Blog: Boards of Directors

Jeff Jarvis’ latest book ‘What Would Google Do’ envisions the ways in which running businesses the way Google is run would change industries. It is impossible to read this book without having a few innovative ideas of your own. It got me thinking ‘What would Google do if they regulated boards or designed corporate governance systems?’

Here are some ideas:

Give people control and they will use it – in theory this is what happens at AGMs. In practice the process stultifies the content and the voting rules and systems mean that the exercise is often an empty formality because the deals have been done long before the meeting took place. The Google algorithm would ruthlessly accept voting decisions, in real time over the internet. The AGM could be webcast and votes cast remotely after hearing the arguments for and against each issue. Chat rooms could allow shareholders to communicate with each other and the board on the issues as they were being discussed. A bulletin board could gather topics for discussion and the Chairman could allocate time to each topic depending on the number of shareholders who wanted to have it discussed. No more hijacking of meetings by vocal minorities; much more communication that shareholders want.

Life is a beta test – instinctively, when we make mistakes, we feel embarrassed. We shouldn’t.  A board that truly values innovation or creativity should be out pushing the boundaries of what is possible and failing a little from time to time. (and how many companies have those two buzz words in their values statements?) Failing well means acting quickly to rectify mistakes and that means having the systems in place to know about the failures, fast, and to admit to them, openly. When Coca Cola Amatil implemented a system of ‘pre-nuptial’ agreements designed to help the whole board to eject any one member whom the rest felt was no longer part of the team there was a major outcry; shareholders want dissident voices to be heard in the boardroom not ousted from it. The Chairman apologised and the contracts were ripped up and never mentioned again. I don’t respect him less because of that issue; I respect him more!

Don’t be evil – Google’s founders wrote, before their IPO, “We believe strongly that in the long term, we will be better served – as shareholders and in all other ways – by a company that does good things for the world even if we forego some short term gains.” Wow! How many pages of social and environmental reporting does it take most boards to say the same thing? And why do we still see boards that countenance obviously bad behaviour for short term gain, whether we look at the sporting club that covers up a star player’s drug and violence problems, an asbestos producer that severs all ties to the people who may need compensation for the harm its products have caused, or the banks that allowed trading in instruments that were clearly not the creditworthy investment grade product they were held out to be?

Elegant organisation of data – When you type a search into Google you get back a simple list of relevant sources of the information sought. There is no clutter, no distracting graphic, and the sources are ranked in order of likely importance. Why aren’t board papers presented like that? Why don’t boards report to their shareholders like that? Imagine what an annual report would look like if the most frequently read information was on the front page. How good would accounts be if useful information, instead of being stuck in pages of small print notes to the accounts, was up front in the P&L and less useful information was hidden behind the summarised data and only sprang to view when you clicked upon it to expand it? Shareholders have voted against receiving paper annual reports. We don’t need a thick catalogue full of glossy photos to tell us about our company. We don’t want that replaced by a pdf file of the same thing. We want data that we can sort, cut and paste into our spreadsheets, condense and expand to suit our needs. So do boards. So why are we still in the trap of ‘doing what we did last year’ and creating thicker, more unwieldy, documents instead of taking a Google approach and providing interactive reports, with important information (that is what the recipients are most likely to want to see) first, and less important information later?

Meritocracy wins – in boardrooms it is often the sad case that directors are selected because of what they have done in the past and with insufficient real analysis of what they will provide to the board in the future. On Google data is realtime; imagine if we could constitute boards that had access to the best expertise on any topic, instantly, as required. How would that affect quality of data, independence of thought and speed of reaction? Of course there would be a cost in consensus building, responsibility for implementation and group decision making. I know some boards are using open source technology to run their agendas but what if they adopted the open source model for their committee structures and even the board itself, allowing executives and visiting experts to enrich the debate?

Well, those are the first five ideas that struck me on reading the book. What do you think?

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Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance.  See her website and LinkedIn profiles, and get her book Dilemmas, Dilemmas: Practical Case Studies for Company Directors.