Sunday, February 08, 2009

Challenging boards: responding to the credit crisis with fresh thinking

I’ve spent most of my weekend at the National Housing Federation Board Members’ Conference hearing about the credit crunch and change (in the case of social housing, there is a transformed regulatory and investment landscape). Therefore, it was particularly timely to read in the McKinsey Quarterly an article by Andrew Campbell and Stuart Sinclair on Mobilising boards for change. (The article can be read and/or downloaded after registering.)

The article made the case for shaking up the natural rhythms of boards and challenging directors to re-examine their thinking. More than that it gave chairs some ideas about how to do it. For example, it argues:

Mobilizing the board to tackle the economic crisis requires a fundamental overhaul of how its members interact. The only solution is to force change. The chairman needs to underline the gravity and urgency of the situation by summoning the board to extraordinary “credit crunch” meetings, “survival” meetings, “does our plan still make sense” meetings, and “how can we turn this pain into an opportunity” meetings. Without disrupting the rhythm, anchored thinking will continue to dominate.

The housing association board that I sit on as vice chair had a credit crunch breakfast which was useful in terms of thinking afresh at the implications of events.

The article suggests the use of outsiders in challenging assumptions and facilitating a change in style. (I think this is a good idea and I charge very reasonable rates!) The authors refer to how one board was assisted by an outsider:

In one board, the work involved identifying the six to ten premises of the company’s plan for 2009. The outsider then interviewed each director and asked them to offer their opinions on each premise confidentially. When shown to the group, the results demonstrated that most of the board no longer believed the premises were valid.

Groupthink is unhelpful at any time. At exceptional and fast-changing times like this it is particularly dangerous.

3 comments:

toronto realtor said...

Good thinking. After reading your article I felt fresh wind blowing around me, taking away the stale air that was being accumulated for ages. Are you going to apply this in any way?
Take care,
Elli

Bob Deed said...

Reading the article in McKinsey Quarterly did make me think. In terms of applying it on the housing association board that I sit on, I'll need to chat to our new chair.

One thing that many boards struggle with is finding space to do strategy at any time. We tend to focus on monitoring performance, wading through paper, etc.

Having extra meetings is one option. We've done that post-crunch - we had an additional meeting as well as the credit crunch breakfast. The difficulty with additional meetings is that busy board members have trouble with diaries. I'll be suggesting to our chair that we fix some provisional meetings in diaries well ahead: if we need to use them on strategy or responding to changing times, that'll be possible, if we don't need to meet, we can free the space.

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