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    Looking forward to looking forward with some great Australian leaders

    Conferences Diversity Family Business Governance Leadership Performance Strategy
    I'm looking forward to looking forward with some great Australian leaders in Brisbane, QLD on Thu 19 May. 
    I'll be talking about emerging trends including the board's role in value creation; the importance of setting a clear purpose for the business; board involvement in strategy; how to drive performance through the chief executive, in reality; and, telling a few stories along the way. Look forward to seeing you there!
    Two events have been scheduled on Thu 19 May: breakfast and dinner. The breakfast event is almost booked out. However, some seats at the dinner event are still available. If you want to hear about emerging trends in governance and board practice, and their application in a family business context, click here to read more information and to register. 
  • Published on

    MediaWorks: a gross failure of governance?

    Accountability Ethics Governance Leadership Performance
    MediaWorks, a broadcasting company that owns several radio, television and internet brands is doing it tough, this week especially, to the extent that the wheels appear to be falling off. Consider these recent events:
    None of this augers well for a company that is struggling to maintain mindshare and marketshare against the national broadcaster, Television New Zealand. A blind man can see something is wrong, badly wrong.
    ​My sense is that the spotlight needs to be shone on the board. After all, it is the board that holds the ultimate responsibility for overall company performance and the various contributory pieces including culture; values; strategy; and, the performance of the chief executive. That the company has been struggling for a couple of years or more, and seems to have been (blindly?) experimenting with programming options suggests that the board doesn't have a good grasp on things. ​
    Sadly, MediaWorks is not the first company to trip in this way, and it won't be the last.
    Several years ago, I studied another company with a successful track record that, unexpectedly, began to fail. Though operating in a different sector of the economy, that case (sorry, I can't disclose the details) had similar characteristics to the MediaWorks situation. The board had hired a sanguine chief executive to craft and implement a new growth-based strategy. The board gave the chief executive plenty space to operate, to such an extent that it did not scrutinise the chief executive or company performance adequately. Ultimately, the strategy was flawed and the board only worked that out when a staff member blew the whistle. The board had been gamed—it had been asleep at the wheel. To its credit, the board's response was strong: it released the chief executive and many directors resigned as well. Shareholders were briefed, and they were invited to recruit a new board and 'start again'. Within six months, the company had a new board and chief executive; its 'reason for being' (core purpose) was revisited; a new strategy was developed to achieve the purpose; and, resources were adjusted to suit. The company got back on track and it continues to perform well to this day.
    Perhaps it's time for the MediaWorks board to also respond to the signals, by looking in the mirror; reigning in the culture of hubris and excess that seems to have pervaded the company; and, making some much needed adjustments. The fish rots from the head, after all.
  • Published on

    What is going on with New Zealand's largest company?

    Accountability Decision Making Ethics Governance Leadership Management Performance Strategy
    Picture
    After several years of paying high milk prices to its farmer-suppliers, Fonterra has hit hard times. International demand for milk products has slumped. On the supply side, prices paid to farmer-suppliers have tumbled. Some have said the problem is primarily related to changing demand especially in China, whereas others have suggested that Fonterra is complicit having stimulated supply to 'feed' its massive processing plants. To make matters worse, Fonterra has started losing farmer-suppliers to its competitors and it seems to be exercising "considerable discretion" with payment terms as well. 
    The latest commentary, an interview on Paul Henry's breakfast show today, lay out some of the challenges in plain English. Click here to watch the video clip. (disclosure:  James Lockhart is my doctoral supervisor, but had no prior knowledge of this interview.)
    The situation, which has been brewing for a several years, is messy to say the least. Other companies including Tatua and Open Country Dairy seem to coping much better. This begs several questions including whether the Fonterra board and management are actually in control; whether the corporate strategy is sound or not; and, whether the company has the financial and managerial resources to respond effectively. While I'm nowhere near close enough answer these questions, the old saying "where there's smoke there's fire" seems to apply.
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    Would you like to learn more about #corpgov and board effectiveness?

    Conferences Decision Making Governance Leadership Performance Research Speaking Engagements Strategy
    Are you based in or near London or Paris? Do you want to learn more about board effectiveness, corporate governance and how boards can exert influence from and beyond the boardroom?​ ​If so, please read on.
    In a few weeks I will be visiting London (24–31 May) and Paris (1–4 June) to speak with directors and trust board members about board practices, board effectiveness and emerging trends in corporate governance; share the results of my latest research; attend meetings; and, to present a paper at the EURAM conference.
    ​If you have a question (perhaps along the lines of these ones below) or a request and would like to take advantage of my proximity, please get in touch. I'd be delighted to hear from you and to schedule a meeting. ​
    • Do you want to increase the effectiveness of your board?
    • Would you like to know about my latest research on boards and firm performance?
    • Do you have a question about boards, board practice, corporate governance or a related topic?
    • Do you want to explore how to apply some of the suggestions I've shared on Musings?
    • Are you looking for a speaker to address an event or conference sometime in the next 12 months?
    If you've answered 'yes' to any of these questions...you know what to do. I am at your service.
  • Published on

    Does good governance require a fresh approach?

    Accountability Governance Leadership Performance Tough Questions
    I've been pondering this question for quite a few years now, since reading a seemingly endless stream of articles about the global financial crisis of 2007–2009 published in the popular press and academic literature. Curiously, many authors identified the board as a source of failure (of corporate governance), yet few if any have offered positive contributions to put corporate governance back on the tracks. This apparent void was one of the motivations of my doctoral research quest. 
    However, from time to time, articles do stand out, because the authors speak out. Their comments may not be popular, but take a stand they do. Recently, the ICSA recognised one such author, Ruth Keating, who openly asked the question in a recent essay competition. Two sentences towards the end of her well structured and very readable essay say it all:
    “Corporate governance can do better, and with significant investment, capital and jobs on the line, it must. Good governance requires a new approach, because governance has become a formality to be satisfied rather than something which can be hugely valuable."
    My hope is that, by openly asking the question (as Ms Keating has) others might join the debate. One outcome could be a new understanding of corporate governance and a genuine commitment by the board to add value. Who knows where this might lead, perhaps even to a new normal, whereby boards expect to exert influence from and beyond the boardroom. If that is achieved, a new dawn might not be too far away.
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    Beyond 'unique' and 'different': Is your strategy impactful?

    Decision Making Governance Performance Strategy
    About 25 years ago, I remember seeing, for first time, a rather compelling video on competitive strategy. Michael E Porter, a Harvard professor, spoke about competitive strategy and sustainable competitive advantage. He said that competitive advantage (and, therefore, business success) was largely a matter of deciding whether to pursue a cost (price) or differentiation strategy. More recently, others have suggested that every product/service/company needs to have a unique selling proposition (USP) or a point of difference.
    Fast forward to 2016. Is this pathway still viable? In a crowded world, new entrants come and go, all the time. Barriers to entry for new products and services are getting lower. In this environment, how realistic is it to think that any USP might actually be unique, let alone sustainably so? Also, a product that is different or cheaper is of little consequence if no one buys it.
    Difference is important, but not in the way most people think (unique features &c.). Difference works only until someone copies you. Then you are the same. Your difference, your USP, is no longer unique. Further, at a population level, product or service success doesn't depend on price or feature set. ​Most customers don't care what products or services do. They do care about the what difference it will make to them.
    This challenge is arguably even more important at a company level (i.e., corporate strategy). So, next time your board and management team convenes a strategic thinking workshop, as part of a strategy development process, change the playing field. Ask you facilitator to write these two questions on the whiteboard—and to keep coming back to them throughout the session.
    You might be surprised at the result.
    ​