The Fish Rots From the Head

This week I had the great pleasure of meeting Professor Bob Garratt, author of the above book amongst others. He was in Perth to present on “Directors and their homework: developing strategic thought”.

The presentation was interesting and through provoking and particularly highlighted the ever growing demands on directors, as the scope of what is considered to be doing an appropriately thorough job continues to grow and the essence of what constitutes good governance becomes clearer.

One of the many things covered that I found refreshing was his bias to jargon free simple statements of strategic direction and intent, and using tools such as PPESTT analysis as a board developmental tool.

PPESTT is:

  • Political environment
  • Physical environment
  • Economic Environment
  • Social environment
  • Technological environment
  • Trade environment

His suggestion was to work in buddy pairs with a director and senior executive and address one of each of the above in real detail with quarterly feedback sessions to the board to constitute no more than 4 sides of A4 paper, thereby covering all of the above over 18 months.

The real purpose in doing so is to get quite a different macro view of the world and really lift up to another helicopter level. Further it will make board members consider the daily news intake in a different light in relation to the critical job of setting and guiding strategy.

A good idea – and also a book worth reading.

I asked him at the close of his presentation about how the nature of board relationships had changed since he published “The Fish Rots From the Head”. Interestingly there are now organisations that are monitoring board interrelationships, which is important in assessing independence. He went on to say that whilst there was a big improvement in this area, nurturing new talent is an important and ongoing job. In addition, the evolution of corporate governance is far from complete with financial market players, their machinations and their impact on share price being a key issue needing addressing by market regulators.

I’d go one further and ask how the role of independent audit by the top tier firms still leaves only the directors exposed in a meltdown, even if the auditors should have uncovered the issues.

2 thoughts on “The Fish Rots From the Head”

  1. I used to work alongside one of the guys who introduced the idea into the big 4 firms audit fims to do a PEST and Porters analysis (minus the extra P & the T) in order to understand the risk profile of each of their audit clients in addition to just verifying the numbers. Since then I’ve ended up in a profession which regularly uses the catch cry “the fish rots from the head.” Nice to see this all wrapped up in a single cover, might be worth a look.

    As I see it, the flaw with PEST & Porters isn’t necessarily the model itself, it’s that the people doing it are either unable to see or comprehend some of the things around them, or aren’t in a position to speak up about what they see or be heard when they do. It’d be really interesting to see if the Directors come up with the same results as those working for them who use similar tools. I’d hope the Boards would take a more long term view. I’d love to see a risk analysis by directors focused on “risks that could arise after the current CEO has moved on.” That’d be interesting.

  2. This is the perfect blog for anyone who wants to know about this topic. You know so much its almost hard to argue with you (not that I really would want…HaHa). You definitely put a new spin on a subject thats been written about for years. Great stuff, just great!

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