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    International Governance Workshop: Reflections

    Conferences Decision Making Ethics Governance Leadership Research
    The second annual International Governance Workshop is complete. A small(ish) group of leading thinkers assembled at the Toulouse Business School in Barcelona to discuss and debate emergent research and to ask the "So what?" question. Overall, the presentations and papers were of a high standard, as was the discussion and debate that followed each paper. Also:
    • The organisers did a great job. Barcelona in June is like Goldilocks—not too hot and not too cold. The venues, both at TBS and those used for extra-curricular dinners, were conducive to good interaction between the delegates.
    • The highlight of the workshop (for me) was Silke Machold's keynote talk. She challenged much of the conventional thinking, and called both researchers and practitioners to re-think boards, board-practice and corporate governance expectations.
    • The discussion over wine in tapas bars and restaurants was something to be savoured. Even while socialising, delegates continued to think about the challenges facing companies and boards, and to explore options and scenarios to move from corporate governance towards the notion of a value-creating board.
    • The main theme (actually, challenge might be a better descriptor) that emerged from the workshop was 'change'. The nature of board research needs to change, from investigating isolated and observable attributes of boards and corporate governance activity, to studying boards themselves, both in situ and holistically. This presents a huge challenge for researchers, because it means that straightforward statistical analyses probably need to be replaced by more sophisticated techniques not unlike those used in sociology, psychology, behavioural economics and related fields.
    • The dominant logic of companies—maximisation of shareholder returns—probably needs to be reassessed in the light of wider stakeholder issues. This is not a call for Marxist or socialist-style interventions, but rather a recognition that shareholder maximisation to the exclusion of other logics is unlikely to be sustainable in the longer-term.
    While this conference was amongst the smallest (in terms of delegates) that I have attended in recent years, the quality of the discussion and debate was amongst the highest that I have experienced anywhere. Senior academics openly interacted less experienced researchers and other attendees in the discussions, to the extent that it was hard to tell who was who unless you looked at the titles on name tags.
    From small beginnings in 2014, the TBS team has a clear vision of what they want to achieve. This second workshop built on the first workshop (I am told, I did not attend the first one), which augers well for the future. I commend this workshop to all academics, consultants, advisors and serving directors with an interest in board practice and business performance.
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    IGW'15: Overcoming barriers to deploying complex technologies

    Conferences Decision Making Governance Leadership Performance Research
    The deployment of complex technologies can be a demanding problem in modern societies, especially when various interest groups support or oppose such deployments. The magnitude of the challenge was not lost on Alfred A. Marcus (Carlson School of Management, University of Minnesota). 
    Using the example of implementing wind turbine systems as a source of renewable energy generation, Marcus compared the approaches taken in Texas and Minnesota. Both states have the high and relatively consistent wind runs considered to be a necessity for large farms of wind turbines. However, renewable technologies such are wind turbine farms are not universally supported. Some like the romanticism of the blades gently turning in the breeze; others assert they are a blight on rural vistas; and, yet others both like the idea but oppose local deployment (the pejorative NIMBY). 
    Marcus observed that Texas' approach to decision-making and deployment was more top-down in nature, whereas the Minnesota experience was more bottom-up (and highly politicised). In considering this, he suggested that charisma without supporting regulation can lead to short-lived benefits. In effect, some ideas and decision processes need top-down 'support' to gain traction. Drawing on the work of Wilson (hierarchical decision-making) and Ostrom (collective action), Marcus proposed four 'rules' that can help, as follows:
    • Boundary rules
    • Allocation rules
    • Conflict management rules
    • Rules for changing the rules (!)
    In effect, Marcus' proposal was that a combined approach—incorporating hierarchical governance structures and decision-making processes and collectivism—was probably necessary if the not inconsiderable barriers to the deployment of complex and somewhat contentious technologies (like wind farms) are to be overcome.
    Although he did not explicitly extrapolate his comments, Marcus' suggestions are relevant and applicable to boards of commercial businesses. Many decisions, especially strategic decisions, fail to gain traction in implementation because a suitable framework for both decision-making and monitoring and verifying implementation is not established. Perhaps boards might like to consider Marcus' proposal, and see how it might apply. I suspect the answer in many cases will be 'well'—so long as a shared commitment to a common and singular purpose was in place.
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    Making smart decisions: act fast, not necessarily first

    Decision Making Management Readings Time Management

    Frank Partnoy posted a great article on the HBR Blog Network today.

