Leadership - Peter Crow | Helping boards govern with impact

Published on: 28 September 2022

The craft of board work: Northern tour

The passing of the Covid pandemic has been a great relief for many; boards of directors are no exception. Several weeks ago, I visited Sydney, Australia to meet with directors, boards and leaders of membership bodies. The feedback was clear: if companies (and through them, economies and societies) are to prosper, boards need to start thinking strategically again. Last week, more grist to the mill. During a successful visit to Bengaluru, India to lead a Board Immersion Programme for a globally-known FMCG company, the question of how boards can add value was front-of-mind throughout.

Today, I'm delighted to announce my first post-Covid visit to the United Kingdom and Europe, to continue the advisory work there.

From November 16th through 25th, I will visit the UK, several EU countries, and elsewhere as required, to respond to requests to speak, and to help boards respond well as they pursue sustainable business performance. This includes:

Advisory sessions (individual board and executive team)
Keynote talk on sustainability issues
Half-day immersion workshop to consider modern governance practices
Confidential briefings on emerging issues
Guest lecture to post-graduate students

Do you want to meet in November? Regardless of whether you have a specific request or a general question, please get in touch. I'll respond promptly with some suggestions for your consideration.

Published on: 31 August 2022

Thinking about difficult problems, deeply.

I’ve spent quite a bit of time in recent weeks thinking about problem solving; my attention drawn, in particular, to problems that fall between simple (for which answers are self-evident) and wicked (easily defined, but for which an answer is elusive due to incomplete or contradictory information, or changing requirements). Difficult problems are those that can be solved, but answers are far from evident, even following careful enquiry. The BBC Series, The Bomb, explores a case in point. Nuclear fission was discovered to be theoretically possible (Leo Szilard), but considerable effort over the following decade was required to finally tackle the problem in practice.

So-called ‘difficult problems’ require, clearly, intentional enquiry and, often, patience. As with gravity and magnetism, the underlying explanation (resolution) cannot be observed directly, only through its effects. So, deep and critical thinking is needed, if a resolution is to be discovered.

Such problems are familiar territory for boards: if they were straightforward, management teams would resolve them. And therein lies the challenge for directors: the underlying cause of a problem raised to board level tends to be hidden under that which can be seen. And what is more, any linkage between the problem, the underlying cause, what can be observed, and any subsequent effects or impacts (note: plural) is tenuous and, almost certainly, contingent.

If boards are to be effective in their work (governance: the means by which companies are directed and controlled), directors need to be alert, astute and actively engaged—more so because resolutions to difficult problems cannot be discerned directly. Thus, directors need to think beyond what is written in board reports, and what is apparent when reading other materials. Those who think they can get away with quickly reading board papers a few days before the upcoming meeting are kidding themselves.

If directors are prepared to read widely across a range of topics, allocating 1–2 hours per day for six days every week, to consider ideas and think deeply, the likelihood of uncovering possibilities and solution options is greatly enhanced. Indeed, the correlation between, on one hand, time spent reading and thinking deeply, and on the other, high quality decisions is stark. Time and critical thinking matters, if directors are to add value.

Published on: 20 December 2021

Taking stock at year’s end; and peering into 2022

December is a significant month for many peoples around the world. It is the month in which two of the three great Abrahamic faiths have a major festival (Jews, Hannukah; Christians, Christmas), and the Japanese observe Omisoka. For others not professing a faith, December is significant to the extent that it marks the end of the Julian calendar. Each of these observances is distinctive, but a common thread runs through them: celebration and dedication.

Yes, December is a time to reflect on the year gone and give thanks, and to ponder what lies ahead.

Through this muse, I too wish to give thanks, to the many board directors, business leaders and students that I have had the good fortune to work with during 2021—both in person in New Zealand, and via video link in the United Kingdom, the European Union, the Caucasus region, North America and the Caribbean, India, several African and Middle Eastern countries, and closer to home in Australia. I have learnt a lot, and hope others have derived value from the interactions. Thank you.

