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Theme Paper

15th London Global Convention on Corporate Governance and Sustainability

Effective Corporate Governance and Sustainability: Mandate of the Board

Prof. Colin Coulson-Thomas*

The governance of enterprises of all types and sizes has an impact upon the daily experience of many people. The inventiveness of companies will determine our prospects for the future. Many people spend much time, including their most creative hours, either working for businesses, interacting with them or benefiting from what they do. These companies supply us with incomes and/or goods and services. Taxes on the value they produce fund our public services.

Business, political, professional and thought leaders, opinion formers, regulators and others will be shortly assembling in London to consider recent developments and emerging trends in both corporate governance and sustainability. This annual gathering represents an opportunity for updating, networking and identifying future priorities. It is a forum for discussing issues, celebrating successes and determining next steps.

Corporate governance is particularly associated with issues concerning listed or quoted companies, due to a clearer separation of ownership and control. In many countries effort has also been devoted to improving the governance of public bodies. The convention is an opportunity to also explore the applicability of its principles to small and medium sized enterprises (SMEs), family businesses, social enterprises, the voluntary sector and professional bodies. Are there other arenas such as the world of trade unions that would benefit from a review of prevailing governance arrangements?

The Governance Challenge

How should those with the power to influence governance arrangements best ensure that enterprises pursue appropriate aims, engage in relevant activities, and use capabilities and resources effectively and sustainably? How can they either prevent or reduce the risk of individuals and cliques in positions of power within companies taking advantage of their positions and pursuing their own interests, for example by paying themselves excessive remuneration?

In the case of family businesses, owners or trustees of their interests may be intimately involved, perhaps attending board meetings. Where ownership is widely spread, shareholders may need to wait for periodic communications such as an annual report and accounts in order to assess how directors have performed. They are dependent upon the judgements of others. The protection of their interests can partly depend upon governance arrangements and how they are implemented.

Appropriate governance structures can be accompanied by the inappropriate behaviours of directors. Given the nature of human beings and the extent of temptation, many investors do not entirely trust governance arrangements or the judgements of others. By investing in a diversified portfolio they endeavour to spread their risks and avoid excessive exposure to particular boards that may under perform, for example by taking mistaken decisions or missing opportunities.

General or Specific Responses

For many people corporate governance is associated with principles and/or best practices set out in codes of practice. Such documents can suggest standards and norms and result in assumptions that if deviations from them need to be explained, they may also result in adverse reactions from others. Might this inhibit innovation and diversity to address particular circumstances? In other walks of life a departure from standard could indicate a bespoke approach, and that one has gone beyond a norm and taken the time to address the requirements of interested parties in a specific situation. Customers often pay a premium for a response that meets their individual requirements.

Delegates to the forthcoming global convention will include a substantial contingent of business leaders from India, many of whom may be chairmen and managing directors. Should one immediately challenge these distinguished participants and condemn those who appointed them for flouting a key objective of UK corporate governance by giving too much influence to one person? Alternatively, should one recognise the distinct nature and Indian context of their organisations?

One can understand collective efforts to identify fundamental principles such as seeking to prevent an unhealthy concentration of power, but in relation to corporate governance the duties and responsibilities of directors are set out in legislation. In many countries Companies Acts are quite specific in terms of what directors should and/or should not do. Beyond this while some might benefit from guidance, to what extent should governance be standard as opposed to appropriate to the context? How can one best encourage people to both learn from others and adopt the best course of action in a particular situation and context?

Relating Governance to the Context

Is there too much prescription and too little guidance? Has corporate governance in practice become a bureaucratic and legalistic process of compliance with standard and external approaches, codes and models that seem detached from the process of business building and satisfying stakeholder interests? Some independent directors endeavour to justify their presence at the boardroom table by posing periodic questions relating to assurance, compliance, risks, standards and codes, but many boards delegate the observance of codes – or doing just enough to justify ticking a box – to a member of the corporate legal or company secretarial team. They are not necessarily thinking about better ways of operating, or how they as a board might add more value.

Why should one assume that even similar, let alone the same, approaches and models should apply to an entrepreneurial start up, a long established local family business, a diversified international conglomerate, a professional or charitable body, or a Governmental organisation? In all these areas boards have been encountered that have endeavoured to adopt a general and standard governance code. Why should anyone imagine that a particular governance model would be appropriate at all stages of an enterprise’s development from start-up and through the introduction of new lines of business, international expansion, technological changes, mergers and acquisitions, competitive challenges and changing market, regulatory, economic and social contexts?

One frequently encounters directors who are frustrated at being offered basic principles and general solutions rather than advice on the best governance arrangements for the situation they are in at their company’s particular stage of development. A Martian on being told of the basic principles of corporate governance, and aware of the extreme diversity of organisations, situations and contexts and the fundamental nature of changes and developments that occur, might wonder at the lack of variety in governance approaches, models and practices and the relative infrequency of change.

Customers and Vested Interests

Early pioneers of corporate governance gave their time voluntarily to prevent the recurrence of certain abuses, introduce checks and balances and establish potentially beneficial principles. Would a cynical Martian surveying the scene today suspect that the main customers for corporate governance are those who comment on draft standards codes, influence their development, and derive income from advising on their implementation? Consultants, auditors and accountants are easier to train and the production of manuals and methodologies is more straightforward if there are standards and norms, and if most boards are persuaded to follow them rather than think for themselves. Would too much innovation and diversity lead to a loss of influence and control?

The more extensive and complex rules, regulations, codes and standards are, the greater the revenue opportunity for external providers of assurance, governance and reporting services, and the more likely it is that boards will delegate ‘compliance’ to a head office expert to ‘sort’ and ‘report back’ rather than themselves discuss the issues. Given that much of the governance infrastructure is designed to prevent a recurrence of past ‘scandals’, maybe boards should do just enough to comply in some areas, while focusing their attention on priority challenges and opportunities and remaining alert to new and emerging areas of risk that the governance community has yet to address.

Corporate governance is not an unfrequented backwater. Governance academics, advisers, consultants, committees, codes and publications abound. The cost of keeping such highly qualified people in the manner to which they have become accustomed in salaries and fees is not insignificant. Yet where is the return in terms of either fewer issues or innovation, relevance, proportionality, and bespoke responses that are easy to implement, and which build director competence and board effectiveness and contribute to sustainable business development and the achievement of key corporate and stakeholder objectives? Where is the creative exploration of better alternatives as opposed to occasional reviews of our inheritance from governance pioneers?

Governance and Innovation

Does governance deter risk taking? Some entrepreneurs whose businesses are growing rapidly approach governance with a sense of trepidation. They recognise that greater scale, international operation and new activities and technologies may require new perspectives and different ways of operating at board level. They may face particular problems such as succession when founder directors step back, or how to maintain family control as new people are brought in. However, they may also worry if a standard approach might be appropriate for their business and whether the relatively bureaucratic, more formal and complex approaches being suggested and a greater focus upon compliance might reduce healthy diversity, stifle creativity and inhibit innovation.

Will new procedures being suggested by advocates of more formal governance processes be so time consuming to implement that those with ideas for better ways of operating may lie low rather than suggest changes? Where various business units need to operate differently will subjecting them to common approaches and disciplines act as a straight-jacket? Should different companies within a diversified group have their own governance structures and practices according to what is most appropriate for their individual circumstances?

For many growing businesses and family companies around the globe, would adoption of the prevailing governance structure with its origins in the particular governance problems of listed companies in certain countries damage what is different and special about each of them? Would a better option be to address each case on its own merits, and build upon what already works and put in place governance arrangements that match the aspirations and requirements of each set of stakeholders for the next stage of development of each entity?

Assessing Corporate Governance

Given the profile of governance, should we expect more than just an association between the observance of codes and performance? Should we expect a direct cause and effect link and measurable benefits? Are there fewer business failures? Is there less favouritism, fraud and corruption? Has director remuneration moderated? Are boards taking smarter decisions and better informed, more vital and adding more value? Have entrepreneurs ascribed their success to boards and corporate governance arrangements? Are the later more relevant, flexible and conducive of innovation and value creation? Are governance danger signals still apparent in boards?

How should one measure governance success? Is it observance of principles, compliance with codes and laws, or the degree of challenge and/or the quality of thinking, debate and decisions in the boardroom? Should a board assess itself and/or commission an independent evaluation and/or seek the external views of investors and other stakeholders? Are there indications of external recognition such as awards? What criteria should be employed: vision, strategy, accountability, implementation, risk management, growth, profitability, innovation, sustainability or transparency?

Is corporate governance more relevant to some functions of the board and less relevant to others? Does it make certain dilemmas faced by directors and boards easier to handle? Does it favour the interests of some stakeholder groups over others? Are particular activities from visioning and delegating to implementing strategy and reporting noticeably better or worse? Could any changes be explained by factors other than corporate governance? Where does it rank in terms of impact, compared with say director and board development or bringing new blood into the boardroom and changing the composition of the board as a company grows and develops?

