Why Governance Needs an Operations Revolution

[00:00:00] Today, join host Richard Conway as he interviews Anthony Wright, Chair of Hanlon Industries, Director of CPA Australia and former CEO and founder of LexVoco about how to improve governance effectiveness using process optimisation, technology and data.

[00:00:20] Richard Conway: Welcome to Minutes by boardcycle. I'm your host, Richard Conway, and today on the podcast I'm interviewing Anthony Wright. Anthony's the Chair of Hanlon Industries and Five At Heart and a director at CPA Australia.

[00:00:32] Relevant to the topic we're discussing today. Anthony was the CEO and founder of Lexvoco, a legal and GRC operations and technology business that was acquired in 2019 and also had a past life as General Counsel and Company Secretary and Head of Strategy and Systems at Transpacific now known as Cleanaway.

[00:00:50] Welcome Anthony.

[00:00:51] Anthony Wright: Hi, Richard. Great to be here.

[00:00:53] Richard Conway: So Anthony, the theme I wanted to talk with you about today is at a high level why we never hear the term governance operations and the reason for asking that is because over the last decade or so, we've seen legal teams be quite transformed by what I'd call the legal operations revolution.

[00:01:12] But the CoSec or governance team, which is often part of the legal team or attached to the legal team seems fairly untouched by that and I wanted to ask you whether you agree with that and if so, why you think that is?

[00:01:26] Anthony Wright: I do tend to agree and I'd even take it a step further and if you think about the different corporate functions within most organisations. Legal operations has existed for many decades as well, but it's only started to become more prevalent and more talked about in probably the last 10 years.

[00:01:42] And why is that? Well, I tend to think that a lot of it's driven by external firms and consultants first. So, when they can see that there's an opportunity to help organisations with finance, operations, marketing, operations, technology operations, legal operations. There's a drive to talk about it more and articulate what the issues are for organisations, even if the organisation doesn't realise they have an issue or not.

[00:02:09] And perhaps governance for some reason has missed out on that. I think potentially it's because in the governance space, you tend to follow what's been done before and is there really a need for change? And perhaps, we can get into what is operations and it's the drive for efficiency and effectiveness and continuous improvement.

[00:02:31] Richard Conway: Well, that's exactly the question I wanted to ask Anthony.

[00:02:34] Like, what do you define operations as being? And do you think there is an operational component in governance that makes it suitable to think about this kind of stuff?

[00:02:45] Anthony Wright: Absolutely. I think, at a high level, every function, every team, every group of people within an organisation has an operational aspect to what they do. And when I think of operations, I think of the drive to do things, to do tasks, to achieve results as efficiently and as effectively as possible.

[00:03:07] So, what does that mean? It's getting into how do we add value? How do we save time? How do we improve profitability? How do we improve or how do we help further the cause or the purpose of the organisation? How do we improve quality?

[00:03:23] So, all of those aspects are getting towards how do we become more efficient? How do we become more effective? And whether we like it or not, whether you work in the CoSec team, a legal team, a finance team, technology, etc., there's an operational aspect to what we do or there ought to be a drive to always make those things better.

[00:03:45] Richard Conway: Yeah, absolutely Anthony. And that leads on quite well to the next question I wanted to ask, which is, from what I've seen in in the legal operations space. That's had a big focus on process optimisation, so breaking down what are quite complex and feel like unique legal workflows and turning them into manageable and repeatable components.

[00:04:07] Do you think that that's, applicable in the governance space? Do you think it's more complex or less complex than what we've seen in the legal space?

[00:04:16] Anthony Wright: I definitely think the same principles apply.

[00:04:19] So, whether it's in legal or company, secretarial, or again finance, you are always looking for where is there inefficiency? Where is there waste? Where is there a non-value-added task? Where is there, errors, for example, or mistakes? And I think the starting point for that is to ask the key stakeholders.

