Tag: Governance

Strategic location, direction and path

After a busy month spent judging awards, in conversation with alternative thinkers and reviewing research from business analysts and academics, one key question emerges as preoccupying business leaders:

‘How do we think, decide and act in the long term interests of our organisation?’

Strategic thinking

Our attempts to imagine alternative futures require curiosity and creativity. We bring together a range of interested parties and share insights and dreams. When we encourage diversity of thinking, our biases and pre-conceptions are challenged. Shrewd boards ensure that they are composed of individuals who bring a range of perspectives to the exploration and discussion of strategy.

These ingredients appear simple but are complex to engineer. The currency and contribution of each thinker are critical. This raises complex questions about refreshing board membership and planning succession. Offboarding directors involves difficult but honest conversations in the interests of the organisation’s future. Onboarding directors is an art form, best tailored to the needs of each individual to ensure they can contribute as soon as they are ready.

Our ability to look ahead also requires us to understand our past. We therefore need to ensure that corporate memory informs our discussions but doesn’t prevent imaginative thinking beyond a simple extrapolation of our current approaches.

We are often reminded that listening to the business and its stakeholders is an essential part of any strategic thinking activity. When these conversations go beyond mechanistic process and take place in a culture of trust, they provide valuable intelligence.

Strategic decision making

Your governance framework identifies the roles and responsibilities for strategic decision making but ultimately the responsibility for the strategic direction of your organisation rests with the board. When your board is only used as a ratifier of strategy, valuable opportunities to contribute experience, challenge and stress test assumptions may be missed. A dialogue between horizon scanners and operational experts generally produces robust decisions.

Award winning organisations, projects and initiatives share a common factor in that they are able to clearly articulate ‘value delivered’ and ‘impact’ against defined criteria. Where decisions are made with no clear rationale or intention, tracking performance is problematic.

Among the decision criteria receiving significant attention are cultural fit and risk appetite. Strategic decisions which are aligned to the beliefs and values of your organisation are more likely to engage the support of those responsible for delivering them. Equally, those decisions which are perceived to be contrary to the shared understanding of ‘how we do things around here’ are likely to meet obstacles. Given that the Board are tasked with creating the tone in their organisation, the debate around whether a decision is ‘right for us’ is critical.

Having set the risk appetite of your organisation, the board can assess strategic decisions against clearly defined tolerances. The wise ensure that risk appetite is kept under regular review and does not constrain the selection of innovative options with the potential to deliver value.  

Enabling living strategy

Strategy is merely window dressing if action is missing. Effective strategy formulation involves and engages those who are accountable for delivery. By the time the strategy is launched, a critical mass of enthusiasts can be ready to inspire and encourage their colleagues to deliver the required value and impact.

Effective monitoring involves tracking quantified performance metrics and listening to the real voices along your value chain. Together these practices create focus and sustain momentum. Importantly, they may provide early insight into strategy modifications required and, in some cases, obsolescent activities and initiatives which should be stopped. A continuous appraisal of resource deployment enables agile redeployment where appropriate.

It takes effort to provide opportunities for board members to be visible sponsors of strategy.  ‘Walking the floor’ may result in valuable conversations when leaders encourage the transparent sharing of opinions and capture intelligence for discussed with their colleagues.

The potential for intrapreneurship is often neglected by organisations. If curious and creative individuals are not valued and nurtured, they go elsewhere taking their insights and dreams with them. There is merit in identifying individuals with the natural strengths to think strategically and generate innovative and creative ideas. By exposing them to board thinking, your organisation can increase the probability of retaining their talents.  

A quick healthcheck

  1. What contribution do you make to strategic thinking?
  2. How do you enable other contributions?
  3. Who encourages you to be imaginative?
  4. What metrics do you use to evaluate different strategic options?
  5. How do you stress test your strategic decisions before ratifying them?
  6. Who ensures that strategic decisions, once taken, have collective board support?
  7. How do you show support for those who are accountable for delivery?
  8. What involvement do you have in tracking performance against strategic objectives?
  9. When and how are strategic decisions reviewed and modified?

Sources:

Henry Mintzberg on Strategic Seeing

Nasdaq 2023 Global Governance Pulse

PWC Strategy and Business CEO articles  

Intrapreneurial culture   

Engage to transform

Governance Awards 2023

Contemporary thinking?

How do I stay current?

Expertise takes effort to achieve. It can carry recognition, qualifications and position. The danger is always to rest on our laurels.

