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Assessing a Governance System

Posted on by KCampbell
Assessing a Governance System
Before you begin to redesign your governance system, invest adequate time in analyzing your current system. After all, this is what Einstein would do!

Einstein has been quoted as having said “if I had an hour to solve a problem and my life depended on the solution, I would spend the first 55 minutes determining the proper question to ask, for once I know the proper question, I could solve the problem in less than five minutes. In other words, he would spend significant time figuring out what the problem is.

If your current governance system isn’t performing up to par, it’s important to understand why not. Depending on what the “real” problems are, the solutions may lie in making actual structural changes (reformulating the committee structure or size of board, for example) or they may lie in changing the practices the board engages in (agenda design or meeting design, for example). Investing the time to adequately define and redefine the problem will:

  • Ensure that you are addressing the root (right) problems;
  • Generate information specific to the issue(s) at hand that will be useful in solving the problem(s) and developing a sound governance system; and,
  • Lead to group consensus on what the problem actually is, which is vital to the creation and execution of sound solutions.

Although a problem might be complex, the processes used to solve a problem are not complex. The first step is properly defining the problem and this begins with challenging assumptions and breaking the problem down to ensure you are focused on the root problem.

ROOT PROBLEM IDENTIFICATION

Determining the root cause(s) of an underperforming or ill performing governance system is one of the first steps in governance system redesign. Often what is first identified is a symptom of the problem, not the root cause. As such, it is important to challenge one’s assumptions and not get “locked” into the first “problem” that is identified.

When analyzing a governance system, two methodologies are useful: Ishikawa Diagram and Toyoda’s 5 Whys.

Ishikawa Diagram

An Ishikawa Diagram takes a systems approach to problem identification. The diagram is used to identify all possible root cause categories, under which actual root causes are listed. This approach forces one to consider all of the different parts of the governance system as one analyzes the problem.

An Ishikawa Diagram looks like a fish skeleton, with the initial problem being the head and possible root cause categories represented by the rib bones, under which root causes are listed. The illustration below uses lack an underperforming board as the initial problem, and then identifies six possible root cause categories, which become the rib bones of the diagram. Actual potential root causes are then listed along each rib bone. A more comprehensive list of root categories for governance system analysis is provided further below.

Five Step Process

  1. Insert the initial problem statement in the problem statement box.
  2. Brainstorm possible root cause categories.
  3. Brainstorm potential root causes in each category
  4. Analyze the potential root causes to clarify / define the real problem(s).
  5. Develop consensus around the root problem(s)

Governance Ishidawa Diagram

GOVERNANCE SYSTEM ROOT CAUSE CATEGORIES

As mentioned above, the Ishikawa process starts with brainstorming all of the potential root cause categories. These are comprised of all of the parts of the “system.” Following is a list of root cause categories for governance issues. All or some of these may apply to your organization. You can use this list as a starting place to identify additional root cause categories that are applicable in your situation as you build out your Ishikawa Diagram.

  • Board Meeting Design
  • Nominating Process
  • Committee Structure
  • Board Size / Structure
  • Board Culture
  • Board Development
  • Board Leadership Development
  • Governance Polices
  • Governance Practices
  • Board CEO Relationship
  • Staff Support

Toyoda’s 5 Whys

Toyoda’s 5 Whys is a very simple method to identify root causes. It can be used alone or in conjunction with the fishbone technique illustrated above. When a problem arises, ask why and for each response to the question ask why again until the why question has been asked at least five times.

Applying the 5 whys methodology to our problem of having a board that is a non-strategic thinking entity, the questions might look like this:

Q: Why doesn’t the Board think Strategically?

A: Because the are always digging into short-term tactics

Q: Why are they always discussing short-term tactics?

A: Because these issues are perceived to be important by the Board

Q: Why are these issues important to the Board?

A: Because they believe it is the role and responsibility of the Board to discuss and act on these issues

Q: Why does the Board believe this is their role and responsibility?

A: Because they don’t know another way

Q: Why doesn’t the Board know another way?

A: Because we don’t have a governance / Board development program

Using this example, we see the real problem is not that the Board isn’t thinking strategically, it is that we don’t have a formalized training / development program for our Board members. Of course, each group (or reader) will answer these questions differently; the point is to engage in the process to dig deeper into the actual root problem.

