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    ECMLG2014: Enterprise Architecture, a bridge to business performance?

    Conferences Governance Leadership Performance Research
    Marco Halen (Aalto University, Finland) is an interesting character. Like me, he came to research after a successful business career—in his case via information technology. He was the CIO of a major company before he embarked on a PhD recently, and his subject expertise is enterprise architecture. 
    Marco's paper was enlightening. He said that enterprise architecture is not well understood, but that those that do have a view think it has or is something to do with the IT department. From my very basic understanding, enterprise architecture is something that is discussed amongst IT-types and that it lacks any real credibility beyond the technical departments of companies.
    Halen asserted that enterprise architecture (EA) can be valuable to business, if it is reconceptualised as a bridge that spans between corporate purpose and strategy, and technology and information systems. However, any move towards effectiveness requires leadership. The CIO, who is commonly the 'owner' of EA, needs to work hard to reposition EA from an IT framework to a business framework; one that exists for the sole purpose of supporting and enabling strategy implementation.
    The unanswered question is how? The board and the executive of most companies are busy people. Proposals to implement yet another framework are unlikely to gain any tangible traction or support unless they demonstrably advance the business towards the achievement of its goals and objectives. Halen implied that the CIO needs to take a deep breath, learn a new language (of business); begin speaking in terms of strategy and performance; release EA to business executives; and reposition the EA experts as service providers to business (cf. fiefdom builders and cost centres).
    Halen's preliminary work is interesting, in that it provides a solid base from which to develop some alternative models; do some empirical research; test some ideas; and, potentially, improve business performance. If EA can be reconceptualised as a bridge as Halen proposes, then it stands a chance of becoming adopted more widely as a useful management tool. If not, the most likely outcome is that EA will be consigned to the scrap heap of esoteric ideas that have emerged from the IT department—solutions looking for a problem. I look forward to seeing how Halen develops his ideas.
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    ECMLG2014: Service as a required leadership competency

    Conferences Leadership Performance Research Societal Wellbeing
    Noel Pearse, of the Rhodes Business School, Grahamstown, South Africa, presented the next chapter in what is rapidly becoming his magnum opus.  I first met Noel twelve months ago, in Vienna, when he presented a paper on servant leadership. This year, he spoke on service as a specific leadership competency. 
    Thinking of leaders and followers, most people understand that an important role of the follower is to serve. In a business context, that means to serve other colleagues; managers; and, customers. The same people would probably suggest that leaders are to be followed and, by implication, to be served. However, emerging leadership trends provide an interesting juxtaposition, whereby leadership responsibility is being distributed; so-called celebrity leadership status is being rejected; and,  ethical leadership is becoming increasingly valued. Further, servant leadership is quite common in high-performance organisations.
    With this background, Pearse posed an interesting question: whether service is actually a required leadership competency. Building on the seminal work of Boyatzis (1982) which identified attributes and competencies of effective leaders, he asked whether certain underlying attributes (my phrase, not Pearse's) are necessary. I was fascinated by Pearse's work—still at a theoretical stage—because it appears to bisect my work on underlying personal qualities of effective effective directors as they seek to exert influence in the boardroom. We plan to stay on stay in touch.
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    ECMLG 2014: Welcome function tonight, sessions from Thursday morning

    Conferences Governance Leadership Management Phd Research
    The 10th European Conference on Management Leadership and Governance starts tonight with a welcome function for delegates. This year the conference is being hosted by VERN' University, in Zagreb, Croatia. I am rested after the long flight from New Zealand via London, and am looking forward to hearing about the latest developments in management, leadership and corporate governance research over the next two days. 
    Please check back regularly if you are interested in the discussion. I will post session summaries here during the conference, and use the #ECMLG2014 hashtag on Twitter to announce new postings. The full conference programme is available here. If you are interested in a particular session, please let me know and I will do my best to attend and report on it for you.
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    The Imposter Syndrome: Are you a director or a "director"?

