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    ICMLG'14: Keynote presentation day 2

    The keynote speaker to kick off the second day of ICMLG'14 was Dr Leonard Schlesinger. Dr Schlesinger was recently appointed Baker Foundation Professor at Harvard University.

    The talk—which built on Isenberg's entrepreneurial ecosystems talk on day 1—explored entrepreneurial thought and action, the primary point being that entrepreneurs are action-oriented rather than thinking-oriented. Whereas the normal modus operandi of established companies is built on structure and linearity, entrepreneurial activity is rather messy. Further, the future cannot readily be predicted (despite the best attempts of consulting firms and mature businesses to do through through detailed and systematic planning processes). Therefore, different approaches are required. Instead of "Where to?", the question needs to be "Where to next?" As such, a degree of predictability comes through the process of taking short steps. The goal should be to map out the next few steps, and to be agile based on known resources and known landscape at that time.

    Schlesinger had much to say, more than what is reasonable to share in this post. His talk would have been quite provocative for many listeners, but I revelled in his frank commentary. They have motivated me to pause and review of some of the assumptions that underpin my doctoral research work, which is great. I'll start that process on the flight from Boston to the Midwest on Saturday morning.
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    ICMLG'14: Accountability in cases of corporate failure

    Dr James Lockhart, of Massey University, New Zealand, spoke to the highly topical issue of governance accountability in cases of corporate failure or fraud. After introducing the topic and comparing rules-based and principles-based systems of governance, Lockhart discussed several cases of corporate failure that have occurred in recent years, including:
    • Case #1: Approximately 70 finance companies went bust due to mismanagement, resulting in the loss of $850bn of investor's funds. Directors, CEOs and related parties were held accountable through the legal system, and several spent time in jail as a consequence of being found guilty.
    • Case #2: Twenty-nine employees and contractors were killed in a major industrial workplace accident. The CEO and some other parties were initially charged, however all charges were subsequently withdrawn, in effect removing any accountability.
    • Case #3: Hundreds of Asians became sick and six died as a result of contaminated milk products exported from New Zealand. No one, in either the affected country (China) or in New Zealand were charged.

    Lockhart's conclusion was telling: if boards and managers lose large sums of money they will be held accountable. However, if lives are lost different accountability rules will apply. The evidence analysed suggests that lives lost are accorded a lower standard of accountability. That seemed odd—tragic even—to Dr Lockhart, and to many members of the audience. 

    The question that lingered in my mind as I left the room? How long it will be (or how many more accidents will it take) before something is done about this glaring inconsistency?

    Disclosure: James Lockhart is my PhD supervisor. However, the paper he presented was entirely his work and I had no involvement in it.
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    ICMLG'14: Opening keynote

    The opening keynote speaker at the International Conference on Management Leadership and Governance (ICMLG) was Dr Dan Isenberg. His topic was A Critical Path to Entrepreneurial Ecosystems. Isenberg described entrepreneurship, challenged a few folklore beliefs and introduced a concept he called an entrepreneurial ecosystem.

    Many scholars, business leaders, community leaders—and much of the popular press—would have us believe that the Google, Facebook, LinkedIn perspective of entrepreneurship is somehow the normal model to be pursued. (This being the rapid growth from nothing towards an IPO event 6–8 years later.) Isenberg challenged this view, and did so very strongly. He cited many examples of successful entrepreneurial businesses that are not necessarily startups or innovative or youthful or owners of small businesses. The data shows that many startups simply don't grow. Further, entrepreneurial businesses are far more likely to come from ideas that are written off as dumb or worthless by 'experts'. In contrast, entrepreneurial businesses are more commonly found in older, basic industries, and that they achieve sporadic growth over time.

    According to Isenberg's research (and experience from several working examples), some of the critical characteristics of successful entrepreneurial ecosystems are actually quite different from those that are commonly regarded as being crucial:
    • a few local success stories which are highly visible
    • a high quality of life, such that talented people desire to stay
    • there is a plethora of usable assets (people, finance, supportive large companies)
    • an anxiety, sense of urgency and fear of the future exists in the culture

    Those characteristics that are commonly regarded as being desirable, but are actually much less important in reality include:
    • having lots of startups in an incubator or cluster context
    • the presence of economic development agencies
    • tax incentive frameworks and supportive government policies

    Isenberg's comments will unsettle many folk, particularly those with an involvement or association with incubators, clusters, angel clubs or local EDAs. However, the evidence is compelling (and not dissimilar to the thoughts on innovation that Dr Bob Brown shared at ANZAM in Dec'13). Folk associated with these groups could do far worse than to take stock, because the current approaches aren't working. 

    Isenberg's talk set an expectant tone for the conference. It challenged much conventional wisdom, and was a breath of fresh air.
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    Feltex: A lemon with the juice squeezed out?

    Feltex Carpets, once a great New Zealand business went public a decade ago, in May 2004. However, the business was mismanaged and it went bust within two years. The $185m case against the board, brought by a former shareholder, is now before the High Court in Wellington. The primary defendant is the board (actually, the directors). The second and third defendants are Credit Suisse Private Equity (promoter of the sale) and Credit Suite First Boston Asian Merchant Partners (CSPE parent).

    During submissions yesterday it was revealed that the company was likened to a lemon from which most of the goodness had been squeezed out. Further, one director referred to "these lousy shares" in an email several months before the company's IPO. These startling revelations place the defendants is a rather awkward position. How material will these pieces of evidence be to the overall case?

    The case, which is expected to last nine weeks, is being watched closely by company directors, the IoD and many others, for it will more than likely set a precedent against which future cases of mismanagement and poor governance are measured.
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    On entrepreneurial thought and action: getting the low down

    Delegates at the International Conference on Management Leadership and Governance are in for a treat next week. Dr Leonard Schlesinger, Professor of Business Administration at Harvard and leading company director (including Forbes and Demandware), is the keynote speaker on Fri March 21. He'll be talking about the entrepreneurial thought process and the conversion of thinking into action.

    Dr Schlesinger is highly regarded in the business and academic communities, and I'm looking forward to hearing what he has to say. I'll post a summary of his talk here, as part of my commitment to provide reflections and comments throughout the ICMLG'14 conference, for the benefit of those that can't attend.
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    ICMLG'14: just around the corner

    The International Conference on Management Leadership and Governance (ICMLG) is only a week away. This year, the conference is being held at Babson College, just outside Boston. The programme looks really interesting. I'll post reflections and comments here during the conference, so please check back if you are interested.

    I leave home on Mon 17 on the Air New Zealand evening flight to San Francisco, to meet a United flight across to Boston. The conference dates are 20–21 March, so I will have some time beforehand to reacquaint myself with a city that I last visited 20 years ago, and to attend meetings with some highly regarded governance advisors who are based in Boston. My paper will be presented on the first day of the conference, and I will chair a session the second morning.

    Immediately after the conference, I fly out to northern Minnesota, to visit the family I lived with as an exchange student 35 years ago. It'll be my first trip back since 1990, and possibly the last time I see my now elderly host parents. While the schedule is tight, I am looking forward to this trip very much. I'll keep you informed.