I recently re-read the book Fahrenheit 451, by Ray Bradbury. It’s an amazing story to read some 60 years after it was first published.
In this futuristic society books are banned and the firemen are employed not to put out fires but to burn any books that are discovered.
Some of the aspects of the future American society such as reality TV and drones are a stark reminder that fiction can become fact.
The development of new products obviously derive from someone’s imagination. Whether these get expressed as part of a novel or via a new product development team in a high-tech business is somewhat incidental.
The point is that humans can imagine and think of things that don’t yet exist.
As a coach and mentor I sometimes ask my clients where they have their best business ideas. The answers that I get are at home in the shower, whilst at the gym, walking to work, or on first waking up in the morning; rarely are they linked to the workplace.
And when good ideas appear they have to go through a process of development and refinement before they become a reality.
Walt Disney had a process where he recognised three distinct roles, the dreamer, the realist and the critic. As the roles suggest, his animation films were initiated by the dreamers and turned into the product by the realists.
But perhaps the generally overlooked role was the critic (a job often denigrated) who provides a sense check and quality control on everything that happens. Each role has equal weight.
In equity markets, in fact all financial and regulated markets, the critic is called the compliance officer, the butt of many jokes and the magnet of much opprobrium. They play an important role in ensuring that banks and other institutions operate within the rules.
But who does this for companies? In the corporate world many businesses adopt codes of corporate governance, and some have ethics committees, to structure and guide their behaviour.
In the smaller companies these codes are adopted and flexed to match the stage of development of each company; there may not be the resources to have committees and sufficient non-executive directors to populate such committees.
So who is responsible for being the critic and to ensure that there is sufficient quality control in a smaller quoted company? Well, I do not see this as being the role of just on person. The chairman of the company may be responsible for the application of good corporate governance. That is what we state in the Quoted Companies Alliance Corporate Governance Code.
The finance director should be acting as a check and balance for the actions and ideas of the chief executive on a day-to-day basis.
The non-executive directors should be acting as a sounding board and also challenge the ideas and actions of the executive directors at a strategic level.
Any company with a chief executive who holds a significant number of shares and is probably the founder of the business should expect that person to “walk the talk” as they set the example for behaviour across the company.
In short the top level management should all be critics of their own and their colleagues’ behaviour and actions.
This should not preclude the origination and development of ideas, which should of course be encouraged. There should be a balance between dreaming, realising and criticising. That dynamic should be at the heart of all good corporate governance. It is this balance that creates trust with shareholders.
And hopefully if business and other institutions do this then the burning of books will remain a fictional construct and not become a reality.