Peering into 2022, the prospect of travelling internationally to work in person with boards and students is enticing. Once the coronavirus situation stabilises, border restrictions are relaxed and travel becomes viable again, I will accept bookings. But in the meantime, I have decided to take on a new project.

For over two decades now, I’ve had the privilege of working with aspiring and established directors on five continents, helping them wrestle with problems, consider opportunities, make decisions and learn what it means to be an effective director. Over the same period, two friends have encouraged—even nagged—me to consolidate my ideas, experiences and insights into a book. And each time it has been mentioned, I have pushed the idea away, citing lack of head space. But circumstances have changed in 2021 and the time now seems right to reconsider the prospect of writing 50,000 words about governance and the craft of board work. So, that is what I will attempt in 2022.

(*) The image shows the Marsden Cross, which marks the location of the first Christian mission settlement in New Zealand, and the spot Samuel Marsden preached the first Christian service, on 25 December, 1814.

Published on: 19 December 2021

What of 2022, and beyond?

Every year, at about this time, sages and futurists of various stripes peer out from their sanctuaries to offer opinions of what the future holds. Many speak or write deterministically, as if they have been blessed with special powers to know or postulate the future with great accuracy. Pronouncements are read with great anticipation by many, and embraced as if categorical. But some commentators are more circumspect; their contingent expressions reveal great maturity and wisdom.

“Forecasting is always a hazardous business. … no one can claim that the future is entirely inscrutable.”

One does not need to look far to see examples of the difficulties faced by those charged with forecasting and strategising. Over the last two years, for example, undertones of fear and stasis have been prominent. People and companies have frozen in response to pronouncements and dictates from national leaders. Economic and social priorities have been set to one side; the main—nay, only—focus has been on the pesky virus known as Covid19. First, borders were closed and populations were locked down, in an effort to flatten the curve. Some even tried to eliminate the virus. Then, recognising their folly, leaders embraced vaccination to reduce the effects of the virus. Most recently, mandates have seen populations divided into two classes, the vaccinated and the un-vaxxed. Naysayers have jumped in, but many of their predictions have proven to be wrong as well. Meanwhile, economies have struggled and the social fabric has frayed.

Amidst this backdrop, boards remain responsible for the performance of the companies they govern. Of those who recognise this (and not all do), some boards wait, perplexed by the unknowns, and others strike out, believing they can control the future, despite a plethora of externalities. Neither response is particularly wise.

High performing boards and leadership teams recognise that things change, often unexpectedly. They remain vigilant, watching for weak signals that might portend the emergence of something significant. They hold options open for as long as possible. Then, when it is time, they act, decisively.

The types of questions high performing boards ask (and keep asking) include:

Are we monitoring and assessing signals, trends and other relevant changes effectively, and what are the data telling us?
Are we attuned to the expectations and preferences of legitimate stakeholders, and are our responses appropriate?
Is sufficient time being allocated for scenario planning and strategising?
Is resource allocation aligned with desired outcomes?
Are we doing the right things?
Are plans being enacted as intended?
Are expected benefits being realised?

While some of these questions may be difficult to answer, boards must persevere. Even partial answers are likely to indicate a more reliable way forward than the lazy option of blindly pursuing the supposedly categorical predictions of mediums, sages and futurists.

Published on: 29 November 2021

The blame game

News of a new variant of the coronavirus emerged this week. B.1.1.529 (now Omicron, a moniker assigned by the World Health Organization) was first isolated by scientists in South Africa. Already, it has been detected in several neighbouring countries and in the United Kingdom, Belgium, Czechia, Hong Kong, Germany, Australia and Israel. Governments are reportedly “scrambling to protect their citizens from a potential outbreak". These responses are supposedly to protect but also, undoubtedly, to buy time.

Given the experiences since the coronavirus disease was first detected and subsequently declared to be a global pandemic, the reactions to the latest variant are hardly surprising. News agencies and social media commentators have been up to their usual antics; newsfeeds are abuzz. Fear is a powerful catalyst, of course. But reliable guidance to indicate whether Omicron is more or less contagious, and more or less virulent, is yet to emerge. For example, the two cases in Australia are asymptomatic and both people are fully vaccinated. A calm response is needed.

