Opinion

Lucy P. Marcus

Lead from the front, or manage from the grave?

Lucy P. Marcus
Jan 26, 2012 00:00 UTC

In the past couple of months, several companies have gone through extreme and very public upheaval. Such transitions offer opportunities for fundamental, board-led change for the better, but they are also fraught with significant risks. Recent developments at RIM and Yahoo help illustrate three pitfalls: “managing from the grave,” sequence and timing, and misplaced suspense.

Managing from the grave

One of the big risks at a time of transition is that those who leave the helm of the company are tempted to “manage from the grave,” being more concerned about their own individual legacy than that of the company.

For example, BlackBerry maker Research In Motion (RIM) has finally rid itself of its founders’ disastrous co-CEO/co-chair setup. Yet the stamp of the old management team is still very much in evidence. The founders continue to have a strong presence in the company, with both remaining as board members, and Mike Lazaridis staying on to head a newly created innovation committee.

RIM needs revolution, not evolution, and yet it has chosen to replace its co-CEOs with a company insider, Thorsten Heins, one of RIM’s two chief operating officers. While this may provide some continuity, what RIM needs right now are fresh eyes and ideas.

RIM’s newly appointed independent chair, Barbara Stymiest, has been on the board for five years, and though she comes with strong credentials, she may be too closely associated with past failures to be truly independent. Only time will tell if the former co-CEOs and co-chairs can truly let go and give the company the freedom it needs to right itself. Also in question is whether the new CEO and the board can resist being deferential to the founders or the pull of past strategies. To make the decisive moves needed to stop a death spiral, they must do both.

RBS’s board lessons

Lucy P. Marcus
Dec 19, 2011 23:45 UTC

By Lucy P. Marcus

The views expressed are her own.

Last week the UK’s Financial Services Authority (FSA) released a report on the near collapse of Royal Bank of Scotland (RBS), the overambitious institution that took over ABN Amro and then had to be bailed out by the British government to the tune of £45 billion ($70 billion) in 2008. It is one of several financial institutions around the world that have encountered serious difficulties in the past several years, but this report is particularly edifying.

The report has harsh words for the board of RBS, and highlights some of the failures of the RBS board in a way that provides an implicit warning for board members of financial institutions. The lessons that can be gleaned from looking at the RBS case are valuable for any director serving on the board of any business.

BOARD SIZE

One of the issues that the FSA report highlights is that of a board’s size. In the case of RBS, the FSA Report points out that the sheer size of the 17 director RBS board reduced the board’s overall effectiveness. As the report notes, it was possible that the having such a large board “made it less manageable and more difficult for individual directors to contribute, hence reducing overall effectiveness.”

What happens when the board goes global?

Lucy P. Marcus
Dec 5, 2011 18:55 UTC

By Lucy P. Marcus

The views expressed are her own.


In the past couple of weeks we’ve seen board-related stories from Japan with Olympus, India with Tata, Italy with Finmeccanica, South Korea with the Korea Exchange Bank (KEB), and more. Each story brings up a different issue around corporate governance, but taken together they raise a fresh question: Is a new global approach to board ethics emerging?

Corporate governance rules and requirements are distinct in different countries, and are often bound up in local attitudes and cultures. Yet there now seems to be emerging an overarching and universal ethic and attitude towards boards, board service, and the responsibilities boards and their members individually and collectively need to fulfill.

Part of the streamlining stems from the fact that most companies of a certain size operate across several jurisdictions, and therefore companies that are subject to differing rules operate to the strictest or highest standard. Another factor is that with transparency comes a new ability to look into the operations and actions of boards, and with this shift, public sentiment and ethical judgments come into play. Yet another factor is that in an increasingly globalized workplace where cultures mix, long-established cultural norms are challenged and the (mal-) practices they have given rise to get publicly questioned, as in the case of a British CEO of a Japanese company.

College trustees are board members, and then some

Lucy P. Marcus
Nov 25, 2011 14:35 UTC

The opinions expressed are her own.

Recent news around Penn State and the “Occupy” Movement on university campuses has thrown the role of the college and university trustee into the headlines and it is worth having a closer look at the role of the board of trustees and what it means to sit on the board of a higher education institution.

Like all boards, college and university boards have a general obligation to be caretakers of the organization and look after the interests of all its stakeholders, but in the higher education sector this role is layered with more complexity than it is for most corporate entities. After all, they are shaping the minds of future generations and it is the last opportunity to do that in a collective setting before a class of future scientists and artists, politicians and teachers, entrepreneurs and journalists spreads out into the world.

The role of the trustee of a college or university is not for the faint of heart, as the university board carries a long list of complex issues that require the trustee’s attention. There are a myriad of competing pressures that higher educational institutions face, no matter where they are in the world. Some are long standing issues, and some are new, and many are heightened by the economic crisis.

Playing board games to win

Lucy P. Marcus
Nov 16, 2011 16:18 UTC

The board room is going through an extraordinary time of transition. More is being demanded of boards than ever before, and the activities of boards are under greater scrutiny.

Corporate boards no longer operate in a secretive world behind closed doors, beyond the watchful eyes of the public and media. Investors, stakeholders, regulatory bodies, and governments are demanding more transparency and accountability. The past six months have catapulted the boards of HP, Yahoo, NewsCorp, Goldman Sachs, MF Global, and Olympus, straight into the news headlines.

The reason for this increased scrutiny is a greater public understanding of the role boards can and should play. There is growing awareness by investors, employees, and customers of the consequences of boards and board members not asking hard questions, not adding real value to the organization, and not protecting its future health and wealth.

  •