Wednesday, 7 December 2011

A 17th century solution to a 21st century problem?

When I was an auditor, a couple of careers ago, I used to reckon that below a certain turnover threshold, I could completely understand any business. Above that level, I knew that the organisation would be too complex for that, and I would have to delegate some of my understanding to my audit team, and trust that I could extract all of their valuable insight in a debrief.

Fast-forward a couple of decades. Companies now are vast and complex. The size of the largest companies in the world far exceeds that of many countries. They span all the continents. Perhaps more significantly, that means they encompass all different types of governance regime and culture. No single person - and that includes the CEO - can fully appreciate what is going on.

Which brings me to the Board. Back in the 17th century, even back in the 20th century, it was appropriate to have a small group of people charged with directing the company. Originally, most of those directors were executives, with day to day responsibilities in the business. Gradually, the role of the non-executive was introduced, and then considerably strengthened in recent decades as we saw the problems that arose in governance, and sought to address them through board direction. Now, the non-executives have an important role in ensuring conformance to regulation, whilst contributing to corporate performance. (Or, more poetically, ‘grounding and star-gazing’, as Lucy Marcus puts it. ).

But tell me. If you were starting from scratch to design a system of corporate governance for today's behemoths - would your obvious choice for governing a large multinational be a group of people working outside of its core business, on a part-time basis?

And would you then hold that group of people legally liable for the actions of the organisation, on the assumption that they should have known and controlled everything it was doing?

This thought came to me very clearly last night when I watched a very capable panel give their considerable insight into how boards and their directors should behave. The seminar ‘Future-Proofing the Board’(#fpboard) brought together an able group of experienced people, who set out an enormous amount of common sense about what a director should do. Their thoughts on board diversity were more sensible than anything I have yet read on that subject; the discussion on critical and strategic thinking from non-executives was insightful.

But I can't help thinking that they were addressing the wrong question, that all of us in the governance world may be asking the wrong question. Perhaps the board of directors is an outdated format, still suitable for governing smaller, national concerns, but not appropriate for the global giants. If these organisations are ‘Too Big To Govern’, then rather than apply ‘more of the same’, and hold the non-executives liable when they fail at their impossible task, perhaps we need a totally different solution. The board was the answer in the 17th century. And the 18th, 19th and 20th. That does not mean it is still fit for purpose in the 21st. What else should we be considering?

To be continued…

I sent this article to Prof Laura Spira for comment, and she referred me to a rather nice paper which expresses similar thoughts, written with more consideration than the brief train journey after last night’s conference afforded me. Beyond the Board, by Kelli A. Alces.  Thanks, Laura!

Friday, 4 March 2011

Afghanaid 10,000 days campaign

I've just received this email from a friend who works in the Charities sector. I trust her judgment totally, and am giving. Please do the same! (And we don't need to limit ourselves to £10, either.)

"As many of you know I have worked with Afghanaid both here and in Kabul. They are an amazing organisation having worked in Afghanistan since 1979 and stayed there through thick and thin - unlike other international organisations. They have their head office in Kabul and work on the most limited of budgets.

Currently Afghanaid are asking for support for their 10,000 day campaign - the number of days that they have existed. They would like to raise £10 from 10,000 people during the first 10 days of March.

I hope that you might feel that this a cause that you would be willing to support.

The campaign website is You can donate direct from this page by clicking on donate.

If you want to go directly to donate some money you can do this through

If you have friends who might be interested in supporting this campaign please forward this e mail to them.

I hope you don't mind me sending this e mail - not something I do very often.