Our expertise must be relevant and relevance is impacted by changes to the context in which our expertise will be applied.

Staying current takes continuous and consistent effort.

September seems to be the month when clients ask me this question. Perhaps a Summer break has provided time to reflect and individuals have returned with a renewed appetite for auditing their currency. Quarter four will certainly be a busy one for boards with increased regulatory and legislative requirements to fulfil and contemporary thinking to apply.

Three habits to develop and nurture:

  1. Develop curiosity and healthy scepticism.  Many thought leaders highlight the importance of investing time in reading and listening. In a busy world with continuously shifting priorities and deadlines, protecting this time requires our active commitment and regular practice. We also need to avoid living in an echo chamber where only inputs which support our world view manage to get through the natural filters we apply.
  1. Recognise the changes which are material. Tools exist to enable us to focus on what is relevant for us now and for the future. These need to be imaginatively rather than mechanistically applied. When we set filters to help focus our efforts, it is important to recognise that they need monitoring. We also need to be realistic about our capacity to track changes and avoid noise. Our efforts are enhanced when we identify sources which provide aggregated and unbiased insights and learn to recognise patterns and interconnections.
  1. Seek relationships which will constructively challenge our certainties. In order to connect with people and sources who don’t think like us, we need to be open minded and willing to adapt our thinking. This habit is less comfortable than a natural gravitation to familiar communities. The value of cognitive diversity on boards is well publicised. Encouraging a wide range of voices to inform our thinking and decision making has been a feature of high- performance boards and individual directors.

Benefits:

  1. Continuous surprise. When we travel hopefully and take alternative paths to inform our thinking and decisions, we avoid boredom and dated or obsolete thinking.
  1. Ability to contribute valuable insights. With currency comes amplification of our voice and invitations to share insights with others.
  1. Network of sources and relationships. Collaborating and working in partnership to scan an increasingly complex world, builds trust and a wider understanding of our context. From tracking what has and is happening, our focus can change to discussing how change may develop in the future.

Where to start:

It is often said that making a habit takes 21 days while ensuring it is embedded takes 90 days. Choosing to develop the three habits mentioned above will also involve deciding what we are going to stop doing. A conversation with our coach, mentor or sounding board is a useful first step.

Searching for Amber

Alderburgh Shoreline – Summer Solstice Sunrise

After asking thousands of directors and their governance advisors to define what they mean by ‘Good’ business, the themes over several decades have largely remained the same though the language and emphasis changes.

‘We admire organisations with a clear sense of purpose. They must also tell a compelling story about what they believe in and where they are heading.’

‘Good’ businesses are well led by boards able to challenge and arrive at cohesive decisions. They invite contributions from a variety of stakeholders, to inform their choices.’

‘The best board decision-making is informed by an understanding of the organisation’s capability and capacity, together with the environment in which it operates. Risks are assessed against appetite, beliefs and the requirement to be agile in a changing world.’

‘The golden thread between beliefs, decisions and actions is transparent.’

This apparently simple agenda is difficult to formulate, implement and sustain. In 2023, the debate focuses on ethics, sustainability, ESG and EDI. These themes have pre-occupied boards for decades, though their mnemonics change.  

Multiple initiatives exist to identify, promote, audit and enforce ‘Good’ practice. Some are regulatory and some are advisory. For example:

The UK FRC Stewardship Code principles provide a clear framework to require asset owners, managers and advisors to enable investors to make informed choices.

The IFRS International Sustainability Standards Board recently published their reporting standards IFRS 1 and IFRS 2. They have been designed to enable organisations to evidence both their company performance and their commitment to driving sustainable value creation. The results should enable better informed investor choices.  

Since 2006, the B Corp movement has been certifying organisations globally and sharing ‘Good’. Their JEDI framework is one of a number of tools designed to enable business to be a force for ‘Good.’

However, despite the publications of standards, regulations and best practice sharing, adoption is slow. PwC publication Strategy + Business July 2023 highlights the gap between sustainability agendas and their delivery. 81% of investors will tolerate a small decrease (1% point or less) in profitability in exchange for ESG action.

Organisations position their beliefs and direction and we, as investors, may choose portfolios with good business credentials but be unwilling to forego returns in the short term. As customers of those same organisations, we may be attracted to those whose philosophy matches our own. The critical question is whether we are prepared to modify our expectations of the products and services they provide in order to support their investment in long term sustainability.  

