The Future of Directorship

On the 14th of March 2012 David Gonski made a presentation at the Australian Institute of Company Directors luncheon on the future of directorship.

His speech was thought provoking and whilst I didn’t agree with his position on all of the topics, the consensus on our table was that his views were thoughtfully developed and he was open to counterpoint views.

He contends that the most significant issue facing company directors in Australia at least, is that the general public doesn’t understand what directors do. Due to the complex nature of legal frameworks and competing stakeholder interests, perhaps many directors also aren’t sure what the requirements are to discharge their respective duties.

David Gonski at AICD Perth
David Gonski at AICD Perth

The public, perhaps many in government and some of judiciary think directors can be – and are – on the top of everything going on within the business – and this is simply not possible, particularly in businesses that are complex, and globally distributed.

In the past the paramount onus for directors has been to look after the company and its shareholders. Now that is no longer true, nor sufficient.

There is a responsibility to many different stakeholders, and it becomes a complex issue in determining how to manage them.

  • Shareholders may be very transient, having shares in the company for no more than 20 minutes during a trade – so acting in the shareholders long term interests in this scenario can seem somewhat counterintuitive.
  • Monitoring of the business is constant, and information is transferred to the web almost instantly.
  • Shareholder activists are not necessarily acting in company interest but one of an alternative agenda.

Gonski’s view – even given this complexity –  is that the duty of the director must be about company first and foremost. However in the current day and age, consideration must be given to the community “licence to operate” and market place perception, as well as purely the fiduciary duty to act.

Singapore provides an interesting case study in applying board diversity, says Gonski, and a model to follow. They have taken an view that diversity of age, gender, business discipline and geography is vital to achieve a robust world view, and better decision making, and have structured their boards accordingly.

Minds of directors need to be broadened, and Gonski encourages directors and CEO’s to have interests other than business to be more well rounded.

A few other observations:

Gonski states that the issue of executive remuneration is significant, and the distinction between the haves and have-nots will be better resolved with more communication. In a free market system, the need to get the best person, need to reward appropriately is important. Companies have typically done a poor job of explaining how they have arrived at their conclusions and remuneration reports. A pop star earns vast amounts of money yet a CEO is not considered to be in the same class in terms of talent or deserving of the same sort of rock star money.

My view is that this is one area where no amount of communication is going to allow the general public to feel comfortable with companies on one hand cutting jobs and on the other hand handing out large executive bonuses, irrespective of the level of explanation. There has been too many poor examples of poor company performance and high bonuses in recent times. Income inequality is growing significantly.

On AGM’s
Gonski’s point of view was that the current structure of AGM’s being a means of forcing votes for decisions isn’t ideal. He contends that the AGM could operate as more of a discussion forum rather than decision making, and as a means of building engagement with shareholders.

I believe this to be a really interesting idea, one that will need some work to execute well. If the prize is a much more engaged (and it theory, loyal) shareholder base, it will be a good outcome. Companies of course have to listen to their customers on a daily basis – particularly given the rise of social activism.

On Governance
David Gonski’s view is that the public are not ncessarily convinced directors on top of governance for their businesses. To my mind that highlights the points of the general public not understanding the role of a director, and the sensationalism of waste, excess and job cuts.

A concern expressed from the audience was that sometimes fear and a short term focus can lead decision making away from growth and towards a risk adverse approach. Committees focussing on specific risk areas are a very positive approach and do yield results.

Qualities in good directors

  • Need an open mind
  • Must be hardworking
  • Need to be able to put across their point of view strongly without offending or breaking down the collegiate atmosphere needed in a board setting

On Politics, Business and Academia

David Gonski expressed disappointment in that it is rare for politicians to have experience in business – and also academia. Business people rarely end up in politics, so as a result it is not diverse, and this is different to the USA in this regard.

Gonski’s closing message was the important of respecting people for what they do both in the workplace and personally. He certainly won over the audience with his clear thinking and well expressed point of view – the clear qualities of an excellent chairman.

Importantly he also got people talking about the issues he raised, and we had a lively debate on our table as a result. I hope that this post serves to stimulate more, and if you have the opportunity to hear David speak, take it….

 

Online Business Strategy Case Study

This presentation provides an overview of what you need to think about in putting together an online business strategy. Enjoy!


Enterprise 2 – Collaborations New Frontier and its Profound Impact on the Enterprise

Here is a recent presentation I’ve completed on this topic, hope you enjoy!


