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    What should boards do about the emerging "Internet of things" trend?

    Leadership Strategy
    Boards need to get their heads around this development, and quickly, lest the companies they govern get overtaken as consumer preferences change. The pressing question is "how":
    • How should boards respond to this seemingly significant trend as they consider strategy and the future of the businesses they govern?
    The desire to connect everything to everything else, via the Internet, appears to be alive and well amongst some sectors of society. The name that's been given to the emerging trend is the "Internet of Things". Essentially, the concept is one whereby everyday devices have embedded computers and two-way Internet connectivity, thus enabling them to send and receive data. If this proposal gathers sufficient steam—certainly the term seems to be entering the mainstream of business consciousness if these Forbes and Guardian articles are any indication—uber-connectedness is likely to have a significant impact on businesses and business models and, consequently, the strategic choices that boards need to make.
    My suggestion: Find a business strategist with expertise in this area (not just a populist consultant or local self-styled "expert"), and a respected academic, and invite them to lead a discussion at your next board strategy day. If you need an independent facilitator, I'd be happy to help. Ask a few of your customers, suppliers and staff to join the conversation as well—their comments may surprise you!
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    UK and Europe speaking and advisory tour in March: updated schedule

    Governance Research Strategy
    My next trip to England and Europe, for meetings and to speak on corporate governance and related matters, is just around the corner. Thank you to everyone who has contacted me recently to discuss meeting options. Since posting the preliminary schedule back in December, several more commitments have been confirmed, including some meetings in Zurich. The updated schedule is as follows:
    Mon 9 March
    Tue 10 March
    Wed 11 March
    Thu 12 March
    Fri 13 March
    Mon 16 March
    Tue 17 March
    Wed 18 March
    Thu 19 March
    * available
    speaking at a symposium in Leeds
    * available
    governance workshop in Winchester
    meetings in London
    meetings in Zurich
    * available in Zurich or any other European city
    * available
    meetings in London, then depart for New Zealand
    As you can see, the schedule is starting to fill up. If you would like to organise a meeting, or have me speak (anywhere in England or Europe is fine), please contact me. 
  • Published on

    London and Europe, in early Spring

    Governance Leadership Performance Strategy
    I am sitting the United Lounge, in the new Queen's Terminal at Heathrow, awaiting the departure of my flight home after a very productive trip to England and Europe. In the last ten days, I have been fortunate enough to speak at the European Conference on Management, Leadership and Governance in Zagreb; refine aspects of the doctoral thesis; meet with executives from the US and UK to discuss board practice matters; discuss research opportunities with UK-based researchers; and, catch up with some research colleagues and make some new acquaintances. To top it off, I attended a Holy Communion Service at St. Paul's in London and was taken on a most wonderful tour of Winchester (the ancient capital of England), including the Cathedral where the da Vinci Code movie was filmed. While trips away can be physically and mentally demanding, and I am looking forward to returning home, my mind is thinking ahead to the next trip, such is the wealth of opportunity that presented itself over the last ten days. Here's a small selection:
    • I have been asked to address a class of Masters-level students at the University of Winchester.
    • A confidential recruiter has begun exploring the possibility of an appointment to a UK-based board.
    • An opportunity to collaborate on a research project, to explore the leadership–board nexus in multi-national companies has emerged.
    • I have been asked to make two presentations, to a board and to an executive team (two different companies), on the topic of strategy in the boardroom. 
    As a result of these opportunities (and a couple of others that I'm not at liberty to mention), I plan to return to the UK and Europe in the early Spring (probably in mid-March), hopefully with my freshly minted doctorate in hand. I expect to be based in London, and may stop over on the East Coast of the USA en route.
    If you would like to explore aspects of strategy in the boardroom, board practice or business performance; or to arrange a meeting or a presentation, please contact me directly. I can travel to any major centre in the UK, or in Western or Central Europe, if required. I look forward to hearing from you.
  • Published on

    If directors get serious about strategy, what are the consequences?