And as I publish this post, today’s mail from McKinsey asks ‘How to create a more sustainable, inclusive and growing future.’

Something to reflect on while watching the tide roll in. And for the curious, sadly I haven’t found any amber yet but I did see the sun rise.

Governance Leadership Programme 2010 – 2022

This is the moment to thank the many individuals who collaborated and contributed to the Governance Leadership Programme (GLP) over the past twelve years. With publication of the Governance Hot 100 2023 it is wonderful to once again see Alumni among the nominees and winners.  

Back in 2010, prompted by enquiries from my clients, I approached the Joint Managing Directors of the Institute of Chartered Secretaries and Administrators’ (ICSA’s) commercial business. We discussed the need for The Institute to provide non-technical personal development for senior, experienced professionals. The GLP was co-designed to enable individuals to develop Situational Intelligence™. Participants were provided with opportunities to reflect on how they thought, decided and behaved in the situations they faced. Providing facilitated conversations in trusted groups and peer and professional coaching, the programme reached a global alumni of governance professionals drawn from CGIUKI and  Europe, Africa, Asia, North and South America. With a focus on currency and practicality, GLP encouraged hundreds of individuals to be curious and brave.

Among the many inspiring colleagues, speakers and hosts who shared their own stories and insights, special mention goes to:

Will Booth who co-designed the programme and bought so many people together in this valuable collaboration.

Simon Osborne who was an active and enthusiastic sponsor and advocate.

David Venus and Charis Evans who were among the gracious hosts.

Chris Moon who excited and challenged each group to explore their own resilience.

Victoria Whyte, David Press, Jeremy Small, David Gracie, Annemarie Durbin, Rob Bellhouse and Lyn Coloff who were among the many wise and generous speakers.

Ten of the best #GLPWisdom

  1. People always remember how you made them feel #GLPWisdom
  2. The biggest limit in life is the way you choose to think #GLPWisdom
  3. Understand your strengths and reputation #GLPWisdom
  4. Be easy to deal with, a capable and safe pair of hands #GLPWisdom
  5. Understand the language of the boardroom #GLPWisdom
  6. With difficult people find out why they are behaving like that and work on an accommodation #GLPWisdom
  7. Flex your style to fit the situation #GLPWisdom
  8. Create the opportunity for healthy tension and robust debate #GLPWisdom
  9. Be curious, learn continuously and know what is coming up #GLPWisdom
  10. Build your support network #GLPWisdom

Thank you all.

Anna Bateson,

Founder of Cutting through the Grey

GLP Programme Director

Board dynamics

Insights from practitioners

In conversations with Chairs and CEOs from across the private, public and third sectors, a number of clear themes are emerging on HOW TO create and sustain effective Board dynamics in tough times. The insights fall into three key areas:

Develop effective connections:

Meet Directors on a 1:1 basis between formal events to build relationships based on a real understanding of each individual’s strengths and ability to contribute to Board discussions.

Identify how each Director operates, the way they prefer to engage and the format in which they can digest information to inform their decision making.

Check out assumptions to make sure they are well founded. Don’t fall into the trap of ascribing views to individuals based on your own perceptions.

Create continuous dialogue:

Tell the whole story to everyone, not partial stories to different audiences. They are all instantly connected and will know.

Tell the truth. It builds confidence and trust, which will create resilience in tough times.

Listen to insights and challenges, particularly from stakeholders who hold different views.

Build understanding of context:

Focus the Board on strategic discussions and avoid tactical game playing, however satisfying for individual egos.

Develop the big picture but ensure that operational reality checks also occur.

Ensure that there is collective understanding of risk appetite and that it informs your discussions.

And the final message from practitioners:

“Don’t try and bounce the Board!”

Reflections 3 years on

March 2020 Looking back at my diary, the month started with a busy week facilitating a number of different workshops for Boards of Directors and Governance Professionals in London. On Friday 6 March I replanned all my Q2 scheduled activity for virtual delivery. Looking back, it is difficult to identify the single trigger which prompted me to replan. Based on my experience as a founder member of The Henley Future Work Forum (FWF) back in the 1980s, and my subsequent collaboration with Dr Laurence Lyons, the FWF co-founder and Research Director, the technological and behavioural transition was smooth. I am fortunate to have a valued support network and trusted client relationships.

