Congratulations once again on your appointment to the Board of Angel Life – as I said at our small celebratory lunch, you are the first of my female friends to make it to the board of a major publically quoted company. You smashed a few glass ceilings on the way – but now you are in really dangerous territory – like the industry I work in, your board colleagues are almost all middle-aged and older white males.
One clearly demonstrated failure of your new male peers has been in their management of IT – private sector, public sector, all much the same. Here is the opportunity for the new generation of female directors to shape a board revolution! I shared the stories of Dennis and the BBC – and Parkinson – in the hope that you can demonstrate that women with your background and fettle know how to avoid the tank traps.
The story of Dennis has been told by one of my favourite journalists, Gillian Tett of the FT. A senior British broker, ‘on the Board of a company that insures some of the biggest accounts of Lloyds of London’ he was party to requesting an overhaul of his company’s information systems ‘plagued by problems’. ‘An expert was hired to devise a new, improved (and expensive) system – and a meeting of the Board was called to approve it’. Dennis’ colleagues waved the proposal through – but Dennis demurred, saying that ’he had not understood a word that the computer expert had said’.
Gillian Tett goes on tell the fuller tale – how Dennis’ colleagues eventually admitted that they also had not understood a word that the computer expert had said: how they then demanded the computer expert translate his plans into plain English: and how Dennis invested time to work closely with the project team. In conclusion Dennis reports that ‘the important point was that I had to be with the installers to explain exactly what I wanted out of the system and see it through with them’.
Gillian Tett goes on to draw parallels with the root causes of the great financial failures of 2007 – boards unable or unwilling to grapple with the complex financial instruments then being invested in.
The BBC story is of the failure of their Digital Media Initiative (DMI) at the cost of some £98.4 million to us licence fee payers. In Gillian Tett’s place is the excellently objective National Audit Office (NAO), whose Memorandum was published this January.
The vision of the DMI was impressive – ‘a major technology-enabled transformation programme designed to allow BBC staff and partners to develop, create, share and manage video and audio content and programming on their on their desktops – requiring development of a fully integrated digital production and archiving sytem’.
Launched in 2007, Siemens were initially contracted to build the system, but the contract was terminated by mutual agreement w/e July 2009 (did the Siemens’ shareholders demand an enquiry at the time?) and the BBC took the project in house.
The story thereafter as detailed by the NAO was one of increasing failure to deliver key objectives – and, more seriously, a failure of the BBC’s governance processes to pick up and act on these failures until that point in 2013 that they closed the project down. To quote several summary conclusions of the NAO : ‘Governance arrangements for the DMI programme were inadequate for its scale, complexity and risk’; ‘The BBC did not appoint a senior responsible owner to act as a single point of accountability’; ‘Reporting arrangememnts were not fit for purpose’; ‘the executive board applied insufficient scrutiny durng 2011 and the first half of 2012’; and so on.
And Parkinson? Well you now have, courtesy of Amazon, a copy of the original 1950s book Parkinson’s Law or the Pursuit of Progress by C. Northcote Pakinson. One of his laws is that the time that Boards of Directors devote to each item on the Board Agenda is in inverse proportion to its value – chiefly because of their limited understanding of the high value items (the nuclear reactor in his example) and their tendency to have lots to say about the low value items (the new staff bicycle shed!).
So here is rich territory for you to work at, develop and exploit as a new female Director determined to create and protect value for your shareholders. Start with what I shall here call Dennis’ First Law – ‘all IT experts should speak in plain English’ and move on from there!
You will be glad to know that the fuller lessons for Board Directors in this key field are being codified into an effective training programme – when you are ready, get in touch with me, quoting NIITE. An overdue initative, surely!