    Governance Leadership Management Performance Strategy
    If you listen carefully, you can hear it. A drumbeat, almost inaudible at first but getting louder now, has been beating a new tune in corporate boardrooms: that directors need to get serious about strategy. If the recently published NACD Blue Ribbon Commission's report is any indication, the era of boards meeting to review past performance and satisfy their compliance obligations (as their sole responsibility) may be drawing to a close. 
    While I was initially non-commital, the BRC should be applauded for its report, and the NACD congratulated for having the courage to commission it. That the BRC has produced a set of strong recommendations is great news for shareholders, the markets and other parties interested in effective corporate governance and the achievement of great company performance outcomes. However, the recommendations are not without consequences: 
    • Directors will need to become more active in learning about the business of the business they govern. That will mean spending more time in the market; more time in the business; and, more time reading and critically analysing information from a wide range of sources. 
    • Directors will need to become adept at strategic thinking and more comfortable with the strategic management process. This may mean that the balance of expertise around board tables needs to change; from legal, compliance and accounting towards innovation and strategy.
    • Directors will need to revisit whether independence and distance (between the board and the Chief Executive) is actually the best basis of board practice. History—actually, the agency theory—has taught us that independence and separation are good, even though no one has produced any research to demonstrate that independence drives performance. If these recommendations are embraced, collaboration may become the order of the day.
    • Alpha-male and queen-bee CEOs may well be threatened by the board encroaching on 'their space'. However, there is no suggestion here that the board should take strategy away from them. The paper I presented in Boston (copy on the Research page) earlier this year discusses this.
    These consequences will place downward pressure on the number of boards that any given director can sit on at any one time, without doubt. Three concurrent board appointments is probably a reasonable maximum for any one director, and possibly two if one appointment was a chairmanship. However, that may introduce a whole new set of concerns, not the least of which might be requests—from directors more interested in earning than serving—to shareholders to increase the size of the directors' fees pool! Notwithstanding this, I hope directors and boards take heed of the calls to action—for they are beating loudly now. 
    Finally, my current research work, and experience in practice, suggests that the calls to action make very good sense. They are likely to lead to better company performance outcomes—but if they are followed.
  • Published on

    Are investors too easily satisfied?

    Governance Leadership Performance Strategy
    Accounting firm PwC has just released its 2014 survey of investor perspectives and board performance. You can get a copy here. The survey findings indicate that investors are generally happy with some things and less so with others. Here are the top points:
    • Investors are happy with the way boards assess strategy, oversee risk and maintain board expertise
    • Investors are not happy with the assessment of director performance, shareholder engagement or management incentive schemes; and they would like to see more diversity in the boardroom
    • The top three risk concerns are cyber risk, climate change risk and KPIs relating to risk management
    The report makes good reading. In all likelihood, it provides an accurate summary of what investors currently think (or at say they think—this is a survey after all). On the flip side, the most surprising and, frankly, most disheartening news is that investors are most interested in visible attributes (gender, composition, et al) and activities (assess, oversee) of boards. These findings suggest that if the board conforms with certain structural and composition 'requirements' and that boards do certain things, then investors are happy.
    My experience—gained as an investor, a company director and a corporate governance researcher—tells me that the top priority for boards should be company performance. However it is not mentioned in the report. The only item that comes close is the satisfaction in the way boards assess strategy—and yet most boards that I've observed or sat on spend most of their time monitoring and controlling the Chief Executive! Do investors, who typically do not attend board meetings, really know if or how boards assess strategy?
    From these findings at least, it would seem that company performance and value creation (growth) is not that important to investors. Is that the reality? If it is, then investors are too easily satisfied. However, if investors are interested in company performance (I think they are, they probably just didn't say so in the survey), then they need to appoint directors whose top priority is to drive business performance, in order to assure a positive return to the very investors that put them there.
  • Published on

    On succession planning: Yes, but three years out?

    Governance Leadership Management Performance Strategy
    Acer Computer, once a strong and proud manufacturer and exporter of personal computer products, has been doing it tough lately. Record losses in the last few years, as the company has struggled to adjust its strategy to the shift from desktop computers to mobile devices, have seen the company chew through three chairmen in fairly quick succession. There have been arguments between the CEO and the board over strategy as well. What has gone wrong? Apart from missing the market shift to mobile devices, I wonder whether the company has run out of ideas and has become stale. The last three chairmen have been company stalwarts for example, steeped in the culture and history of the business. Realistically, how much fresh thinking would you expect to emerge in such environments?

    Now the founder has stepped in. A outsider CEO has been appointed, for the first time, to lead the company—and to become the chairman in three years' time. This first part of this is good; it should see the introduction of some new strategic options, but only if the founder (who has come out of retirement to occupy the chair) allows it to be so. However, the second part—of anointing a leader three years before the fact, in an industry sector characterised by rapid change and tectonic shifts, is a huge call. I would have thought it made much more sense to recruit the new CEO and then recruit a new (and probably but not necessarily independent) chairman in twelve months' time. This would give the incoming CEO time to get underway, begin to deliver on the confidence the founder has placed in him, without the additional burden of preparing to add the chairman role at the beginning of year three. What say the new CEO is no good? What say a different skills and expertise mix is required to lead the board effectively in the future? The founder has, in effect, closed off the possibility of introducing new thinking around the board table—even though this seems to have been one of his aims. 

    Complex businesses need highly capable leaders: two good heads are almost universally better than one. Keeping one's options open, to react and respond to changing market forces is smart. Painting one self into a corner is not. Notwithstanding this, the founder can exert influence as he wishes. My view—that the longer-term future of the business, and of the value to shareholders in particular, may have been better served with a succession plan that revolved around two separate appointments—probably doesn't count for much. 

    What do you think?