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    Insights for boards, from a learned gentleman one Friday afternoon

    Conferences Governance Leadership Performance
    ​I was party to a fascinating conversation on Friday evening, with a gentleman—in the full sense of the word—in the lobby of a comfortable hotel in Lisbon, Portugal. The gentleman, a learned business professor, advanced in years but razor sharp of mind, was asked to comment on the Portuguese political situation, particularly as it related to the recent election and the selection of a new Prime Minister.
    ​After a considered pause of some twenty seconds or more, and the repeated stroking of his furrowed brow, he responded. Speaking in somewhat broken but ultimately capable English, the professor said "Aah, the situation is interesting, very interesting. We have many challenges; Portugal needs strong leadership."
    The professor went on to describe several challenges and difficulties, including that the highest polling party lacks the numbers to nominate their leader as Prime Minister and govern by majority. A complicating factor is that the President of Portugal will soon complete his term. The situation is unstable. If it cannot be resolved quickly, a coalition of minor parties including an extreme leftist party may try to usurp power and turn away from the gains made in recent years. The professor suggested that the main casualities will be the economy and the wellbeing of the people. The small audience of four leaned in as the professor spoke, enthralled by the palpable intensity of the situation.
    ​The parallels and lessons for companies, and boards in particular, are stark. 
    ​Boards that are not united in purpose cannot hope to lead the company they are charged with overseeing effectvely. Similarly, chief executives without a clear mandate to lead risk stasis. Those that run agendae in variance to agreed priorities or strategies put the future prosperity (and, potentially, the viability) of the business at risk. 
    ​In society, democracy has it benefits, but only to a point. When a group of people—be it the electorate, a group of executive managers or a board of directors—can't agree, the organisation can't hope to compete effectively or make progress towards value creation goals. As with the Portuguese election result, such situations in business are not sustainable. Strong leadership is required, from the top, to break the deadlock.
    ​As we parted ways, the professor graciously invited me to return to Portugal, both to spend more time with him and to share insights with business leaders. If the quality of our brief exchange is any indication of what might be possible in a wider context, I look forward to that day, and very much so. Thank you professor.
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    ECMLG'15: On cyber defence and leadership

    Conferences Governance Leadership Management Research Strategy
    ​The second day of the 11th European Conference on Management, Leadership and Governance opened with an outstanding keynote delivered by Lt. Col. Paulo Nunes of the Portugese Military Academy. Nunes is the Programme Leader of a NATO-sponsored multinational cyber defence education and training (MN CD E+T) project (click for more details).
    The digital and physical worlds are, increasingly, being integrated—to the extent that some would suggest the existence of a blurred reality. 'Cyber' is a red-hot topic in both the business and military worlds, to the extent that it has become the frontline of various attempts to achieve both legal and illegal political, military and economic objectives. Nunes reported that the biggest weakness in the system is people, the human firewall.
    The MN CD E+T project has been commissioned to design and implement an integrated approach to increasing awareness and providing training at the nation, NATO, EU and business levels to prepare, detect and respond the various weaknesses and threats. This includes work to determine expected behaviours and desired operational outcomes, and then to develop and deliver appropriate learning systems. Seventeen nations are currently involved in the programme, with more enrolments expected in the coming months.
    If implemented well, the programme offers considerable benefits to businesses of all sizes and types. Boards and directors would be well advised to receive briefings and allocate time to think critically through the issues and implications.
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    ECMLG'15: Opening Keynote

    Conferences Governance Leadership Management Research
    The 11th European Conference on Management, Leadership and Governance (ECMLG) got underway this morning, at the Military Academy in Lisbon, Portugal. Nearly 90 researchers, from 28 countries have assembled to present their research and debate emergent ideas and models.
    The overall theme of the conference was set by Colonel Nuno Lemos Pires when he delivered the opening keynote address ​From Leaders to Commanders. His talk provided some interesting contrasts between leadership in a civilian context and a military context:
    • Whereas many leaders choose their team and mission, commanders do not chose their team nor do they chose the mission to be accomplished.
    • Whereas the natural human condition is towards nepotism, the military context is one of renouncing individual freedoms and preferences in favour of the greater good.
    • Military leadership (commandership) needs to embrace—almost by definition—multi-national, multi-cultural and multi-dimensional elements, whereas this is not necessarily the case in civilian leadership.
    Notwithstanding these contrasts and tensions, Pires then described several attributes of effective military leadership that appear to be applicable in the civilian context:
    • Critical thinking, to ask 'why' and understand motivation (cf. blind followership)
    • Individuality and initiative (in effect, ownership)
    • A habit of searching for and discussing contradictory options, to find 'better ways' (continuous improvement).
    Leadership is a complex topic. In drawing both contrasts and parallels, including a direct challenge of the 'command and control' perception of military leadership, Pires set the scene well set for an interesting two days ahead.
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    ECMLG'15: Human-oriented performance management

