21st Century Governance


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A Signature Resources presentation by Les Wallace, PhD.

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  • © Signature Resources Inc. 2009
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  • 21st Century Governance

    1. 1. 21st Century Governance Les Wallace, Ph.D.
    2. 2. Who is this guy and what does he know about governance? <ul><li>Short version of exaggerated credentials </li></ul><ul><li>University professor / administrator </li></ul><ul><li>Hospital administrator—traditional Board </li></ul><ul><li>International consulting company… </li></ul><ul><li>Touch 20,000 people / 31 Execs / Ten Boards a year </li></ul><ul><li>Bank Board of Directors </li></ul><ul><li>Counterpart International Board of Directors </li></ul>© Signature Resources Inc 2009
    3. 3. Husband, Father, Grandfather, Champion Dry Fly Fisherman © Signature Resources Inc 2009
    4. 4. 21st Century Governance <ul><li>All centuries are different as the velocity and complexity of change accelerates. </li></ul><ul><li>Every generation finds </li></ul><ul><li>their traditional models </li></ul><ul><li>of doing business tested </li></ul><ul><li>by new ideas & demands. </li></ul><ul><li>“ Nothing ages faster than the future.” </li></ul><ul><li>David Carr </li></ul>© Signature Resources Inc 2009
    5. 5. 21st Century Governance <ul><li>“ The future ain’t what it used to be.” </li></ul><ul><li>Yogi Berra </li></ul><ul><li>Oversight lapses of this </li></ul><ul><li>Board of Directors will </li></ul><ul><li>impact every board for years to come </li></ul>© Signature Resources Inc 2009
    6. 6. 21st Century Governance <ul><li>“ Permanent Whitewater” </li></ul><ul><li>Peter Vaill Learning as a Way of Being , 1996 </li></ul><ul><li>… 1980s Change compatible—tolerate change </li></ul><ul><li>… 1990s Change adaptable—evolutionary adjustments </li></ul><ul><li>… 21 st Century Change driven—create change </li></ul>© Signature Resources Inc 2009
    7. 7. 21st Century Governance <ul><li>“ The future is not some place we are going to, but a place we are creating. </li></ul><ul><li>The paths are not to be discovered, but made, </li></ul><ul><li>And the activity of making the future changes both the maker and the destination.” </li></ul><ul><li>John Schaar </li></ul><ul><li>U.C. Santa Cruz </li></ul>© Signature Resources Inc 2009
    8. 8. 21st Century Governance <ul><li>Anticipating the future and our value in it is one of the most critical set of leadership competencies of our age: thinking / acting in the future tense! </li></ul><ul><li>External awareness </li></ul><ul><li>Strategic thinking </li></ul><ul><li>Innovation </li></ul><ul><li>Leading transformation </li></ul><ul><li>Leadership succession </li></ul>© Signature Resources Inc 2009
    9. 9. 21st Century Governance <ul><li>“No such thing as an unmovable platform. </li></ul><ul><li>everything is in motion relative to something.” Albert Einstein </li></ul>© Signature Resources Inc 2009
    10. 10. 21st Century Governance <ul><li>Are you running your organization… </li></ul><ul><li>… or changing your organization? </li></ul><ul><li>A Leader’s Agenda </li></ul><ul><li>CEO & Board … </li></ul><ul><li>About 25% typical business </li></ul><ul><li>About 75% strategy and transformation </li></ul>© Signature Resources Inc 2009
    11. 11. 21st Century Governance <ul><li>“ To be responsible inventors and discovers, we need the courage to let go of the old world, to relinquish most of what we have cherished, to abandon our interpretations about what does and does not work.” </li></ul><ul><li>“ We must learn </li></ul><ul><li>to see the world anew .” </li></ul><ul><li>Margaret Wheatly, Leadership and the New Science </li></ul>© Signature Resources Inc 2009