WHY AN INVESTMENT IN PROBLEM IDENTIFICATION MATTERS

Spending time to make sure that you have defined the problem(s) correctly is imperative to governance system redesign. On a very basic level, it ensures that you are focusing on the right problem and creates a high level of probability that the right solution(s) will be developed. Further, working on the problem identification process with a Governance Task Force builds consensus around the actual (root) problem(s). Finally, engaging in robust problem identification reveals information and knowledge that will inform the development of solutions and governance redesign.

Of course, it is also critical that you and your board have a thorough understanding of what good governance looks like as well as the appropriate roles and responsibilities of a high performing board. Likewise, it is helpful to create a vision of what a high performing board would look like for your organization so you can redesign toward that vision.

About the Author

Robert Nelson, a Certified Association Executive (CAE), brings over a quarter-century of successful executive leadership experience, working with Boards and high-powered CEOs in a not-for-profit setting. He is the founder of Nelson Strategic Consulting and brings hands-on experience guiding and facilitating the design of strategy development processes and think tanks. His focus on organizational strategies and strategic solutions to complex organizational and global grand challenges for national as well as international organizations.

Contact Robert through his website, or learn more about Nelson Strategic Consulting at www.nscstrategies.com.

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Association Strategy Pitfall: Looking for the “Right” Answer

Posted on by Miranda Pruitt
Association Strategy Pitfall: Looking for the "Right" Answer
As a society, we are so accustomed to being asked to find the right answer that we often don’t look beyond that answer. This can problematic when we develop an association strategy. In fact, it can be problematic anytime we are trying to solve a problem.

When developing strategy, it is imperative to think strategically. And, a key component of strategic thinking is creative thinking. Creative thinking is also vital when solving problems outside of the strategy development realm.

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Creative thinking demands that we come up with a variety of solutions. Maybe our first “right” answer is the best solution, but maybe the best right answer is the second, fourth or tenth right answer. The point is, we won’t know if our first “right” answer is the best until we have developed other solutions to compare and contrast it to.

The first step to identifying the best right answer is asking the right question. That starts with by charging your team with finding the right solutions or answers, not the right solution or answer. It also requires that your team challenges or ignores its assumptions. How you word the question can make a difference as well.

If we ask an employee or group of people to solve a problem, they will typically rely on their assumptions and come up with the solution. They will find a sense of satisfaction when they first encounter the solution and be happy to demonstrate that they have the solution. What they often don’t do is continue to search for other answers. As a facilitator, leader or manager it is your job to encourage them to develop multiple answers or solutions.

THE RIGHT ANSWER

In Roger von Oech’s book “A whack on the Side of the Head, ” he has some excellent examples that demonstrate the importance of not stopping with the right answer and the importance of asking the right question. But first, I need you to select the shape below that is different from all of the others.

onerightanswer

If you picked B, great job, you are right. B is the only shape that is made from all straight lines. Of course, if you picked C, you are right as well, as it is the only shape that is asymmetrical. But, then, A is also a right choice as it is the only shape with no points. As you give it more thought, you see that D is also the right answer; it is the only shape that has both straight curved lines.

The point is, often there are many right answers. However, the right answer in not always the best answer.

THE RIGHT QUESTION

Von Oech goes on to tell the story about a plague striking a village many centuries ago. Those stricken with the plague almost immediately fell into a death like coma. Most died within a day, although a few miraculously survived. One problem the village faced was that in the 1700s medical technology wasn’t very advanced and it was extremely difficult to tell the dead from those still alive.

The village was horrified one day when they discovered that someone was accidentally buried alive. So a group of villagers got together and solved the problem by agreeing to put a little food and water in each casket along with an air tube going to the surface. It was an expensive solution, but they knew it could save lives. A second group also got together and developed a cheaper solution; they would affix a knife blade to the inside top of each coffin that would pierce the heart of the victim as the coffin was closed, thereby assuring that no one would be buried alive.

The solutions were different because each group used a different question to find the solution. The first group asked, “what if we bury someone alive” and the second group asked, “how can we make sure everyone we bury is dead”?

FORGET ASSUMPTIONS

When confronted with a problem that is similar to a previous problem we have dealt with, it is human nature to assume that the solutions and results will be similar. However, when developing strategy and solving problems it is important to either forget or challenge assumptions. The fatal nature of not challenging assumptions is illustrated in the story of Croeus, the last ruler of the great Lydian Empire.

As Croeus contemplated attacking the Persians in 546 BC, he turned to two oracles for advice. They both answered that if he attacked the Persians, a great empire would be lost. This made him feel secure and gave him the confidence to move forward; so he formed an alliance and attacked the Persians. In the end, Croeus was defeated and true to the oracles statement, a great empire was lost. Croeus’ fatal assumption was two fold: he relied on the first right answer, which was the one he assumed he would find, and he assumed since he had went into battle before and won that he would get a similar result this time.