Adversity Much of my time over the last three years has been spent supporting business leaders as they navigate adversity. The privileged position of being invited to talk with leaders across multiple sectors and territories, highlights two truths:

– Adversity corrodes inspirational leadership

– Adversity reinforces inspirational leadership

Identifying angels and devils has pre-occupied business authors for decades. The corrosive damage which toxic behaviour can wreak on any organisation is universally recognised. Perhaps it is surprising that multiple recent examples exist of visible devilry being tolerated and condoned. The behaviour can be viral and damages people.

Conversely, spirits lift with examples of inspiring leadership practiced passionately and altruistically. This celebration of angels is also viral and draws together communities of loyal followers, eager to share and collaborate.  

Leaders Our decisions and behaviour are scrutinised to determine whether we are devils or angels, or perhaps a bit of both. Taking time to consider the impact we have on others is essential, but as a solitary activity we can be selective in what we choose to see and believe. It takes curiosity and also bravery to develop self-awareness of the real impact of our behaviour and how people perceive us.

Relationships Resilient and agile leaders nurture relationships, investing time and effort in building and sustaining trust. These relationships extend beyond the boundaries of their organisations and create continuous conversations which lead to shared solutions to challenges. It is heartening to hear many examples of supply chains and customers collaborating to sustain organisations in the difficult trading environment of the last three years.

Constructive challenge Talking to people who don’t think like us takes more effort but provides insights which may be far more valuable than existing in an echo chamber. Inspirational leaders are increasingly ensuring that they make robust strategic decisions by creating small groups of empowered individuals with the brief to rigorously test implications and impact.  The practice is not new. When co-writing the British Airways Leadership Story with Tony Voller back in 2004, we highlighted how the CEO, Rod Eddington, navigated the airline through 9/11 supported by a ‘Gang of 5’ constructive challengers who gathered ideas and perceptions from across the airline and beyond.

Learning The last three years have been characterised as ‘unprecedented.’ Reflecting on  the organisations who have navigated well, one characteristic stands out. They have experienced adversity before and learned from it. Going far beyond a mechanistic review process generating ‘lessons learned,’ these organisations have probed to discover causes behind symptoms and developed new ways of operating which anticipate change. Mistakes are shared not hidden and ‘near misses’ are discussed openly. This behaviour requires the visible sponsorship and involvement of all leaders to become instinctive. It requires inspirational leaders.

Behaviours to admire

As the season for recognition and awards progresses, stories are shared of the behaviour which defines excellence in organisations and their leaders.

With the privilege of coaching directors and their advisors over many years, delivering chartered qualifications and judging professional awards, common themes are apparent to me. They highlight the behaviour we admire and seek to emulate:

Explaining why – Organisations, initiatives and individuals who can clearly articulate their purpose are able to attract and retain the interest and attention of their audiences. Their decisions and behaviour are continuously judged against that purpose.

With a human face – It is easy to intend being clear about what you believe in, taking decisions in the light of those beliefs and behaving in a way which is consistent with your stated principles and values. Living your values at organisation and individual level takes effort but pays dividends. Values in practice are evident in the opportunities you choose not to pursue as well as the actions you take.

In conversation – Award-winning organisations and individuals recognise the importance of visible and continuous dialogue with their stakeholders. Their project Gannt-charts have ‘engagement activity’ as the top line. Effective conversations listen to the unfiltered voices of diverse people and respond in a way which demonstrates appreciation for ideas contributed and an understanding of concerns.  

Working together – Collaborative ventures, based on common understanding and commitment, deliver value for all participants. Identifying individuals and organisations with complementary strengths provides a foundation for creating productive and enjoyable relationships. Award winning partnerships are defined by natural curiosity, the desire to look beyond the current and obvious and anticipate changing trends and the opportunities they provide.  

For the greater good – Altruistic leaders, clearly motivated by more than self- interest, attract loyal followers. They understand that leadership is about more than directing and controlling. The generosity of spirit which enables others, characterises excellence. The media have labelled the late Queen Elizabeth II as a globally recognised exemplar of ‘servant leader’. Recognising the organisation as a separate legal entity, identifying the expectations and aspirations of all stakeholders and balancing the collective good are all characteristics of award-winning organisations.

And delivering – Promises made and kept inspire trust and confidence. They epitomise an organisation’s or individual’s lived brand. Intentions are laudable but delivery is essential. Excellence is demonstrated by behaviours that pay continuous attention to progress against objectives and that track both the achievement of outcomes and the approach taken.