    12. 12. 21 st Century Governance <ul><li>“Professionals generally know so much about what they know that they are frequently the last to see the future differently.” Edie Weiner & Arnold Brown, Future Think </li></ul><ul><li>“Your biggest competitor is your own provincial view of your future.” Watts Wacker, The Visionary’s Handbook </li></ul>© Signature Resources Inc 2009
    13. 13. 21st Century Governance <ul><li>Boards frequently struggle with their role. </li></ul><ul><li>Most board members have much more management than governance experience. </li></ul><ul><li>Management is more day-to-day hands-on. </li></ul><ul><li>Governance is more strategic. </li></ul><ul><li>No surprise…boards frequently stray into operational or tactical decisions that should be the purview of the ED/CEO </li></ul><ul><li>(micro-management, getting in the weeds) </li></ul>© Signature Resources Inc 2009
    14. 14. 21st Century Governance <ul><li>The role of governance is to create , authorize and monitor the strategic direction of the enterprise and create values , policy and financial plans that support vibrant delivery of their mission. </li></ul><ul><li>Fiduciary, policy and strategy governance. </li></ul><ul><li>Boards that Make a Difference , John Carver </li></ul>© Signature Resources Inc 2009
    15. 15. 21st Century Governance <ul><li>Governance is not so much about the technical literacy of a board member regarding a challenge facing the organization </li></ul><ul><li>(e.g., HR, marketing, finance/budget, legal, fundraising, testing) </li></ul><ul><li>…as it is about the leadership competencies that give a board member a sophisticated peripheral vision to oversee a complex enterprise. </li></ul>© Signature Resources Inc 2009
    16. 16. 21st Century Governance <ul><li>Boards hire a CEO/ED to whom is assigned the management of the organization consistent with board direction. </li></ul><ul><li>What if a board has serious concerns about the effective management of some aspect or element of the enterprise? </li></ul><ul><li>( E.g. HR, Member services, Financial controls, work climate) </li></ul>© Signature Resources Inc 2009
    17. 17. 21st Century Governance <ul><li>Governance competencies—sometimes referred to as executive leadership competencies include… </li></ul><ul><li>Enterprise leadership (complex multifunctional business entity) </li></ul><ul><li>Strategic thinking and planning </li></ul><ul><li>Organizational transformation </li></ul><ul><li>Complex policy development </li></ul><ul><li>Executive leadership assessment </li></ul><ul><li>Political savvy—influence, negotiation, communication </li></ul><ul><li>Customer value creation </li></ul>© Signature Resources Inc 2009
    18. 18. 21st Century Governance <ul><li>Our Journey Today </li></ul><ul><li>Fiduciary Governance </li></ul><ul><li>Policy Governance </li></ul><ul><li>Strategy Governance </li></ul><ul><li>Governance Leadership </li></ul>© Signature Resources Inc 2009
    19. 19. 21st Century Governance: Annual Duties <ul><li>Elect board officers </li></ul><ul><li>Conduct external financial audit </li></ul><ul><li>Affirm financial statement is accurate </li></ul><ul><li>Re-validate and update “strategic plan” </li></ul><ul><li>Approve annual budget </li></ul><ul><li>Evaluate the CEO and set annual goals </li></ul><ul><li>Resign conflict of interest statements </li></ul><ul><li>Conduct board self-assessment </li></ul><ul><li>Nominate new board members for positions </li></ul>© Signature Resources Inc 2009
    20. 20. Fiduciary Governance <ul><li>Revenue & expenditures </li></ul><ul><li>Assets & liabilities </li></ul><ul><li>Operating reserves </li></ul><ul><li>Potential to generate revenue </li></ul><ul><li>Historical trends / shifts in overall financials </li></ul><ul><li>Concerns of external auditor (exceptions?) </li></ul><ul><li>Risk management </li></ul><ul><li>Conflict of interest </li></ul><ul><li>Whistleblower policy </li></ul>© Signature Resources Inc 2009