Continuing Requirements

Governance arrangements should reflect how people are rather than how we would like them to be. What about digital governance? What arrangements and policies should be in place to address risks such as hacking, money laundering, terrorism, the funding of banned and suspect organisations and the stealing of personal and corporate information and intellectual property? A proportion of people may be out to take advantage of any loophole or opportunity, but surveillance, monitoring and counter-fraud initiatives can raise legal, moral and practical issues and can also compromise trust.

Is corporate governance unduly defensive? Could we use the expertise of the governance community more pro-actively and creatively and to better effect? For example, what about the governance of criminal and/or terrorist organisations? If we better understood the governance of these networks, how leadership is exercised within and across them and how control is maintained, maybe we could find new ways of disrupting, disabling and/or neutralising them.
Are boards ticking boxes to get governance out of the way in order to focus on business building, or are they investing quality time and effort in reviewing governance arrangements and investing in re-shaping them to contribute to the next phase of business development? If directors are doing just enough to show willing, how do we move on from compliance with general codes, rules and regulations to getting governance arrangements right for particular enterprises?

Disaggregating Governance

One alternative to a standard code would be a series of codes and/or guidelines to address the distinct requirements of different types of entity and/or sectors, or organisations facing particular challenges and opportunities. Each would need to be periodically reviewed and updated to remain current, but who would do this and under what auspices? Would a family of codes, while it may have advantages, be a staging point en route to boards putting in place governance arrangements appropriate for the entities for which they are responsible? Should this be a statutory duty with the lazy adoption of a standard model a possible indicator that directors are not doing their jobs?

Is separate guidance required concerning governance in particular arenas, for example, innovation, knowledge, risk or talent management, IT or strategic planning? As in other areas, potential adopters would need to ensure that general guidance is not inappropriate for particular companies. In some sectors intelligent steering rather than annual corporate planning may be required. Guidance relating to education and training and human capital growth might not be a priority for a company with a strategy of replacing people with robots, drones and self-help systems.

Governance is preoccupied with preventing downsides. The need for vigilance is justified by reference to corporate scandals, with the same few names regularly trotted out in articles and speeches. However, what about upside potential? For every negative example, there may well be hundreds or thousands of boards that are missing opportunities, taking well meaning but less than optimum decisions, and not operating as effectively as they could for a variety of reasons. What is governance contributing to this wider problem of improving the competence of directors and boards that could not be accomplished by other means such as director and board development?

Challenging Assumptions

One might expect shareholders to be vigilant in looking after their best interests. This is particularly true of entrepreneurs and the worlds of SMEs and family companies, where shareholders often keep a close watch on their investments, or are intimately involved in ‘building the business’. Many corporate governance approaches and codes have evolved to address a different situation, namely a separation of ownership and control and the reality that many investors have a diversified portfolio of investments and/or invest via institutions and their pensions. Hence they have less motivation to be actively involved in the affairs of any particular company.

There are quoted companies of national and international significance where few if any individual shareholders can exert much influence on their affairs. But the question of the relative advantage of standard and bespoke approaches still applies. The ideal governance requirements of an integrated utility considering a new generation of nuclear power stations may not be the same as that of a seasonal fashion business, or a restaurant chain or an e-business in terms of board composition, frequency of meetings, agendas or how the business of the board is conducted. Why do those whose governance experience derives from some arenas assume it is relevant in quite different contexts?

Certain assumptions and widespread practices need to be challenged. For example, why do so many boards put such a high priority upon recruiting a high powered CEO? Elevating one person far above executive colleagues in standing and powers can encourage an unhealthy concentration of power and the hierarchical forms of organisation that are associated with it. Does current corporate governance assume certain forms of organisation? Is it equally relevant to the internet age and the different models of operation that are emerging and which can quickly mutate and enable relatively small numbers of people to rapidly build valuable businesses.

Governance and Sustainability

What if anything is contemporary corporate governance contributing to sustainability? How have governance approaches changed to address sustainability considerations? Governance and sustainability ought to be natural complements as continuity, effective challenge, the efficient use of resources and the best long-term interests of organisations and their stakeholders are concerns of practitioners in both arenas. Are they engaged in a productive dialogue? Governance itself needs to be sustainable and it needs to embrace sustainability.

It is easy to become lost in generalisation and the rhetoric of governance. What do terms such as ‘transparency’, ‘integrity’ and ‘ethical’ mean in relation to sustainability? How open should one be in competitive markets about risks and future problems, while not being alarmist and while awaiting related developments? Apart from corporate governance responses, what else are boards doing to reflect greater public interest in sustainability considerations? Are people with sustainability credentials being brought onto boards? How does one assess whether or not individual directors and a board collectively are environmentally sensitive and aware and alert to sustainability issues?

The greater use of mobile devices and social media mean that the consequences of corporate failure in sustainability and other areas can be more evident and disseminated more quickly and to greater numbers of people than ever before. Some responses cannot wait until the next board meeting. Directors and boards face a host of new and emerging challenges and opportunities, a proportion of which may raise issues relating to direction, policy and/or strategy. In order to cope, directors may need to review governance arrangements and operate in new ways. Lets look now at some of the specific questions that speakers could address at the 2015 London Global Convention.

Global Perspectives on Governance

How are contemporary approaches to governance perceived in different parts of the world? Do views vary in respect of different types of entity at particular stages of growth and development? Are new dimensions and practices emerging in relation to the implementation of compliance and risk frameworks? How applicable are good governance principles to SMEs and family businesses?

Is consolidation or fragmentation occurring at an international level? Will the next generation of codes, regulations, approaches and guidelines contain more common elements, or will they be noticeably different in order to accommodate local issues and requirements? Will providers of finance and certain international institutions prefer some approaches over others? Will the corporate governance landscape favour or inhibit joint ventures, mergers and acquisitions?

Are distinct areas of national or regional focus emerging? Do we need different approaches in an Asian context or other regions of the world? Could or will China seek to exert influence and promote a particular approach to governance? Are competing models and approaches converging or moving further apart? Should we be thinking in terms of ‘global’ best practices, and if so what are they and how does one judge their applicability in a particular situation and context?

Building Tomorrow’s Boards

How should boards renew and reshape themselves for tomorrow’s pressures, priorities, concerns, challenges and opportunities? Is there an ideal board composition for driving business development and sustainable growth, or does it all depend upon the context? What constitutes a high performance board? How do directors and board chairs create a high performance board and best leverage and apply its contribution, and build high performance organisations?

What are the priorities in respect of diversity, whether of thinking or composition? How should one best improve diversity, relevance and quality? A collection of carefully chosen and excellent people does not necessarily constitute an effective board. How does one persuade a founder chairman and chief executive to separate a focus upon building the business from a focus upon the more effective operation of the board? What role should institutional investors and other owners and executive and independent directors play in building more effective boardroom teams?

How should one set about building tomorrow’s boards in emerging markets? Are certain roles different from their equivalents in more developed contexts? Do control structures need to be different and contextual? How should independent directors be selected, used and supported? In respect of family companies, what parallel developments need to occur in relation to the governance of family interests? How should one handle the departure of first generation entrepreneurs?

Stakeholder and Shared Leadership Issues

How should roles and responsibilities for building mutually beneficial relationships with different groups of stakeholders be allocated within the boardroom team? Are there better ways of engaging stakeholders and involving them, whether to increase awareness and/or understanding or to stimulate supportive action and benefit from it?

What role should the company secretary play in the boardroom? How can chief financial, legal, risk, knowledge, talent and technology officers better support boards? How might these players with a professional interest in good governance share views, discuss issues and coordinate their responses? What can they contribute individually and collectively to ethical business practices and organisational integrity?

In some companies more attention could be paid to what members of the senior management team could do to better support the board. Whether by better understanding the function of the board and the distinct liabilities, duties and responsibilities of company directors or through better reporting mutual appreciation and support could also be increased.

Sustainable Development

How does one match the desire, intention and rhetoric of sustainability with practical initiatives that change behaviours in desired ways without putting a company at a cost and competitive disadvantage? What questions should directors be asking to embed sustainability in a competitive business strategy? What leadership should a board provide to develop a more sustainable business model or paradigm, and to help staff, customers and the users of goods and services make more sustainable decisions?

Where there are calls from politicians, commentators, social and traditional media, and others for growth and development that is inclusive as well as sustainable, how should boards respond? To what extent should they skew decisions to favour particular groups, or to achieve social objectives that may or might not be priorities for other stakeholders? Does being responsible extend to social engineering and becoming involved in areas that are properly the province of Government?