Directors ask the right questions to develop ‘Situational Intelligence’

Effective boards know how to ask questions of their organisations and board advisors. The opportunities for individual directors to ask searching questions are often greatest during their own due diligence activity through the recruitment, appointment and onboarding process.

Remaining curious and asking challenging questions is an essential strength for any director. Vigilance is better than complacency given the significant responsibility and liability which directors carry.

Rigorous questioning can establish:

– Fashion or true sentiment

– Initiative or strategic intention

– Clear purpose or agile rebranding

– True or disposable values

It pays dividends to develop a real understanding of the context in which you are expected to add value as a director.

Words matter, behaviour must follow

Over decades, business language has developed. Fashionable boardroom vocabulary adopts three letter acronyms referencing philanthropy, socialisation, corporate responsibility, compliance, governance, stakeholder engagement, sustainability, diversity, inclusion, environmental conscience. The words which leaders use may change but to be trusted, true sentiment must be apparent and behaviour must follow.  A strong foundation for trust is to develop a clear and common understanding of what the words mean.

Purpose – why we exist

Purpose guides strategic choices, provides clarity and a rationale for activity.  It is seen by internal and external stakeholders and can guide consistency of messages. Director due diligence pre-appointment will often involve making judgements on the clarity and resilience of an organisation’s purpose.

Culture – what we believe and how we behave

Our values are evidenced by what we choose not to do as well as what we do and how we do it. Shrewd Director candidates use every opportunity to establish the extent to which beliefs, principles and values are embedded in an organisations’ practices. Beyond a menu of fine words is the reality of what is acceptable behaviour. Valuing difference underpins the practices which deliver diversity and inclusion. 

Strategy – what we aspire to be and how we will deliver that aspiration 

Multiple metrics arrive in the boardroom. Newly appointed Directors are in the privileged position of contributing to and observing strategic decision being made. Astute individuals notice what really drives strategic decision making and the success with which the organisation balances the requirement for short term performance with the need to build long term stability. Understanding the board’s appetite for risk and change and the level of organisational agility, helps newly appointed directors to challenge effectively.

Stakeholders – who we choose to work for and with

Our brand is a promise to our stakeholders. In a transparent world, all stakeholders can see the promises we make to each other. We are judged on whether our promises are fair and whether we keep them. If we can’t keep our promises we are judged by the clarity with which we explain why. In today’s turbulent world, demonstrating an understanding of  the attitudes, aspirations and intentions of organisational  stakeholders is one of the most critical strengths a newly appointed director can evidence.

Responsible business

Government, regulators, investors, talent and consumers are among the many stakeholders calling for clarity on the ways organisations make strategic decisions, prioritise and implement those decisions. Evidence is required to demonstrate materiality, commitment, action and the impact of initiatives.  The way in which a board formally and informally reports progress and performance is critical in developing stakeholder perceptions of the voracity of the board. Being a director is not for the faint hearted.

Now, soon and the future

Multiple research reports counsel against short term thinking and decision making in boardrooms. Regulation seeks to prevent directors capitalizing on short termism. Governance codes highlight the importance of balancing short term performance with long term stability. Working across different time horizons is recommended.

When a crisis occurs like a global pandemic, thinking beyond survival becomes more difficult. It is a brave board which sponsors significant changes in strategic direction and major investments. We will hear the stories of these brave boards, navigating their organisations through transformational change. We may hear less about the teams who enabled their informed bravery.

Behind every high performance board are professionals from many disciplines, accountable for providing intelligence to inform strategic decision making. Working in partnership with the board, they enable holistic questioning and are responsive to constructive challenges. From disciplines including corporate governance, compliance, strategy, risk, legal, internal audit, investor relations and communications, these experts enable board effectiveness.

To sustain a range of initiatives which simultaneously maximises short term survival/performance, while planning changes to the current business model and exploring innovative and transformation changes, calls for courage, imagination, stakeholder engagement and excellent programme management.

The Board’s future thinking is often overtaken by the time required to solve problems in the ‘now’ and ‘soon’. A recent McKinsey Sustainability at COP26 event predicts the emergence of ‘50 new Tesla’s’ led by innovative technologists engaging multiple stakeholders in their ambitious plans.

Beyond auditing the time investment each board makes in operational problem solving and designing the future, exploring board health and dynamics is often an effective means of identifying the quality and effectiveness of strategic thinking, decision making and monitoring. With better understanding of their effectiveness and the support of internal stakeholders, each board is well equipped to improve their strategy formulation process and outcomes.