Theme Paper questions the future of governance and how it might add more value
By Prof. Colin Coulson-Thomas
What should be the evolving role of the board in an uncertain global economy? What changes are needed in governance arrangements and board practices to accommodate greater diversity, ensure sustainable innovation and enable more confident and flexible responses to new opportunities and mutating risks? What needs to be done for sustainability to become a new business paradigm? These and related issues will be discussed at IOD India’s 2016 London Global Convention.
The 16th London Global Convention on Corporate Governance and Sustainability will review the current and emerging roles and responsibilities of directors and boards, and explore ways of enhancing their effectiveness. With corporate governance at a cross roads and facing multiple challenges, the issues, options and opportunities will be explored from a global perspective.
Our corporate governance institutions, codes, principles and practices largely derive from reactions to problems encountered by certain quoted companies in particular countries in what now appears a bygone age. Are they sustainable? In the countries in which the first corporate governance reports appeared the number of companies de-listing has exceeded the number of new listings and many of the new entrants require much less investment in physical assets and/or employ far fewer people.
Corporations face multiple threats. Individual consumers can increasingly use on-line platforms to help themselves or connect with other individuals who can help them, whether by giving them a lift or renting a room. As more offerings are bought on-line and/or produced at home or locally by 3D printer, and lifestyles change to accommodate the need for greater sustainability, what will happen to manufacturers, retailers and distribution chains? Will corporate governance experience the decline of corporations and their de-listing, or like a virus will it mutate to find new hosts?
What will boards and boardrooms look like in five, ten or fifteen years? Will the downward trend in the size of boards with significantly fewer executive directors experienced in some jurisdictions continue? Will board composition change in terms of age, gender and nationality? Will boardrooms and monthly meetings be needed as more connected directors deal with issues as and when they arise, and make greater use of conferencing technologies? In a fast moving world, will waiting for the next opportunity to get onto the agenda of a monthly board meeting seem an archaic practice?
Have governance codes and regulations created a community of advisers with a vested interest in ever more detailed intervention because their livelihoods depend upon it? In an era of greater diversity and uncertainty, alternative business and organisational models, and new ways of working and operating, is a prescriptive approach, the use of single standards and a compliance bias out of sync with such changes? Are they resulting in tick-box and legalistic attitudes, rather than a focus on outcomes and allowing more scope for imagination and innovation in terms of how they are achieved? How might more flexibility be introduced?
Will an excess of regulation, requests for more information and disclosure and greater media scrutiny discourage people from seeking CEO and senior executive roles? Will greater exposure to scrutiny and enhanced risk of investigatory and legal action put more people off seeking board positions? At the same time, the emerging crowd-based economy depends upon trust. Who and what will protect the consumer when peer-to-peer services disappoint or result in harm?
Many boards do little to actively encourage innovation and entrepreneurship. In established companies their focus is often upon consolidation, rationalisation, cost-cutting and squeezing more out of existing operations. Corporate cash is disbursed as dividends or used to buy-back shares rather than invest in new industries. The emphasis is often upon keeping an existing show on the road and avoiding failure rather than creating a better alternative.
Must creative spirits in T-shirts be replaced by cautious retainers in suits? If corporate governance attitudes and advisers are introduced too early, might the cold draft of compliance snuff out the sparks of innovation? Will more companies seek to avoid such negative associations by de-listing? Would innovation and entrepreneurship be best served by avoiding a standard model developed for a different context, and instead adopting bespoke governance arrangements that are right for an enterprises stage of development and particular situation and circumstances?
Digital developments present businesses with a variety of challenges and opportunities. What role will directors and boards play in crowd-funded, web-enabled, organically evolving, creative and networked enterprises that need to adapt and mutate in real time? In more democratic and participative markets will an intermediary role of directors and boards be required? Will governance become a series of questions to address to determine what is best for a particular network at one moment in time, rather than a set of principles and rules that assume a standard requirement?
What proportion of assets and economic activity will be in the hands of large companies owned by external shareholders? Will people directly barter and share what they have, whether empty space or home grown vegetables? Will self-employed individuals use networks of relationships to access what they need and do what they enjoy and feel they are good at? They may find their individual ability to quickly adjust and embrace new technologies and opportunities exceeds that of those have to await new direction from a board before they can change. Will people govern themselves rather than expect someone else to undertake directorial activities on their behalf?
The theme paper and outline programme for the 2016 London Global Convention on Governance and Sustainability are now available from: http://www.iodglobal.com/london-global-convention-2016.html
Prof. Colin Coulson-Thomas, chairman of Adaptation holds a portfolio of board and leadership roles and has advised directors and boards in over 40 countries. His latest publications, including Developing Directors, a handbook for building an effective boardroom team can be obtained from www.policypublications.com. Further information on the 16th London Global Convention on Corporate Governance and Sustainability of the Institute of Directors, India can be obtained from www.iodonline.com