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    How to keep strategy alive in the boardroom

    Accountability Governance Performance Strategy
    A couple of weeks ago I had the privilege and pleasure of working with 20 company directors on the strategy day of the Institute of Directors' Company Directors Course. Several delegates had a particular interest in how to keep strategy 'alive' in the boardroom. In their experience, boards start with good intentions but they quickly return to what they know best, monitoring and controlling. They agreed that boards are responsible for company performance (which means boards need to make decisions about the future of the business), so boards need to take strategy seriously. But many don't, which suggests that an important questions remains unanswered. How can boards keep the important matter of strategy alive?
    I put the question to the group and we had a great discussion. After about 20 minutes of to-ing and fro-ing, the group seemed to settle on four main suggestions, as follows:
    • To tip the agenda on its head. Rather than discuss action items, the risk register and performance reports (typically the chief executive's report and the financial report) first, the group thought strategic items should be discussed first, particularly if some major items were expected to need considerable time and careful attention.
    • To ensure that reports were aligned directly with strategy. If the company was working to (say) four strategic priorities, then the chief executive's report should have a business performance overview followed by four sections, to demonstrate progress against each strategic imperative. The reports should also comment on the results actually being achieved vis-a-vis expected results.
    • To ensure that a major element of strategy (one of the strategic priorities, for example) was tabled at every second meeting (to allow space for annual reporting, budget cycles and other compliance oriented matters that also need attention at other meetings). The purpose of the agenda item is to debate progress, explore environmental and contextual matters pertaining to the strategic priority.
    • To create space for new information—particularly emerging trends and competitor news—and then to check whether the extant priorities were still valid and appropriate, or whether adjustments might be required.
    These are great suggestions, and they are consistent with my research and experience. They appear to have 'reach' as well, from smaller companies just starting out with boards, right up to publicly-list enterprises. What was most heartening though was the reality check that came at the end of the discussion: many of the delegates agreed that the 'urgent' can and often does get in the way of the 'important'. Consequently, business-as-usual (monitoring and compliance items) can supplant strategy. A strong and vibrant relationship between the chairman and chief executive was thought to be vital, to ensure that the agenda was appropriate; that the reporting was at the right level; and, that the chief executive had the resources to execute on that which they were expected to deliver upon. Notwithstanding such efforts, individual directors need to make a commitment—to themselves and each other—to keep the conversation focussed on strategy, for the sake of the future performance on the company.
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    HSBC's big call: an external chairman

    Accountability Governance Leadership Performance
    Reports emerged today that the next chairman of troubled banker HSBC will be an outsider. If this is what "completely overhauled" means, then HSBC might have just made an inspired decision. However, it is not a slam-dunk. The decision is the first of many that will be required to get the organisation back on the rails and to re-establish much-needed credibility in the marketplace. 
    Another word of caution: an external chairman is no guarantee of success. Boards needs to be led well, and a high-performance culture and an effective strategy are also crucial elements. But to make the move away from appointing a chairman from amongst the executive team is a very big step in the right direction.
    Well done for taking an important step HSBC.
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    Might the potential liabilities of cyber risk change the face of business as we know it?

    Governance Performance Societal Wellbeing Strategy
    Stephen Catlin, head of the largest Lloyd's insurer Catlin Group, delivered a stark message to the business and the insurance communities this week. He said that the potential liabilities following a cyber attack are too large for insurers to cover.
    Wow. Most company directors and executives have a general awareness of cyber risk: that attacks can have drastic impact on business. However, many directors and executives have probably felt that their insurances and risk plans have been sufficient. Until now perhaps. 
    What might Catlin's comments mean for business? Could the uber-connected world and the seemingly headlong thrust towards the Internet of Things have some nasty side-effects that we are only just becoming apparent? For example, if companies cannot secure adequate insurance cover (either outright or at a reasonable cost), might they be faced with the challenge of reviewing their business models? Progress rarely occurs without consequences. Perhaps some of the so-called old ways that many have rushed to consign to history—like walking into a store and buying groceries and other goods in person—might not be so bad after all. Is your board prepared to wrestle with this issue, or will it simply walk away?
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    More on the HSBC debacle: What does "completely overhauled" actually mean?

    Accountability Leadership Performance
    The debacle that has become known as #HSBCleaks continues to simmer. Stuart Gulliver, chief executive, went public today with a full-page letter in several Sunday papers. The letter offers an apology for the debacle, and it seeks to provide some assurances to both customers and the general public. 
    Statements that the bank has "completely overhauled" and "fundamentally changed" its operation sound good, albeit historical. But what of the executives and directors who were not monitoring business operations properly? Are they still happily drawing benefits without further consequence? Does accountability stop short of the executive suite and the boardroom? That Lord Green is the only head to have rolled so far raises more questions than it answers, including what "completely overhauled" actually means.
    HSBC and the wider business community must learn from this scandal.
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    Is governance anything more than a fad?

    Governance Performance Research
    Have you noticed how common the term 'governance' and a whole raft of variants have become in the last decade? The terms (there's an increasingly large set of them) get peppered throughout conversations almost at will. Corporate governance; HR governance; IT governance; enterprise business technology governance; and, organisational governance (amongst others) have all entered the lexicon in the few years.  Hardly a month goes by without another variant being introduced, or so it seems.
    A cynic might say that governance has become some sort of panacea in the eyes of many. If you have governance, or better still, if you have a specific type of governance (ITgov, HRgov, et al), then the likelihood of objectives being met or projects being delivered on-time is somehow greater than if governance is not in place. What happened to good management, good leadership, accountability and responsibility?
    Is there any substance to this? Or are these terms simply examples of people grasping at straws or hiding behind jargon, in lieu of doing the hard yards to work out what actually matters? I've decided to investigate this during 2015—to try to separate the talk and hot air from what actually matters. If you have a view on this, or can point me to some credible research, I'd love to hear from you.
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    ICMLG'15: Board roles in SMEs

    Conferences Governance Performance Research
    Wafa Khlif, a Tunisian professor working at a French university in Spain (Toulouse Business School, Barcelona), presented the results of recent research into boards in small–medium enterprises (SMEs). The purpose of the research was to understand how boards work and the role they play in the governance of SMEs. 
    The research suggests that boards perform different roles in organisations, from that of an entirely passive bystander (she uses the wonderfully descriptive term, legal fiction) through effective cooperation to that of a dominant bully. However, most of the research has investigated large and typically publicly listed firms. Precious little research has been published on SME boards, until now. Khlif interviewed 26 directors and chief executives of six Tunisian-based SMEs over a two year period.
    All four of the important roles of boards that had been identified in larger firms—control, service, strategy and mediation—were also apparent in smaller companies. However, no single combination or arrangement of the roles was apparent. As with larger companies, considerable variation in the way boards work, and their purported dynamism and impact on firm performance (as claimed by interviewees), was apparent in the interview data that Khlif and her colleagues collected and analysed. However, some combinations of roles that are more common in larger firms (the watchdog, for example) is not so common in smaller firms (where the owner is more likely to be directly involved as a director and/or a manager).
    The framework that Khlif and her colleagues developed as part of their research shows how the important roles can "fit" together in SMEs, and the types of background factors (firm complexity, ownership span, amongst others) that might influence how the roles are performed are identified. However, the research did not explore the link between board roles and business performance.
    From an academic perspective, this research provides support to the idea that the role of the board cannot be adequately explained by a single theory. It provides strong guidance for practice as well: boards and board situations are all different, so forget about 'best practice' cookie-cutter models. Therefore, owners and boards that ignore the organisational context when boards are being established or reviewed do so at their peril.