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Governance As Leadership - Wiley Barnard

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Wiley Barnard

on 30 April 2011

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Transcript of Governance As Leadership - Wiley Barnard

The problem with "migratory governance" is that it creates competition between the CEO as leader and the trustee as a source of leadership. The formulation of governance by leadership, however, provides a positive approach that expands opportunities for fresh leadership and adds value to the individual trustee. In short, governance is too complicated to be reduced to simple formulas like "Board sets policies which administrators implement" Two analogues to governance are offered - intelligence and leadership attributes. "Intelligence" is now conceptualized as personal repertoire of skills demonstrated by linguistics, spatials, kinesthetics, musical and interpersonal skills. Effective leaders easily move from mode to mode, not relying on a single mode. Unfortunately, that's what trustees do not experience by being single-minded. Historically, the stereotypical image of a NP administrator was simply a well-intentioned do-gooder. In the past, successful NP practitioners, usually unfamiliar with accepted business practices, rose to leadership roles by default. Today's NP leaders are well versed business professionals leading their organizations in sound business practices. Today, NP CEO's often have formal education in the field of NP management and are recognized as not just do-gooders, but organizational leaders providing professional guidance to the organization. As a result of these leadership improvements in the NP arena, trustees, employees, clients and donors have come to expect leadership from the CEO in all organizational facets. With NP managers gravitating to leadership roles, board roles have shifted from leadership to management roles. As boards assume management duties, they are becoming more diversifed in order to address the demands of the NP. Often resulting in boards that are multitalented with members that are specialists in their field, such as law, labor, finance, marketing, strategy and human resources. As the CEO/Board roles are reversed, the real threat to governance is not a Board the micromanages, but a board that microgoverns, leaving it blind to governance as leadership. Theoriticians now surmise that a leader is cognitively complex, that is, they are able to think and work in multiple modes. Leadership was historically associated with physical attributes, personality traits, particular activities and specific realms of expertise. There are three modes of governance, all equally important. Type 1 - The Fiduciary Mode - Boards are concerned with managing the tangible assets of the organization. Type 2 - The Strategic Mode - Board creates a strategic partnership with management. Type 3- The Generative Mode - Boards become a less recognized, but critical, source of leadership for the organization. When these three modes merge in a singular approach the board starts to achieve governance as leadership. The most exemplary Boards perform in this "tri-modal" state. The majority of boards work most of the time in the fiduciary or strategic modes. When all three modes are engaged simultaneously, however, the board achieves a fresher, more innovative approach - "Governance as Leadership". There are three problematic areas concerning poor board performance. First, it has long been proposed that board rivalries, individual member dominance, one-way communication and bad chemistry have all contributed to Board ineffectiveness. Second, board members that are not fully engaged in their personal commitment to the mission, the "No-Show Trustee". But a third problem has been raised by analysts - not properly communicating what's expected of the board members to the board at-large. In addressing the third problem, the author suggests a five part board member job description. 1) Clarify and set the organization's mission and strategy, being prepared to modify as needed. 2) Monitor the organization's performance and hold management accountable. 3) Select, evaluate, support and if necessary replace the executive director or CEO. 4) Develop and conserve the organization's funds and facilites. 5) Serve as bridge and buffer in the external environment, serve as organizational advocate and support the wider community. Another problem that exists behind the problem of performance is a fundamental problem of purpose or lack thereof. As the nature of board members governing work is episodic, not every meeting addresses governance, the meetings may stagnate for trustees. Board members should be encouraged to equate all meetings with governance and management. Board oversight of management should be a constant process. To spot problems or malfeasance is ongoing and critically important. It is a responsibility that must be taken seriously as it is a fundamental legal demand that trustees meet their "duties of loyalty and care". Boards are similar in three ways. 1) A board can creates legitimacy for an organization. Funders, clients and employees look to the board for legitimacy. In fact, the boards very existence creates legitimacy. 2) The board provides management with "sense making" opportunities simply by meeting. 3) As an entity the board encourages vigilance by management. The problems of purpose become most acute where the board's key governing work is concerned. The problem of purpose also demands a new job description as well - one that could possibly assign boards more attractive tasks and hopefully inspire new ways of organizing those tasks. A task and structure approach may seem the obvious solution. But keeping the board busy doesn't necessarily translate to better governance. An alternative response might be raising the question "What are we governing?" Differences between mature and fledling organizations place different demands on board and governance methods. One approach would be to evaluate the potential gap between the mental map of the organization versus the governing modes actually employed by the board. The mental map should match the governance methodology in its nature. In a Type 1 mode the mental map is rarely employed. Type 1 mode only ensures resources are used effectively in the execution of the mission. The Type 2 mental map depicts the logical organization operations, predicting and reacting to the internal and external