[00:04:41] So for the Company Secretariat function, the key stakeholders are obviously the chair, the board and the other internal stakeholders within the organisation and the external stakeholders. But the starting point needs to be the client or the customer, which I think in this case, is the chair, or the board as a whole - what do they perceive as to be efficient or ineffective or not quite working right, or frustrating or annoying?

[00:05:10] And then how do we improve those things? And to me, that's what operations is about.

[00:05:16] Richard Conway: Anthony, how do you, I guess that requires, 'cause you talked earlier about, governance, sometimes doing things the way they do it because it's always been done that way. How can you, if you're in one of those teams and you have been doing things, the same way for a long time, how can you look at it with new eyes, with that kind of lens and distinguish between what you've been doing because you've always been doing it and what you’ve been doing because it’s actually valuable?

[00:05:45] Anthony Wright: It's really a change in mindset. So that, without question, you need to get the basics right, being right across the governance and compliance obligations of that organisation. Being diligent and reliable in terms of preparing and conducting meetings and all the administrative tasks that go with the board or the company secretariat.

[00:06:07] Being an excellent communicator. But then once you've got the basics right, it's then taking a step back and asking yourself, what more could we do to help this organisation or this team being the board to do better, to do things more efficiently? And I'll keep repeating those words, efficiency and effectiveness. But really just taking a step back and thinking, more broadly and listening and asking questions about what could we do differently.

[00:06:35] But what do we need to help grow this organisation, not just protect it.

[00:06:43] Richard Conway: Anthony, another aspect of what you see in these operational spaces is, a degree of standardisation of processes, etc.. And I guess a challenge that Company Secretaries might have with that is that things are bespoke for their board – the board deserves to have things that are, developed specifically for it.

[00:07:07] But do you think that it, and I guess where I'm going here is that standard standardisation often involves some kind of compromise and delivers efficiency because it isn't exactly as bespoke as it might otherwise have been in the past.

[00:07:22] Is that okay in the governance space? Is it all right for Company Secretaries to do something that's more efficient? If it delivers perhaps a less bespoke result?

[00:07:31] Anthony Wright: I think so. The way I look at standardisation is that whatever we do at work, particularly in the various corporate functions that we've already discussed.

[00:07:41] It's a bit of the 80/20 rule. Surely there are tasks or things that we need to do as a team that's repeatable. But what everyone's after is no surprises, which leads to predictability, which leads to standardisation. And yes, there might be that 20% that needs to be customised for that organisation, the individuals, the personalities, the way that certain personalities like things done, whether they want information in a certain way.

[00:08:14] But surely if we can work towards that concept of how do we try to standardise and be more process orientated which is like standardisation for let's say 70%, 80% of the things that we do. Then we can customise around the edges, depending on the scenario and the personalities.

[00:08:33] Richard Conway: So, just to play that back to you, in other words, I guess what you're saying there is that standardisation and delivering things in a way that your stakeholders can expect and get the same result every time - that is high quality in some respects even if it's perhaps not as bespoke as it was previously.

[00:08:52] Anthony Wright: Absolutely. And there's this, it's a real trap for high performing determined individuals particularly with a legal background and perhaps a finance background as well - this idea of perfectionism. And we need to be right, I'm not saying that, but what's the definition of perfection? No one can answer that. It's so subjective.

[00:09:18] So, we need to be delivering documents, communications, work product that's fit for purpose - and fit for purpose as defined by the customer, which is the board chair, the board, the regulators, the different stakeholders - not what we as individuals in the CoSec team perceive to be fit for purpose or perfect. Because we can just keep working and working and working and perfecting a document or perfecting a process but is it really adding value to the big picture of that organisation? Sometimes, probably not.

[00:09:58] Richard Conway: I guess a step that you would want to go through there would be making sure that your stakeholders, like your chair for example, actually understand the processes that you go through and then asking them whether they value those processes.

[00:10:12] So, I guess one thought I have is that often CoSec teams are doing a lot of things in the background and perhaps their chairs or their board don't even know that those things are really happening. Don't even know how much time they're necessarily taking.

