Over the last 6–12 months, a steady stream of articles, blogposts and on-line discussions calling for Boards to become more "tech-aware" have appeared. I've read many of these, and have concluded that the drivers for many can be grouped into one of two categories:

• IT Managers and technology professionals have become frustrated that their reports and their proposals to implement new systems are not understood or approved by the Board.
• Boards have been caught out (often at considerable cost to the company through project failure, customer impact or balance sheet stress) because they've approved technology programmes or investments that fail to deliver as promised, or simply are not aligned with agreed corporate objectives.

The time to bridge the chasm between what the Board needs from IT and what IT delivers has long-since past. Calls for Boards to become tech-aware need to be addressed. However, there appears to be a problem that needs to be called out: what does "becoming tech-aware" actually mean? And how does a Board achieve such a state? Rather than simply call out the problem, or brow-beat directors with standards (ISO 38500, for example), companies need to make progress on these questions. Several options are available.

Seek IT-expertise when making new Board appointments: The recruiting of IT-experts (former CIOs for example) can provide an immediate gains, particularly to help Boards understand trends, and reports and proposals from management. However, this option can backfire if appointees are inclined towards detail, jargon-laced statements, and the ardent promotion of the latest trends and fads.

Require the CEO and management to ensure all papers (reports and proposals) explicitly state business and strategic impacts: This is an outstanding option, and one that all Boards and CEOs should actively pursue. If management wants support for investments, then it is their responsibility to package proposals in such a way that the risks are made plain, and that impact on business performance and strategic goals is made explicitly clear. Boards have a role to play, by specifying how information needs to be presented in order to be most useful.

Boards request and schedule presentations from external specialists: The pace of technology change—and the business and strategic impacts that follow—continues unabated. If Boards are to maximise the value of the organisation effectively, they need to understand emerging trends and developments. Rather than secure this knowledge from staff (and run the risk of only hearing what management wants to say), Boards should seek contributions directly, just as they (should) seek any other strategic market comment, risk or audit advice. The goal is to gain a broader perspective, to inform the debate and the selection of strategic options.

It should go without needing to be said, but for completeness, these options are not mutually exclusive. In fact, a combinatory approach, with all three options in place, is likely to raise the chances of a strong outcome.

Every day, news stories and articles from a plethora of sources arrive in my email inbox and news reader software. The deluge is self-inflicted—I need to read widely for my doctoral studies. Mind you, having a voracious appetite for general knowledge doesn't help much!

Every now and again, an article seems to lift itself off the screen, seemingly to attract extra attention as my eyes scan down the headings. Today, one such article was the "Top 100 global thinkers for 2012" list, published by Foreign Policy magazine. I looked at the FP list, because I was fascinated to know whether Aung San Suu Kyi of Burma or the Pakistani student Malala Yousafzai featured anywhere. To my surprise (and delight) both appeared in the top ten.

It seems that, in 2012 at least, global influence is strongly correlated with politics and activism. With one exception (Sebastian Thrum—a computer scientist who has been working on the driverless car), the top ten are all activists or politicians fighting for various causes. It's not until you read further down the list that musicians, economists and business people start to appear.

The point of this muse? Perhaps if you aspire to become globally influential, you should turn to politics in a volatile state, or embrace a vital cause. But most people motivated by these endeavours couldn't care less about fleeting appearances on "influence" lists. Rather, their primary motivation is the cause they've chosen the invest their hearts and souls in, and the enduring impact of their efforts. And therein lies a lesson for us all, as we ponder our role in society and contribution to it.

I've been involved in several discussions about risk management recently, including one at a Business Leaders Forum hosted by Grant Thornton. Most of the discussions have centred on the struggles that Boards face in managing risk—and more specifically, ensuring they are adequately informed. In listening to people, I've discovered many Boards struggle in this area. 

• How do Boards know all relevant risks are being notified?
• How big (or small) should risks be before they are reported? What is relevant?

Let's tackle the second question first. In most organisations, management has the responsibility to implement strategy. Therefore, they also have the responsibility to identify and manage risk. In doing so, management should raise (with the Board) all risks that have the potential to compromise their implementation of strategy—together with mitigation plans. Anything with a strategic impact should be reported. If Boards are not receiving relevant risk information, they should go looking for it.

That leads nicely to the first question. In my [direct though anecdotal] experience, most risk information tends to arrive via management. Though the common pathway, it is not without its problems. Many Risk Managers report up though the CEO. Even external Auditors tend to be retained by the CFO and report via the CEO. And therein lies the problem. Who decides what gets reported to the Board? Why would a CEO notify a risk that exposes him/her to extra work and/or uncomfortable questions from the Board? Oh, the foibles of human nature... 

Whereas most Boards receive risk information via the CEO, several of the high performing Boards that I've worked with seek and debate risk information directly—from staff, customers, outside advisors. They also do so in the context of strategy. Boards that open several channels are more likely to be adequately informed and, consequently, be better positioned to assess strategy implementation and ensure risks are managed effectively.

Boards need to ensure that they are adequately informed, and the best way to do that is to work directly with a range of internal and external sources. While this approach sounds straightforward, it has the potential to cause angst amongst management if not handled well. The CEO should be kept fully informed of risk discussions, and, ideally, be present when external advisors make presentations to the Board.