Another interesting aspect of the current situation is the response to those who first alerted the world to what they had discovered. When virologists in South Africa openly shared the results of their advanced gene sequencing tests, others (especially in so-called advanced economies) were quick to point the finger. They accused several countries in southern Africa of being the source of the outbreak, and ostracised them by banning travel—even from countries with no recorded cases—demonstrating the blame game is alive and well.

Effective leaders (boards) do not get caught up in the blame game. They take another path:

They think strategically and dynamically;
they seek multiple perspectives, and consider a wide range of options and possibilities;
they are proactive, formulating plans ahead of time to ensure they and those around them can respond well to various scenarios that might emerge, including scenarios that are difficult or even impossible to predict;
they document plans, response options and desired outcomes into risk management frameworks; and,
they communicate openly with others.

Then, having prepared and decided upon a course of action, effective boards remain engaged. They keep their eyes open, scanning for weak signals that might portend danger. If danger strikes, they engage immediately and fully—supporting the executive response but remaining calm at all times.

Is your board well-equipped to lead in an event that threatens the company’s prosperity or viability? And what is the likelihood it will oversee an appropriate response? Will it work calmly with the executives as a conjoint team to assess the situation and activate an appropriate response, or will it remain aloof and descend into finger pointing (perhaps because directors are more interested in protecting their personal reputation)? If there is any chance of the latter, consideration should be given to replacing the board with directors who are prepared to take their duties more seriously.

Published on: 23 November 2021

The self-corrective power of the market

The invisible hand, Adam Smith opined, is a metaphor for self-corrective power in systems. If one party within a system, or one part of a system, becomes too strong or dominant then, sooner or later, an alternative will emerge, to restore equilibrium. Regardless of whether it is applied personally (think: bodily effects of obesity), in politics (extreme ideologies), or at population (demographic and social inequities) or even planetary level (geological stresses), the maxim holds, it seems.

In business, the self-corrective power is the market. If price is perceived to be too high, or too low; workplace culture or employment conditions are unhealthy; product or service quality does not meet expectations; or, return on funds invested is too low, prospective customers (staff, suppliers, shareholders) respond—they seek alternatives. This inherent power, held by those who interact within the system, has underpinned sustainable commerce for centuries, even millennia.

And yet some governments and para-governmental agencies find it necessary to intervene, through the creation of rules. But such interventions are usually costly, and they rarely achieve enduring equilibrium. Inevitably, those with decision-making power within companies find ways around what they perceive to be unreasonable barriers to sustainable prosperity. Please don't misconstrue this observation as a wholesale rejection of rules. It is not. Rather, it is a plea for regulators and boards to take stock. What is the minimum regulatory or policy framework to facilitate commerce and ensure fairness; the point beyond which effort will naturally be diverted, resulting in inefficiencies?

Consider stakeholder capitalism as a case in point. Advocates argue a more stringent regulatory framework is required to ensure the value created by companies is 'shared equitably'. This seems fair. But what if an external stakeholder group influences company strategy in a direction different from that which the board and management have agreed is appropriate? Where does accountability lie is such a situation? Should external stakeholder groups be held to account if they ‘force’ certain practices and policies onto a company that impair the performance of the business and lead to in value erosion? The more time spent satisficing the expectations of external stakeholders, including complying with regulatory requirements, the less time remains to pursue agreed goals and sustainable performance.

If company leaders—boards in particular—focus resolutely on the pursuit of agreed strategy, and on the achievement and reporting of results across the three critical dimensions, namely, social (staff, client, supplier satisfaction, which includes fair pay, good relations, etc.); environmental (impact, minimising footprint) and economic (financial return to shareholders), prosperity should follow. But if leaders trade recklessly; abuse staff or suppliers, price goods and services above what is reasonable, or disregard the environment, the company they govern deserves to struggle or, in severe situations, fail. Regardless, the invisible hand will have made its presence felt. What more should anyone expect?

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