Corporations love their strategies. They are like cuddly little teddy bears that comfort leadership at night. “We must be on the right track because, we have a strategy, right?” Yet how many times over the years have I heard our executive leadership come out with the phrase “we’re not hitting our targets so changing our strategy”? Unfortunately far too often in sadly, far too many corporations over the years. And you would think after decades of corporations inventing new methodologies, frameworks, mechanisms, processes, relations, etc., they would be expert in delivering successful corporate strategy, yes? Sadly, so far from the truth it’s heart breaking.
But why? Well I’ve heard all the excuses over the years. Whereas “hindsight is 20/20” and it should be self-evident, it’s not. And the reasons vary. Insufficient analysis during planning. Overly ambitious targets. Failure to recognise real threats and barriers (or deliberately ignored?). SWOT, 5 forces analysis deficient. Cultural resistance. User resistance. General resistance to change. Cost overruns. Lack of delivery expertise (projects, programs, initiatives). I could go on and on, but, you get the idea.
But to say these are the real causes is like blaming a driver for negligence who causes an accident because they were speeding. We look at what is evident, and ignore the hidden causes. We don’t look at the fact his training was poor. Or what the delivery of that training entailed. We don’t take into account the road conditions. Or analyse the quality of where the speed limit signs were posted. We don’t take into the account the experience of the other driver. In short, we don’t look at the governance that failed and failed and failed.
What is corporate governance?
Wikipedia has a good definition which if you’re interested, you can read the full description at your leisure here https://en.wikipedia.org/wiki/Corporate_governance. I’ll just cite though the most relevant part which is “Corporate governance includes the processes through which corporations’ objectives are set and pursued in the context of the social, regulatory and market environment. These include monitoring the actions, policies, practices, and decisions of corporations, their agents, and affected stakeholders. “
Ok, so what does this mean? That the problem starts right at the top. With the CEO’s, COO’s, CFO’s, CTO’s, MD’s, Presidents, VP’s, Directors, etc., (I think you get the point). Simple principle is that these “individuals” are not typically hired for their overarching intelligence (although I have seen a few exceptions). They are hired for a variety of reasons that include their ability to “dazzle you with their supposed brilliance”, their ability to socialize, their track record from their past work lives, their “passion & enthusiasm” (oh dear!). Other lesser reasons I’ve seen though include “being part of the old boys club”, bigotry, nepotism, cronyism, etc.
Kleptocracy in corporations
Ever hear of kleptocracy? Comes from the Greeks (love history here!), meaning “thief”, “I steal”, “power rule”. Now typically, this means government with corrupt leaders (kleptocrats). They use their power to exploit the people and natural resources of their own territory in order to extend their personal wealth and political powers. And we normally associate these “Kleptocracy’s” with dictatorships, oligarchies, military juntas, or other forms of autocratic or nepotistic governments. External oversight is impossible or does not exist. But having seen it for so many years in corporations, I personally think they should extend the scope to include corporations. Because isn’t this what is really happening here?
Think about it. Self-interest is the number one guiding rule of all rational animals (NB: mankind included). And our autocratic corporate leadership are a power unto themselves when it comes to dictating the rules. Oh they may not be focused solely on the money, but rest assured, they are focused on their personal challenge to “rise to the top”. And quite often, they invest hundreds of millions of (insert currency value) into ambitions that are doomed to fail from the start. Why? Because they are convinced in their own megalomaniacal thinking that they are right! They suffer from delusions of grandeur, their own view of perfection that there is almost no way they could be wrong.
The dangers of self interest, why it doesn’t get fixed
And to ensure they are not held culpable “just in case” things should fail, they ENSURE there are no easy mechanisms, policies or practices that can be traced back directly to them. In short, so they can ensure they cannot be held Accountable, when things go wrong. So they are happy to stick their hands up and take the credit IF things go right! Yet, when things do go right, it’s more often by accident or the outstanding efforts of subordinates at the bottom, rather than “great leadership” up front. But these incompetents simply trundle onto their next disaster, blissful in the knowledge that only in exceptional circumstances, would they ever be held to blame!
So we understand the problem but why can’t it be fixed? Simply put, it’s not in the Executive Leadership’s best interests (remember self-interest?). Control, governance and accountability at the forefront could easily resolve this dilemma in many corporations. But this form of policy decision would (by necessity) have to be forced down directly from the top (Board of directors or CEO level). And they are looking after their own self-interests. So this sets up an irreconcilable conflict in their minds, “how to take credit if things go right but duck blame if it goes wrong”!
I welcome insight if any corporate has this truly under control? I would love to be proved wrong and that this form of “top level corporate governance” really does exist, somewhere? But I will not hold my breath…