environment influences. A comprehensive mental map of the modern NP calls for Type 3 generative governing. Type 3 shapes and incorporates Types 1 and 2 work by adding detailed expressive aspects of the organization. This preferred work state produces concentration, absorption and high performance because both challenges and skills are equal to each other. In this sense, governance as leadeship is not a burden, but an opportunity. Overview of Type 1 Fiduciary Governing Fiduciary work is so basic that most NP trustees and executives consider it synonymous with trusteeship. Type 1 Fiduciary governing aims to prevent theft, waste or misuse of resources, ensure that resources are deployed effectively and efficiently to advance the organizations mission, safeguard the mission against both unintentional drift and unauthorized shifts in purpose and require that trustees operate solely in the best interest of the organization. These duties all be summed up in the phrase "duties of loyalties and trusts", the fundamental work of trusteeship. The term "trustee" describes a person who holds assets for the benefit of another. Trustees are generally subject to a more exacting standard in executing their duties than directors are. The Type 1 mental map of a bureaucracy is no ones vision of a organization today. The bureacratic assumptions of Type 1 governing has become institutionalized in Type 1 boards, creating a problematic archetype for achieving the feduciary goals for which this model was intended. Type 1 board governing practices are set in concrete. The feduciary work of budgeting, auditing, investment management, development and program review became a series of fixed committees, one for each production process. Nonprofits may have bureaucratic features, but they are not bureaucratic. The weakness of the Type 1 mental map is that it describes only the bureaucratic dimensions of the organization and is too restricted to address the realities of modern nonprofits. Type 1 is problematic because boards only encourage governing and limit leadership. In turn, trustees become vulnerable to the fatigue and boredom of routine work. Type 2 Governing - Strategic A Type 2 mental map charts new territory, where organizations are complex human systems are permeable organizations susceptible to internal and external influences. The boards attention shifts from conformance to performance and the trustee's perspective changes from "inside out" to "outside in". As the nonprofit world evolved, strategy became an essential organizational focus and the board member became an fully engaged participant. The boards primary role is now to ensure that the CEO has developed a comprehensible, defensible plan. Board now poses questions like "What business are we in?". The board is defining strengths, weaknesses, opportunities and threats. Six problems contribute to strategic disillusionment:
1) Plans without traction
2) Plans without patterns
3) Plans without strategies
4) Ideas without input
5) The pace of change
6) Unforseen outcomes Instead of relying on formal analytics to detail strategies, leaders can arrive at strategy through insight, intuition and and improvisation. Brilliant ideas, not brilliant plans, are the springboard for revolutionary strategies. When governing in the Type 2 mode, the role of the board shifts from the power of the boards oversight to the power of the boards ideas. Effective boards now both oversee strategic planning procedures (Type 1) and work with management to determine what matters most to the long-term future of the organization (Type 2). This shift from board as monitor to board as partner spawns three major changes. 1) Board Structure - strategic planning necessitates a flexible board structure. The boards structure must be adapted to strategic priorities, not vice versa. 2)Board and committee meetings - Ritualized agendas and rituals don't fit in the Type 2 mode. As with board structure, form should follow function. 3) Communication and information - To think strategically, trustees must understand what influential internal and external shareholders think as well. There are three circumstances when board engagement in strategy implementation might be warranted:
1) The Chair and CEO believe that one or more trustees could best handle a task.
2) Participation in implementation would be instructive for trustees.
3) Involvement would inform trustees about whether the organization was on course and mission. It should be noted that Types 1 & 2 still compromise the state of the art in trusteeship. However, greater examination of today's NP reveal a less orderly and more complex environment. In this environment:
1) Np's are more than just strategies and plans.
2) Organizations are also cultures, political systems and symbolic contexts.
3) The sense people make of events often matters more than the events themselves Much of what drives strategy occurs before strategic planning starts and before boards engage in the process. Strategies sometimes emerge despite plans or apart from plans. But these attributes collectively necessitate an equally critical mode of trusteeship - generative governance. Type 3 - Generative thinking Board members tend to overlook three ideas central to Type 3 governing:
1) How powerful generative thinking is.
2) How vital it is to governing.
3) How nearly everyone in a NP, except the board, uses it to influence the organization. Boards are often not present when and where the most important action occurs. When it comes to generative governing, most trustees add too little, too late. Generative thinking precedes and generates familiar organizational processes like mission setting, strategy development and problem solving. The generative process is easiest to grasp by starting at the end, describing the result of generative thinking and then looking backwards to see what produces that output. Generative thinking produces a sense of what knowledge information and data mean. "When you put it that way, it does make sense". "Putting it that way" is a three step process:
1) Noting cues and clues - The cues and clues people need shape the problems they see and the strategy they develop.
2) Choosing and using four frame styles - structural, human resource, political and symbolic.
3) Thinking retrospectively - people make sense by thinking about the past, not the future. When executives displace trustees we have, in effect, leadership as governance Leadership as generative thinking: the leader defines reality