Boards have to make choices. In relation to sustainability, what are ‘green credentials’ and how should one assess their achievement? How is a company portrayed and perceived in social media, and how representative are the views that others are expressing? In relation to timing, should directors act now or later, for example when the cost of renewable energy has further reduced? In relation to CSR where should the priority be and at what point has one done enough?

Embedding CSR and Ethics in the Boardroom

Directors and boards are custodians of an organisations values. Many boards have to establish policies and principles to cover the activities of people from a wide range of nationalities, religions and political persuasions, some of whom may have very different values. Certain choices are multi-dimensional and more difficult than they may appear at first sight, and some directors find it easier to make ethical judgements than others. Should we be embedding CSR into corporate boardrooms or should we be sceptical? Where markets are free and regulation is effective, does irresponsible conduct simply lead to customers, investors and ones best employees going elsewhere?

Is there a danger that some directors may loose sight of the primary purpose of enterprise? Might certain boards contribute more to wider society, as well as immediate stakeholders, by avoiding distraction with additional and peripheral CSR initiatives, and focussing instead upon innovation and more effective and sustainable operation in their core business, where their comparative advantage is greatest and corporate capabilities are most relevant?

Are we in danger of imposing so many duties and expectations upon directors that some of them may loose the plot? In discussions of corporate values and ethics, what is the value of diverting attention and resources from a core activity where breakthroughs could be game changing to an initiative that may be inefficient in comparison but which is undertaken just to tick a CSR box and chalk up a ‘responsibility’ credential? In terms of their small scale, relative ineffectiveness and opportunity costs is the use of corporate resources for some ‘social’ initiatives ethical or unethical?

Measuring Board Effectiveness

Some boards are blessed with favourable conditions that are not of their own making, while others are hit by a succession of problems. Coping with recession presents different challenges from riding a boom, but in tough economic times there may still be opportunities to gain competitive advantage. The assessment of board effectiveness should reflect the situation and circumstances. Should it take account of professionalism as well as performance?

What are the emerging trends in relation to reporting, the accountability of directors and boards, how they are evaluated and how their individual and collective performance is measured? How should one assess performance and compliance? Are the approaches of internal and external auditors changing? How can boards best work with them to obtain the assurance that directors require? How might risk-based and risk-centric approaches help?

How many people actually read and understand annual reports and accounts? How could their value and cost-effectiveness be increased? Is integrated accounting a natural evolution or a paradigm shift? What are the implications of integrated accounting and/or applying international reporting standards for boards, stakeholders, governance and sustainability? What standards should family companies observe? Would confidence accounting clarify or complicate?

Evolution or Revolution in Governance

Do we need a revolution in governance, a new model, a family of different approaches for various situations, or is it just a question of a shift of emphasis and change of balance? For most of our history the effective use and re-use of scarce resources has been essential for survival from one spring to the next. Every day objects could be passed from generation to generation. Sustainability meant continued existence. After many millennium one might have expected the avoidance of inefficiency and waste to be in our genes and sustainability to be an integral element of governance.

Given extensive frameworks of laws, regulations, checks, assurance and compliance mechanisms and the number of people from auditors and independent directors to regulators, officials and those concerned with policing and fraud prevention who are paid to check up and monitor them should one assume that most members of the community of directors are greedy and self-interested mercenaries who will be up to no good from the moment they think they can get away with it?
Alternatively, if transgressors are few in number and inherently suspect should more effort be devoted to appointing honest and competent people to boards? Would this be more cost-effective than imposing constraints upon all companies that might inhibit innovation and diversity?

Wise backers of ventures and smart individuals looking to join them have always looked for honest, competent and fair-minded people who would look after their interests and do the right thing, in either favourable circumstances or adversity. They would weigh the risks involved. While welcoming windfalls and suffering occasional losses, only the naïve would normally expect other than reasonable returns over time. Since the creation of limited liability companies, their owners, whether holders of shares in a quoted company or in a family business, have hoped that directors will be competent and boards effective and adding value rather than just acting as rubber stamps.

We can contribute to better governance by encouraging people of integrity who can think for themselves and are able to put the interests of others before their own to consider a directorial career. We can also encourage them to view any directorial appointment as an opportunity to make a difference, and to commit to lifetime learning from their experiences and that of others in order to stay current and become a better director. Members of boards have our futures in their hands so their active participation in the forthcoming London Global Convention is to be welcomed.

*Author

Prof. Colin Coulson-Thomas, a member of the business school team at the University of Greenwich and Director-General of IOD India for UK and Europe Operations has helped companies in over 40 countries to improve director, board and corporate performance. In addition to being the chairman of company boards he is a member of the General Osteopathic Council and chair of its Education and Registration Standards Committee, chair of the audit and risk committee of United Learning, the UK’s largest operator of academies and independent schools, and leads the International Governance Initiative of the Order of St Lazarus. An experienced chairman of award winning companies and vision holder of successful transformation programmes, he has held various public appointments at local and national level. Colin is the author of over 40 books and reports, including ‘Transforming Knowledge Management’, ‘Talent Management 2′, ‘Transforming Public Services’ , ‘Winning Companies; Winning People’ and ‘Developing Directors’. Since being the world’s first professor of corporate transformation he has held professorial appointments in Europe, North and South America, the Middle East, India and China. He was educated at the London School of Economics, the London Business School and the Universities of Aston, Chicago, South Africa and Southern California. Colin is a fellow of seven chartered bodies and secured first place prizes in the final examinations of three professions.

Further Information
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The 15th London Global Convention on Corporate Governance and Sustainability of the Institute of Directors, India will be held in London from 7th to 9th October 2015. Following a Global Business Meet at the House of Lords and a special session on the changing role of finance professionals in the boardroom at Chartered Accountants Hall on the first day, the conference element of the convention and the presentation of Golden Peacock Awards will be held at the Millennium Hotel in Grosvenor Square. Further details of the convention and other activities of the Institute of Directors are available from www.iodonline.com.

 

25 Aug 2015
Colin Coulson-Thomas

World Congress call for more innovative and entrepreneurial responses

Prof. Colin Coulson-Thomas

In a recent encyclical on climate change, the environment and inequality Pope Francis suggests our planet is ‘beginning to look more and more like an immense pile of filth.’ His indictment embraces rubbish, the throwaway culture, the impacts of pollutants and greenhouse gas emissions. His critique suggests that in relation to environmental governance, innovation and entrepreneurship we have more to do.

Litter is not hard to find. Will growing mountains of waste be one of our most tangible legacies? Are they just a side effect of our business activities that we can either ignore or leave to others to clear up? Or do we accept responsibility and address the issue?

In his 1960 Harvard Business Review article on marketing myopia Theodore Levitt asked business leaders the question: “What business are you really in?” Given the comments of Pope Francis, are you in the business of producing rubbish?

Do your strategies embrace built in obsolescence? Do you upgrade or change products so that older models are thrown away? Is your packaging excessive, unnecessary or non-biodegradable?

Fast food outlets can sometimes be located by following a trail of discarded cartons. Are there mechanisms that would improve market responses? Should businesses that produce or serve fast food be made responsible for clearing up the resulting rubbish?

If we fail to address environmental issues, others will. Governments and regulators will impose general solutions upon us. There is a risk that intervention might pander to vested interests? How do we ensure future regulations are effective, easy to implement and proportionate? Are there better alternatives such as incentives?

This year is the 30th anniversary of Innovation ’85, an activity I conceived for Rank Xerox. It was attended by over 20,000 decision makers. The event attracted Royal and diplomatic visitors and a display by the Royal Air Force’s aerobatic team the Red Arrows.

The exhibition covered the history of innovation. A common feature of many breakthroughs was that those causing them asked the right questions. Is effective environmental leadership, governance, innovation and entrepreneurship about asking the right questions?

Are you thinking strategically about environmental issues and asking the right questions? Collectively are we focused on reducing carbon emissions, while overlooking the extent to which our activities are also reducing biodiversity? What could your company and its supply chain do to enhance biodiversity?

Are social impacts of our built environments being overlooked? How accessible for the disabled are they? Do they create positive feelings and improve performance? Do they enable interaction as opposed to causing isolation? Do they inspire the creativity and innovation we need to address environmental issues, challenges and opportunities?

Responsible leadership is about choices – making the right calls, selecting the best alternatives, establishing priorities and balancing contending forces. Can we turn environmental challenges into business opportunities?

Are growth and development contributing to congestion, pollution and ill health? Are we protecting our architectural, artistic and cultural heritage as old buildings are swept away? Should we renovate rather than replace?

The regeneration of UK waterways and derelict docks has boosted local employment, growth and property values. Cleaning up rivers can yield leisure, health and lifestyle benefits, as well as encouraging tourism and other commercial activities.

The world’s most visited place is not a world heritage site but a shopping mall in Dubai. The most polluted shopping location in the UK is Oxford Street. If regulators, retailers and transport authorities worked together reduced traffic flows could benefit shoppers, retailers and landlords.

