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    Boards: ask different questions, and delight in the possible

    Accountability Governance Leadership Management Performance Strategy
    We live in a paradoxical world. Rates of change are increasing, yet we want certainty. Times to market are reducing, yet we still want instant gratification. Zafer Achi and Jennifer Garvey Berger explored these paradoxes recently. They acknowledged that searches for certainty are "only natural", and that managers spend much of their time "managing the probable". However, the world is a social place. People make choices and things change, often unexpectedly. Consequently, the best laid plans can fail completely, leaving managers exposed and potentially out of a job. Achi and Berger suggest that the frame of reference used by most managers, of managing the probable, is a big part of the problem. Rather than managing the probable, they suggest that managers need to "lead the possible". They offered three recommendations to help managers make the change (see article for details):
    • Ask different questions
    • Take multiple perspectives
    • See systems
    These recommendations have the potential to change the way managers think, make decisions and lead. While reading the article, I couldn't help but think that the recommendations also have application in the boardroom. However, the adoption of 'possibility' thinking would up-end board practices in many cases. Boards that spend most of their time monitoring past performance and controlling the activities of the chief executive would probably be quite uncomfortable, even though the recommendations are neither earth-shattering nor inconsistent with the role and responsibility of the board (to maximise performance in accordance with the wishes of shareholders). Maybe its time for directors to take stock.
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    Is the rush to place women onto boards driving the best behaviours?

    Accountability Governance Performance
    The rising tide, expressed as an increasing number of women receiving appointments onto boards of directors, is now well-established. Some countries (Norway, Germany, for example) have driven change via quotas, whereas others (Australia) have utilised peer pressure by requiring companies to report the gender mix of their boards in annual reports. Others are just getting on with it.
    The latest drive, in India, has seen some interesting behaviours emerge. The Indian Companies Act now requires every board of every publicly listed company to have at least one female director, with a compliance deadline of 31 March 2015. The Bloomberg reporter used "scramble" to describe recent behaviours, as if to imply that the motivation to appoint female directors is driven by compliance rather than performance. While the scramble may satisfy the statute, and some inspired appointments will be made, there is a very real risk that some boards will be encumbered with a 'token' female who does not have sufficient skill and expertise to contribute effectively.
    If companies and societies are serious about achieving high business performance, then at least three things probably need to happen:
    • The strong norms of privacy and self-serving interests that pervade some director groups and shareholding interests needs to be challenged. The best interests of the company, and of all shareholders, needs to prevail over those of any individual director or shareholder.
    • Researchers need get inside boardrooms to find out how boards can have an impact on performance. However, this will require researchers to embrace a new generation of more sophisticated research methods. Standing on the outside of boardrooms and counting things, or interviewing or surveying directors about what supposedly happens inside the cloistered boardroom, is unlikely to reveal meaningful knowledge.
    • A commitment to continuing professional development, for all aspiring and incumbent directors, needs to emerge, to build a sizeable pool of highly capable 'board ready' directors for shareholders to select from.
    If these things (and others, no doubt) occur, then the unhelpful patterns of behaviour witnessed in India will, hopefully, be consigned to history. However, this hope is predicated on an underlying [cultural] change taking place, whereby the focus of shareholders and boards moves from conformance and compliance, to performance. Is this something worth pursuing, or might it be a bridge too far?
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    Changes at Diligent. I'm confused.

    Accountability Governance Leadership Performance Strategy
    Diligent Board Member Services has just announced the appointment of former McKinsey partner Brian Stafford as chief executive. Stafford takes over from outgoing chief Alex Sodi, "who will become chief product strategy officer and remain on the board". This second part of the announcement caught me by surprise and, quite frankly, confused me.
    I'm not sure I'd want to be in Stafford's shoes just now. The former chief executive is now both his boss (a director) and one of his staff. Consequently, the moral ownership of strategy implementation, and of product strategy in particular, is unclear to say the least. Why the Diligent board chose to structure the company in this way, and why Stafford agreed to the appointment given the challenges of 'above-and-below' reporting is beyond me. I can't see how this sort of anomaly is conducive to a high trust and high performance work environment.
    Perhaps a 'better' approach might have been for Sodi to perform one or other of the two roles (director or strategy office), or to leave the company. If any readers have any insights as to why Diligent made these decisions, or how the new structure might add value to the business, I would love to hear them!
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    Can strategy development and pragmatism be bedfellows?

    Performance Strategy
    With my doctoral thesis now out to review (sent to my supervisors on Monday), I have decided to take a couple of days out to catch up with myself and reflect on the events of the past twelve months. I also need to start thinking about upcoming priorities because, in addition to refining the thesis based on the feedback from my supervisors, my diary contains several teaching, speaking, advisory and facilitation engagements; in New Zealand, the UK and Europe.
    Amongst the engagements are several strategy development workshops, to lead boards and executive teams on a journey of discovery and critical thinking; the goal being a coherent strategy. These workshops are fun: I get to ask some searching questions and to help the participants think about the future prospects of their business. Often, we need to go back to basics, to discuss and agree what strategy is (and is not). Sadly, many managers have a predilection for detail, which means their expectations are of a highly detailed plan (more akin to an annual operating plan). The causality is pragmatism.
    Thankfully, there is no need to forfeit pragmatism. If a holistic framework is used and the debate is focussed on the purpose of the company, business performance, and a set of strategic priorities to achieve the purpose, then the strategy that emerges is likely to be coherent, succinct and workable. Many frameworks and tools are available. The framework that I use is StratCross. It contains the sum of my knowledge and experience gained over fifteen or more years of helping companies create effective, winning strategies. If you'd like to know more, please get in touch.
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    The board's contribution to strategy and business performance: Some thoughts to ponder

    Accountability Governance Performance Strategy
    The topics of strategy in the boardroom and the influence that boards have (or not!) over firm performance have been in the minds and on the lips of many people in recent months. From high-quality articles on websites and respected magazines, to academic research papers, speeches at conferences and symposia and casual thoughts expressed in private, the conversation has ebbed and flowed.
    That these topics remain on the radar suggests that directors are starting to recognise that the board might have a role beyond approving strategy and monitoring performance. But what role? To assist the discussion, here are some thoughts published on Musings in the last twelve months:
    I hope this collection of links is of some use. Please contact me if you would like to pick up on any of the points made here or elsewhere.
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    Petrobras initiates #corpgov review, albeit from the inside

    Accountability Ethics Governance Performance
    Petrobras, Brazil's state-owned oil company, hit the headlines today, saying that it intends to revise its governance and organisational management model. The company has had problems with corruption and, just recently, employed a governance, risk and compliance (GRC) officer, its first.
    Interestingly, the review will be conducted by a "group of executives with experience in various areas of the company". This sounds reasonable enough, until you consider that the stated problem is corruption. The review is being conducted by the very people that may (or may not) have been involved. How much confidence should one place in the internal panel isolating the problem(s) and, having done so, the Petrobras board making changes to get its house in order? Usually, such reviews are conducted by external parties, if they are to be afforded any credibility.
    This will be interesting to watch.