    I've heard it said many times in business circles that "velocity wins"—meaning the faster we move and the faster we make decisions, the better. Partnoy disagrees. He argues that speed is killing our decisions. If we get caught up in a fast decision cycle, where speed (of decision-making) is everything, we risk making poor decisions and suffering the consequences as a result. Partnoy commended the decision-making framework developed by John Boyd, fighter pilot and military strategist, as a means of improving decision quality. The framework is called OODA (Observe, Orient, Decide, Act).

    In my opinion, OODA has considerable applicability in business. Boyd asserted that the ultimate goal is to act fast, but not necessarily first. I agree. Making smart decisions is more important than outright speed.

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    Is gender reporting the right thing to focus on?

    CEO Chairman Decision Making Diversity Governance Phd Productivity Research
    The debate surrounding the benefit of women on boards is starting to heat up. Eight days ago, NZX announced it's decision to require gender diversity reporting for all publicly listed boards. Yesterday, an article by Richard Baker asserted that "gender diversity is not essential to the good running of major companies". Today, Denis Mowbray challenged the NZX proposal. He said it is "intellectually lazy" to isolate a single characteristic (like gender).

    I agree with Baker and Mowbray. Governance is a socially dynamic phenomenon, with many variables and much complexity. Numerous researchers and practitioners have investigated structural and composition factors over many years. More recently, world-class governance researchers, including Leblanc, Huse and Nicholson, have investigated behavioural and process factors. To date, the research findings have been inconclusive, and causality with performance is yet to be established.

    Despite flights of fancy from some commentators, slow progress by researchers, and much frustration all round, the search for a link between governance and company performance is of enormous practical importance. Therefore, efforts to understand the mechanisms within the governance phenomena, and any relationship with company performance, must continue. However, the research agenda much be changed. Attention must move away from consideration of individual characteristics—toward a holistic consideration of governance—if further insights are to be gained and any clear understanding is to be achieved.

    My doctoral research efforts attempt to build on Leblanc and Nicholson's work. I plan to use a longitudinal multiple-case study approach (to understand the processes, behaviours and dynamic interactions within the governance system) to focus on the way Boards make decisions. Strategic decision-making has been postulated to be an important factor in the governance–performance relationship. If this is correct, a link between a strategic decisions and subsequent improved company performance should be apparent, after some longitudinal delay. The challenge will be to determine whether or not strategic decision-making can be attributed to the Board.

    So where does this leave us? I certainly don't have any silver bullets, and progress is likely to be frustratingly slow. Boardroom diversity is important, however I suspect a focus on decision-making and related factors will reveal more about board performance than arguments about the number of women at the board table. Let's push on.

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    Not-so-straight thinking

    Complexity Decision Making Integrity

    Most decisions we make are subject to some form of bias or pre-conditioning. Most of us think we are straight thinkers, but our biases can mess with our heads and can cause us to make poor decisions. Business Insider just published a list of 61 (yes, sixty-one) behavioural biases that can compromise the quality of the decisions we make.

    Read about them and how to deal with them here. It won't take long to work through them. I suspect the quality of the decisions you make tomorrow and in the future will be the better for it.

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    The next generation

    Accountability Decision Making Rules Societal Wellbeing

    Three significant events happened this week.

    • On Tuesday, we proudly witnessed our son graduate from the University of Canterbury with a Bachelor of Engineering with Honours. Tim is a member of the cohort of 2011, the so-called earthquake cohort. He has endured the trials and tribulations of the Christchurch earthquakes, and we are convinced he and many others are stronger for the experience.
    • On Wednesday, ANZAC Day, we remembered those New Zealanders and Australians that fought for freedom in wars in faraway places. Many returned, but many young lives were lost. Lest we forget.
    • On Friday, we received a large package of information relating to our daughter's AFS student exchange. Megan leaves in mid-August to live in Belgium Flanders for 12 months. The experience will change her life, as it changed mine when I participated on an AFS exchange to USA in 1979-80.

    Together, these events reminded me of our responsibility as parents and adults to prepare the next generation, and to provide them with space to make their contribution in life. We all owe it to our kids and those that follow to give our best to this task. How will you prepare those you influence to become significant contributors in the world?