The GLC takes a look at some of the pressing issues for directors in 2015 in the February/March edition of boardroom magazine.
The role of the board
In a brief overview, the IoD discusses strategy in the boardroom. It’s about thinking strategically about the future of the organisation, to consider the big picture and take a birds-eye view so that the best decisions can be made. This is no easy task and requires an ability to take a step back from the day-to-day operation of the organisation and focus instead on the larger and longer-term picture.
Models of strategic thinking
The Harvard Business School released a compendium of best-selling articles in “10 Must Reads On Strategy”. It contains excellent introductory information on strategic thinking.
The Boston Consulting Group (BCG) is a global management consulting firm and is widely regarded as a leading advisor on business strategy. The BCG Matrix is a tool used in assessing business portfolio potential.
Blue Ocean Strategy is the process whereby a business simultaneously pursues differentiation and low cost, in order to create new market space which in turn renders competition irrelevant.
Understanding and engaging with competition is a critical, even unavoidable part of business strategy. However, competition is often reduced to a narrow set of ideas. Porter’s Five Forces takes a broad view to articulating the factors which influence competition in a given industry.
It is a core challenge of the business strategist to define and measure success. Rather than reducing the success of your organisation to financial metrics, it can be appropriate to examine outcomes from a range of perspectives. Balanced scorecards offer a different set of lenses through which you might consider the effectiveness of your business in delivering on your mission.
Understanding the context within which your organisation operates is essential to embarking upon any process of strategic planning. The SWOT (Strength, Weaknesses, Opportunities and Threats) analysis is a popular approach to situational or environmental assessment.
A more recent innovation to the standard SWOT model is PESTEL, an extension to the strategic SWOT analysis which is more far reaching. The PESTEL analysis is an effective lens to deepen your assessment of the external organisational environment.
The Ansoff Matrix, developed by a Russian/American mathematician of the same name, is a tool used to analyse risks and opportunities through existing and new markets and products.
An international collaborative work between director institutes including the Institute of Directors in New Zealand. This paper from the Global Network of Director Institutes (GNDI),Curbing Excessive Short-Termism provides background, consequences and some recommendations around how to more effectively deal with short-termism in business.
Professor Bill George of Harvard Business School discusses how to better gear the market and our understanding of capitalism towards long-term strategic thinking. Some cornerstone arguments are featured here around short-termism vs long-termism.
New Zealand lags behind advanced OECD countries in productivity and per capita income levels, in spite of what can be characterised as growth-friendly structural policy settings. The New Zealand Productivity Commission has identified some key determinants for New Zealand’s under-performance which are discussed here.
The Australian Productivity Commission undertook a public inquiry in 2009/2010 into the regulatory framework around remuneration of directors and executives of companies regulated under the Corporations Act. Further information can be found here.
International Trends and Economic Outlook
The Trans-Pacific Partnership Agreement (TPP) involves 12 countries and accounts for 36% of the global economy. It reflects an evolving theme in the world trading system as trade agreements have shifted increasingly from large scale global agreements to bilateral, regional, and sectoral agreements, with a much broader scope.
For an overview see our directorsbrief: The TPP explained.
The IoD has also produced a Boardroom article which explains what the TPP means for small business
MFAT provides a TPP website and overview.
Chapman Tripp summarises key points and implications in this Brief Counsel.
The Ministry of Foreign Affairs and Trade (MFAT) commissioned a study to estimate the economic impact of TPP, focussing on New Zealand. A National Interest Analysis is also available.
World Bank analysis is available here, and highlights here.
Finally, for a series of papers providing analysis on the TPPA from academics and other experts, produced with financial support from the NZ Law Foundation and the NZ Public Service Association, check out this TPP Legal page.
KPMG, partnering with the Mowat Centre at the School of Public Policy and Governance, University of Toronto, have released a report (Future State 2030: The global megatrends shaping governments) identifying nine global megatrends that are most salient to the future of governments and their core responsibilities of economic prosperity, security, social cohesion and environmental sustainability.
Ross Buckley, Executive Chairman at KPMG, presented at the IoD conference in April 2015 about the report. His presentation is available here.
Released in May 2015, is a new McKinsey book, “No Ordinary Disruption: The Four Global Forces Breaking All the Trends”, which focusses on four disruptions:
- The age of urbanisation
- The challenges of an ageing world
- Accelerating technological change
- Greater global connectedness
We live in an age of constant change; change that affects relationships between companies, customers and society on a daily basis. These changes force forward thinking business leaders to question the purpose and outputs of their businesses and reflect on the assumptions surrounding their industry. Price Waterhouse Coopers release an annual global CEO survey examining these ideas. The 2015 survey explores the themes of growth, competition, technology, partnering and diversity.
Regular Commentator on Chinese and International news media, and Managing Director of Mahon China Investment Management Ltd., David Mahon, produces a quarterly review of the Chinese economy. Provided to clients for more than 20 years, China Watch provides insightful analysis on the evolving business environment in China. Mahon China also writes regularly on specific industries and China’s interaction with other countries, particularly New Zealand. More information is available on the Mahon China website.
Mergers and acquisitions
Mergers and acquisitions can pose testing times for good corporate governance practices. Directors need to ensure there is robust due diligence, excellent evaluation, appropriate timing and that intended outcomes are realised. The IoD’s Four Pillars provides a brief overview of a director’s role in mergers.
The Takeovers Panel enforces compliance of, and grants exemptions under, the Takeovers Code.
The IoD and Takeovers Panel have published The Takeovers Code: a quick guide for directors in 2015. This brief guide is to help determine if a company needs to comply with the Takeovers Code, and if so what the key compliance responsibilities are for directors.
A more detailed 2014 guide, Basic Guide for Directors about the Takeovers Code, explains how takeovers and other kinds of transactions are regulated by the Takeovers Code in New Zealand, and will help directors understand their obligations under the Code.
The Takeovers Panel has also published a Basic Guide for Shareholders and a series of Fact-Sheets for Shareholders about the Takeovers Code, which are available on the Takeovers Panel website.
Responding to a lack of market-led information about the actual challenges faced by Māori enterprises, Icehouse (In partnership with the University of Auckland Business School, Te Puni Kōkiri, Grow Rotorua and The Institute of Directors) have produced a report regarding Business Growth Challenges Facing Maori Businesses. The report identifies the goals of Māori SMEs and Māori Trusts, and the challenges they face in achieving those goals.
The Maori Economic development strategy and action plan are available on the MBIE website, here.
The BERL Maori Economy Report for Te Puni Kokiri is available here.
Unitec hosted the ‘Forum for the Future’ in 2010 which had a focus on unlocking the potential of Maori business. Coverage of the event can be found here.