    21. 21. Policy Governance : “The conditions under which organizational functions should be carried out?” <ul><li>Areas of organizational risk and performance: </li></ul><ul><li>Financial management </li></ul><ul><li>Human resources </li></ul><ul><li>Ethics </li></ul><ul><li>Technology </li></ul><ul><li>Customer/constituent value / service </li></ul><ul><li>Governmental compliance </li></ul><ul><li>Governance </li></ul>© Signature Resources Inc 2009
    22. 22. Strategy Governance <ul><li>Envisioning a desired position in the business environment of the future </li></ul><ul><li>Articulating strategies / tactics for migration </li></ul><ul><li>Approving resources for the journey </li></ul><ul><li>Monitor strategic (positioning) progress </li></ul><ul><li>Act as sentinel of business environment shifts </li></ul><ul><li>Board guidance--organizational transformation </li></ul>© Signature Resources Inc 2009
    23. 23. 21 st Century Governance <ul><li>Get out of the Blender </li></ul><ul><li>Into the Helicopter </li></ul><ul><li>… see ourselves and our organizations from </li></ul><ul><li>distance—and test the moment to moment choices we make. </li></ul><ul><li>Move toward “governance leadership” </li></ul>© Signature Resources Inc 2009
    24. 24. 21 st Century Governance Leadership © Signature Resources Inc 2009 Policy Based Governance “ Oversight of organizational performance” 25-50% of Board conversations Governance Leadership “ Future facing conversations” 50-75% of Board conversations <ul><li>Fiduciary conversations </li></ul><ul><li>CEO performance oversight </li></ul><ul><li>Customer satisfaction review </li></ul><ul><li>Policy review and creation </li></ul><ul><li>Periodic organizational self-assessment </li></ul><ul><li>Annual planning processes </li></ul><ul><li>Environmental scanning / tracking </li></ul><ul><li>Strategic Thinking about transformation </li></ul><ul><li>Scenario building </li></ul><ul><li>Strategic Plan Review (5 year horizon) </li></ul><ul><li>Innovation / breakthrough discussion </li></ul><ul><li>Benchmarking with industry innovators </li></ul><ul><li>Purposeful transparency </li></ul><ul><li>Board Leadership Succession </li></ul><ul><li>Organizational leadership succession </li></ul><ul><li>Inclusive customer input data </li></ul><ul><li>Customer value tracking (not simply satisfaction) </li></ul><ul><li>Annual self-assessment & development plan </li></ul>
    25. 25. 21st Century Governance: Challenges <ul><li>Discussions stagnate into decimal point performance reports, departmental work plans, and second guessing management decision-making </li></ul><ul><li>Individual political / personal agendas </li></ul><ul><li>Provincial Viewpoints vs Strategic thinking </li></ul><ul><li>Leadership succession </li></ul>© Signature Resources Inc 2009
    26. 26. 21st Century Governance: The Balanced Scorecard Dashboard <ul><li>Monitoring a set of “indicators” across the “balance” of the organization’s work </li></ul><ul><li>Distilling the “cattle call” of numbers and progress reports from management </li></ul>© Signature Resources Inc 2009 Business Performance Customer Performance Employee Engagement <ul><li>Budget performance </li></ul><ul><li>Capital investment </li></ul><ul><li>Operating reserve </li></ul><ul><li>Transactions / income </li></ul><ul><li>New business </li></ul><ul><li>Robert Kaplan, Balanced Scorecard </li></ul><ul><li>Customer value tracking </li></ul><ul><li>Customer satisfaction </li></ul><ul><li>Quality tracking </li></ul><ul><li>Repeat business </li></ul><ul><li>Harry Beckwith, Selling the Invisible </li></ul><ul><li>Employee survey </li></ul><ul><li>Retention </li></ul><ul><li>Employee development </li></ul><ul><li>Talent succession </li></ul><ul><li>Marcus Buckingham, First, Break all the Rules </li></ul>
    27. 27. 21st Century Governance: Strategy <ul><li>Positioning the organization to remain relevant, valuable, and vibrant </li></ul><ul><li> Strategic thinking should proceed strategic planning. </li></ul><ul><li>“ Evolution keeps you alive…Revolution keeps you relevant.” </li></ul><ul><li>Gary Hamel, Leading the Revolution </li></ul>© Signature Resources Inc 2009
