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    The Solid Energy case: we have much to learn

    Governance Management Research Strategy
    The case of state-owned enterprise Solid Energy, the CEO of whom was a doyen of the business community, raises some interesting questions, as practitioners and researchers search for reasons for the "perfect storm" and the recent fall from grace:
    • What sequence of events and circumstances led to Solid Energy arriving in its current predicament?
    • Why did Solid Energy pursue such an aggressive diversification plan, and risk the viability of its core business in so doing?
    • Who approved the diversification plan, and what milestones and monitoring regime was put in place to ensure goals were being met?
    • Why did the Board not respond more quickly or more decisively in the face of a rapidly changing external factor (slump in coal prices)?

    Hopefully, answers to at least some of these questions will become apparent in the coming weeks, as the investigations proceed. We have much to learn from this case—both in terms of what happened, and in terms of how governance, decision-making and management could (should?) be conducted differently in the future.

    In the meantime, one thing that has been puzzling me has been the response of the Board. Why did Don Elder, the former CEO, have to endure considerable criticism from the media, the public, former employees and the government (the shareholder and regulator) in recent days? Why was attention not focussed on the Board, and why did they not come forward? Surely the Board, as the shareholder's representative, holds the ultimate accountability to ensure the satisfactory and sustainable performance of the business?

    The attendance of John Palmer, former Chair, alongside Don Elder at the Select Committee meeting yesterday provided some comfort. Helpfully, apologies were provided to affected parties amongst the conciliatory and defensive responses. However, many questions over the financial management of the company, and of how strategic decisions were made, remain. Hopefully, the various authorities and interested stakeholders will put their reputations, egos and agendas aside in order to conduct a proper investigation and learn from the findings. Here's hoping.
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    Perhaps Board composition does matter after all?

    Governance Performance Research
    An interesting article appeared in the Financial Times about a week ago. I've been pondering it for a few days now, because it challenged my perception that Board composition has relatively little bearing on company performance outcomes.

    The article reported the results of a comprehensive survey into US company performance in the decade 2000–2009. The results revealed that the prevalence of lawyers on Boards increased from 24% (2000) to 43% (2009)—and that the levels of litigation, malpractice and corporate risk-taking declined markedly—through the decade. The results are not that surprising, given the introduction of Sarbanes-Oxley and other compliance measures in the survey period.

    On the surface, this study suggests that the presence of lawyers on Boards does make a difference in some areas (and therefore composition may matter). But what about the big question: Does the presence of lawyers lead to increased company performance? The study enhances the case for lawyers on Boards for their contribution to the risk conversation. However, this should not be misunderstood as providing evidence to link the presence of lawyers with increased company performance. Increased performance is dependent on innovation, the taking of risks and the making strategic decisions—all of which are somewhat of an anathema to many members of the legal community.

    So, does Board composition matter when it comes to company performance? On the evidence provided by  this study, we still can't tell—but I doubt it.
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    Adding a string to my bow

    Research Teaching Time Management
    I added a new string to my bow (so to speak) today—by becoming a Tutor at Massey University. So, with tutoring in the mix, I now have six strings to manage and keep in tune (Doctoral candidate, advisor, director, husband/father, cyclist, tutor). The task I've taken on is to teach the 115.108 Organisations and Management paper on the Wellington campus. It's a core paper in the BBS programme, and should be a lot of fun.

    Preparing for weekly lecture and tutorial sessions will be a new experience for me, one that promises to be both demanding and fulfilling. I'll need to organise my time in a more structured manner than I've been used to—to ensure I meet the weekly cycle and provide space for students to visit to ask questions. On the upside, the idea of contributing to the learning and development of the next generation of business men and women is quite neat.

    One initial observation: the systems and processes Massey has in place for new staff—even part-timers on fixed term contracts like me—are amazing. When I visited the campus today, I discovered access to key on-line resources had already been configured, an office had been assigned, access keys and cards were waiting for collection, and staff were bending over backwards to be helpful. If today is any guide, I'm in for a fulfilling semester ahead. Hopefully, the students agree!
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    ICMLG Conference: Post-conference summary

    Conferences Governance Management Performance Research Societal Wellbeing Strategy
    I've just arrived home after a demanding but highly enjoyable trip to attend the ICMLG Conference in Bangkok. On the long flight back to New Zealand I found myself reflecting on the conference overall. Here's a selection of what I wrote down in my notebook:
    • While diverse in topic, research methodology and scope, the general calibre of papers and presentations was impressive. ACI did a great job pulling together and running the conference.
    • Input-output research designs and quantitive data sets continue to dominate the research landscape, despite qualitative data and empirical data being more well suited to understanding and explaining social dynamic phenomena (like governance).
    • The case study approach appears to be gaining ground as a credible methodology for governance and leadership research.
    • Those researchers who are using qualitative methods are attempting to move from purely descriptive (exploratory) studies towards explanatory studies. (One of my objectives in attending ICMLG was to gain a better understanding of contemporary research methodologies.)
    • Relatively few researchers are investigating the link between governance and company performance.
    • I met some wonderful people! The conference was a melting pot of cultures. People from many different nations, religions and cultures were in attendance—a true "global village".
    Overall, I learnt a lot and the investment was well worthwhile. ICMLG 2014 will be at Babson College in Boston, Mass. On the strength of this year's conference, expect to see me in Boston in 2014!
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    ICMLG Conference: Reflection #6

    Conferences Management Performance Research Strategy
    Gender diversity: a new competitive advantage?

    Manasi Shukla (Bangkok University) and Aurilla Aurelie Arntzen (Buskerud University, Norway) presented a conceptual paper which explored gender diversity in management and systems design as an important element for competitive advantage.

    They outlined the challenges many women face, whereby many systems and products are designed by men, without any significant consideration for female cognitive or physical elements. They suggested that a woman's response to "design shortfalls" is to dismiss or avoid using a particular product.

    Shukla and Arntzen tentatively proposed a leadership practices inventory, to assist organisations design for, and accommodate, the needs of women. They asserted that organisations that take such steps have the opportunity to secure a competitive advantage in the marketplace. This is an interesting assertion—one that merits further research via the analysis of empirical data to determine if/how the practices they suggest are indeed significant. I look forward to reading more about this in the future.
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    ICMLG Conference: Reflection #5

    Conferences Performance Research
    Are solutions the solution to adding customer value?

    Philip Dover (Babson College, Mass) started his talk by sharing data that clearly shows that businesses perceive that "solutions" are crucial to business success. But what is a solution? There are as many definitions as claimants. Dover offered a definition developed by ITSMA, and then described a solutions hierarchy which ranges from general capability through to customer-specific solutions (which is where considerable added value occurs). He went on to acknowledge that it is very difficult for a company to make the transformation from a product-oriented company to a solutions-oriented company.

    Dover and ITMSA have identified several key elements that must be addressed when companies wish to become solutions-oriented:
    • The organisation must redesigned, to allocate P&L responsibility at the business unit level, appoint a "solutions Tsar", and align effort with business partners
    • Marketing must be redefined—to events and sales literature, to a deep understanding of customer needs and the creation of value propositions
    • Move from a [standalone] product development cycle to an integrated portfolio approach (founded on an intentional solutions development process)
    • Change the measurement metrics from revenue and profit, to lifetime value of the customer
    • Change the sole of the salesperson from a single operative, to that of a coordinator ("acts like a quarterback").

    Given the commercial upside of embracing a solutions-oriented approach, should all businesses strive to adopt such an orientation? Dover's is "no". He suggested three elements must be present as pre-requisites before attempting to adopt a solutions orientation—being a large (high $$) customer and a complex requirement and relatively new technology.