The Fish Rots From the Head

March 19, 2008 - 3 minutes read

This week I had the great pleasure of meeting Professor Bob Garratt, author of the above book amongst others. He was in Perth to present on “Directors and their homework: developing strategic thought”.

The presentation was interesting and through provoking and particularly highlighted the ever growing demands on directors, as the scope of what is considered to be doing an appropriately thorough job continues to grow and the essence of what constitutes good governance becomes clearer.

One of the many things covered that I found refreshing was his bias to jargon free simple statements of strategic direction and intent, and using tools such as PPESTT analysis as a board developmental tool.

PPESTT is:

    • Political environment
    • Physical environment
    • Economic Environment
    • Social environment
    • Technological environment
    • Trade environment

His suggestion was to work in buddy pairs with a director and senior executive and address one of each of the above in real detail with quarterly feedback sessions to the board to constitute no more than 4 sides of A4 paper, thereby covering all of the above over 18 months.

The real purpose in doing so is to get quite a different macro view of the world and really lift up to another helicopter level. Further it will make board members consider the daily news intake in a different light in relation to the critical job of setting and guiding strategy.

A good idea – and also a book worth reading.

I asked him at the close of his presentation about how the nature of board relationships had changed since he published “The Fish Rots From the Head”. Interestingly there are now organisations that are monitoring board interrelationships, which is important in assessing independence. He went on to say that whilst there was a big improvement in this area, nurturing new talent is an important and ongoing job. In addition, the evolution of corporate governance is far from complete with financial market players, their machinations and their impact on share price being a key issue needing addressing by market regulators.

I’d go one further and ask how the role of independent audit by the top tier firms still leaves only the directors exposed in a meltdown, even if the auditors should have uncovered the issues.