Societal Wellbeing - Peter Crow | Helping boards govern with impact

Published on: 4 December 2013

ANZAM Conference: Opening keynote

The 27th Australian and New Zealand Academy of Management (ANZAM) conference got underway this morning. The opening keynote was delivered by Dr Bob Brown, former leader of the Australian Green Party. His talk, Why Global Democracy is on its Way – Australia's Key Role, explored the issue of effective and sustainable management of the biosphere. Brown noted that we humans—all 7.5 billion of us—are dependent upon the biosphere, but it is not dependent on us.

Brown's talk was interesting, in that it highlighted many relevant and important issues relating to sustainability. However, the rather thinly-veiled anti-business tenor of Brown's talk was somewhat naive. He appeared to ignore the societal well-being improvements achieved by high performing businesses over many generations, and necessity of interconnects between business sectors. For example, Brown opposed mining (citing environmental impact and limited employment opportunities) and promoted tourism (limited environmental impact and greater employment opportunity). These industries are actually connected, in that hydrocarbons are required to power the vehicles (planes and ships) needed to transport tourists to a given location. Brown's submissions would be considered extreme by many. Notwithstanding this, Brown set the scene and theme for the conference well.

Published on: 16 November 2013

ECMLG'13: Don't forget the stakeholders' interests

Marina Lovrincevic (University of Split, Croatia) presented a very interesting paper on the relationship between supervisory board efficiency and stakeholder orientation. In so doing, Lovrincevic exposed a chasm between the Euro-centric view of the sustainable purpose of the company (based on stakeholder theory) and the Anglo-American view (agency theory).

Lovrincevic's analysis, of empirical data from a sample of Croatian non-financial listed companies, asserted that supervisory boards are helpful to protecting the interests of the wider set of stakeholders. An interesting debate ensued, essentially comparing and contrasting the Friedman view (value maximisation for the shareholder) and the stakeholder view (value distribution). The audience seemed to agree that the paper provided an interesting platform for future research, particularly research to explore whether a modified view of stakeholder theory might provide a more complete basis for effective governance.

Published on: 15 November 2013

ECMLG'13: Keynote address day 2

Prof Vlado Dimovski (University of Ljubljana, Slovenia, and formerly a Minister in the Slovenian government) spoke on the topic of advanced approaches to leadership, from the perspective of his experience in Central and Eastern Europe.

After providing a summary of leadership in socialist Yugoslavia (where leadership was not discussed—indeed it was suppressed), Dimovski caught the audience's attention when he answered the classic question Are leaders born or made? with "Yes". In so doing he introduced the concepts of holistic leadership and complexity. He went on to challenge the superman leadership paradigm which dominates western thought and practice. Rather than criticising Western thought and practice outright—and promoting Eastern philosophies as "better"—Dimovski challenged the audience to consider the possibility that effective leadership might best be built on a "both–and" model. He then suggested three frameworks that may be helpful to leadership practice in the future:

Authentic leadership: Leadership without masks, related to values, the "true you".
Daoist leadership: Leadership is not intrusive (as it is in Western models) but inclusive and based on a deep reality, that nothing is exactly as it first seems.
Neuroleadership: Connects neuroscientific knowledge with leadership practice. Suggests that leadership potential can be fulfilled through a better understanding of how the brain functions and cognition.

Dimovski's paper was well received by the audience, some of whom said to me beforehand that they were expecting to hear from a "socialist evangelist". However this was not the case. We need to hear more from people like Dimovski.

Published on: 15 November 2013

ECMLG'13: Culture and conflict in MNCs

Selected views on the organisational culture of multinational corporiations

Alena Safrova Drasilova (Masaryk University, Czech Republic) presented her research on conflict and culture in multinational corporations (MNCs). Drasilova surveyed people from 2509 branches of 335 MNCs, in an effort to understand the influence of headquarters culture on the culture of branches located in the Czech Republic. The preliminary results indicated that MNCs headquartered in Europe displayed less conflict at the branch level than companies headquartered elsewhere.

The discussion that followed the paper was extensive—clearly the paper stimulated the interest of the audience. One aspect of the discussion explored the notion of cultural alignment in a category Drasilova described as global (companies that identified themselves as not having a national head office—Bosch being German, or IKEA being Swedish, for example—but rather a pervasive culture in which the characteristics of the brand itself prevails over the location of the country—McDonalds, for example)

It would be very interesting to understand if any linkages between culture/conflict and performance exist, particularly whether the presence or absence of conflict makes any difference. Drasilova said that no work had been undertaken yet, but that this is the next step in the research. I look forward to reading this next phase of work, because I suspect the approach she plans to take may well have parallels to my own work.

Published on: 23 October 2013

When "tongue-in-cheek" cuts close to the bone

A somewhat satirical opinion piece, written by Joe Bennett, caught my eye this morning. As I read it, over my morning coffee, I smiled, for the opinion piece is very well written. But afterwards, as I sipped on my coffee again, I winced, for the images conjured in Bennett's mind and exposed through prose, cut a little closer to the bone than many who are au fait with boards and governance would care to admit.

Most of the directors that I know, and boards that I am familiar with, work hard, as they seek to optimise business performance and build shareholder value. They read their board papers carefully and critically before meetings, prepare well and ask searching questions. They also spend time understanding the business of the business, so they can contribute meaningfully to strategic discussions, and make informed decisions about the strategic future of the business. In other words, they engage actively in the process of governance.

However, some (perhaps the majority?) directors and boards still don't engage in this way. They adopt a more passive modus operandi of monitoring past performance. They spend little, if any, time considering strategic options and marking out the future of the business. In extreme cases, they behave as Bennett suggests. Sadly, the self-serving, fat cat imagery described by Bennett will remain part of the psyche—for as long as it continues to describe how some boards behave at least. I long for the day that such imagery becomes folklore, of the way things used to be, but no longer are.

Published on: 8 August 2013

The Fonterra crisis: a failure to learn from past lessons?

Fonterra, dairy industry giant and also New Zealand's largest company, has been in the news of late, for all the wrong reasons. Fonterra processes raw milk and exports 97% the resultant products for further processing and consumption in countries around the world.

The cause of the recent events was a suspicious product test, which raised the possibility that the bacteria that can lead to botulism was present in a 38-tonne batch of whey product manufactured in early 2012. The whey product is used in the manufacture of infant milk formula, and botulism can be fatal. Understandably, the event became front page news, with flow-on ramifications in political, economic and tourism circles, very quickly.

At this point, I want to acknowledge that mistakes, unexpected events and crises happen. This is a fact of life. The test of one's mettle comes in the response.

On the surface, it would appear that Fonterra has failed to manage the crisis well, despite an exemplar case being widely available. In 1982, packets of the then market-dominant Tylenol product were laced with cyanide. Seven people died from unknowingly consuming poisoned capsules. Johnson & Johnson's response to the crisis was exemplary. They immediately withdrew every box of Tylenol from sale, established a 1-800 helpline and actively sought media coverage. While Johnson & Johnson took a short-term hit, they emerged stronger than before. Compare that with delays in reporting the possibility of the problem to the authorities, and seemingly poorly briefed representatives at press briefings. And where was the Chairman?

No doubt a review (or, more probably, several reviews) will be conducted to discover how the problem occurred; why it was not discovered earlier; what processing, communications, information sharing and other processes failed; and how the whole affair was managed. I hope that, in the process, someone thinks to look to other similar cases—like the Johnson and Johnson one—and to learn from them!

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