An outstanding Editorial appeared in our local newspaper, the DominionPost, today. The editorial highlights the significant conflict of interest that exists when local government politicians are appointed to the boards of Council Controlled Organisations (CCOs). The appointment of local councillors—many of whom lack sound governance expertise, and all of whom are conflicted as the editorial argues—must stop. 

Councils and local communities would be far better off if independent directors were appointed to the boards of CCOs (and held accountable through normal shareholder and fiduciary processes). Independent, commercially astute directors would focus entirely on their role of acting in the best interests of, and maximising the performance of, the company. In so doing, the returns to shareholders would more than likely improve over what would otherwise be possible with a highly conflicted Board.

PS: I disagree with one sentence towards the end of the Editorial "...over time, superior systems will produce superior results." No. Governance is a complex and socially dynamic phenomenon. Over time, superior systems should produce superior results. 

As a reasonably pragmatic type, my starting point when writing is function. Every sentence should have a purpose—it is more important to communicate the message fluently and eloquently than to dress the message in what some describe as "flowery language". Unlike many fiction writers, my default setting is to prioritise function over form.

Yet when I read this article, I found myself thinking about my as yet unwritten thesis. Doctoral theses are limited to 100,000 words (about 270–300 pages), with an expectation that a robust argument will probably require 75,000–85,000 words. Gosh that seems like a lot. Why so long? Bulk for bulk's sake is never going to make the grade. Clearly a balance needs to be struck between function and form though, to ensure the expectations of the academic community are satisfied and that the essence of one's thesis is clearly communicated. But where does one draw the line between function and form?

One of the things I need to tackle in my PhD is to ground my research in theory. Simply, it isn't acceptable to conjure up some grand scheme without showing the theoretical basis from which your ideas emerge. As none of the three main theories of governance (agency, stewardship and resource dependency) account for all situations, I have been looking at decision theory as the theoretical basis for my research. Further, research method also needs a theoretical basis. I am planning to use an iterative inductive-deductive-inductive method, based on grounded theory. 

Do you know of someone in New Zealand or Australia who is an expert in decision theory or grounded theory? If so, can you please contact me because I'd like to speak with them to build my knowledge. Equally, if you can point me to some good books or academic articles, I'd appreciate that as well. As these theories are new territory for me,  I'd welcome any and all suggestions—thanks in advance!

The first (planning) phase of my doctorate journey is drawing to a close. In the next few weeks I expect to finalise my research proposal and defend it in front of the University Confirmation Panel. Assuming that goes well, I can start the research proper, by selecting three companies to participate in the research. I have one already, but need at least two more. Here are the parameters:

• A record of high-growth over at least three years (revenue growth at least 20% pa compounding)
• A mature governance structure in place (a formal board that meets regularly, with reports and minutes)
• Formal records available (annual reports and board minutes)
• Domiciled in New Zealand

Would you like to participate in some ground-breaking research to explore the contribution boards make to company performance? The research will involve observation of board meetings and some interviews, and all company details will be kept 100% confidential. 

Please contact me if your company might be willing to participate, if you know of a company I should consider, or you would like more information. Thanks in advance!

How well to do contribute in your work environment? Most of us rate ourselves fairly highly, but we all have blind spots. Today, Jessica Hagy offered some simple truths to help us lift our game. She suggested we all need six people around us, to challenge and encourage us to perform well.

Thanks Jessica, your thoughts were a timely reminder for me as I continue to wrestle with my doctoral research. 

The role the judicial system plays in the governance ecosystem—dealing with fraudulent directors, company failures and company liquidations—eats me up. So much value is lost through inappropriate boardroom behaviours and decisions. And shareholders are left to pick up the pieces (and in far too many cases, bury them). Commonsense tells us that it is far better to avoid danger than pick up the pieces afterwards. But how can and should boards improve their performance to avoid fraud or failure events?

Carly Fiorina, an experienced director and previously CEO of ICT giant HP, wrote an interesting piece today. You can read it here. She made some insightful observations:

• Too many Board members serve too long
• Too many board members go along to get along
• Dominate voices and cliques can reduce decision-making quality
• Some board members don't understand the business
• Some board agendas are too full

• Conduct self-assessments and performance reviews
• Institute term limits
• Make board appointment process transparent
• Make board (and particularly decision-making) processes transparent
• Shareholders should hold board accountable (through questions)

While Carly's comments reflect her US-centric experience, most of the observations and antidotes are equally applicable in other countries, including New Zealand. Notice most of Carly's antidotes relate to process and behaviour, and not to director competence (competence is addressed in antidote one only). Carly's call to hold boards accountable is on the money—because boards hold the ultimate responsibility for the performance of the organisation. 

In my experience, the challenge most boards face in this regard is one of implementation. How does one implement an effective governance framework that improves the prospect of good company performance and holds directors accountable? The recently updated The Four Pillars of Governance Best Practice (published by the Institute of Directors in New Zealand) provides a very useful starting point. This document provides useful best practice guidance and a clear code of practice—all aimed at helping directors and boards avoid the sort of carnage (and the expensive involvement of the judicial ecosystem) that we read about far too often in the newspapers. I commend it to all directors and CEOs.