GOOD STRATEGY / EFFECTIVE PROBLEM SOLVING

Good strategy and effective problem-solving demand that we ask the right questions, challenge our assumptions and develop a number of right solutions before moving forward with the best solution. The next time you ask a group or an employee to solve a problem, ask them to identify solutions not a singular solution. Then make sure you and they are challenging the assumption upon which the answer rests. Of course, before you even ask them to solve the problem, it is imperative that you’ve identified the right problem and ask the right question; after all a great strategy for the wrong problem is no strategy at all.

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Stakeholder Analysis: The Key to Good Strategy

Posted on by Miranda Pruitt
Stakeholder Analysis: The Key to Good Strategy
Stakeholder audits are a critical component of an ongoing strategy development process. Your organization can profit from stakeholder audits in other ways as well. Stakeholder audits are an imperative component of an issues management program, they are part and parcel of good governance, and they are key to collaboration.

Stakeholder analysis should be undertaken as part of your environmental scanning activity. In addition, such analysis can play an important role in strategy execution, as you seek to align stakeholders with your strategy. Although you may take a “stakeholder management” approach when conducting environmental scanning, a different mindset is suggested for strategy execution. When possible, in strategy execution, the goal is to take a collaborative approach with stakeholders. Ultimately, a mutually defined, reciprocal relationship should be sought.

Stakeholder Identification

The first step is to identify your stakeholders. For purposes of a stakeholder audit, stakeholders are defined as anyone or any organization that could be affected or that could influence your organization or its outcomes. Take an expansive or divergent approach when identifying stakeholders. Early in the process, it is important to identify all of your stakeholders. It is often helpful to take a systems approach.

Stakeholder Identification Systems Approach

Stakeholder Analysis

Once you have identified all of your stakeholders, it is time to conduct an analysis of the stakeholders. Make a determination to use either (or both) qualitative or quantitative analyses. Likewise, you will want to engage in both primary research and secondary research. The types of stakeholders and your current relationships with them, along with your ultimate research goal, will dictate the research methodology you employ. The objectives of the research are to: gain an understanding of their influence, determine their needs, determine their concerns and issues, assess their level of commitment or resistance, and understand their perceptions of your organization.

When evaluating the influence of stakeholders, take into consideration their constituencies, credibility and capacity. You will also want to consider whom they are connected to.

A complete analysis also takes an inward view. You will want to give consideration to what you want from each stakeholder. Finally, you will want to make a determination of the importance each stakeholder represents to your organization.

Stakeholder Prioritization

Relative importance and influence are two key elements generally considered when engaging in stakeholder prioritization. The following matrix can be used to map stakeholders and determine their priority level.

Stakeholder Audit Priority Matrix

Protect: This quadrant contains stakeholders that are considered to be very important to your organization, but they do not have a lot of influence. As such, it will be important to pay particular attention to the group to make sure that their interests are protected and considered as strategy is developed. In fact, you may want to make sure they are well represented at any strategy development think tank.

Good Relations: You will want to make sure that you develop a close and constructive working relationship with this group. If engaged properly, these stakeholders can have a significant multiplier effect on your strategy execution and programs. They are considered to be high priority stakeholders.

Monitor: These stakeholders wield significant influence, but they are not very important to the organization. As such, they can be a source of risk to the organization. In the strategy development process, it is important that you recognize the potential risk and consider risk scenarios.

Low Priority: These stakeholders are of relatively low importance to the organization and do not carry much influence.

The priority level classification of each stakeholder is taken into consideration as strategy is developed. Priority levels are also fed into an issues management program.

In summary, the primary goal is to take a collaborative approach with stakeholders, especially those in the “protect” and “good relations” categories. This demands a mindset wherein you consider the stakeholders as sources of opportunity and competitive advantage. On the other hand, some stakeholders, such as those in the “monitor” category, could present risks and, therefore, require a stakeholder management approach to ensure that you mitigate the potential negative impact.

In today’s rapidly changing environment, it is important that you engage in a comprehensive stakeholder audit every 12 to 18 months. Most importantly, it is critical that you begin with an all-inclusive list of stakeholders; taking a systems approach to stakeholder identification can help ensure you are considering all potential stakeholders.

How do you engage stakeholders in the strategy development process?