Responsible business can be profitable business. Could your purchasing power be used to better effect? Could you part fund a supplier’s development of more environmentally friendly packaging in return for a share of resulting revenues?

Freedom encourages innovation. New models of network and virtual organisation – and new ways of working, learning and consuming – free people from activities at particular times and places. Such developments and greater use of intelligent homes, offices, robots and support tools can deliver environmental benefits.

Should you be collaborating with others? Compelling visions can engage, excite and bring together the know-how, technology and finance needed for their implementation. If you lack resources and capabilities you can collaborate with those who have missing pieces of the jig-saw puzzle.

How compelling is your environmental vision? How joined-up are the elements of your strategy? Could your company or business contribute to smart city, town and village initiatives and benefit from them?

Don’t be afraid to cooperate with compatible partners. Some projects are so complex that even Governments find them difficult to handle. A network of collaborations may be required to build an airport or metro network, replace sewers or construct nuclear power stations.

Where cooperation is possible size is not everything when it comes to effective responses. Established companies sometimes protect existing investments, where innovative and entrepreneurial ones create new options and better alternatives. Business owners and directors should challenge entrenched assumptions.

Are there different and more sustainable models of growth? Could different policies and practices differentiate us and simplify and enhance our lives, and those of our customers, while protecting and improving physical and aesthetic environments?

Activity sometimes replaces thinking. Should you rush to meetings, answer emails or reflect? When did you last watch the tide come in and out, or a flower open and close, and quietly reflect on how helping others to address challenges might create new opportunities?

Business owners, directors and boards should probe and question strategies, priorities and approaches. Will governance arrangements cope with the speed and scale of adjustment required? How do we engage with customers and other stakeholders and ensure informed debates?

Are we getting the right balance between immediate pressures and longer-term concerns? How do we fund progress along learning curves and prepare for the future while remaining competitive?

Questions stimulate the search for solutions. Today’s questions determine our tomorrows. How do we achieve more with less? Rather than change corporate cultures, are there quicker, more sustainable and less disruptive ways of simultaneously achieving multiple objectives?

There are affordable steps that can be taken. Customers could be given support tools to help them make more responsible, sustainable and healthier purchase and consumption decisions. Better support can also make it easier for people to excel at difficult jobs, speed up responses, reduce costs, ensure compliance and deliver other benefits for people, organisations and the environment.

Innovative, responsible and sustainable responses could restore trust and lead to less intervention and greater reliance upon market mechanisms. They could also produce closer and more productive public-private collaboration, as each better appreciates the contribution of the other.

Pope Francis called for a ‘moral’ approach. Business leaders have capabilities he lacks. They can employ practical, innovative and responsible business approaches. They can engage, utilize and deploy people, resources and capabilities to develop and implement more sustainable and beneficial business strategies.
Note: These comments were made by Prof. Colin Coulson-Thomas to the 17th World Congress on Environment Management that was organised by the Institute of Directors of India and held at the Hotel Le Meridien, New Delhi, India. The event coincided with the Institute’s 25th anniversary and was attended by Ministers from the UK and India, senior civil servants and business leaders.
Prof. Colin Coulson-Thomas holds a portfolio of board appointments and has helped organisations in over 40 countries to harness more of the potential of directors, boards, management teams and corporate capabilities to improve performance and deliver multiple objectives. He is a member of the business school team at the University of Greenwich and author of some 70 books and reports. He has held professorial appointments in Europe, North and South America, the Middle East, India and China, and has spoken at over 300 national and international conferences. He was educated at the London School of Economics, the London Business School, UNISA and the Universities of Aston, Chicago and Southern California. A fellow of seven chartered bodies he secured first place prizes in the final examinations of three professions. His latest books and reports are available from www.policypublications.com.

 

18 Jul 2015
Colin Coulson-Thomas

Investigation finds many widely adopted approaches are unnecessary and counter-productive

Regulators and HR practitioners who call for culture change to prevent behaviours that led to the last financial crash are barking up the wrong tree according to research findings by the University of Greenwich’s Prof. Colin Coulson-Thomas which have just been published. The evidence of a five year investigation suggests attempts to change corporate cultures can be counter-productive and are not necessary when there are quicker and easier ways of changing behaviour, preventing undesirable conduct and ensuring compliance.

Coulson-Thomas argues that: “Calls for general and fundamental change of structure, culture or procedures should trigger alarm bells. Continuity can be as important as change, particularly continuity of relationships and consistency of experience that meets customer expectations and requirements. Changes can create new opportunities for fraud, theft, hacking and other abuses. Uncertainty during a period of transition or transformation, or while changes are bedding in, can create new loopholes and vulnerabilities.”

The Professor believes: “Customers, employees, business partners, suppliers and investors often represent a diversity of cultures, religions, values and nationalities. A variety of perspectives can spur creativity. General culture change is often advocated where there are affordable ways of quickly changing behaviour and achieving other aims with existing people and cultures. Fraud and other abuses usually result from technical loopholes and vulnerabilities rather than deficiencies of general attitudes and values.”

In summary, Coulson-Thomas suggests “many general corporate culture change programmes and associated training may be unnecessary if their purpose is to quickly alter specific behaviours in particular areas. Organisations may need to embrace a diversity of cultures and encourage a variety of approaches and behaviours across different functions and business units. Performance support which integrates learning and working can be a cost-effective way of changing behaviour, ensuring compliance, enabling people to innovate and remain current and competitive, and delivering multiple objectives without requiring a change of personnel, culture or structure.”

Coulson-Thomas points out that: “To a libertarian attempts to change attitudes, beliefs and values might be as unwelcome as the efforts of totalitarian regimes to change how their people think. One response to a desire or request for culture change could be questions such as change to what culture or to whose culture? Will the attitudes, beliefs and values of a CEO, board or consultant hired to advise on culture change be better or worse, or more or less relevant and/or appropriate to various situations and contexts than an existing mix of attitudes, beliefs and values?”

He continues: “Many HR practitioners need to question whether they are helping or hindering. My investigations of what high performers do differently reveal large and measurable differences in performance among people trained, rewarded and compensated the same way. The variability of performance across members of key work-groups raises questions concerning the relevance and contribution of many training, reward and other HR policies and practices. Wide differences are explained by how many critical success factors are in place. The extent to which the job, task or activity is done in a winning or losing way determines outcomes.”

The professor finds “Training, reward or compensation do not appear differentiators in the many sectors in which the policies and practices of competing companies seem largely the same. For key jobs such as bidding for business, building key account relationships, pricing, purchasing, or creating and/or exploiting know-how, the approaches of winners – or those in the top quartile of achievement – are very different from those of losers in the bottom quartile of achievement. Evidence from reports that have examined critical success factors for key jobs suggests that however much people are paid, whatever their culture and however motivated and engaged they are, if they approach a task or activity in a losing way they are likely to fail. Increasing motivation or remuneration in the hope of a better result while people’s approaches and the support they receive remains unchanged could be like pouring money down a drain.”

He continues: “Reward and compensation policies and practices also contribute to mis-selling and other abuses. The prospect of commission payments can bias views, distort judgements, encourage risky behaviour and result in a flouting of rules. There are other expensive practices and naïve behaviours, such as a policy of paying above average or in the top quartile to attract better people and then complaining about the cost of talent wars. Reward, compensation and other policies that companies pursue may have much less impact than those who champion them and/or have a vested interest in them claim.”

Coulson-Thomas suspects: “Many companies pursue policies that are general, time consuming and disruptive when quicker, cheaper and more affordable options exist. In relation to training, reward and other HR policies and practices a ratchet effect may be in operation. The wrong policies may have a negative impact on behaviour, while many expensive approaches deliver little in the way of positive benefits in relation to other and better ways of improving performance. Too often those in roles that are neither visible nor a source of competitive advantage or differentiation benefit the most from general remuneration policies. Supporting key work-groups is the key to success.”

Prof. Colin Coulson-Thomas holds a portfolio of board, academic, public and voluntary appointments, including being a member of the business school team at the University of Greenwich, Director-General for UK and Europe of the Institute of Directors of India and leader of the International Governance Initiative of the Order of St Lazarus. He has advised companies in over 40 countries on how to improve director, board and corporate performance. The evidence in parts one and two of an article “Learning and behaviour: addressing the culture change conundrum” published in Industrial and Commercial Training draw upon three reports Transforming Knowledge Management, Talent Management 2 and Transforming Public Services by Colin Coulson-Thomas which summarise the findings of a five-year investigation into the most cost-effective route to high performance organisations. They and some 20 studies of critical success factors for key jobs are published by Policy Publications and can be obtained from www.policypublications.com

 

02 Jun 2015
Colin Coulson-Thomas

Environmental Governance – Transitioning through Green Economy

Prof. Colin Coulson-Thomas*

The forthcoming 17th World Congress on Environment Management which is being held in New Delhi is well timed in view of international developments and new policies emerging from the Government of the host country. The event also coincides with the Silver Jubilee anniversary celebrations of the organising body, India’s Institute of Directors. It provides an opportunity to celebrate the institute’s achievements and consider issues of importance for all boards.