Information Management Challenges in Enterprises

Recently I attended the Institute for Information Management session on Fremantle Ports‘ journey  with information management.

As a part of the session there was an extended discussion on why champions of information management struggle so much in getting buy in from people working in the business to apply good information management practice.

One of the biggest blockers is that some of the  traditional champions of these types of systems still talk about  electronic documents and records management systems. With the invention of DVDs and CDs, the term “record” is as old fashioned as is the notion of a company librarian.

The internet has somewhat liberated us  from the drudge of finding relevant information, however so many people could  find that some simple help on search would be far more practical  assistance.

The common enemy for information managers is the shared drive, and the reasons shared drives are attractive to business users are obvious:

  • fast
  • visual
  • easy to understand
  • drag and drop
  • easy to create from other similar structures used at previous employers
  • cheap, no software cost
  • no change management or training required

However there are plenty of downsides, and the problems manifest more greatly the larger the organisation

  • cannot find information  created and saved by other team members
  • ediscovery  legal issues
  • security  as to who can access which documents
  • version  management through many documents called final or versioned simply by date without regard to contents
  • no ability to easily discover relevant information created by others

Whilst many people that are working in the industry consider they are making headway, the reality is that they only make significant change when the two challenges faced here are brought together.

In the former instance the advantage of a shared drive structure is most felt by the individual. In the latter case, the benefit of using an enterprise content management platform primarily benefits the business as a whole. Clearly then, the technology needs to get out of the way and get back to being a really helpful tool for people creating documents and  using information today.

It is also important to recognise that there are different kinds of information management needs. Individuals often make their own choice of when something is valuable enough that it needs to be versioned and kept, or when it is still very much in a creation stage and not ready to be considered final. The challenge exists in circumstances where many projects start as ideas and stop soon after. It often only becomes apparent what should be kept after the project is complete, and in many cases people are under job and time pressure without the time to go back and appropriately document all that was covered.

I’m a big fan of some of the social business tools that exist, particularly around projects. These tools are of most advantage when you have participants in the project are remotely located and aware of ideas and information is shared in the project. Basecamp is a classic example of one of these tools and there are a range of others such as Jive, Socialtext, Confluence, Cubetree and many others.

If you are interested in a series of tools that I use in running my business that are cloud-based please see June edition of Emergination in Action.

Is the Executive Remuneration debate clouding all judgement on director liability?

I attended a briefing held by the Australian Institute of Company Directors (AICD) called Directing Tomorrow Today: The Essential Director’s Update. For me this is a must attend event, as there is a wealth of quality information provided on current issues relating to the essential process of quality company directorship.

There is an enormous amount of work that AICD undertakes on the members’ behalf to advocate for appropriate legal frameworks and legislation changes. One particular area of the debate which has taken an extraordinary turn for the worse is the expectations around personal liability for company directors.

Let us not forget why the formation of limited liability companies were created in the first place – to limit liability to shareholders in order to raise capital to grow. However the overwhelming and I think highly disturbing trend is that the liability is certainly transferred away from shareholders and directly and personally placed onto the shoulders of company directors. A recent survey conducted by Australian Federal Treasury has clearly shown that it is affecting decisions to take on directorships. Here are a couple of key points quoted from that survey by Gabrielle Upton, Legal Counsel AICD,  in the February issue of Company Director magazine:

  • 71 per cent of respondents had declined the offer of a company directorship because fo the risk of personal liability
  • 62 per cent of respondents believed their boards had lost a potential or suitable board member because of that person’s concern about the risk of personal liability
  • 87 per cent knew of other people who had declined an offer of company directorship because of the risk of personal liability; and
  • 75 per cent knew of other people who had resigned from a company directorship because of the risk of personal liability

Why is this occurring?

The fallout from the Global Financial Crisis, some large scale corporate collapses created a real change in regime and compliance activities.

In addition the continued greedy behavior by a small number of directors in top companies has led to rewards for this small percentage completely out of alignment with corporate performance. In short pay has gone up, performance has gone down. In addition, the pay packets for these individuals are way out of kilter with the expectations of most of the population. Those people who act in the interest of personal greed, instead of the interests of the shareholders, deserve every bit of the criticism they get.

Unintended Ramifications of this Activity

There is a high calibre of corporate governance in Australia. Part of this is due to the separation of the powers of the Chairman of the Board, and the CEO that applies in Australia. Another big part is the emphasis on non executive directors being part of boards.

