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    Governing Apple is nothing like governing a fledgling company

    Accountability Decision Making Governance Performance Research
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    What is it with corporate governance? Thirty years ago, the term hardly rated a mention in business magazines—let alone general conversation. Now, corporate governance is seen by many (tacitly at least) as a panacea for all manner of corporate ills and director recalcitrance. The pursuit of best practice models (the one-size-fits-all approach) has become commonplace, even though the operating context of and challenges faced by small and medium companies are fundamentally different from those of publicly listed corporations. 
    Mak Yuen Teen, an associate professor of the NUS Business School and corporate governance expert thinks the one-size-fits-all approach is myopic and has just gone on record on the matter. Furthermore, many commentators, regulators and serving directors seem to have lost sight of Sir Adrian Cadbury's commentary, that corporate governance is primarily about the performance of the business. My experience, in research and as a serving director bears this out.
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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: Performance evaluation systems for corporate directors

    Accountability Conferences Governance Management Performance Research
    Demands on boards to ensure desired company performance outcomes are achieved have led to increased scrutiny of directors and director effectiveness in recent years. Performance evaluation systems (PES) have emerged as a tool of choice to assess director performance. However, the influence of such systems on business performance is largely unknown.
    ​Marie-Josée Roy reported the findings of a recent Canadian study that examined PES closely, in an attempt to bridge the knowledge gap. Roy's survey-based study of 89 large Canadian companies identified three distinct types of PES (exemplar, formal, minimalist—definitions of which were provided in her supporting paper). The typology was based on descriptions provided by survey respondents. Her analysis revealed some interesting correlations, including that boards with an exemplar PES were more likely to be involved in important board roles of strategy and monitoring, and were more likely to be effective in these roles.
    While ​Roy's study was helpful in that it provided empirical evidence on board performance evaluation systems, it did not resolve the crucial question of how, in actuality, an effective PES might work. Survey respondents can (and often do) provide answers of convenience. Sadly, knowledge of whether any PES in use is actually useful (or not) for improving director and board performance remains largely unanswered. Other approaches to research, including longitundinal observations of boards in action and (probably) pyschological assessments are likely to be required if tangible progress is to be made. Even then, another even more vexing question—of whether improved board effectiveness leads to improved company performance—lies in wait.
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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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    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.