    Conferences Governance Leadership Performance Strategy
    The translation of strategy and goals into actionable targets and outcomes is a challenge for many organisations. Rob ter Hedde and Benny de Wall (Utrecht, Netherlands) have been investigating this challenge. While many think in terms of 'hard priorities' of operational efficiency and organisational design, ter Hedde and de Waal focused on human factors. They presented a model consisting of four dimensions—strategy translation; dialogue and action orientation; continuous improvement and organisational learning; and, information and visualisation—and suggested that the link between strategy and effective implementation was contingent on this four dimensional model being set in motion.
    Their results showed that anchoring the organisation's objectives and strategy in the minds, hearts and hands of the people (staff and other stakeholders) is crucial for performance improvements. While not explicitly stated, this research reinforces the importance of clearly annunciating core purpose—the 'why'. People are more likely to get behind causes that things. The civil rights leader, Martin Luther King, provided a very famous demonstration of this with his Dream speech. Just imagine the [non]impact if MLK had uttered "I have a plan...".
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    EIASM Corporate Governance Workshop: Reflections

    Conferences Governance Research
    Thirty-six researchers from over twenty countries gathered in Brussels last week (29–30 October) to discuss emerging developments in the fields of corporate governance and board practice. While some of the contributors are 'pure' academics committed to theory development, others (like me) span academia and practice. Consequently, a sharp 'real world' edge was apparent. Here are a few of the insights and topical themes that emerged:
    • A question that emerged early on the first day and seemed to underpin much of the discussion was whether researchers have begun to lose sight of what corporate governance is or might be. There was a call for researchers to return to first principles, whereby corporate governance is that set of activities and interactions that occur in the boardroom  when the board is in session. The group acknowledged that other activities occur amongst shareholders, advisors, regulators and managements. While these activities are both important and necessary they are not corporate governance.
    • The impact of the 'second owner' (of entrepreneurial and high-growth businesses) on business performance was discussed. The second owner is the second-largest shareholder, the largest being the founder/CEO. The research suggested that the second owner has a large moderating effect on the founder/CEO's behaviours and decisions, and that this effect seems to be linked to increased business performance.
    • Several researchers reported the results of case study research on the governance of family businesses. One paper that stood out concerned the leadership transition from the founder/CEO to another family member. Such transitions can be problematic, especially if the founder/CEO has concerns over the capabilities of the incoming leader. The research discovered that non-family shareholders (specifically, private equity investors) can play a powerful mentorship and decision-making role through a transition period. The benefits are two-fold: the incoming CEO is seen to be effective 'from day one' even though they lack the requisite skills and expertise, and the experiences gained through the process accelerate the CEO's learning and development.
    Two other developments that stood out concerned the conduct of board research:
    • A small but discernible move towards 'making a meaningful contribution' was apparent throughout the workshop. In the past, many researchers have simply 'published research', some of which has had questionable relevance beyond the immediate researcher's interests. However, it seemed that researchers have begun to realise that, while publishing might be an important metric within academia (the 'publish or perish' mantra), the more pressing priority—of delivering relevant, actionable research to assist shareholders, boards and executive teams—needs to prevail. This is a great development, one that might help span the sometimes gaping divide between academia and the 'real world'.
    • A second noticeable trend concerned the methodological approaches being used by researchers. For many decades, the dominant approach to board, director and corporate governance research has been to look from afar—using publicly available data and statistical analysis techniques. In contrast, many of the papers recognised the complex, socially-dynamic nature of boards, and the need to utilise methodologies that studied boards holistically and (ideally) in situ. This development is significant, because it recognises that when boards are dissected they are no longer boards.
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    Important #corpgov conference, this week

    Conferences Governance Management Performance Research
    Are you interested in emerging research on boards and corporate governance, and its practical application in boardrooms? If so, two upcoming conferences may appeal (I will be speaking at both of them):
    Session summaries will be posted here, so check back later in the week for update, and then again in a couple of weeks time, on 12–13 November. Please let me know if you are interested in a particular paper or session: I will do my best to attend and report on it for you.