    28. 28. All products, services, organizations have lifecycles <ul><li>Re-positioning through vision, </li></ul><ul><li>strategic thinking, and planning </li></ul>Enterprise life-cycle Changing Business Climate © Signature Resources Inc 2009
    29. 29. External Awareness <ul><li>Globalization </li></ul><ul><li>Economics </li></ul><ul><li>Government </li></ul><ul><li>Customer value shifts </li></ul><ul><li>Technology </li></ul><ul><li>Social / demographic shifts </li></ul><ul><li>Leadership / Governance competencies </li></ul><ul><li>“ Getting out of Plato’s Cave” </li></ul>© Signature Resources Inc 2009
    30. 30. 21st Century Governance <ul><li>Vision: where are we going? </li></ul><ul><li>Mission: why do we exist? </li></ul><ul><li>Values: how will be behave? </li></ul><ul><li>Strategic Thinking: “how might we re-design our enterprise to leverage leading edge marketplace and business models?” </li></ul><ul><li>Strategic Planning: given our desired position, how must we change to assure it’s accomplishment? </li></ul>© Signature Resources Inc 2009
    31. 31. 21st Century Governance: Strategic Thinking © Signature Resources Inc 2009 Strategic Planning : “What is our desired business position and how must we change to get there?” Strategic Thinking : “How might we re-design our business to leverage leading edge marketplace and business models?” <ul><li>Identifying an alternative future position </li></ul><ul><li>Anticipating opportunity and threats </li></ul><ul><li>Setting change priorities </li></ul><ul><li>Designing change pathways </li></ul><ul><li>Evolving / adapting systems </li></ul><ul><li>Outlining formal plans </li></ul><ul><li>Three-five year cycle </li></ul><ul><li>Course corrections regularly </li></ul><ul><li>Challenging core business assumptions </li></ul><ul><li>Re-inventing the business </li></ul><ul><li>Exploration of new paradigms </li></ul><ul><li>Sponsoring paradigm shifts/pilot tests </li></ul><ul><li>Bold innovative movement </li></ul><ul><li>Confirming stakeholder value shifts </li></ul><ul><li>Projecting / anticipating lifecycles of products, services, organizational model </li></ul>
    32. 32. 21st Century Governance: Strategic Planning <ul><li>Envision your enterprise 3-5 years out: </li></ul><ul><li>Be bold, Dream, Be specific! </li></ul><ul><li>Describe your desired future in as many ways as possible. </li></ul><ul><li>Imagine yourself there—how did you get there? </li></ul><ul><li>What five-seven strategies might be most vital to making the desired journey? </li></ul><ul><li>4. What data / research / benchmarking might we need to validate our vision and strategies? </li></ul><ul><li>5. For each strategy outline: tactics, milestones, resources, leadership </li></ul>© Signature Resources Inc 2009
    33. 33. 21st Century Governance <ul><li>Building greater external awareness / strategic thinking on your Board… </li></ul><ul><li>Dissect a trend at each Board meeting. </li></ul><ul><li>Discuss articles about governance or the profession. </li></ul><ul><li>Play with a paradigm shifting question: What if? </li></ul><ul><li>Pose a dilemma to your social network and discuss the responses. </li></ul><ul><li>Invite 3-5 new credential holders / members in for a chat about perceptions of value and service—better yet, invite 100’s through web 2.0 social networking! </li></ul>© Signature Resources Inc 2009
    34. 34. 21st Century Governance <ul><li>Governance and Leadership Succession </li></ul><ul><li>Development, Recruitment, On-boarding, Developing </li></ul>© Signature Resources Inc 2009
    35. 35. 21st Century Governance <ul><li>How many potential board members do you currently have in the developmental pipeline? </li></ul><ul><li>Committee work is not enough—real leadership and governance competency development! </li></ul>© Signature Resources Inc 2009
