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    Expanding one's horizons...

    Readings Research Time Management
    One of the promises (or more correctly, one of the aspirational goals) I made when setting out on my doctoral journey was to read widely—particularly in "off-topic" areas. My reason was selfish: to expand my horizons, maintain a sense of sanity and (hopefully) trigger some new ideas, because the sheer volume of on-topic material is enough to intimidate even the most ardent student.

    However when I paused for a few days after completing the confirmation process, I realised that progress towards my "read widely" goal had stalled somewhat. In the daily routine of reading about governance, strategy, research methodologies, philosophy, and the theory of knowledge creation, I'd lost sight of the bigger goal.

    Having realised what had happened, I decided an active remedy was required. To this end I have explicitly reserved an hour a day to read off-topic material. Further, I have decided to embrace the novel genre (for the first time in my adult life!), and specifically the so-called modern classics. A search engine provided the starting point: To Kill a Mockingbird. Next in line is yet to be determined, so if you have any suggestions, please let me know!
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    What does "becoming tech-aware" actually mean for Boards?

    Governance Management Research Strategy
    Over the last 6–12 months, a steady stream of articles, blogposts and on-line discussions calling for Boards to become more "tech-aware" have appeared. I've read many of these, and have concluded that the drivers for many can be grouped into one of two categories:
    • IT Managers and technology professionals have become frustrated that their reports and their proposals to implement new systems are not understood or approved by the Board.
    • Boards have been caught out (often at considerable cost to the company through project failure, customer impact or balance sheet stress) because they've approved technology programmes or investments that fail to deliver as promised, or simply are not aligned with agreed corporate objectives.

    The time to bridge the chasm between what the Board needs from IT and what IT delivers has long-since past. Calls for Boards to become tech-aware need to be addressed. However, there appears to be a problem that needs to be called out: what does "becoming tech-aware" actually mean? And how does a Board achieve such a state? Rather than simply call out the problem, or brow-beat directors with standards (ISO 38500, for example), companies need to make progress on these questions. Several options are available.

    Seek IT-expertise when making new Board appointments: The recruiting of IT-experts (former CIOs for example) can provide an immediate gains, particularly to help Boards understand trends, and reports and proposals from management. However, this option can backfire if appointees are inclined towards detail, jargon-laced statements, and the ardent promotion of the latest trends and fads.

    Require the CEO and management to ensure all papers (reports and proposals) explicitly state business and strategic impacts: This is an outstanding option, and one that all Boards and CEOs should actively pursue. If management wants support for investments, then it is their responsibility to package proposals in such a way that the risks are made plain, and that impact on business performance and strategic goals is made explicitly clear. Boards have a role to play, by specifying how information needs to be presented in order to be most useful.

    Boards request and schedule presentations from external specialists: The pace of technology change—and the business and strategic impacts that follow—continues unabated. If Boards are to maximise the value of the organisation effectively, they need to understand emerging trends and developments. Rather than secure this knowledge from staff (and run the risk of only hearing what management wants to say), Boards should seek contributions directly, just as they (should) seek any other strategic market comment, risk or audit advice. The goal is to gain a broader perspective, to inform the debate and the selection of strategic options.

    It should go without needing to be said, but for completeness, these options are not mutually exclusive. In fact, a combinatory approach, with all three options in place, is likely to raise the chances of a strong outcome.
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    Local Councils: You need to resolve your #corpgov conflicts

    Governance Management Research Societal Wellbeing
    The ugly face of conflicted interests in local council governance raised it head in Wellington again today. In September, I suggested that it was time for Councils (and Councillors) to resolve the conflict of interest that exists when they appoint themselves to subsidiary company boards.

    This morning, the Dominion Post published a front page article stating that Wellington City Councillors had voted to axe perks for board appointments. This sounds like a step in the right direction, however the decision will only become effective from the next term! Further, Councillors can (and probably will) still appoint themselves to plum roles. This smacks of cronyism and the feathering one's nest for personal gain.

