What I’m reading – Abby Foote

Christchurch-based Abby Foote CFInstD has spent more than a decade as a full-time independent director on NZX-listed boards and Crown entities. She currently sits on the boards of outdoor clothing giant KMD Brands, transport company Freightways, and is chair of Christchurch City Holdings, which overseas commercial companies owned by the Christchurch City Council.

This week, she tells us about a thought-provoking book with a captivating title.

What is the governance or business book you’re reading, or can recommend? 

I find that there are governance insights in many non-fiction books, but a specific governance-based book that I’ve read recently and would recommend is What’s Wrong with Boards: Rethinking Corporate Governance by Professor Fred Hilmer.

Hilmer is an ex-partner of McKinsey and has been a director of companies including Coca-Cola Amatil, Macquarie Bank, Westfield Holdings and has also served as a Vice Chancellor of the University of New South Wales.

How would you describe the style of writing?

The book is easily digestible with a coherent argument, supported by points of evidence and real-life examples. It is pragmatic and practical with the aim of being thought provoking.  Helpfully, it also concludes with practical guidance for boards to consider.

What drew you to the book?

I was initially drawn to this book by the title. As a professional director, I’m always interested in opportunities to reflect on the role of directors and how boards can be more effective.

The title speaks to Hilmer’s core thesis that the environment for large public companies is rapidly evolving and becoming increasingly complex, with a need for strong and effective governance. With the governance problems we face being sufficiently different from those of the past, fresh thinking is needed. He argues the expectations being created by Australia’s current approach to corporate governance are unreasonable and that the current direction of travel of governance reforms risks making company performance and stakeholder outcomes worse. 

Given Hilmer’s strong governance credentials and the similarities between New Zealand and Australian corporate governance, I was interested to understand the argument and Hilmer’s proposed solutions.

What resonated with you the most?

Hilmer talks about two common governance failures being the acceptance of marginal performance and ‘can-kicking’, or an unwillingness to confront failures in an existing business strategy.

He argues that confronting these failures with ‘more of the same’ governance reforms will not bring about change and that boards should focus on ‘best fit’ governance models, rather than ‘best practice’.   

I have seen examples of both these governance failures during my governance career. I can also sympathise with the challenge of fitting traditional governance structures to the increasingly complex and disrupted environment most companies face.

What is something you’ve taken away from the book that now follows you into your board roles?

Hilmer’s idea of best fit, rather than best practice, has caused me to reflect further on some elements of what is considered ‘best practice governance’ and whether different approaches might be warranted in some situations.

It has led me to reflect on whether the layering of increasing expectations on directors in service of better governance is leading to worse outcomes – either solely in terms of company performance or more broadly.

Since reading this book I have approached the role of ‘non-independent’ directors slightly differently to the way I might have in the past, with a greater focus on how boards can truly benefit from the different perspective and insight that a non-independent director can bring.

How does reading feed into your governance practice/learning?

As most directors will testify, the reading workload of a director can be substantial and it can be a challenge to add more reading to the mix. But I think being a good director requires you to access information and perspectives beyond those that are delivered up in the board pack. This is often industry- or issue-specific, but I also like to be informed about emerging governance issues and thinking, so I will look for material that covers these things, most commonly written, but podcasts can be useful also.

Who should read this book and at what stage in their governance career?

While this book is geared towards experienced directors, in particular, those in listed company governance roles, there are messages in the book that are equally applicable outside of that environment. There is a particularly helpful chapter on the role of the chair and how they can be a more effective driver of board and company performance.

When you’re not reading about business or governance, what kind of books are you likely to pick up? 

I tend to favour non-fiction books. Recently, I’ve been reading a number of books written by investigative journalists, several of which have focused on significant cybercrime incidents, such as The Lazarus Heist by Geoff White. I’m currently listening to the audio version of The End of the World is Just the Beginning: Mapping the Collapse of Globalization by Peter Zeihan, which is a thought-provoking view of what might be ahead of us. I also enjoyed Ruby Tui’s book, Straight Up. 

What are some of the most pertinent governance issues at the top of mind for you, and why?

Reflecting on my role with Chapter Zero, top of mind issues currently are how directors should approach the challenges of adapting to climate change impacts and working out how to sensibly invest for meaningful change in emissions profile, particularly, when challenged by a less-than- rosy economic outlook and steadily increasing cost base.

And then, trying to work out how to present all of that thinking within the Climate Related Disclosures framework without falling into a compliance mind set!

What has been the most surprising thing you’ve discovered about yourself and others while being on a board?

Perhaps not that surprising, but individual egos seem to play more of a role in governance than they should.

If there was anything you want to see more of at the board table, what would it be, and why?

I see value in boards being better at self-reflection and spending time considering opportunities to adapt their governance practices to add more value.

It is easy to fall into a pattern of behaviour based on current structure and approach, so taking time out as a board – and with management – to regularly reflect on whether a different approach might add more value ensures continuous improvement. 

If there is a book on your radar that you’d like to share, send an email to: Sonia.yee@iod.org.nz