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    On making predictions about the future

    Phd Readings Research Societal Wellbeing
    I've been reading some back issues of The American Scholar recently, as part of my personal commitment to read widely and explore topics that I'd not normally think about. Reading widely is the side story of my quest to explain how Boards influence company performance. It provides a bit of balance to the humdrum of reading academic papers. 

    Some of the articles and books that I have read have really captured my attention and thought. One such article, originally published in the Spring 2010 issue of Scholar, summarised British philosopher A.C. Grayling's book Ideas that matter: The concepts that shape the 21st century. Grayling introduced 12 ideas that would, in his opinion, dominate public consciousness and debate during the century ahead. 

    This sounded remarkable, for the making of reliable predictions—especially longer-term predictions—is notoriously difficult. A reliance on empirical evidence can easily lead to erroneous conclusions—the White Swans Thesis is a famous case in point. Notwithstanding this, most, if not all, of Grayling's predictions are coming to pass, just three years after his thesis was published. What does this say about Grayling's ability to predict the future? Did he see something that most of us missed, or is Grayling's "long term view" actually much shorter than what readers might have assumed in reading the title? I suspect the answer lies somewhere in the middle. Call me a sceptic if you will, but I'm yet to see a robust case to suggest that the making of future predictions based on empirical historical evidence is anything more than intelligent guesswork.
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    Report: Most company failures are failures of governance

    Governance Performance Research Strategy
    A recent study, conducted by UK firm Reputability LLP, has found that failures of governance are at the seat of most company failures. A lack of [governance] skill and an inability to influence management were cited as the root cause of 88% of the failure cases studied. Gosh, that's nearly nine out of every ten failures attributable to poor governance! Information asymmetry, a tendency to rely on quantitative data (numbers) and poor 'soft' skills were identified contributing factors. The full report is available, for a fee, here.

    This report is an indictment on governance. It clearly exposes an underlying problem with governance. Boards, in general, are not operating effectively. I'm not particularly surprised by the findings of this study. Most corporate Boards operate within a framework called 'agency theory', whereby an adversarial relationship between the owner's representatives (the Board) and management exists. The Board sees its role as that of a policeman, to monitor and control management, in order to protect the interests of the owner(s). In such situations, trust is typically low, reputations are carefully protected, and information is shared carefully and sometimes under duress.

    The tragedy is that agency theory remains the dominant governance framework—in the western world at least—despite a seemingly endless body of evidence that shows companies are not well served by it. Perhaps this report might prompt Boards and shareholders to take stock, and consider other governance frameworks whereby Boards and management actually work together to maximise performance. After all, the evidence is compelling. Is that asking too much? 
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    On the aspirations of women in business

    Management Performance Research Societal Wellbeing
    The topic of gender diversity has been a popular theme in the popular press and academic literature in the last couple of years. Awareness groups have been formed to speak into the diversity debate, and to promote the interests of women in business. Research reports have identified a correlation between women and performance, in that the presence of women in Boardrooms and executive suites seems to enhance company performance. However, the research is not conclusive, and a sound causal explanation is yet to emerge.

    With all this interest and activity, you would think women would be actively pursuing executive positions, particularly the C-suite. I thought this as well—until I read McKinsey's report entitled Unlocking the full potential of women at work. The most intriguing insight was that, despite their career success, 59% of women said they did not aspire to the C-suite. The main reasons for the reluctance? Structural obstacles, lifestyle choices, and corporate politics in the C-suite. While the market seems to be keen to provide opportunities for women to participate in all levels of the business community (which I applaud), it seems that for some roles at least, women just aren't interested.
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    Stepping up a gear...another milestone reached

    Governance Phd Research
    This week marks a red letter point in my doctoral journey because, on Thu 13th, I will visit the Boardroom of Company Beta (*), observing and recording the meeting. Finally, after twelve months of reviewing the literature, proposal writing and careful planning, I've reached the milestone point where data collection can commence. It feels good! Over the next year, I will be gathering data from several sources within three companies (Board reports, minutes and meeting observations; Chair and CEO interviews; annual accounts; historical performance data), and trying to make sense of it. 