    It's disappointing that the Council has not bitten the bullet by moving immediately to appoint independent directors to the Boards of subsidiary companies. The appointment of independent directors, through a robust appointment process, will achieve at least three positive outcomes:
    • Remove the conflict of interest that exists when Councillors appoint and pay themselves
    • Ensure the best possible skills are recruited to maximise business performance
    • (Begin to) restore public confidence in civic administration 
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    What is your Christmas #corpgov wish?

    Governance Research Societal Wellbeing
    Thanksgiving marks the beginning of the Holiday Season in the US. Sinter Klaas is not far away for Western Europeans (5 Dec). Indeed, today marks one month until Christmas Day. With the cooling of the weather in the Northern Hemisphere, and its warming in the Southern, many people start reflecting on the year past, and the year ahead. On their hopes and dreams, and on the giving and receiving of gifts.

    In the spirit of the season, and the general theme of this blog, what might your corporate governance wish be this year?
    • more diversity on Boards?
    • better alignment between pay and performance?
    • less corruption and fraud?
    • directors taking more responsibility and accountability?
    • something completely different?

    I'd like to think that 2013 will herald a sea-change for governance; the year in which the boardroom troubles of recent years were consigned history; the year in which Boards got on with the business of growing companies, making them strong and improving societal wellbeing as a result. Gosh, that sounds grand. Is this too much to wish for, or is this something worth striving for?
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    The governance intent–reality gap (trap)

    Governance Management Research Strategy
    I've been conducting an informal survey in recent weeks—asking directors and managers about the importance of strategy, and the extent to which the Board of their company is involved in strategy formation.

    The overwhelming majority of respondents have told me that the Board has a key role to play in [forming] strategy. However, after listening further and checking, I've discovered what appears to be a yawning gap between what respondents claim and what actually occurs in practice. Surprisingly few Boards actually spend much time on strategy at all. Rather, they concentrate on monitoring and controlling the past, on managing risk and on ensuring compliance.

    Why is there an intent–reality gap when it comes to governance and strategy? And why is it so large? Surely, if Boards have a key role to play in forming strategy, they would be directly and heavily involved in the process? When pressed, Board members said they expect management to form strategy, for consideration and approval (or otherwise) by the Board. In reality, they spend the bulk of their time reviewing business performance. Is this smart? Looking backward is hardly a good technique when the goal is to drive forward.

    If Boards are serious about maximising the performance and value of the organisation they govern, you would think they would spend the bulk of their time on strategy and the consideration of strategic options. What do you think is going on here? Is this another case of board members offering the so-called "correct" answer because they don't want to be shown up? Or does "consideration and approval" equate to "appropriate involvement"? Or is some other psycho-social interaction driving behaviour? I'd love to hear from you!
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    Governance in sport: the same or different?

    Governance Research Strategy
    What role should governance (especially Boards) play in sport? Should sporting codes be governed any differently than commercial businesses or not-for-profit agencies? 

    These questions are raised from time-to-time—often by the media and commentators, and especially when a team or code is not doing so well. Yet another case was reported today, this time concerning New Zealand Cricket. Dion Nash is reported as saying "the board is failing in its duty to lead the game in the right direction." Such criticisms are not new. The challenge is in finding and implementing the remedy.

    The moving parts that make up a sporting code are familiar—a board, administration, management, players (called workers, employees, volunteers in other contexts), spectators (customers, consumers). In my view, sporting codes are just another form of organisation, albeit with goals specific to their context. Therefore, they should embrace [sound] organisational constructs and practices, including governance.

    Dion Nash's call for the NZC Board to take control of the sport's destiny (and ultimately the Black Caps' performance) via sound top-level planning (strategy) has much merit. The development of strategy is now widely accepted in academic circles to be a major task of the Board. To do this effectively, Boards need to be comprised of people who understand the market and emerging trends, and understand and participate in the development of strategy. In NZC's case, that means appointing suitably knowledgeable and competent people to the Board, and soliciting well-structured contributions from various specialists.

    The time to act is now. But will the NZC Board be so bold as to make the necessary governance adjustments—for the good of the game?