21st century governance

21st Century GovernanceLes Wallace, Ph.D.

Who is this guy and what does he know about governance?

Short version of exaggerated credentials University professor / administrator Hospital administrator—traditional Board International consulting company…

Touch 20,000 people / 31 Execs / Ten Boards a year Bank Board of Directors Counterpart International Board of Directors

2© Signature Resources Inc 2009

Husband, Father, Grandfather, Champion Dry Fly Fisherman


21st Century GovernanceAll centuries are different as the velocity and complexity of change accelerates.

Every generation finds

their traditional models

of doing business tested

by new ideas & demands.

“Nothing ages faster than the future.”David Carr


21st Century Governance“The future ain’t what it used to be.”

Yogi Berra

Oversight lapses of this

Board of Directors will

impact every board for years to come5© Signature Resources Inc 2009

21st Century Governance “Permanent Whitewater”Peter Vaill Learning as a Way of Being, 1996

…1980s Change compatible—tolerate change

…1990s Change adaptable—evolutionary adjustments

…21st Century Change driven—create change


21st Century Governance

“The future is not some place we are going to, but a place we are creating.

The paths are not to be discovered, but made,

And the activity of making the future changes both the maker and the destination.”

John SchaarU.C. Santa Cruz



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!

External awareness Strategic thinking Innovation Leading transformation Leadership succession



“No such thing as an unmovable platform.everything is in motion relative to something.”

Albert Einstein


21st Century GovernanceAre you running your organization…Are you running your organization…

… …or changing your organization?or changing your organization?

A Leader’s Agenda

CEO & Board…

About 25% typical business About 75% strategy and transformation



“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.”

““We must learn We must learn

to see the world anewto see the world anew.” .”

Margaret Wheatly, Leadership and the New Science



“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

“Your biggest competitor is your own provincial view of your future.” Watts Wacker, The Visionary’s Handbook



Boards frequently struggle with their role. Most board members have much more management

than governance experience.o Management is more day-to-day hands-on.o Governance is more strategic. No surprise…boards frequently stray into

operational or tactical decisions that should be the purview of the ED/CEO

(micro-management, getting in the weeds)



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.

Fiduciary, policy and strategy governance.Boards that Make a Difference, John Carver



Governance is not so much about the technical literacy of a board member regarding a challenge facing the organization (e.g., HR, marketing, finance/budget, legal, fundraising, testing)

…as it is about the leadership competencies that give a board member a sophisticated peripheral vision to oversee a complex enterprise.



Boards hire a CEO/ED to whom is assigned the management of the organization consistent with board direction.

What if a board has serious concerns about the effective management of some aspect or element of the enterprise?

(E.g. HR, Member services, Financial controls, work climate)



Governance competencies—sometimes referred to as executive leadership competencies include…Enterprise leadership (complex multifunctional business entity)

Strategic thinking and planningOrganizational transformationComplex policy developmentExecutive leadership assessmentPolitical savvy—influence, negotiation, communicationCustomer value creation



Our Journey Today

Fiduciary GovernancePolicy Governance

Strategy Governance

Governance LeadershipGovernance Leadership


21st Century Governance:Annual Duties

1. Elect board officers

2. Conduct external financial audit

3. Affirm financial statement is accurate

4. Re-validate and update “strategic plan”

5. Approve annual budget

6. Evaluate the CEO and set annual goals

7. Resign conflict of interest statements

8. Conduct board self-assessment

9. Nominate new board members for positions19© Signature Resources Inc 2009

Fiduciary Governance Revenue & expenditures Assets & liabilities Operating reserves Potential to generate revenueHistorical trends / shifts in overall financials Concerns of external auditor (exceptions?) Risk management Conflict of interest Whistleblower policy


Policy Governance:“The conditions under which organizational

functions should be carried out?”Areas of organizational risk and performance: Financial management Human resources Ethics Technology Customer/constituent value / service Governmental compliance Governance


Strategy Governance

Envisioning a desired position in the business environment of the future

Articulating strategies / tactics for migration Approving resources for the journey Monitor strategic (positioning) progress Act as sentinel of business environment shifts Board guidance--organizational transformation



Get out of the Blender

Into the Helicopter

…see ourselves and our organizations from

distance—and test the moment to moment choices we make.

Move toward “governance leadership”


21st Century Governance LeadershipPolicy Based Governance

“Oversight of organizational performance”

25-50% of Board conversations

Governance Leadership“Future facing conversations”

50-75% of Board conversations

Fiduciary conversations

CEO performance oversight

Customer satisfaction review

Policy review and creation

Periodic organizational self-assessment

Annual planning processes

Environmental scanning / tracking

Strategic Thinking about transformation

Scenario building

Strategic Plan Review (5 year horizon)

Innovation / breakthrough discussion

Benchmarking with industry innovators

Purposeful transparency

Board Leadership Succession

Organizational leadership succession

Inclusive customer input data

Customer value tracking (not simply satisfaction)

Annual self-assessment & development plan


21st Century Governance:Challenges

Discussions stagnate into decimal point performance reports, departmental work plans, and second guessing management decision-making

Individual political / personal agendas

Provincial Viewpoints vs Strategic thinking

Leadership succession


21st Century Governance:The Balanced Scorecard Dashboard

Monitoring a set of “indicators” across the “balance” of the organization’s work

Distilling the “cattle call” of numbers and progress reports from management

Business Performance Customer Performance Employee Engagement

Budget performance Capital investment Operating reserve Transactions / income New businessRobert Kaplan, Balanced Scorecard

Customer value tracking Customer satisfaction Quality tracking Repeat business

Harry Beckwith, Selling the Invisible

Employee survey Retention Employee development Talent succession

Marcus Buckingham, First, Break all the Rules


21st Century Governance:Strategy

Positioning the organization to remain Positioning the organization to remain relevant, valuable, and vibrantrelevant, valuable, and vibrant

Strategic thinking should Strategic thinking should proceed strategic planning.proceed strategic planning.