    To those readers not familiar with my doctoral research: I am investigating the relationship between governance and performance, with the overall goal of providing an explanation of how Boards actually contribute to business performance (because we don't know). The research design is a longitudinal multiple-case study, underpinned by a philosophy called critical realism, and the direct observation of Boards in situ. This combination has never been tackled before—hopefully I haven't bitten off too much! If you'd like to learn more, have a look at the papers on my Research page, or contact me directly.

    (*) Company Beta is so-named because it was the second company to provide approval to participate in my doctoral research. Anonymity is an important condition of this research, to protect the companies and give them confidence that what is reported in the final thesis is not identifiable back to source. I'm due in the Boardroom of Company Alpha in late June, and am still negotiating with a couple of companies to become Company Gamma.

  • Published on

    On teaching and learning, undergraduate style

    Research Societal Wellbeing Teaching
    Today is the first Thursday I've had to myself since 14 February. I have been teaching 115.108 "Organisations and Management", a first-year paper at Massey University. This was my first teaching experience in an undergraduate environment, so I didn't really know what to expect. Would the students engage? Would they just sit there? Would they even turn up?

    Fast forward to today. The semester is complete, save the final examinations. Having now completed the assignment, I've learnt a lot—about myself, the students and the learning environment—so thought a few reflections would be in order:
    • Most young men and women are committed learners—if you encourage them, show them trust, and treat them as adults. The natural learning style of most adults is to share ideas and ask questions, a style I adopted this semester. In my experience, if you ask people questions, they will answer—surprise, surprise. In contrast, the standard modus operandi in a university context seems to be to lecture—a one-way transfer at best. I continue to be amazed that universities operate on the basis of broadcasting information in a lecture format. Is this conducive to effective learning?
    • I was stunned at the drop-off in attendance as the semester progressed. Attendance dropped by 50% over the course of the semester. Other Tutors said this was normal, and not to be alarmed or critical of my own effectiveness. I can't help but be alarmed. Were some students inappropriately enrolled at the beginning of the semester? Did the course and delivery not suit the learning preferences of the class? Were there timetabling clashes? Did the students get lazy? I don't have any answers to this one, but suggest university councils treat this as a real concern, as they grapple with their goals and seek to allocate limited resources effectively.
    • The ability of the class to think critically was well below what I expected. Our modern world is complex. We need leaders who think critically and make smart, informed  choices. I wonder whether the NCEA system, which dumbs down topics by separating the holistic subjects into parts, is to blame?
    • The assignment forced me to adopt a weekly rhythm, to ensure material was available and I was "ready to go" each week. But it was fun. I enjoyed working with a great group, most of whom were just embarking on the tertiary and professional careers, but can't see myself full-time in a university environment. The pace is too slow!
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    On vision, core purpose and related matters

    Management Performance Research Strategy
    What role does "vision" have in the modern organisation? Is such a thing still relevant and, if so, who should "own" it? The question of vision has been a bit of a hobby-horse of mine for over a decade now, particularly when I've been asked to help with strategic planning. A discussion on the Institute of Directors group page over at LinkedIn brought the issue to the surface again this week.
     
    I must admit to being a doubter when the wave of books, seminars, consulting engagements promoting the vision and mission statements first flowed across the business community in the 1990s. While considerable money and effort was expended on the creation of some quite wonderful statements, many of which were printed and displayed for all to see, the gains in productivity and business performance were questionable in most cases.

    Vision is typically expressed as some aspirational sense of what an organisation seeks to achieve (a big goal, if you will). It addresses "what", a key question that all stakeholders need answered. But people don't get behind things or targets, they get behind causes. It should come as no surprise therefore that vision "leaks", and that staff are naturally sceptical, particularly when vision statements are too ambitious as many are. 

    Vision alone is not sufficient however. For sustained effort, people need to know "what" and "why". Core purpose is much better, because it addresses both questions. Core purpose incorporates the vision (what) and the underlying driver/cause (why). A good statement of core purpose is succinct, self-evident and realistic. It should be developed by the Board because, ultimately, the Board is responsible for the purpose of the organisation, on behalf of the shareholders. The core purpose should be owned by everyone. Notwithstanding this, the challenge of motivating the people and aligning their effort to move the organisation towards the core purpose is no easy task. I guess that's one reason why good CEOs are paid so much!