    Governance Leadership Performance
    Do you know the difference between a book and a "book"? Here's a clue. Books have substance, they are helpful and meaningful. In contrast, "books" are that in name only: testaments to the ego of the author or publisher whose name is printed on the spine. That is not to say that "books" are not popular: the distinction is one of value.
    I had not given this distinction much thought before. However, having read Beam's article, I found myself pondering the question in the context of boards of directors. As with books and "books", the distinction between a director and a "director" is not initially obvious. "Directors" are quite likeable people. Many carry an aura of authority. However, the distinction—one of style over substance—becomes rather stark if you look more closely at some of the behaviours:
    • A propensity to 'collect' board appointments, and to volunteer one's status in an overt manner
    • A lack of commitment to invest time and energy to understand the business of the business, or to think critically about the issues raised in board papers so that meaningful questions can be asked in board meetings
    • A tendency towards highly vocal contributions during board meetings, or silence
    Do you recognise these indicators in any of your colleagues or associates? Sadly, I suspect more directors than some would care to admit would fit in the "director" category, if they were honest with themselves. And what of yourself? Am I director or a "director"? The corollary is perhaps even more important: What, if anything, I am going to do about it? These are important questions for all of us to ponder.
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    If directors get serious about strategy, what are the consequences?

    Governance Leadership Management Performance Strategy
    If you listen carefully, you can hear it. A drumbeat, almost inaudible at first but getting louder now, has been beating a new tune in corporate boardrooms: that directors need to get serious about strategy. If the recently published NACD Blue Ribbon Commission's report is any indication, the era of boards meeting to review past performance and satisfy their compliance obligations (as their sole responsibility) may be drawing to a close. 
    While I was initially non-commital, the BRC should be applauded for its report, and the NACD congratulated for having the courage to commission it. That the BRC has produced a set of strong recommendations is great news for shareholders, the markets and other parties interested in effective corporate governance and the achievement of great company performance outcomes. However, the recommendations are not without consequences: 
    • Directors will need to become more active in learning about the business of the business they govern. That will mean spending more time in the market; more time in the business; and, more time reading and critically analysing information from a wide range of sources. 
    • Directors will need to become adept at strategic thinking and more comfortable with the strategic management process. This may mean that the balance of expertise around board tables needs to change; from legal, compliance and accounting towards innovation and strategy.
    • Directors will need to revisit whether independence and distance (between the board and the Chief Executive) is actually the best basis of board practice. History—actually, the agency theory—has taught us that independence and separation are good, even though no one has produced any research to demonstrate that independence drives performance. If these recommendations are embraced, collaboration may become the order of the day.
    • Alpha-male and queen-bee CEOs may well be threatened by the board encroaching on 'their space'. However, there is no suggestion here that the board should take strategy away from them. The paper I presented in Boston (copy on the Research page) earlier this year discusses this.
    These consequences will place downward pressure on the number of boards that any given director can sit on at any one time, without doubt. Three concurrent board appointments is probably a reasonable maximum for any one director, and possibly two if one appointment was a chairmanship. However, that may introduce a whole new set of concerns, not the least of which might be requests—from directors more interested in earning than serving—to shareholders to increase the size of the directors' fees pool! Notwithstanding this, I hope directors and boards take heed of the calls to action—for they are beating loudly now. 
    Finally, my current research work, and experience in practice, suggests that the calls to action make very good sense. They are likely to lead to better company performance outcomes—but if they are followed.
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    Are investors too easily satisfied?

    Governance Leadership Performance Strategy
    Accounting firm PwC has just released its 2014 survey of investor perspectives and board performance. You can get a copy here. The survey findings indicate that investors are generally happy with some things and less so with others. Here are the top points:
    • Investors are happy with the way boards assess strategy, oversee risk and maintain board expertise
    • Investors are not happy with the assessment of director performance, shareholder engagement or management incentive schemes; and they would like to see more diversity in the boardroom
    • The top three risk concerns are cyber risk, climate change risk and KPIs relating to risk management
    The report makes good reading. In all likelihood, it provides an accurate summary of what investors currently think (or at say they think—this is a survey after all). On the flip side, the most surprising and, frankly, most disheartening news is that investors are most interested in visible attributes (gender, composition, et al) and activities (assess, oversee) of boards. These findings suggest that if the board conforms with certain structural and composition 'requirements' and that boards do certain things, then investors are happy.
    My experience—gained as an investor, a company director and a corporate governance researcher—tells me that the top priority for boards should be company performance. However it is not mentioned in the report. The only item that comes close is the satisfaction in the way boards assess strategy—and yet most boards that I've observed or sat on spend most of their time monitoring and controlling the Chief Executive! Do investors, who typically do not attend board meetings, really know if or how boards assess strategy?
    From these findings at least, it would seem that company performance and value creation (growth) is not that important to investors. Is that the reality? If it is, then investors are too easily satisfied. However, if investors are interested in company performance (I think they are, they probably just didn't say so in the survey), then they need to appoint directors whose top priority is to drive business performance, in order to assure a positive return to the very investors that put them there.