Cutting Through The Grey

Board Effectiveness - Beyond Compliance

The High Performance Board:

High Performance Boards are characterised as combining challenge and cohesion. Corporate governance principles highlight the roles which non executive directors play as independent thinkers, providing challenge to Board discussions. The chairman's role is specified as the first among equals, responsible for orchestrating inputs from all parties, encouraging rigorous thinking and creating an environment in which cohesion is achieved.

Establishing how a Board performs and how it can maximise effectiveness, involves a process which goes beyond evaluating compliance with regulatory principles. Exploring the relational dynamics and their impact on both decision making and behaviour, is an essential foundation for developing Board effectiveness.

Why it matters:

The UK Companies Act 2006 is a mixture of reform and restatement of company law, redefining the 7 Director duties and highlighting the need to consider the interests of a wide range of stakeholders. The introduction of the Act and the continued preoccupation of the media with high profile corporate governance failures, has focused the minds of many Boards. Chairmen are keen to develop good internal processes which track their strategic decision making and actions, linking these to the corporate ethics and principles they espouse. They are investing in the development of their Board effectiveness.

What it takes to succeed:

1. The active sponsorship, involvement and continuous commitment of the chairman.
2. The involvement of all Board members in a process which is built on established business cycles.
3. Independent facilitation of the evaluation and development activity, to promote confidence in objectivity.
4. A process and timescale which builds focus and momentum.

And so:

In an information age when the behaviour of Boards is the  subject of continuous scrutiny from all their stakeholders, Board evaluation and development become essential activities.

Developing leadership capability

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Organisations play changing roles in 21st century society and this impacts  the expectations placed on their leaders. Complexity and continuous change provide significant challenges and opportunities. Growing and nurturing leadership talent has become a Board preoccupation. Global business coaches, Anna Bateson of Cutting Through The Grey and Dr Laurence Lyons of Metacorp, collaborate to bring business leaders a highly interactive masterclass designed to build real capability.

Value Realisation post mergers and acquisitions

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There is a significant growth in the number of organisations expressing a desire to develop their acquisitive capability and realise the value post deal. Despite more attention being paid to the due diligence process and deal making activity, a significant proportion of business integrations fail to realise the intended value. The reasons are complex and many are avoidable. Combining their expertise in the leadership of strategic change and the creation of technology enabled businesses, Anna Bateson of Cutting Through The Grey and Clive Taylor of Sesai collaborate to bring business leaders a highly practical masterclass.

Strategic change in the World Labour market

Some challenging thoughts about the 21st century labour market:

Jack Welch, leading business thinker and ex CEO of GEC, addressed an audience of UK Directors in November 2005 and cited the convergence of biotechnology, nanotechnology and management science as providing significant new job opportunities for the 21st century.

According to Karl Fisch, an American academic working in Colorado, the top 10 in-demand jobs in 2010 didn’t exist in 2004, so academic institutions are preparing students for jobs that don’t yet exist. He forecasts that China will soon be the number one English speaking country in the world, with a strong belief in developing intellectual capability.

Alan Blinder, Economics Professor at Princeton,believes that globalisation and improved communications technology will result in some of the most prestigious jobs in accountancy, law, financial trading and education being done more cheaply in territories such as India and China. The professor believes that the jobs which will remain in highly developed economies will be those which require high touch, significant face to face communication.

Messages for those entering the 21st century labour market:

Charles Handy, leading business thinker and social philosopher coined the term Portfolio Careers in the 1980s, recognising that the single employer career was unlikely to continue. He now promotes EUDAIMONIA, Aristotle’s word for doing your best at what you are best at.

Leon Benjamin, futurist and author of Winning by Sharing, highlights the growth in talented, creative individuals searching for autonomy and flexibility in their working choices. In return for this freedom, these portfolio workers will need to replicate the same range of functions as a larger organisation and combat the challenges of being constantly available. He researches the way in which portfolio workers and businesses are using the functionality of Web 2.0 in order to build communities of common interest, supporting each other in securing and undertaking work.

In January, Bill Gates visited UK and offered this advice to budding entrepreneurs:

“I never thought of Microsoft as being a super valuable business. I worked on software because it was fun and people could not see just what it could do, so I decided to work on that. We never thought we would have a big business with all these employees. Enjoyment is much more about what you do every day. If you are engaged and enjoy something, you are more likely to do world class work than if you decide something has a good wage rate, so you will go and be a dentist or whatever. For an entrepreneur, picking something about which you are passionate is by far the most important thing.”

Business leadership in the 21st century:

Based on my work with business leaders from across the world, the most successful subscribe to EUDAIMONIA. They are characterised by their intellectual capability, coupled with their sensitivity to different cultures and philosophies. They are able to collaborate with other people in both the real and virtual world.

Organisations and leaders in society

Addressing the challenge

To lead your business effectively in the 21st century, depends on developing self awareness and situational intelligence. Real leadership capability is built by developing insights across both these areas. This allows you to judge the most appropriate way to intervene in a given situation.