[00:10:26] So, a key step is actually just exposing that to your stakeholders and asking them whether they think that's a value add or not.

[00:10:34] Anthony Wright: Exactly.

[00:10:35] And I think a good example is, let's say there's a template document. Perhaps it's a cover note or, or a summary note in front of a board paper that's been provided by business unit within the organisation. And that template that sits on top of the actual business unit performance report or a performance update might be two pages and it takes, as you would know, two pages doesn't seem too long but that might take tens or 20 many hours to condense it into that two-page summary. But perhaps if you actually sit down and ask the board what do they really want to see in that summary, they might actually only read one paragraph of that two-page summary every time.

[00:11:19] So, what's the point in going to all the effort of that two-pager when one paragraph with some key numbers or some key information or dot points would be perfectly fine, and that's what they're looking at anyway.

[00:11:32] Richard Conway: Yep. I guess what occurs to me immediately is you give that example, Anthony, is that the board's made up of however many individuals and they're not all necessarily gonna have the same view on whether they want one paragraph or two pages there.

[00:11:47] How should you approach that kind of issue in developing a consistent process?

[00:11:53] Anthony Wright: The key is to ask, so you're right, every person might have a slightly different answer, but again, it comes back to what's the best outcome for the organisation and the majority, and then the others will find their way to work with that new approach and it'll be the right outcome for the organisation.

[00:12:12] Richard Conway: Absolutely. And then the last question I wanted to ask you on this, Anthony, was around, I guess in the other functional areas where we've seen operations become stronger. So, finance, legal, etc., data and analytics has been a big theme of, it comes with a territory to some extent there.

[00:12:30] And so, I wanted to ask you, whether you see data and analytics as having a place in the governance sphere and particularly whether you think it's something that should be driven by  the CoSec team or it's of more interest to the board actually.

[00:12:45] Anthony Wright: I think there's always a place for having data to try and see where there's inefficiencies or areas for improvement and we think of the CoSec team, the corporate services function, the three data points that I generally always come back to is time, cost, quality.

[00:13:03] So, how much time is it taking us to do certain things? And we're talking about the actual amount of hours, but also turnaround times. So, does something take two weeks because we're waiting on certain things but time is a big one. And that's not necessarily saying that we need to keep time sheets or anything like that, but just an idea of how much time and effort we put into certain tasks or responsibilities.

[00:13:28] The second one is about cost and then you can work out then by labour what the costs are of doing certain things. But also, a really good example I saw recently in one of the organisations that I'm involved in, is the company secretariat did a fantastic exercise of looking at more cost effective ways to hold AGMs and there was some fantastic data that the CoSec team pulled together about time, cost, and then the third part is quality, which is more subjective. But you can start to, whether it's an annual survey that you might do from board members or some more informal feedback about quality.

[00:14:06] So, come up with your own metrics about how you measure quality. But you can start to measure how often there are mistakes or errors or how often you get positive feedback from a board member about a particular approach the CoSec team's taken.

[00:14:23] Richard Conway: Great. Last question, Anthony. If you were a CoSec who wanted to think about your governance operations, what would be the first step you would suggest that they take?

[00:14:33] Anthony Wright: The simplest approach is to start talking to your stakeholders, particularly the board members about what's going well, and what could be improved and then do the same thing with your team members and also the management team, because preparing for board meetings from a management team's perspective or the executive team's perspective is painful. It takes up a lot of time. It's stressful. Query, whether it's adding enough value to the organisation.

[00:15:06] But talking to the executive team that are putting together all the information for the board or the subcommittees of the board, and really working out what's working, what's frustrating, what could be improved. That's the starting point.

[00:15:20] If you want to take it a bit further, start reading and learning about different continuous improvement theories, like lean. And the other part that's quite good, and we've referenced it in this discussion already, is the concept of design thinking.

[00:15:36] So, really putting the client, which I call the board in this example, at the centre of what do they value and what don't they? And then that starts your continuous improvement, company secretariat, operations journey.