Mike O'Donnell: Policing against bad calls in business

Like many chief executives, British Prime Minister Theresa May could have done with some outside advice before holding a ...
DAN KITWOOD/GETTY IMAGES

Like many chief executives, British Prime Minister Theresa May could have done with some outside advice before holding a snap election.

OPINION: Thirty-four years ago this week English rock band The Police put out their fifth and final album, Synchronicity.

The album became the band's biggest success and featured the catchy "Every breath you take."

The album's name was inspired by Arthur Koestler's book The Roots of Coincidence, which plots the relationship between physics and time. In simple terms, it's about significant coincidences.

Mike O'Donnell: ''Board directors are not fine wines that improve with age, but more like craft beers that give their ...
KEVIN STENT/FAIRFAX NZ

Mike O'Donnell: ''Board directors are not fine wines that improve with age, but more like craft beers that give their best while still fresh.''

Such a moment of significant coincidence happened last week when at the same time I got handed a copy of Board Shorts, a new book by governance expert Henri Eliot, when the results of the British election came out.

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Two months earlier British Conservative Prime Minister Theresa May made a very big call.

Despite the fact that her Government had another three years to run before the next election, she surprised everyone (including her party) by announcing a snap election.

Apparently motivated by a desire to quieten the opposition as she prepared for Brexit negotiations with the European Union, May guessed that a quick and decisive win would let her team be in a stronger bargaining position with the continental types across the ditch.

She guessed wrong.

Her Conservative Government ended up losing 13 seats, while Labour got a handy 30-seat lift, forcing May into coalition talks so she could still govern at all.

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In eight weeks, she took her organisation from a tower of strength to teetering apocalypse.

Reading through the autopsy of her woes it struck me that May could have really benefited from quality advice and some hard questions, the kind of thing that a good board offers a chief executive.

It's the same kind of thing that Henri Eliot's book focuses on in a New Zealand business context.

A French Canadian with a pedigree that includes Deloitte in New York and Morgan Stanley in London, Eliot set up his company Board Dynamics in Auckland in 2009. The company focuses on board establishment, as well as board evaluation and board efficiency.

Far from being a conservative old guy in a three-piece suit, Eliot is more of an irreverent younger guy in a Hawaiian shirt, so the double entendre of Board Shorts is apt.

Having worked with hundreds of New Zealand boards over the past eight years, Eliot's book is one of the few (and perhaps only) published how-to guides for governance in Aotearoa. It's also filled with war stories from old soldiers about what does and doesn't work.

Best of all, it's written in a punchy style as it draws on many of his articles from the last five years. Three things for me stood out.

The first was Eliot's observation that better boards need better leaders around the table, and that leadership is not just the preserve of the chair.

Rather, every director needs to demonstrate leadership in the positions they take, and their refusal to bow to peer pressure.

He goes on to note that part of good leadership is knowing when it's time to leave.

Boards of directors are not fine wines that improve with age, but more like craft beers that give their best while still fresh.

I've previously criticised boards whose members have held their seats for 10 or even 20 years. Such lengthy tenures stifle innovation and impact on risk mitigation.

Every person has their cognitive bias and by failing to turn them over, that bias can make the company blind to both risks and opportunities.

The second chapter that stood out for me was the importance of directors spending time on the "shop floor". The shop floor here could mean anything from a glass tower to a paddock or premise.

He convincingly argues that a director cannot exercise ultimate governance and accountability for operations they have never actually observed happening.

A blinding glimpse of the obvious, really. And with the new Health and Safety at Work Regulations, there's now a specific requirement for directors to undertake their own investigations. The shop floor is often the best place for this.

A final section of the book that caught my eye was a quote from veteran board director and reformed trade unionist Rob Campbell.

He noted that organisations are prone to linear, repetitive processes. Sometimes such linear processes can be a strength, but they can also be a weakness.

Campbell encourages directors to invert an issue or a proposal and ask the question, "What happens if we do the opposite".

This strikes me as a key role for any director to play. And in the case of Theresa May, it would have resulted in the insight that by not going to the polls, they were guaranteed three more years in office.

My favourite track on Synchronicity is "King of Pain". It's a salient reminder that there's a world of pain to be had from poor decision making. Just ask Theresa.

Mike "MOD" O'Donnell is an e-commerce manager and professional director. His Twitter handle is @modsta and he reckons The Police sound best on vinyl played on Linn turntables.

 - Stuff

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