2017 shall, in our household anyway, be remembered as a significant date. It was on this date that a father and a daughter both crossed the stage to receive recognition for their respective achievements.
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    • Megan: Bachelor of Business Studies, majoring in International Business
    • Peter: Doctor of Philosophy, in corporate governance and strategic management
    While the day was special for close family members in attendance, the awarding of academic credentials is by no means an endpoint. Rather, it marks a weigh point on a long-term journey. The priority for Megan now is to build her career in international business, marketing and customer service (get in touch if you have an opening for a willing and able staff member). I will continue to encourage boards and directors to focus on what really matters: fulfilling their responsibility for company performance. 
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    The distinction between governance and management

    Accountability Decision Making Governance Performance
    Bob Tricker, named by Sir Adrian Cadbury as the godfather of corporate governance, is a hero of mine. While he did not 'invent' the term (Richard Eells did, in 1960), Tricker did do most the heavy lifting—helping all of us who followed understand what corporate governance is and, crucially, what it is not.
    Sadly, some directors, consultants and academics have lost sight of Tricker's useful guidance; wandering off to propose all manner of definitions and descriptions. Thankfully, Tricker and a few others have continued to carry the baton, periodically reminding us what corporate governance actually is. Recently, Tricker put pen to paper again, writing this short piece to call out a common mistake: of conflating governance and management. That these two terms are used interchangeably has become a real problem. ​
    A key insight from Tricker's most recent article is that corporate governance is what the board does. In contrast, management is what managers do. Sometimes, the two distinct roles (director and manager) are performed by the same person (an executive director, for example). In such cases, the person performing both roles must be diligent in the extreme, to correctly discern the particular hat they are wearing at a given moment in time. 
    Thank you for the timely reminder Bob.