Leadership as governing process: engaging others in generative thinking

Boards become bystanders: Boards address the problems presented to them

Governance by fiat: Trustees displace executive, not a positive option because CEO's have access to cues, clues and constituents that inspire sense making.

Governance by default: When boards and executives disengage, staff fills the vacumn In the best scenario, boards work in tandem with executive. The work takes two forms - overseeing generative work and initiating generative work. Nonprofit boards are ideally positioned for generative work
for three reasons:
Power - generative thinking shapes what happens
Plurality - generative work thrives on participants with different
perspectives and frames
Position - From a vantage point of distance trustees can assess
big picture Type 3 - Generative governing First law of generative governance - The opportunity to influence generative work declines over time. Opportunity peaks when organization faces a problematic situation. Trustee involvement is lowest when generative opportunity is greatest and trustee involvement increases as generative opportunity declines. The following resources are recommended to promote working high on the generative curve:
1) A Type 3 mental map that describes the organizational
terrain that the board will find.
2) A review of landmarks that signal generative opportunities.
3) Address opportunities that are conducive to generative
4) Techniques for considering the past and its implications
for the future.
5) Methods for promoting generative deliberation.
6) Considerations for assessing boards generative work. The Type 3 mental map should address three facets of the nonrational, generative organization:
1) Goals are ambiguous, if not contested.
2) The future is uncertain.
3) Meaning matters. When assessing landmarks, several characteristics should be considered in the process - ambiguity, saliency, stakes, strife and irreversibility. If all are present, trustees should be working in the generative mode. The triple hex issues are those that demand feduciary, strategic and generative considerations. As opposed to the isolation of the board room, a better approach for executives, trustees and generative governing has boards start and end in the boardroom, but also work at two boundaries. At the internal border, dialogue occuring between the board and the organization, at the external border, interaction between the board and the wider environment. Work at the internal boundary gives trustees unfiltered access to the organizational stimuli the promote generative thinking. At the external boundary trustees can find two other important resources - generative occasions and alternative frames. Looking back - Boards regularly examine the feduciary past. Trustees examine the record via benchmarks, scorecards and progress reports in generative governing. using the past to make sense of the future options. The key tools in this research are retrospective questions and dominant narrative. In the process of suspending the rules to allow free generative processing, four conditions should be present:
1) Assume action informs goals rather than vice versa.
2) Consider counterfactuals and hypotheticals.
3) Treat intuition as actuality.
4) Pose catalytic questions.
Ultimately, the results of this process should stimulate robust dialogue.
The Pay-Off: Specifically, generative governance
1) Empowers the board to do meaningful work
2) Engages the collective mind
3) Enriches the boards work
4)Enhances the boards value Board members and senior staff must learn to recognize, appreciate and capture the value of four no less crucial forms of capital, beyond money, that trustees can provide. These are intellectual, reputational, political and social capital. Each form of capital can be generated by trustees and invested on the organizations behalf. There are three start-up challenges to generative governance.
1) Some boards and CEOs may be inclined to pursue the suggested process
too literally.
2) Organizations needs to guard against unproductive overuse of a given
mode, particularly the generative mode.
3) Governance as leadership could easily become the pretext for reforms
that various trustees or staff have long been eager to advance. When organizations reframe governance as leadership, the board becomes more than a fiduciary of tangible assests and more than managements strategic partner, as vital as these functions are. The board also become a crucial and generating source of leadership for the organization. In short, the board learns to perform effectively in all three forms of governance. The better the trustees do that, the more deeply the board will understand the purpose of governing. The better the board understands governance, the better governed the organization will be.
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