Directorship is the next piece of the management puzzle.
In 2015, management thinking will expand to complete the 2x2 matrix that captures all four forces that shape the modern corporation. I call it the DLMA Matrix:
The DLMA Matrix is designed to show the forces that impact on the direction and performance of firms. Their similarities and differences.
The horizontal axis represents “Value Creation” on the right and “Value Protection” on the left. The vertical axis has “Hands Off” at the top and “Hands On” at the bottom.
Running clockwise from the top right-hand corner are the four forces or functions of management in its broadest sense. “Directorship”, then “Leadership”, then “Management” and finally “Governance or Assurance”.
The top two quadrants comprise the board of directors. The bottom two, the executive.
The right half represent the functions that share the characteristics of leadership captured in the phrase “right things”. The left half represents functions that share managerial qualities captured in the phrase “things right”.
Don't be confused. Directors and managers do different things. But when they govern and manage they approach those tasks with the same mindset. Likewise, when directors direct, their attitude should be that of a leader.
On the diagonals are governance and leadership and directorship and management. Curiously, governance and leadership are states of mind or attitudes. The latter are positions within the firm. Only managers manage and directors direct. But leadership and governance can be practiced throughout the firm. Recognising the board's unique position in a broad model of management is a natural evolution.
Finally, a brief description of directing and leading qualities appears on the right of the DLMA Matrix. Whereas the qualities associated with managing and governing appear on the left.
Within the DLMA Matrix is every organisation. Each with a different focus. Some will have strength in leadership, others in governance, fewer still in directorship. I believe great corporations understand the tension between all four and get the balance right. Likewise within every failure is a company that failed to recognise that it needed all four to grow and prosper.
Next post continues the marketing shareholder primacy series. Winning their minds examines the curious relationship between universities and the investment industry.