One final point. If risk mitigations are not being implemented effectively, and the achievement of strategy is being compromised as a result, then the Board should replace the CEO.

Many commentators—academics and practitioners alike—have suggested that corporate governance is an complex task. I agree. In the context of maximising company performance, Boards must satisfy many demanding (and often competing) priorities: the legal and compliance requirements of their jurisdiction; monitoring of company performance; management of risk; future directions (strategy); hiring (and sometimes firing) of the CEO. It's a busy job, and it's one that takes time and commitment to do well.

Many commentators—academics and practitioners alike—have suggested that corporate governance is an complex task. I agree. In the context of maximising company performance, Boards must satisfy many demanding (and often competing) priorities: the legal and compliance requirements of their jurisdiction; monitoring of company performance; management of risk; future directions (strategy); hiring (and sometimes firing) of the CEO. It's a busy job, and it's one that takes time and commitment to do well.

The steady stream of corporate failures in recent years, and board indiscretions, suggests many Boards are simply not doing their job well however. Why is this?

• Are director's schedules too full to give each Board the necessary time and effort?
• Are Boards defaulting to the arguably "easier" task of risk management and performance monitoring, and taking their eye of strategy and future value?
• Are directors simply not asking the right questions?
• Is the safety of groupthink dominating the challenge of debating diverse options?

Researchers have investigated many aspects of governance, including structure, composition and boardroom behaviour, in an effort to understand how boards work and how they contribute to performance. Independent directors have been held up as crucial to maintaining distance from the CEO and overseeing performance effectively. Gender (and other) diversity has been promoted heavily in many quarters. The forming of a strong team through high levels of engagement and "desirable" behaviours has also been explored. As yet, none of the research has exposed any conclusive results in terms of increased company performance.

In my view, the prevailing theory of governance (agency theory), which underpins most governance frameworks today, is flawed. It is an adversarial model that assumes management cannot be trusted and needs to be closely monitored. This theory (and various incarnations arising from it) has not delivered the results the original proponents expected—despite many decades of trying.

Rather than continue to dogmatically pursue a flawed model, we need to move on. The goal posts need to be moved—from a focus on compliance, structure, composition and behaviour, to a focus on strategy and value. The notion of a strategic board suggests a focus on future performance and value maximisation; on engaging with management and other stakeholders to develop strategy (together, not in isolation); on high levels of engagement, to understand the business and the market; on critical thinking and an independence of thought; and, on robust debates which explore a wide range of strategic options (diversity to avoid groupthink). 

Imagine what Board meetings might be like if the focus changed. They'd probably last longer. There may be heated discussions. Directors would be read their papers before meetings, and they would be engaged. Necessarily, directors would sit on fewer Boards, because they'd be spending more time (making better decisions) on each one. But perhaps, if Boards were bold enough to change their focus, they might become more effective. Perhaps. Here's hoping.

According to a survey commissioned by accounting software firm MYOB and conducted by Colmar Brunton, New Zealand firms are slow adopters of technology. A newspaper article which summarises the research report was published today. The report contains statistics about the digital world, including cloud-computing uptake and website presence. The article suggests that NZ businesses are "off the pace", and goes on to imply that the NZ economy is weaker as a result of slow technology adoption.

Gosh, this is heady stuff. The Internet has changed the way we live and work, and no doubt will continue to do so. But to say that an economy is weaker because uptake of the latest iterations of computing capability is slow is a big call. Businesses need to get clear about their motivations and choices. I know many SME firms that operate well (ie. very profitably) using so-called legacy computing systems. They have not embraced cloud computing (for example) because the financials and or security risks simply do not stack up for them.

Finding new and more efficient ways of doing things is an important element in the business mix. In fact, the pursuit of sustained competitive advantage demands that we continue this quest. However, jumping on-board with a new development because everyone else is seemingly doing so is not a sufficient justification. We need to be careful to avoid the trap of seeing all innovations as panaceas. We have much to learn from history in this regard. While some innovations will prevail, many of today's so-called innovations will be re-labeled as "fads" in the future, just as we have re-labeled earlier developments. Let's keep our eyes open and our brain engaged when looking at new innovations. I suspect the economy will be better for it.

*Declaration. I happily use a mix of cloud- and local-computing tools on a daily basis.

A seemingly small—but ultimately quite significant—statement emerged from the corporate governance sector this week. The CEO of one of New Zealand's larger companies went on record when announcing the company's annual result. He stated that his directors must act in the best interests of the company (not the shareholder).

Meridian chief executive Mark Binns said the company would take time to evaluate the situation but would ultimately come to a decision that was in the best interests of Meridian Energy Limited. ''The obligations of the directors are very clearly set out in companies law and the Companies Act, that is to act in the best interests of the company.''

This was a refreshing statement, because most directors and executives (in New Zealand) incorrectly believe their role is to act in the best interests of the shareholder. Research conducted in 2010 by Dr James Lockhart indicated that the majority of directors in New Zealand simply do not understand their legal obligations. The New Zealand Company Act is quite clear: directors must act in the best interests of company. Well done, Mr Binns.