What is Leadership in the Boardroom?

When leading divorced from managing back in the mid 1970's there was a choice.  Redefine managing to include these new qualities or create a new field of management science - leadership.

Today we face a similar problem and again it centers on the concept of leadership.   The difference is that the debate has moved from leading in the C suite to leading from the boardroom.

Ram Charan, Dennis Carey and Michael Useem argue that the role of the board is changing.   Boards must evolve beyond their now traditional role as overseers.   "Governing boards should take more active leadership of the enterprise, not just monitor it's management" they write in their latest book Boards That Lead.

A similar message is now coming from Mckinsey & Company.  Long the champions of boards concentrating on maximizing shareholder value, their focus is shifting.   Though they don't use leadership in their latest insight ,  the broad theme is that boards need to spend less time monitoring management and more time looking forward.

Indeed, these authors support what I have been saying for a decade.   Boards must direct for the strength of their organizations first and govern for the weaknesses of their people second.  Though we may disagree on the why and how,  we all agree that leadership should be on the agenda of today's public company board.

But before spending the next ten years getting into the detail and arguing over whose approach delivers the greatest value,  its opportune to stop and ask what should we call leadership in the boardroom?

Corporate Governance ?

Ram Charan and his fellow authors argue that now is the time to redefine the concept of corporate governance:

"In light of the far-reaching and irreversible developments in company leadership...this is a good moment to redefine our working concepts to more accurately characterize the emergent reality of board leadership"   They continue "rarely do traditional definitions of corporate governance make much reference to company leadership".   They conclude "Yet given the emerging leadership practices by the board that we have chronicled here, a revised definition would wisely incorporate the new reality that board are now leading directly and in partnership at many enterprises - and should in our view, be doing so at all companies"

I think redefining corporate governance to include leadership is a mistake:

  • First, corporate governance has been described as a "10 pound concept trying to fit in a five pound bag" ( or words to that effect) and that was before the emergent reality of board leadership.  Trying to add another 10 pounds in the form of the intellectual baggage of board leadership, will just compound the problem.
  • Second, there is no universally accepted definition of corporate governance to redefine to include board leadership.     Corporate governance is peculiar in that there is no agreement as to what it actually means.   The Puzzle of Corporate Governance Definition(s): A Content Analysis, examines 22 definitions of corporate governance to reveal how little consensus there is.
  • Finally, if there is a popular definition of corporate governance, it centers on oversight, monitoring, process and control.    Governing, shares more in common with managing than leading.   Governing and managing are essentially about doing things right (and unfortunately ticking the right boxes).    Leadership is, as Peter Drucker reminded us, about doing right things.  Describing the board's managerial and leadership functions as corporate governance just creates more confusion and begs the question of how to distinguish the two.

Leadership?

An alternative would be to expand the concept of leadership to encompass both executive leadership and board leadership.

This too would be a mistake:

  • Combining board leadership and executive leadership in the one concept would confuse where the line in the sand between the two is drawn. 
  • Second, board leadership is different to executive leadership.   Both lead but in different ways.  Rather than lose sight of the nuances of the two approaches by grouping them together in the one concept, it would be useful to create a new word to describe and clearly distinguish leadership in the boardroom from leadership in the C-suite.

Directorship?

To overcome these and other problems,  I argue that directorship is leadership in the boardroom.   

My solution to the problem of what to call leadership in the boardroom has been to combine the noun "director" with the suffix "ship" to come up with another meaning for an old word "Directorship".

Ship is a commonly used suffix to form nouns of state or condition.  Whilst historically used to denote the office or position of a director,  I can't see a reason why it shouldn't be used in the same way as "leadership".   Leadership is used both to describe a position and a skill.    Likewise, it seemed logical to me that directorship be used to denote the skill of a director in creating value for their organization.   

Indeed, you'll find a number of examples where the word "directorship" is used alongside corporate governance to distinguish between the two.

Corporate Governance, Leadership and Directorship Are All Different

(c) Tunjic 2014

(c) Tunjic 2014

Describing traditional board practices as corporate governance and the emergent leadership practices as directorship provides a brand new framework with which to understand the boardroom.

We are just coming to realize that governing to protect value through oversight and directing to create value are fundamentally different functions in much the same way as managing and leading are.   Indeed all four are vital to organizational success. 

  The manager sees the trees.  The leader sees the forest.  The director, practicing corporate governance, looks for the threats hiding behind the trees.   But, the director does something different again.  

Boards need to look further out than anyone else in the company,” commented the chairman of a leading energy company to Mckinsey&Company.   They're right.  A director, practicing directorship, must look beyond the forest for the opportunities that lie ahead.  


For more more on governing and directing.