““Evolution keeps you alive…Revolution keeps you relevant.”Evolution keeps you alive…Revolution keeps you relevant.”Gary Hamel, Leading the Revolution


All products, services, organizations have lifecycles

Re-positioning through vision,

strategic thinking, and planning28© Signature Resources Inc 2009

External Awareness

Globalization Economics Government Customer value shifts Technology Social / demographic shifts Leadership / Governance competencies

“Getting out of Plato’s Cave”


21st Century Governance Vision: where are we going? Mission: why do we exist? Values: how will be behave? Strategic Thinking: “how might we re-Strategic Thinking: “how might we re-

design our enterprise to leverage leading design our enterprise to leverage leading edge marketplace and business models?”edge marketplace and business models?”

Strategic Planning: given our desired position, how must we change to assure it’s accomplishment?


21st Century Governance:Strategic Thinking

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?”

Identifying an alternative future position

Anticipating opportunity and threats

Setting change priorities

Designing change pathways

Evolving / adapting systems

Outlining formal plans

Three-five year cycle

Course corrections regularly

Challenging core business assumptions

Re-inventing the business

Exploration of new paradigms

Sponsoring paradigm shifts/pilot tests

Bold innovative movement

Confirming stakeholder value shifts

Projecting / anticipating lifecycles of

products, services, organizational model


21st Century Governance:Strategic Planning

1. Envision your enterprise 3-5 years out: Be bold, Dream, Be specific! Describe your desired future in as many ways as possible.

2. Imagine yourself there—how did you get there?

3. What five-seven strategies might be most vital to making the desired journey?

4. What data / research / benchmarking might we need to validate our vision and strategies?

5. For each strategy outline: tactics, milestones, resources, leadership


21st Century Governance Building greater external awareness /

strategic thinking on your Board… Dissect a trend at each Board meeting. Discuss articles about governance or the profession. Play with a paradigm shifting question: What if? Pose a dilemma to your social network and discuss

the responses. 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!



Governance and Leadership Succession

Development, Recruitment, On-boarding, Developing



How many potential board members do you currently have in the developmental pipeline?

Committee work is not enough—real leadership and governance competency development!


Weak 20th Century Governance 2008

Governance and the Wall Street Collapse:

“You had very few real, functioning boards to control what went on on Wall Street.

The CEO puts friends on the board, his cronies, and in the end those guys aren’t going to throw him out.”

Carl Icahn, United Shareholders of America, Nov. 15, 2008

Governance and credentialing boards…hmm


21st Century Governance Charisma is not leadership. Professional popularity is not leadership. Leadership is not technical competency—

yet that’s what many depend on for Governance.

Selecting governance leadership by any measure other than competencies is an out-dated model.

Oops, what about the membership organizations and “running for office?”


21st Century Governance Leadership—not committee work at a higher level

Sponsor “governance leadership” workshops at any meeting of your profession of more than 100 people

Conduct some “governance leadership” tutorial at every committee / task force / item writing meeting

Principles of 21st Century Governance should be available on your website. [Start with John Carver]

At least: Board candidates should speak to distinct governance experience and competencies

Maybe Board candidates should “test” to assure adequate competency understanding of governance


Consumer & Public Board Members

Huge opportunity for next generation governance excellence

1/3 of current consumer / public members are clueless, adrift in governing chaos, and not contributing. Another 1/3 iffy.

NCCA is clear on purpose: stakeholder interests

Not hard to find executive / governance leadership competencies for this position


21st Century Governance:Annual Self-Assessment


21st Century Governance:Annual Self-Assessment

Personal governance contributions Advancing the vision / mission Strategic planning Oversight: fiscal, programs, services Board / Management partnership Governance roles and responsibilities Governance structure Board dynamics: meetings, relationships, prep Board makeup, development, succession


21st Century Governance:CEO Feedback

Annual feedback, goal setting, compensation decisions…biannual updated feedback!

Entire Board participates—

Executive or Governance Committee Communicate© Signature Resources Inc 2009 42

21st Century Governance:CEO Feedback

Enterprise operational management (financial, HR, org. climate, customer satisfaction, legal compliance)

Board relationship and communicationExternal relations (governmental, customers, funding

sources, enterprise partners, vendors)Strategic thinkingSelf developmentEthics Specific goal achievement (e.g. IT update, resturcture)


ContactLes Wallace, Ph.D.

President

Signature Resources Inc.

PO Box 460100

Aurora, CO 80046

[email protected]

© Signature Resources Inc 2009

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