There are multiple challenges. The effects of climate change will impact directly upon people everywhere, although some may face issues such as food and water security, flooding and coastal erosion or bio-diversity before others. Certain challenges represent huge business opportunities ranging from clean and low-carbon technologies and sustainable and renewable energy to geo-engineering and new investment vehicles. There will be growing demands for related services.

Directors have a key role to play in ensuring that future growth is beneficial, inclusive and sustainable. Decisions taken in boardrooms can have positive and/or negative impacts upon the physical and social environments. Effective corporate governance arrangements and responsible judgements increase the prospect of beneficial outcomes and a reliance upon market mechanisms. Alternatively, a failure to see the bigger picture, a reluctance to grasp strategic opportunities and a mistaken focus upon narrow and short-term aims could lead to a loss of faith in markets and tighter and more restrictive regulation. So what are the questions that we as directors should be addressing?

Environment Governance

Lets start with governance considerations. Will our existing mechanisms be able to cope with the speed and scale of adjustment required, or will radical change, transformational leadership and new forms of environment governance be required? What leadership should boards provide? What should the agenda be and who should be consulted and involved? How do we ensure informed debates and integrated responses? Are all those who need to be approached aware of environmental impacts, challenges and opportunities in their areas?

Do we take the initiative and act alone or further reflect and seek allies? Should we engage directly with environment related initiatives where our corporate capabilities are relevant and collaborate with other organisations in the search for market solutions? Are our environment policies and responses consistent with our activities in other areas such as business development and corporate social responsibility? Are they fully integrated into our business model?

What are the views, aspirations and preferences of our stakeholders in relation to environmental issues, challenges and opportunities? Are we communicating with them and engaging with them? Is there mutual understanding and respect? How are we accounting for our performance in this arena? How do and should we report our concerns, activities and achievements? If we have not done so already, should we consider the adoption of integrated accounting?

Strengthening Markets

Will market-based solutions be enough? If Government intervention is required, what form should this take? Are we tracking regulatory developments and compliant with them? How can we best endeavour to ensure that any future regulations are effective, easy to implement and proportionate, and that they address priority issues rather than pander to vested interests? What are market trends and developments and the tone and topics of public debates telling us about the concerns of others?

How might we best use existing market mechanisms to address environmental issues, challenges and opportunities? Are there new mechanisms that would strengthen them and improve market responses? For example, carbon trading has been championed, but are there other areas in which a price could be charged for pollution and organisations allowed to buy and sell the right to pollute? Are there barriers to entry and other obstacles in the path of market based responses?

Have we identified the various parties involved in delivering what we are seeking? Effective market responses can require action at a number of levels. For example, the rapid and widespread adoption of vehicles powered by electricity, hydrogen or bio-fuels depends upon the extent to which the activities of relevant parties are consistent and synchronised. New vehicles will need to be licensed and tested and enough refuelling points provided to make their ownership viable for early adopters.

Monitoring Developments

Effective directors are aware of what is happening in the business and market environment. Is your board monitoring external trends and developments relating to environment management issues, policies and plans? For example, what will the implications of the Made in India initiative be for locations in which your company operates? Would additional manufacturing activity put pressure upon water and other supplies, or your ability to attract skilled labour at an affordable price?

Have we prioritised the issues that most impact upon us and identified potential crisis areas? When assessing impacts do we take objective and independent advice? How do we gain access to the specialist and technical expertise to help us to understand enough of the science involved to assess the significance of developments and their consequences? Are we aware of our environmental footprint and the full implications of our own activities?

Companies needs to identify and track significant developments, assess their implications and impacts and determine what needs to be done in response at local, business unit and group level. Responses could be reactive or proactive. In some cases they could involve various departments and collaboration with other and complementary organisations that have shared interests and concerns. Reading the road ahead and thinking about consequences should come naturally to a director. Should a proactive response include lobbying to influence public decision making?

Securing an Integrated Response

In relation to global developments such as climate change and immediate issues such as emissions, hazards and threats of shortages of resources, are environmental risks being identified and assessed? Are mitigating actions and assurance mechanisms in place? Do we have robust and integrated policies, processes and systems for ensuring effective environmental and risk management? In relation to our business model, can we access affordable energy and other required resources?

Boards needs to ensure that stakeholders whose activities are impacted by environmental issues participate in decisions relating to environmental policy. The interests of some functions are more obvious than others. Thus emissions from a manufacturing unit can have an tangible and measurable impact upon the environment, while the consequences for an HR team concerned with health and safety of environmental pollution might be more difficult to assess.

Are you sure that all those who need to be involved in environment related decision making have an appropriate voice? Have interests been missed? Are minority views being overlooked or ignored, or are they being taken account of in integrated responses? Is there enough challenge and debate and a sufficiently inclusive process to avoid group-think?

Cooperation and Collaboration

Because environmental changes and developments can impact upon a variety of organisations in a particular locality they can create fertile ground for collaboration. Some boards are primarily reactive and defensive. They cooperate when they feel they are being adversely effected or have interests to defend. Is your board missing opportunities to collaborate for positive reasons? Should you be more proactive in pursuing opportunities that require the complementary qualities that working with others can assemble, or the critical mass that it can create?

Are we taking a sufficiently long-term and strategic view of environment issues, challenges and opportunities? Do we have obligations to future generations of stakeholders? If so, how do we weigh them? Can we cope with the challenges and address the opportunities with our current capabilities, collaborative partners and existing legal and regulatory requirements? What changes are required? Where, when and to whom should we communicate our suggestions for reform?

Should we lobby or otherwise put our case at local, regional, national and/or international level? Who are the key decision makers and what are the the most important forums for discussing the matters that most concern us? How can we best reach and influence them? Where and when will the most important meetings be held? Are the agendas public? How do we monitor proceedings? Who could help us to assess what emerges and its implications for our strategy and operations?

Environment Cities

In India and elsewhere there is greater focus upon establishing smart cities. As a consequence, will there be less emphasis upon creating more environment cities? Will rural areas fall in priority? Alternatively, will increased networking and improved infrastructure provide new opportunities for quicker responses to environment issues and collective action to address them? A systems and joined up approach could allow more city wide responses to issues that arise. For example, a real time system could provide public information, re-route public transport and delay mass departures and journeys to reduce the impact of a serious traffic jam created by an accident.

The internet and social media enable small businesses and individuals to participate in and influence wider debates. Directors who doubt their ability to sway national and international decisions may find their voices carrying greater weight at local and municipal level. Access to politicians and officials may be easier and attendance at relevant meetings more affordable. Is there a local cluster of like-minded business leaders with shared interests? Does municipal environmental policy match the requirements of corporate strategy? Does it enable sustainable local development?

Are current arrangements to provide water, power, transportation and other services to your manufacturing, warehousing, office and/or retail locations sustainable? Does your city have an integrated and sustainable development plan covering areas such as education, housing, energy, transportation and the environment? What are the implications of this for current and future operations, customers and employees? What can you do to address any gaps?

Environment Management and Behaviour

Have environmental debates become too technical? Are they overly hard and scientific? Are we paying sufficient attention to softer issues such as environmental impacts upon behaviour? Our disposition and behaviour can be heavily influenced by our work, social and built environment.

Some environments remind us of our place within a hierarchy, while others are less constricting. Many corporate headquarters are office blocks in which people are piled on top of each other in rooms with windows looking out and away from each other. A central core of lifts, stairs and other support services further inhibits interaction. How are your corporate spaces, facilities and furnishings influencing behaviour? Are they energy efficient? What needs to change?

In many UK cities post-war housing development replaced Victorian housing with glass and concrete tower blocks. They destroyed the intimacy and interaction that occurred when neighbours used to meet each other and talk and play outside their front doors. In comparison, the limited social spaces in graffiti laden entrances to lifts and stair wells seem forbidding and unsafe. British Airways recognised the value of interaction, networking and chance meetings when designing its corporate headquarters with its meandering atrium streets, social spaces and coffee bars.

Creative Environments and Innovation

A key consideration for many boards is the extent to which work, corporate and local environments are conducive of innovation and creativity. Some environments are oppressive and depressing, while others are more uplifting and inspiring. One can specifically create an environment that encourages flexibility, dynamism and change, for example working and learning spaces and supporting technology that can be reconfigured for different purposes.

Do your working and learning environments and related arrangements inspire and enable the innovative thinking and developments required to address environmental issues, challenges and opportunities? Are your support arrangements, processes and tools conducive of responsible innovation? Do they and your business and funding models allow alternatives to be explored? What incentives would encourage the development and trial of more sustainable options?

