I am innately curious, and, in the spirit of openness, was born before JFK’s audacious “We choose to go to the moon" challenge. Consequently, and as you would expect for a child of the sixties and seventies, I have seen and done a few things.
While these statements are evidentially correct, the past twenty-five years have seen me concentrate my efforts on something reasonably narrow, but which seems, to me, to be important if societies are to function well: that leaders and boards make great decisions and build enduring companies.
I am all-in when it comes to boards, governance, and performance, but make no claims about having it all together. No, not at all. However, I have noticed a few things that stand in the way of great outcomes:
- We have a problem in our boardrooms. One in six directors understand the business of the business, many directors can only recall two or three of the seven duties they owe, and one in twenty boards are completely aligned when it comes to the purpose of the business (the reason it exists). Given these indicators, how can boards do their job if they don’t know what their job is?
- Almost all directors I know are well-intentioned, and some boards are effective. However, weak engagement and faulty moral compasses remain a real problem.
- Over the decades, best practice recommendations, governance codes, and compliance measures have been promulgated as harbingers of better outcomes. But, at what cost? What has been achieved, and what difference have they made, in real terms?
- Conceptions of corporate governance vary (widely) despite the original definition being perfectly adequate. Richard Eells, who coined the term, said corporate governance describes the structure and functioning of the corporate polity, the board. Sir Adrian Cadbury offered a refinement in 1992 with "the means by which companies are directed and controlled." Why the variety of understandings?
On this final bullet point, the original definition highlights the two critical aspects of board work (conformance and performance), and these are directly aligned with the etymological root of governance: to steer, to guide, to pilot.
Have you noticed that, in life, you cannot comply your way to a great outcome? Closing a barn door simply limits passage. Boards are no different. If the company is to thrive (meaning: achieve and sustain high performance), a future focus is critical. Compliance is necessary, of course, but it is far from sufficient. The barn door must be open, so boards can look out, beyond the business, and make decisions. And, because boards are social, the key to achieving success in this regard is likely to be [underpinned by social mechanisms] as well.
Reputable research supports this: Values, culture, capability, activity, and behaviour matter far more than structure and regulation. Such is Boardcraft, a pragmatic philosophy to help directors take the company they govern into the future. And what is there not to like about that?