The psychological focus on addressing just the former, assumes individuals are disfunctional and 'fixes' them. The new, improved business leader may conform to a common view of 'good' but be ineffective in the real World they inhabit.

Situational intelligence develops a line of sight which encompasses the immediate operating environment, the business environment and the wider World. While perfect vision and foresight are hard to achieve, each business leader can develop their acuity (keeness of thought) and see more of the situation.

In the 21st century, we recognise that leadership is a relationship which can exist to address situations at any level, rather than a role to be performed by the few at the apex of the hierarchy. Those few, who direct, are tasked with creating a climate in which other leaders thrive.

The 21st century ADEPT leader

ADEPT is a noun and adjective describing one who is thoroughly proficient; a skilled alchemist (Oxford English Dictionary).

ADEPT leaders develop self awareness and situational intelligence. They have the strength to analyse and consider advice. They deliver high performance because they are willing to learn from other's experience and not just their own.

Article from The Institute of Directors Effective Leadership Conference - 8th November 2007

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Leaders define the drum beat to which their organisations march

The Credo

Principled Leadership is a way of thinking, which embraces:

Truth - Principled leaders are authentic and true to themselves, recognising personal purpose, ethics and appropriateness of response. Their reputation for authentic behaviour is earned, respected and valued.

Politics - Principled leaders enable others to lead. They recognise that this is the style of choice for the advanced organisation paradigm, given that power relationships have altered, career paths are mobile and personal branding is essential.

Dialogue - Principled leaders create dialogue, founded on mutual respect and shared expectation of behaviour and outcome. They recognise the importance of both the journey and the destination.

Collective Success - Principled leaders enable collective success by inspiring and being inspired. They engage with others, sharing ideas and building common purpose. Their decisions and actions are informed by their principles.

The Questions:

What are your organisation's values?

How is your community encouraged to live those espoused values?

How are the espoused values promulgated?

How is dialogue created and sustained?

How is the baton of leadership shared?

What value is placed on being authentic?

What inspires your community?

What role do you play in inspiring those around you?

How are decisions and actions linked with values, ethics, principles?

So do you live in an environment which encourages Principled Leadership?

Planning strategic change

The turbulent business environment which most organizations inhabit, has impacted the degree to which it is possible to plan change. A more responsive and adaptive approach is required in order to innovate and lead through crises. Creating strategic change is about getting fit for an uncertain future, while also ensuring operational stability.

Most analysts agree that change derails as a result of inappropriate timing and lack of engagement. While there is no blueprint for success, there are some tried and tested guidelines for increasing the likelihood.

Deciding when to launch new initiatives relies on the ability of business leaders to recognize the factors driving change by scanning their operating environment and accurately assessing their stakeholders’ attitudes and expectations.

High performing organizations are adopting a participative approach to strategic planning, which surfaces all existing and proposed change initiatives and allows them to be evaluated in the light of strategic imperatives.

Change overload and fatigue are common complaints from Directors.  At the same time, new initiatives are championed and obsolete ones are seldom ‘killed.’

Mapping all change initiatives against the business planning cycle, highlights conflicts and interdependencies, while providing an holistic view of the agenda the organization is being asked to embrace. Pinch points become apparent and Director time focused on steering multiple initiatives concurrently.

This participative approach to planning ensures that constructive challenge becomes part of an effective process to determine which initiatives are Mission critical and when they should be launched. A common agenda is created and Directors can begin the process of engaging their stakeholders in the journey.

Planning strategic change is most effective when it recognizes the operational pulse of the organization.

Engaging stakeholders

Without consensus on the change agenda, it is difficult to create true engagement. With a clear and consistent story of why change is required and how it will be achieved, Directors can create dialogue with stakeholders.

Directors balance the need to manage the expectations of disparate stakeholders and provide this clear and consistent message to internal and external audiences. With instant global communications, mixed messages are quickly identified and doubted.

Dialogue engages attention and surfaces fears and concerns early. These can then be addressed and groups and individuals helped to build their rational understanding of the proposed change. Emotional engagement takes longer.

When confronted with any change, the initial response is self concern. If fears are not allayed at an early stage through dialogue, individuals are likely to resist the change or withdraw. Early involvement in planning strategic change increases both rational and emotional engagement.

Recognition of the communication channels which are most respected in your organisation, will increase the likelihood of your change messages being heard. Face to face communications of proposed change, will provide instant feedback and an opportunity to assess change readiness. Dialogue is created most effectively in small forums.

Glossy, branded publications may be misinterpreted, while regular articles in company newspapers or bulletins may attract more attention.

A key ingredient for implementing sustainable change is the active engagement of people in an iterative process. This can be achieved by establishing a strategic planning group with a clear understanding of the business environment and an operational group with a practical understanding of business activities and processes. The interaction between these groups as they plan and implement change, ensures reality checking at both a strategic and operational level.

Directors lead strategic change effectively by engaging stakeholder audiences through:

 Visibility
 Listening
 Reiterating