Executives: No faith in company strategy

Booz & Co. published results at the beginning of the year that evidenced company executives do not feel the company strategies will lead to success. A staggering 52% of those surveyed were of this opinion. The full survey and results can be found here.

The survey compiled of 1813 respondents across Asia, Australia, South Pacific, Europe, The Americas, and the Middle East and Africa.

50% of executives also believed setting strategy to be a significant challenge.

It can be speculated that changes in board structures may be the cause of these results. I have noted in previous blog posts about the changing board dynamic to one closer to a stewardship model. This has resulted in boards of directors being more involved in company strategy. To speak colloquially it may be a case of too many cooks. Conversely, results by Ingley and Walt which empirically examined the role of the board (between 2000-2005) found the opinion of most executives that the board was at least generally helpful or a strategic asset, and this opinion had greatly changed in their 5 year collection period. This paper can be found under citation: Ingley and Walt, 'The Evolution of Corporate Governance: power redistribution brings boards to life' (2007) 15(5) Corporate Governance: An International Review 780

This suggests that the lack of confidence in strategy may be a result of other factors. To speculate these could include: Increased awareness of competing interests in the company i.e. stakeholders; the impact of an unstable market after the recession; uncertain political environment; evolving media sources and increase in information technology; presence of emerging economies; EU significance in company law.

The first reason as to competing interests is evidenced in the survey results which saw 64% of respondents say they felt they had "too many competing priorities". Whilst 36% of respondents felt a frustration factor on management was having their decisions second guessed.

Why? Academic or inquisitive child...

It was a phrase we all thought we had grown out of. That all important question, why? Fortunately, gone are the days where we would nag our parents to death with asking this question; yet the question is becoming more and more frequently in my daily wanderings. The more I read the more I being to ask, why is this?

My observation is this seems to be vital to contemporary legal academic research. Excellent research complies of many qualities but without this vital quality you may find yourself open to criticism - constructive or otherwise - (although probably unavoidable no matter what you write).

But it is becoming increasingly apparent that some legal research often fails to address this question, which has ignited and allowed to flow the discussion of legal research and what do legal researchers do? Lawless, Robbennolt and Ulen stated in their book on Empirical Methods in Law that "Empirists don't accept a statement or generalization about the world because an authority or expert says it is true, or because tradition and common sense say it is so, or because it seems intuitively plausible".

Lawless et al have summed up the importance of understanding the wider influences on social life and the importance of asking why. Academic research cannot merely accept a point-of-view because a judge concluded in 1927 that this was correct. I was reading a recent article the other day on a "pro-US" corporate opportunities doctrine for the UK and it failed to address this question. Although it cited a few cases that backed up such an approach it failed to address why the UK should accept a US-style corporate opportunities doctrine. It lacked evidence and an opposing side of the argument. Why should we accept what they said in case A rather than case B. Law is a social institution that is dynamic and constantly evolving to balance interests, maximise the value of the economy and respond to social change.

These changes have formed a fundamental basis for my own research. A conflict of interest is considered the most understood duty. Something I constantly hear from anyone I speak to on the topic or article I read. Yet, ever since the seminal case of Keech v Sandford in 1726 this duty has constantly been breached more than any other duty: and I ask you/myself, why? Why should we accept a case from trusts law to be the same for company law? Why should we accept a case from 1726 before Charles Darwin wrote the Origin of Species and the law was heavily influenced by the Church?

So, I encourage myself and any inspiring academic to seek out answers for their research and ask themselves why. With this simple question we can advance our knowledge in an attempt to provide answers.