Andrew Kakabadse, Professor of Governance and Leadership at Henley Business School, has presented the results of his global research project into the effectiveness of corporate boards and his theory on how business can deliver sustainable value.
Mr Kakabadse, has been tracking board performance for over a decade and has accumulated data from 19 500 organisations across 35 countries, including Russia, China, the US, Middle East and UAE.
His findings reveal that managers and leaders in organisations often cannot agree on its prime purpose or its competitive advantage. “Each view may be based on impeccable logic but there is, invariably, no cohesive view. Board members in 66% of the world’s top teams simply don’t talk to each other enough. They are too concerned about their own specialist areas or are too inhibited to raise challenging issues,” he says.
“A prime example is Marconi. The precise timing of its bankruptcy was predicted by senior figures within the company five years before it happened. Everyone knew the strategy wasn’t working, but this uncomfortable issue was never formally raised.”
Mr Kakabadse says that the latest findings from the global survey highlighted stark disparities between directors’ perceptions of their own behaviour and performance, compared to how they are perceived by their management teams.
In Germany, 75% of chairmen and presidents that were surveyed believed that trust existed within their top teams. However, only a third of the general managers in the same organisations agreed.
In Britain, 60% of chairmen and CEOs considered themselves to be understanding and supportive but only 30% of their general managers agreed. In China, 80% of those surveyed recognised that there were organisational issues which should be discussed by the top teams, but were not.
According to the research, the results vary significantly from country to country, but many boards are inundated with compliance and protocol issues. In the US, with its highly dictatorial system, boards appear to be more inhibited than anywhere.
In Russia, perhaps surprisingly, more honest conversations seem to be taking place. In South Africa there are massive disparities while Australia stood out in a positive way, probably because it has instilled a culture of allowing individuals to sit on a maximum of three boards.
Mr Kakabadse suggests that in order to be a good leader, the board needs to have diverse thinking. But can they see far enough, he asked?
Through the findings, the research has shown the impact a lack of engagement and alignment has on an organisation. However, a shift in thinking can reap tangible rewards.
But by changing the emphasis away from strategy and towards engagement and alignment, organisations can move from a value proposition-based approach, to one of value delivery. This shift is expressed through transposing the x and + elements of the following equations: Strategy x (Engagement + Alignment) = Value Proposition
Strategy + (Engagement x Alignment) = Value Delivery.
In other words, no matter how strong the strategy, it won’t yield a positive result if engagement and alignment are not in place.
According to Mr Kakabadse, numerous companies are suspicious of this approach and courage is needed to face up to the truth and to gather the evidence. It requires resilience and inner strength, morals and ethics, he says.
He cited EasyJet as an example, having had the foresight to appoint a CEO with no previous airline industry experience, but a track record of rallying the workforce. Its progress was slow but sustainable. He also pointed to Henley as a rare example of an establishment that is especially strong in this respect.
Mr Kakabadse urged leaders to be more open, more transparent, and above all, to base their decisions on real evidence to ensure it works and delivers sustainable value to all parties.
“You don’t have to be incredibly special to be a leader, you need sufficient self-knowledge to know you aren’t perfect as well as having a strong sense of purpose. Real leaders are continuously confronted by their own inadequacy, which they need to overcome on a regular basis,” says Jon Foster-Pedley, dean of Henley Africa.
“A true leader needs to be brave and at the same time not be a dictator. Leadership is not about you. If you want to learn something then teach it, that’s how one becomes a good leader. Leading and then learning from the practical experience.”