However the risk / reward trade-off has become so significant that mighty steps need to be taken in order to ensure that the director pool continues to grow AND that directors don’t become obsessed with risk to the detriment of company performance. You could understand this too if your career and everything you own and have worked for was at stake too.

Yet, the issue of the greed of a few is desensitizing those involved to the potential plight of the genuine director – and they receive little sympathy.

There are more than 660 state and territory laws that impose personal liability on individual directors and officers.

660 laws that impose personal liability on the people that are directing a company. That is outrageous. The most damning thing is that some of these laws come from a context of providing proof of innocence rather than proof of guilt. Imagine that being applied in any other setting? I don’t know the details of the bill of human rights, however the right of innocence until proven guilty is something we all take for granted.

The counter argument is that we must have suitable deterrents for those earning the big dollars that are a sufficient penalty. I have no issue with that. Let’s however be clear on the principal at play: the director that has acted honestly, in the best interests of the shareholders, that has sought advice when appropriate, has inspected and checked that risk is being managed effectively and making reasonable decisions based upon the facts presented SHOULD be protected by law. Those that act dishonestly deserve to be punished mightily.

The Unintended Affected

It is vital to understand that the liabilities and responsibilities of being a director remain the same (other than specific rules applying to listed companies, such as continuous disclosure) if someone is working in a small company, or contributing their time as a director for a not for profit board.

There is a huge amount to consider as a company director to discharge responsibilities properly and effectively. The reward should be commensurate with the risk. If the risk is inordinate, then rewards to match will be demanded – and many of the best and brightest minds will pursue other opportunities.

Put this in comparison with the standards expected and the respective pay packets of Australian Rules Football players, many of whom earn many multiples of the salary of the prime minister of our country.

As with the global financial crisis… never in the field of business governance should so many be angry at so few.

Using Twitter to deliver more power to a presentation

Edge of the Web 2008 logo

At Edge of the Web 2008 I discovered something that I hadn’t seen before – over a third of the audience was using Twitter as opposed to taking notes. And it was a good thing…

If you are giving a presentation, do you want 100% of people’s attention? You might think so, but perhaps not anymore. If you have 100% of people’s attention, you don’t get:
1. Twitter feedback
2. Wider audience outside of the presentation
3. Exposure beyond the slide deck
4. New connections
5. Access to audience insight

Here is another example of this at work, see colleague Eric Brown’s post on Jeffrey Veen’s experience….

Twitter is one of those tools that becomes indispensable… but only by using it. It is also one of those tools that doesn’t immediately appear to be really useful when you first look at it. Feedback from some of the people that I talk to clearly shows this.

Please share your experiences with Twitter that have proved valuable… and to ensure we have balance, any that have been not so valuable as well…..

Obama’s Oratory Skills…

A colleague of mine, Thomas Murrell at 8mmedia has just emailed me with his observations on Obama’s oratory skills. This post is not meant to be political, but Tom’s review of the way President Obama speaks provides a good insight into how great speakers do the job. Tom coaches people on how to present (amongst other things that he does). I’ve included Tom’s observations here unaltered….

History has been made. There is a new leader of the most powerful country on earth. Democrat Barack Obama defeated Republican John McCain to become the first African-American president of the United States. Obama gave a victory speech before a crowd of 125,000 ecstatic supporters gathered in Chicago’s Grant Park.
He’s young, lacks experience but is a superb speaker. So what can we learn from Obama’s oratory skills that you can implement for your next speech?
Here are my insights into his outstanding speech making and speech giving skills.
1. A Warm Welcome
“Hello Chicago”. These were the first words he said in his speech.
Simple, direct, warm and authentic. The audience loved it.

2. Start With A Rhetorical Question
After the welcome, Obama opened with a question.
This is a powerful way to engage an audience straight away.
“If there is anyone out there who still doubts that America is a place where all things are possible, who still wonders if the dream of our founders is alive in our time, who still questions the power of our democracy, tonight is your answer.”

3. Visual Metaphors Linked To Active Words
These always inspire people and make the intangible, tangible.
“It’s the answer that led those who’ve been told for so long by so many to be cynical and fearful and doubtful about what we can achieve, to put their hands on the arc of history and bend it once more toward the hope of a better day.”

I love the concept of bending an arc towards a better future.

4. Linking Words Together That Sound The Same
“And to all those who have wondered if America’s beacon still burns as bright – tonight we proved once more that the true strength of our nation comes not from our the might of our arms or the scale of our wealth, but from the enduring power of our ideals: democracy, liberty, opportunity, and unyielding hope.”
Highlighted are those words that sound magnificent when said together out loud.
This is writing for the ear not the eye.

