IMHO: Governing at pace

At the Institute’s inaugural Advanced Directors Course we were asked to suggest a title for a book that we’d like to write on an aspect of governance – I chose “Governing at pace”.

How does a board govern effectively at pace? Is there a point at which a company is moving so fast that independent governance becomes meaningless? I’ve wondered about the answers to these questions as I’ve watched businesses grapple with this age of disruption.

Disruption is sometimes used to mean simply “big change”, but it’s much more powerful to recognise it as where two or more technologies combine into a radically new offering that then exponentially displaces the old – ridesharing for example, where digital technology combines with underused private cars to displace taxis. Famously, that kind of exponential growth is unnoticeable at first, but then ramps up steeply.

Can traditional governance keep pace with that?

Quiet contemplation, noisy debate

Traditionally, directors are expected to be well-informed, to think deeply so they have something unique to offer, to be brave in putting their views forward, to actively listen, and to be prepared to compromise or lose gracefully.

Philosopher and ethicist Professor Anthony Grayling elegantly described the role of elected local councillors in a way that applies equally to directors:

"The duty to deliberate upon matters of common concern, and to decide according to the best of their judgement….Those elected have to be fit for the purpose of acquiring information, examining it, listening to the arguments relating to it, forming judgments, submitting their own judgments to the scrutiny of others, changing their minds if they encounter evidence and reasons that compel a change of mind – and reaching decisions that responsibly address the interests of more than their own partisan loyalties."

But what if the company has to move at great pace to develop a product before the money runs out, or claim market share before competitors beat them to it? Companies moving fast isn’t new, but maybe it’s become a lot more common and often with bigger stakes. I used the hoary ride-sharing example earlier because I heard that one major rideshare player ripped up its multi-year strategy shortly after entering the Australian market once they realised they had to change tack every few months.

Was that a failure of planning, or recognition that key strategic decisions simply had to be made that often? Does governing at that pace allow for quiet contemplation, active listening, and noisy debate?

While an organisation’s purpose may continue to be clear, what about maintaining an effective governance culture – let alone holding management to account when the goals change every few months? In that context it’s easy to imagine compliance becoming frayed.

Risks of moving fast

My friends Pita and Ness are growing their social enterprise fast. They have done the leadership courses and are now seeking the best advice about governance and how best to scale up. They have an answer: they’ve decided to establish an advisory board rather than a governance board, for the sole reason that there will then be no constraints on rapid decision making.

As their enterprise matures they expect to establish a governance board, but they’ve concluded that at this point in their trajectory, speed trumps the benefits a governance board will offer. 

So what are the risks they face? A lack of time for due consideration and fulsome debate clearly is one of them.

But existing risks can also be amplified. Our old friend optimism bias might more easily escape scrutiny at pace, especially if “p hacking” by management (looking at enough variables until you find something that went well) is also harder to spot at pace.  

A key role for boards is determining the balance between resilience and a “fast fail” approach – or, being dogged vs a wariness of throwing good money after bad. Boards have to be brave enough to adopt techniques like setting a date for a goal to be met and then pulling the plug if it’s not, ignoring optimistic projections of success being around the next corner. This is consistent with psychologist Angela Duckworth’s definition of “resilience” being about strategic clarity coupled with a willingness to adjust how you get there.

Pulling the plug is always difficult of course given the information asymmetry between boards and management. But this asymmetry may be much greater when moving at pace.

Thinking about how to mitigate increased risks resulting from moving at pace might lead to broader benefits. On the ARC we heard of one major bank producing 1,500-page board packs. That’s insane, and also insulting, and seems suspiciously like “butt-covering” (“But it was in your board pack”). The bank got better at this though, and is now producing short, sharp board material.

Good questions

Short, sharp board packs tend to be a feature of fast-moving organisations. But on the other hand board material also needs to be comprehensive. So just how do you strike that balance?

I haven’t written my book yet and I can’t properly answer the questions I’ve raised in this article. But I have become more convinced that they are good questions.

I also also wrote about resilience vs fast fail in the NZ Herald in November 2018 – see Grit or quit? Why business owners need to know when to give up - NZ Herald.

"Governing at pace" is also an episode in the IoD's podcast series Board Matters and hosted by Steven Moe. Check it out in the player below or on your favourite podcast app, including:

Spotify | Apple Podcast Player | Google Podcasts | Amazon Music | iHeartRadio

About the author

Kevin Jenkins CMInstD is a founder of Martin Jenkins and has over 30 years’ experience as an advisor to business, not-for-profits and government. He works with boards and executives to help them clarify their strategic direction and make the best choices to achieve their purpose and goals.

The views expressed in this article do not reflect the position of the IoD unless explicitly stated.

Contribute your perspectives and expertise on an area of governance to the IoD membership and governance community. Contact us mail@iod.org.nz