There may be barriers to innovation to address. Entry costs to some new renewable energy technologies can be high and it may take time to move far enough along a learning curve to be competitive with conventional alternatives. In a field such as coastal erosion getting access to trial opportunities can be complex and may involve a number of parties. How does one fund developments in these areas and prepare for the future while remaining competitive?

Aesthetic and Supportive Environments

In our environmental management discussions and planning, while focusing upon the avoidance of negatives such as pollution are we devoting sufficient attention to areas where we could make a more positive contribution to improving the quality of life? How could we use our budgets for buildings, facilities, fixtures and fittings to create safer and more flexible and enjoyable working environments that can accommodate a wider range of changing needs?

Aesthetic considerations range from the briefs given to designers and architects to creating opportunities for people to participate. Most urban and many industrial environments could be greatly improved by individual and collective initiative, whether modest such as the sponsored planting of a roundabout or more strategic such as an integrated redevelopment plan. Are we prepared to do what is necessary? There are options to suit a range of budgets, but dealing with hazardous waste and contaminated land can require determination and significant effort.

UK examples, range from the aesthetic improvement of largely derelict and abandoned streets to encourage people to take pride in their immediate environment to volunteer groups meeting to clear up rubbish and cut and replant verges. One street to which residents are returning has been enhanced to the extent of being recognised as art and being nominated for the annual Turner Prize. Along the River Thames there are communities of house boats where floating gardens have been created with potted trees and shrubs on certain barges for the benefit of the community.

Inclusive Environments

Another issue is the extent to which environments are inclusive or whether certain groups are excluded. For example, how accessible and safe are our corporate, urban and other environments to the partially sighted, or those who cannot hear a machine or approaching car? At one extreme, lepers are physically ejected and driven away from some communities, but there are also many other groups who can find involvement and participation to be a challenge.

Are disability and related participation issues properly addressed in our environment management and planning discussions? Directors need to ensure that at a minimum a company meets its obligations under the law, for example in relation to disabled access if it is operating in certain countries. A more ambitious and proactive approach is required to ensure the full participation of certain groups. There are many social as well as commercial and public policy issues for environment specialists, opinion formers and business leaders to discuss at next month’s congress.

In a democracy, if growth and development are not perceived as sustainable, mutually beneficial to stakeholders, fair and inclusive, businesses and the market itself may face much greater questioning and challenge. In contrast, innovative, responsible and sustainable responses could lead to less intervention, greater reliance upon market mechanisms and closer and more productive public-private collaboration as each better understands and appreciates the contribution of the other.

*Author

Prof. Colin Coulson-Thomas, a member of the business school team at the University of Greenwich and Director-General of IOD India for UK and Europe Operations has helped companies in over 40 countries to improve director, board and corporate performance. In addition to being the chairman of company boards he is a member of the General Osteopathic Council and chair of its Education and Registration Standards Committee, chair of the audit and risk committee of United Learning, the UK’s largest operator of academies and independent schools, and leads the International Governance Initiative of the Order of St Lazarus. An experienced chairman of award winning companies and vision holder of successful transformation programmes, he has held various public appointments at local and national level. Colin is the author of over 40 books and reports, including ‘Transforming Knowledge Management’, ‘Talent Management 2′, ‘Transforming Public Services’ , ‘Winning Companies; Winning People’ and ‘Developing Directors’. Since being the world’s first professor of corporate transformation he has held professorial appointments in Europe, North and South America, the Middle East, India and China. He was educated at the LSE, the London Business School and the Universities of Aston, Chicago, South Africa and Southern California. Colin is a fellow of seven chartered bodies and secured first place prizes in the final examinations of three professions.

Further Information
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The 17th World Congress on Environment Management and Silver Jubilee Function of the Institute of Directors will be held 10-11 July at the Hotel Le Meridien, New Delhi (India). Further details of the congress and other activities of the Institute of Directors are available from www.iodonline.com.

 

27 May 2015
Colin Coulson-Thomas

Pioneers use new approaches to responsible risk taking to innovate while retaining control

There is a particular requirement for creativity, innovation and local entrepreneurship in many more places and including the Middle East according to Prof. Colin Coulson-Thomas. Speaking in Dubai to business leaders he suggested “Current consumption patterns with consumers queuing up in shopping malls to pay hefty premiums for imported brands may not be sustainable. They set a poor example for a world that needs to make more effective use of available resources.”

The professor suggested questions that need to be addressed in many countries: “Where are the local entrepreneurs and the locally designed goods and services that would better suit local needs? Where are the local architects who could use traditional methods and styles and provide alternatives to the services of international practices that better match local topography, history and climate”.

According to Coulson-Thomas “Goods, services, buildings and practices could be differentiated and developed to stress what is unique, special or different about the local situation, circumstances and context. While the vision for Dubai is an exciting one, simply importing overseas goods and services can lead to a buildings that could find a home in many cities and external fast food outlets can result in the obese children one finds waddling through shopping malls.”

The author of Winning Companies; Winning People suggests that: “If responsible entrepreneurship is to thrive business practices and approaches need to change. In particular a new balance between freedom and control is required. Building checks into the support provided to key work-groups can enable them to be set free to develop new solutions and create additional options. The provision of 24/7 support can allow people to be given new freedoms in terms of where, when, how and with whom they work. New leadership shifts the balance from monitoring people to helping them.”

After sharing new research findings from his latest investigations of how to balance freedom and control Coulson-Thomas went on to explain how applications of performance support can reconcile the requirement for compliance and prudent control with the need for greater freedom and diversity that can lead to innovation and new options and choices. He gave examples of companies that have used approaches based upon his work to transform their performance and quickly achieve multiple objectives and deliver benefits to both people and organisations. The lessons are relevant to both large companies and small businesses in many sectors.

Colin Coulson-Thomas holds board, public and academic appointments and has helped companies in over 40 countries to improve board and corporate performance. He has authored over 50 books and reports. Prior to joining the University of Greenwich he had professorial roles in Europe, North and South America, the Middle East, India and China. He was educated at the LSE, the London Business School and the Universities of Aston, Chicago and Southern California. A fellow of seven chartered bodies he secured first place prizes in the final examinations of three professions.

Prof. Colin Coulson-Thomas was speaking in Dubai at the Etisalat Academy Centre of Excellence on the subject of New Leadership and HR: A quicker, affordable and more sustainable route to high performance organisations. The findings of his investigations into less expensive, disruptive and time consuming ways of transforming performance and simultaneously delivering multiple benefits for both people and organisations are set out in three reports Talent Management 2, Transforming Public Services and Transforming Knowledge Management. They set out the change of emphasis and new leadership required and can be obtained from http:www.policypublications.com

 

25 Apr 2015
Colin Coulson-Thomas

Business leaders at global convention learn how to balance freedom and control

Prevailing practices, leadership styles and organisational structures are stifling people and inhibiting innovation according to Prof. Colin Coulson-Thomas. Speaking in Dubai at the 25th World Congress on Leadership for Business Excellence and Innovation the author of Winning Companies; Winning People told business leaders that standard practices, norms and controls can result in risk aversion and a dull uniformity.

Coulson-Thomas believes that if companies are to become more entrepreneurial, innovative and sustainable business leaders need affordable and practical ways of balancing freedom and control. Rather than constrain people he reports that governance, risk and compliance frameworks can be designed to foster diversity and creativity and set people free to develop new solutions and additional options.

The professor has led an investigation covering over 2,000 companies and over 500 professional firms. The findings are set out in three reports Transforming Knowledge Management, Talent Management 2 and Transforming Public Services. They present a quicker, cheaper and less disruptive route to high performance organisations that can be adopted by businesses at different stages of development in many sectors.

Coulson-Thomas reports: “There is an affordable and practical approach to compliance that can lead to a more innovative and sustainable business. One can balance freedom and control across a company and its supply chain with existing people and without restructuring or a change of culture, in ways that benefit both people and organisations.”

The professor believes: “Creativity, innovation, diversity and freedom are interlinked. Most of us are born with an innate desire to reach out, explore and learn. We are individuals with the ability to experience and think for ourselves, but our evolutionary journey has also taught us the value of collaboration. Collaboration creates opportunities for exchange, co-creation and sharing.”

Rules, regulations and norms may be required for effective and fair interaction, and codes and guidelines can also provide helpful advice. However, Coulson-Thomas believes there are potential downsides: ”Prescription can inhibit free expression. Too much order can stifle creativity, hinder innovation and discourage exploration. Norms and approved approaches can also lead to intolerance, exclusion and hostility towards outsiders”.

In his 1992 books Transforming the Company and Creating the Global Company Coulson-Thomas called for more flexible and responsive organisations that can evolve organically. Networks of collaborations and portfolios of projects offer huge advantages. Yet bureaucratic and hierarchical models of organisation persist, despite huge improvements in affordable connectivity.