    36. 36. Weak 20 th Century Governance 2008 <ul><li>Governance and the Wall Street Collapse : </li></ul><ul><li>“ You had very few real, functioning boards to control what went on on Wall Street. </li></ul><ul><li>The CEO puts friends on the board, his cronies, and in the end those guys aren’t going to throw him out.” </li></ul><ul><li>Carl Icahn, United Shareholders of America, Nov. 15, 2008 </li></ul><ul><li>Governance and credentialing boards… hmm </li></ul>© Signature Resources Inc 2009
    37. 37. 21st Century Governance <ul><li>Charisma is not leadership. </li></ul><ul><li>Professional popularity is not leadership. </li></ul><ul><li>Leadership is not technical competency— </li></ul><ul><li>yet that’s what many depend on for Governance. </li></ul><ul><li>Selecting governance leadership by any measure other than competencies is an out-dated model. </li></ul><ul><li>Oops , what about the membership organizations and “running for office?” </li></ul>© Signature Resources Inc 2009
    38. 38. 21 st Century Governance Leadership— not committee work at a higher level <ul><li>Sponsor “governance leadership” workshops at any meeting of your profession of more than 100 people </li></ul><ul><li>Conduct some “governance leadership” tutorial at every committee / task force / item writing meeting </li></ul><ul><li>Principles of 21 st Century Governance should be available on your website. [Start with John Carver] </li></ul><ul><li>At least: Board candidates should speak to distinct governance experience and competencies </li></ul><ul><li>Maybe Board candidates should “test” to assure adequate competency understanding of governance </li></ul>© Signature Resources Inc 2009
    39. 39. Consumer & Public Board Members <ul><li>Huge opportunity for next generation governance excellence </li></ul><ul><li>1/3 of current consumer / public members are clueless, adrift in governing chaos, and not contributing. Another 1/3 iffy. </li></ul><ul><li>NCCA is clear on purpose: stakeholder interests </li></ul><ul><li>Not hard to find executive / governance leadership competencies for this position </li></ul>© Signature Resources Inc 2009
    40. 40. 21st Century Governance: Annual Self-Assessment © Signature Resources Inc 2009
    41. 41. 21st Century Governance: Annual Self-Assessment <ul><li>Personal governance contributions </li></ul><ul><li>Advancing the vision / mission </li></ul><ul><li>Strategic planning </li></ul><ul><li>Oversight: fiscal, programs, services </li></ul><ul><li>Board / Management partnership </li></ul><ul><li>Governance roles and responsibilities </li></ul><ul><li>Governance structure </li></ul><ul><li>Board dynamics: meetings, relationships, prep </li></ul><ul><li>Board makeup, development, succession </li></ul>© Signature Resources Inc 2009
    42. 42. 21st Century Governance: CEO Feedback <ul><li>Annual feedback, goal setting, compensation decisions…biannual updated feedback! </li></ul><ul><li>Entire Board participates— </li></ul><ul><li>Executive or Governance Committee Communicate </li></ul>© Signature Resources Inc 2009
    43. 43. 21st Century Governance: CEO Feedback <ul><li>Enterprise operational management (financial, HR, org. climate, customer satisfaction, legal compliance) </li></ul><ul><li>Board relationship and communication </li></ul><ul><li>External relations (governmental, customers, funding sources, enterprise partners, vendors) </li></ul><ul><li>Strategic thinking </li></ul><ul><li>Self development </li></ul><ul><li>Ethics </li></ul><ul><li>Specific goal achievement (e.g. IT update, resturcture) </li></ul>© Signature Resources Inc 2009
    44. 44. Contact <ul><li>Les Wallace, Ph.D. </li></ul><ul><li>President </li></ul><ul><li>Signature Resources Inc. </li></ul><ul><li> PO Box 460100 </li></ul><ul><li>Aurora, CO 80046 </li></ul><ul><li>[email_address] </li></ul>© Signature Resources Inc 2009