5. Show Vulnerability
“It’s been a long time coming, but tonight, because of what we did on this date in this election at this defining moment, change has come to America.”
“I was never the likeliest candidate for this office. We didn’t start with much money or many endorsements. Our campaign was not hatched in the halls of Washington. It began in the backyards of Des Moines and the living rooms of Concord and the front porches of Charleston. It was built by working men and women who dug into what little savings they had to give $5 and $10 and $20 to the cause.”

6. Acknowledge Your Key Stakeholders
“It grew strength from the young people, who rejected the myth of their generation’s apathy, who left their homes and their families for jobs that offered little pay and less sleep.”

7. Opposites In The Same Sentence
This technique increases the “stickiness” of your message by creating cognitive dissonance.
Here’s what I mean with the first two of many opposites highlighted.
“It’s the answer spoken by young and old, rich and poor, Democrat and Republican, black, white, Latino, Asian, Native American, gay, straight, disabled and not disabled – Americans who sent a message to the world that we have never been a collection of Red States and Blue States: we are, and always will be, the United States of America.”

8. Put A Time Context To Your Message
“What began twenty-one months ago in the depths of winter must not end on this autumn night.”

9. Personal Stories
This technique always connects with people at an emotional level.

In his speech, Barack Obama told the story of a 106-year-old woman who knew Dr. Martin Luther King Jr. as a child.

“This election had many firsts and many stories that will be told for generations. But one that’s on my mind tonight is about a woman who cast her ballot in Atlanta. She’s a lot like the millions of others who stood in line to make their voice heard in this election except for one thing – Ann Nixon Cooper is 106 years old. She was born just a generation past slavery; a time when there were no cars on the road or planes in the sky; when someone like her couldn’t vote for two reasons – because she was a woman and because of the color of her skin. And tonight, I think about all that she’s seen throughout her century in America – the heartache and the hope; the struggle and the progress; the times we were told that we can’t, and the people who pressed on with that American creed: Yes we can.

At a time when women’s voices were silenced and their hopes dismissed, she lived to see them stand up and speak out and reach for the ballot. Yes we can.
When there was despair in the dust bowl and depression across the land, she saw a nation conquer fear itself with a New Deal, new jobs and a new sense of common purpose. Yes we can.
When the bombs fell on our harbor and tyranny threatened the world, she was there to witness a generation rise to greatness and a democracy was saved. Yes we can.
She was there for the buses in Montgomery, the hoses in Birmingham, a bridge in Selma, and a preacher from Atlanta who told a people that “We Shall Overcome.” Yes we can.
A man touched down on the moon, a wall came down in Berlin, a world was connected by our own science and imagination. And this year, in this election, she touched her finger to a screen, and cast her vote, because after 106 years in America, through the best of times and the darkest of hours, she knows how America can change. Yes we can.”

10. A Great Call To Action
Every speech must end with a strong call to action.
“The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term. But, America, I have never been more hopeful than I am tonight that we will get there. I promise you: We as a people will get there.”
“America, we have come so far. We have seen so much. But there is so much more to do. So tonight, let us ask ourselves – if our children should live to see the next century; if my daughters should be so lucky to live as long as Ann Nixon Cooper, what change will they see? What progress will we have made?
This is our chance to answer that call. This is our moment. This is our time – to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American Dream and reaffirm that fundamental truth – that out of many, we are one; that while we breathe, we hope, and where we are met with cynicism, and doubt, and those who tell us that we can’t, we will respond with that timeless creed that sums up the spirit of a people:

Yes We Can. Thank you, God bless you, and may God Bless the United States of America.”

Microsoft Azure and Cloud Computing

Information is now hitting the web about Microsoft Azure and how this benefits Cloud Computing.

Microsoft Services platform

Reactions so far seem mainly positive from the Cloud Computing newsgroups that I subscribe to.

Microsoft’s market position is to leverage the environment they have and increase availability to the Cloud. Their advantage has always been around architecture, and for many organisations “Architecture = Microsoft” has simplified a very complex debate – and cut short many a 12 month engagement for budding enterprise architects. The key message coming through is “these are very familiar environments for developers and your support engineers”.

Will be interesting to see the feedback over the next short while and please feel free to post your feedback comments here. In the meantime you can find out more at Azure.