His 1997 book The Future of the Organisation set out essential freedoms for adaptation, creativity and innovation. They were designed to accommodate different approaches, capabilities and styles. He finds: “How, when, where and with whom we collaborate, co-create, work and learn can vary according to the particular project or task, the situation we are in or the relationships we require. Our preferences and choices can also reflect our roles, family commitments and lifestyle choices.”

Coulson-Thomas believes: “Freedoms appeal to those who wish to include, engage and liberate people. Yet rules, standard procedures and mandated practices often constrain. In some environments there is little experimentation. Exceptions are rare. Directors worry about risks, setting precedents, opening loop-holes or creating problems for processes and systems.

He continues: “Many younger, creative and entrepreneurial people that organisations need to retain, involve and engage long for greater control over their lives and more opportunity to express themselves. Predictability, prudence and responsible risk taking are desirable. Yet freedom can foster innovation, create new choices and tackle tricky problems.”

We cannot blame directors for being cautious. The professor points out: “They have onerous duties and responsibilities. Some people seek personal advantage and commit fraud. The challenge is to prevent the harm they cause without inhibiting the enthusiasm, commitment and creativity of those who want to contribute and innovate.”

Coulson-Thomas reports: “It is possible to build checks into performance support frameworks and tools without incurring the excessive costs and unreasonable delays of some approaches to compliance. People can be liberated to develop new approaches, responses and solutions while avoiding commercial risks, regulatory breaches, quality issues and legal problems. Responses can be tailored to the needs of individual customers, citizens and clients.”

He continues: “Contemporary connectivity and social networking across a community can allow continually updated and personalised support to be provided on a 24/7 basis, wherever people are, including when they are on the move. Users can free to pioneer, investigate new possibilities and explore alternatives, while those in leadership roles can be confident they have taken evidenced steps to ensure compliance with legal obligations and corporate policies.

Coulson-Thomas stresses: “There is no point just speaking about the desirability of innovation. People need to be helped and equipped to make it happen.” The new leadership advocated in the professor’s reports goes beyond rhetoric and the formulation of policy. It embraces the reality of implementation and switches the emphasis from monitoring people to helping and supporting them.

Performance support solutions have transformed results and simultaneously delivered multiple benefits in many areas in a variety of sectors and across supply chains. By supplying tools that make people aware of the consequences of their buying decisions and lifestyle choices pioneer adopters have both gained market share and enabled more responsible and sustainable consumption.

Social networking can enable support provided to be critiqued. Instant updating can enable information and assistance to remain relevant and current. Early adopters have reacted quickly to marketplace, technological and other developments, challenges and opportunities. Solutions can be quickly rolled out across a global network. In the afternoon people can deploy responses to problems or requirements they did not know existed when they had breakfast that morning.

Coulson-Thomas emphasises that “Speed, focus, relevance and affordability are key requirements for contemporary business success. Companies of all sizes can embrace, retain and fulfil customers and other stakeholders from a variety of backgrounds, locations and cultures. They can become living entities and adapt, develop and evolve organically as required. Diversity and creativity can be accommodated. We can set people free while respecting their differences and ensuring compliance. In summary, one can be entrepreneurial, innovative and responsible.”

Prof. Colin Coulson-Thomas was speaking on balancing freedom and control at the Dubai Global Convention and 25th World Congress on Leadership for Business Excellence and Innovation which was held in the Ballroom of The Meydan Hotel, Meydan Racecourse, Dubai, UAE. He holds a portfolio of board, public and academic appointments and has helped companies in over 40 countries to transform director, board and corporate performance and to responsibly innovate. He can be contacted via http://www.coulson-thomas.com/. The findings of his recent investigations into quicker, more affordable and less disruptive ways of transforming performance and simultaneously delivering multiple benefits for both people and organisations are summarised in three reports: Talent Management 2, Transforming Public Services and Transforming Knowledge Management. They set out the change of emphasis and new leadership required and can be obtained from http://www.policypublications.com/

 

23 Apr 2015
Colin Coulson-Thomas

Too many boards focus upon compliance rather than business development

Many boards could contribute much more to business growth and development if they adopted a different approach to corporate governance according to Prof. Colin Coulson-Thomas, the author of Developing Directors. Speaking in Singapore he told Asian directors, board chairs and company secretaries that his recent investigations have identified opportunities for boards to add greater value by shifting the focus of their attention. He finds: “In seeking to avoid interference in operational matters many directors are overlooking areas that are properly the responsibility of the board.”

According to Prof. Coulson-Thomas: “The approaches to corporate governance adopted by some companies are excessively negative and are inhibiting innovation, entrepreneurship and responsible risk taking. Directors need to understand that competitive success can require both prudence and creativity, and practical and cost-effective approaches are available that can reconcile the two. For example, building checks into performance support tools can make it easy for people to comply and difficult for them to act in ways that cause quality, commercial, regulatory and other problems while exploring different solutions, bespoking responses and developing new options. ”

Coulson-Thomas’ evidence of what more effective directors do differently reveals how much more value boards could contribute if they shifted their questioning to areas such as ensuring executives focus on better supporting those work-groups that contribute the most to key corporate objectives: “Handing demanding objectives to a CEO and senior executive team and hoping for the best is no longer enough when one can challenge the expensive, time-consuming and disruptive approaches being adopted when quicker and more cost-effective options exist. Boards need to be aware of approaches that avoid traditional trade-offs and allow the simultaneous achievement of multiple objectives. They should champion quicker routes to high performance organisations.”

The Professor mourned the lack of innovation and diversity in board practices: “There are so many options for operating boards today and a variety of different ways in which they can discharge their responsibilities. The prevalence of corporate governance codes, a focus upon compliance and the practice of resorting to advisers and consultants who have climbed aboard the corporate governance bandwagon appears to have produced a dull uniformity of practice. Too many directors are doing just enough to comply rather than thinking through what form of board structure, composition and practice would be best suited for the situation a particular company is in, its stage of development, its priorities, the nature and geographic scope of its operations and the challenges that it faces.”

Coulson-Thomas suggests: “With vested interests and well meaning people calling for ever more detailed reporting and governance requirements we are in danger of loosing sight of their purpose. What happened to relevance, economy, simplicity, proportionality, adaptability, flexibility, diversity, innovation and business development? Human nature is such that shareholders need protection but it is not unreasonable for the owners of companies to expect that the directors they appoint to look after their interests will also be diligent in stimulating, encouraging, enabling and supporting the profitable and sustainable growth of the businesses for which they are responsible.”

Prof. Colin Coulson-Thomas, author of Developing Directors, a handbook for building an effective boardroom team, is a member of the business school team at the University of Greenwich and holds a portfolio of private, public and voluntary sector appointments. He has held UK public appointments at national and local level and can be contacted via http://www.coulson-thomas.com/. Developing Directors and his recent reports Talent Management 2, Transforming Public Services and Transforming Knowledge Management which outline where a change of focus can help boards to add more value and simultaneously pursue multiple objectives can be obtained from: http://www.policypublications.com/. Prof. Coulson-Thomas was in Singapore to deliver a three day course on corporate governance, directors and boards at the Grand Copthorne Waterfront Hotel.

 

14 Mar 2015
Colin Coulson-Thomas

Directors told to ensure that key work-groups within their organisations are properly supported

Too many boards approve disruptive restructuring, unnecessary culture change programmes and expensive talent wars rather than ensure key work-groups are properly supported, according to Prof. Colin Coulson-Thomas, author of Developing Directors and Winning Companies; Winning People. Speaking in Bangalore to members of the Institute of Directors of India he suggested: “In many companies there are far too many corporate initiatives that are not relevant to customers and which do not relate to critical success factors for competing and winning. Sources of competitive advantage, differentiators and the fundamentals of buying and selling are being overlooked.”

The Professor calls for a return to basics: “In place of preoccupation with areas driven by vested interests boards should concentrate upon the distinct contribution they can make to the growth and development of a business. Their behaviours – what they do and the quality of their thinking and the decisions they take – determine the value they add. Directors should keep their feet on the ground in terms of focus, speed and affordability and be aware of what is happening in the business and market environment. The Conference Board in its CEO Challenge 2015 report undertaken with the support of its regional partner the Institute of Directors of India identifies the concerns of Indian CEOs. Their top two issues are human capital and operational excellence.”

Coulson-Thomas believes “Boards need to ensure human capital, financial, technological and other resources can be harnessed and applied to what directors are setting out to do in terms of vision, goals and objectives. Many companies are rich in human capital but poor in terms of operational performance. Impressive capabilities represent overhead costs if they cannot be accessed and utilised by key work-groups as and when required to address a challenge or pursue an opportunity.”

He continues: “The key to competitive success is to ensure certain jobs are undertaken in a winning way. In uncertain and competitive markets there may be little point recruiting expensive people with potential who may not be required at a future date if they are neither engaged nor properly supported. If existing staff in front-line roles are not equipped to excel at tasks such as winning business, building customer relationships, pricing and purchasing there may not be a tomorrow.”

The professor’s investigations identify critical success factors for activities that contribute directly to competitive and sustainable success. They discover what high performers do differently from less successful peers in these areas, and examine how others can be enabled to emulate their superior practices. His recent reports highlight what evidence suggests is the quickest, most affordable and least disruptive route to high performance organisations. The findings suggest a new approach is required. The new leadership advocated in his recent reports Talent Management 2, Transforming Public Services and Transforming Knowledge Management puts greater emphasis upon intelligent steering, implementation and ensuring the people of organisations are properly supported.

Coulson-Thomas points out: “There is little point producing plans that people are not equipped to implement, or having highly motivated people who lack the tools needed to do their jobs. Boards should challenge CEOs and their executive teams and question whether people – and especially those in front-line and customer facing jobs – have the help they need to do what is required to compete and win. Personalised 24/7 performance support can provide relevant assistance whenever required, including when on the move. It can also enable customers, clients and citizens to help themselves, and it can simultaneously deliver multiple benefits to both people and organisations.”

Prof. Colin Coulson-Thomas, author of Developing Directors, a handbook for building an effective boardroom team and over 60 other books and reports is a member of the business school team at the University of Greenwich and holds a portfolio of private, public and voluntary sector appointments. He can be contacted via http://www.coulson-thomas.com/. Developing Directors, Winning Companies; Winning People, Talent Management 2, Transforming Public Services and Transforming Knowledge Management can be obtained from: http://www.policypublications.com/.
Coulson-Thomas has just returned from India where he spoke at events in Mumbai and Bengaluru. His presentation on “what’s keeping boards awake and what should they do about it?” was delivered to the Bangalore Chapter of the Institute of Directors of India at the Hotel Royal Orchid Central.

 

01 Feb 2015
Colin Coulson-Thomas

Opportunity to make a mark on history identified at international conference

Companies are missing a historic opportunity to eliminate leprosy, a traditional scourge of mankind according to Prof. Colin Coulson-Thomas. Speaking in Mumbai at the International Conference on Corporate Social Responsibility he raised the question of whether CSR strategy should aim for width or depth: “Should we focus our efforts in order to attain the critical mass to achieve impact, or should we encourage a wider range of initiatives in order to engage as many people as possible? Should we spread risks and have a diversity of projects, or concentrate upon a smaller number of initiatives – perhaps linked by a common theme, purpose or goal?”

The author of Winning Companies; Winning People suggested a proposed CSR activity may need to be of a certain scale or potential to attract interest, achieve an impact and enable people to justify the time, effort and resources required to become involved: “Boards need a strategy and criteria for selecting CSR initiatives. How does one select a project that might appeal to multiple constituencies, interest the media and have a noticeable national or international impact?”

Coulson-Thomas suggested: “An ambitious and sensitive board could seek a transformational impact in an area that has traditionally presented challenges for public bodies. One could look for the potential to stand out and attract attention – a noble and engaging objective that relates to brand value. A company concerned with connectivity and exclusivity could look for opportunities to reach communities that have hitherto been excluded.”

The University of Greenwich professor suggested one cause that could be adopted: “Lepers have been excluded for over two millennia. They have been ostracised, rejected by their families and communities, ejected from towns and villages and sent to leper colonies. Lepers face discrimination. The disease is grounds for divorce. In India – the world’s largest democracy – lepers have been denied the vote.”

Coulson-Thomas pointed out that as great leaders, thinkers, artists and scientists have come and gone lepers have been ever present: “When the founders of major religions and political movements were among us there were lepers – and lepers are still with us today. South-East Asia is the World Health Organisation (WHO) region with the highest prevalence of the disease. Leprosy is a curable condition that is particularly associated with India. It can be treated and its elimination has been judged by the World Health Assembly to be a practicable possibility.”

He continued: “India represents over 60% of new cases of leprosy reported by countries that have notified over 1,000 new cases in the past five years – a higher proportion of reported cases than in the period 2006-2008. In 2013 that’s 126,913 cases. Given the size of India’s population and how leprosy spreads one would expect higher absolute numbers than in other countries, but leprosy can be controlled by multi-drug therapy when detected early. The 44th World Health Assembly in 1991 called for the elimination of leprosy as a public health problem by the year 2000.”

The professor told delegates: “Leprosy can afflict young and old and result in physical and social disabilities. Because they cannot feel pain in areas affected by the disease lepers can suffer more than others from accidents. The Order of St Lazarus – supports missions and homes for lepers in India that care for the unwanted and rejected. One resident was sent away by her four sisters who were subsequently abandoned by their husbands on account of her leprosy. Another resident who has lost his fingers and most of his toes helps with a mission’s cattle and is learning to read. Cases therefore need to be detected before disabilities occur. ”

Coulson-Thomas explained: “The daily lives of many other lepers in India today echo those of victims of leprosy two thousand years ago. Yet this continuing strand of human suffering could be ended. A vaccine would increase the protection afforded to those living in areas where leprosy is endemic. In 2013 seventeen Ministers of Health from highly endemic countries met for an international leprosy summit and issued the Bangkok Declaration. This called for a reaffirmation of commitment – with appropriate resourcing and use of multi-drug therapy – to achieve the goal of a world without leprosy.”

Coulson-Thomas told delegates: “The elimination of leprosy is a significant, appealing and achievable target. For those aspiring to make a difference there is an opportunity to achieve a milestone in history and benefit India and many countries in which the disease is found. Don’t let leprosy become the forgotten disease. Its elimination needs to become a core CSR goal while a window of opportunity exists.”

Prof. Colin Coulson-Thomas of the University of Greenwich and Director-General, IOD India, UK and Europe Operations, leads the International Governance Initiative of the Order of St Lazarus. He was speaking at the 9th International Conference on Corporate Social Responsibility on 19th January, 2015 at the Hotel Taj Lands End, Bandra (West), Mumbai (India) organised by the Institute of Directors of India. He also presented recommendations for action at the end of the conference and later addressed business leaders in Bangalore. His most recent books and reports are available from http://www.policypublications.com

 

01 Feb 2015
Colin Coulson-Thomas

Directors told to stop playing ‘pass the parcel’ and ensure adoption of affordable ways of enabling implementation and compliance

While directors should focus on strategic direction and not get involved in operational matters they need to provide challenge and ensure their strategies and policies are implemented, according to Prof. Colin Coulson-Thomas, author of Developing Directors. Speaking in Dubai at the 3rd annual Board of Directors conference he suggested: “Too often boards agree policies and plans and then sit back and hope for the best.”

The Professor recognised: “The distinction between direction and management is a vital one, and a good manager may not have the potential to become an effective director and vice versa. However, while seeking not to interfere in areas delegated to management directors need to remember their responsibilities. They are still accountable.”

Coulson-Thomas emphasised that “board business is not a game of pass the parcel. Boards need to ensure that activities delegated to a chief executive and management team are effectively discharged. They need to question, challenge and make sure that implementation occurs and that things happen according to agreed guidelines and policies. There is little point agreeing plans, goals and objectives and assembling relevant resources, and then standing back without enquiring if the means are in place to apply the capabilities of a company to what it is setting out to do.”

The Professor pointed out that: “Corporate capabilities are costs and only of value if they can be harnessed and applied when and wherever required to pursue an agreed vision and achieve desired aims. Boards need to probe and question whether people – and especially those in the front-line – have the help and support they need to do what is required to compete and win.”

He continues: “In an era of insecurity and uncertainty formulating detailed plans and standing back is no longer enough. Traditional planning may need to be replaced and/or complemented by intelligent steering. Affordable and flexible performance support can enable important work-groups to stay current, vital and competitive. It can also enable the simultaneous delivery of multiple benefits to different stakeholders to the advantage of companies, people and the environment.”

The new leadership and governance which Coulson-Thomas advocates in his recent reports Talent Management 2 and Transforming Knowledge Management involves a shift of emphasis in the boardroom from planning to intelligent steering and providing more questioning and challenge in the areas of implementation and ensuring the people of an organisation are properly supported.

Prof. Colin Coulson-Thomas, author of Developing Directors, a handbook for building an effective boardroom team, and over 60 other books and reports is a member of the business school team at the University of Greenwich and holds a portfolio of private, public and voluntary sector appointments. He has held UK public appointments at national and local level and can be contacted via http://www.coulson-thomas.com/. Developing Directors, Talent Management 2 and Transforming Knowledge Management can be obtained from: http://www.policypublications.com/.

Coulson-Thomas’ presentation on “what’s cooking in the boardroom agenda?” was delivered to the 3rd Annual Board of Directors 2014 conference held at The Address D

 

01 Dec 2014
Colin Coulson-Thomas