There are a number of issues that arise under the umbrella of Senator Xenophon's disclosure this week of alleged rape within the Catholic Church.

First: The allegations were of a rape. That is a crime. The organisation within which this alleged crime was committed should have/must report it immediately to the police - its a crime and not a discretionary or disciplinary issue for the Church to manage.

How would it be if any organisation within which a crime was committeed had as much time as it liked to manage the individuals, evidence, context and witnesses before it reported the matter to the police? It would quite legitimately be totally unacceptable. Yet the Catholic Church, which is theoretically meant to hold the moral high-ground, has not been moral or ethical by refusing to report the mattter to the police immediately the allegation came to their attention. There was NOTHING for them to do BUT report the matter to the police and allow the authorities to do what they needed to do.

In fact, one may even go so far as to accuse the Church of aiding and abbetting an alleged crime.

Secondly: The time taken by the Church to "investigate" the matter could reasonably be interpreted as a cover up as there was nothing for them to investigate. It is even conceivable that the Church may have been found to have allegedly covered up, abetted or facilitated the alleged accused from ever having to front the law. This, in any other circumstance, would be interpreted as a criminal act in itself.

Therefore, the Church was entirely incorrect to delay, for even a day, any such alleged criminal activity. The Church has lost any moral high-ground it might have had claim to by virtue of its demonstrable inaction.

In their defense, the Church argues that there are complex and sensitive issues to consider. Sorry - that's irrelevant. There are no complex or sensitive situations that absolve alleged criminals from facing the legal process. If complexities and sensitivities do exist, as they do, then the police and judiciary are quite capable of managing them. It is not the place of the Church to decide what is complex, sensitive and therefore beyond their obligation to report to the police. How much crime would be covered up if we all had that privelege?

That brings us to the actions of the Senator. Generally speaking, the actions of the Senator in this case are unusual but not without precendent. I suspect that the Senator acted because of the clear breach of duty of the Church and the appearance of obfuscation and delay by them. He probably figured that the law and the authorities can't do their job if the powerful owner of the context in which the incident allegedly occurred appears to be preventing access or due process.

By making the statement under Parliamentary Privelege the Senator was able to surface a clear breach of process without the defamatory threats that would certainly be applied if the matter was surfaced outside the Parliament.

I conclude that the Senator's action, in this circumstance is both reasonable and appropriate. He has used his judgement wisely to bring to the authority's attention something allegedly criminal that strong forces were trying to keep hidden.

In that action alone, the Senator has done more good for the average citizen than much that has been undertaken in Parliament over the last couple of years.

I would have thought that if the entire organisation has a "risk-management" mentality, then it will be very hard for new and break-through initiatives to occur from within.

I don't mean to imply that risk-management is unimportant - just the opposite - it is critical. However, it depends on where the risk management should occur. If you are an engineering company making or designing highly volatile and dangerous products, then product and process risk-management disciplines need to be embedded within the company, while the business risk-management needs to be(inevitably will be) "higher-up".

On the other hand, if you are in a highly volatile consumer market that requires adaptive products and innovative channels, you need to be creative and encourage creativity within the departments of the corporation. The commercial (and legal) risk management activities need to occur at executive management and at board level.

Horses for course, as they say. What is certain however, is that one size does not fit all. Be careful what you aspire to achieve - a risk management culture throughout will stifle entrepreneurship and creativity - just look at the Australian banks!

The number of directorships is certainly a product of individual competence but other issues come into play:

1. The complexity of the context and the corporation: the more complex the organisation, the more time and commitment is required. Therefore, fewer additional commitments are reasonable.

2. The role of the director in the corporation and the number of sub-committee commitments required will also affect the ability to take on additional roles. Where the corporation requires limited involvement, then more directorships are possible. The more a corporation requires a director to take on pseudo-executive commitment, then the fewer other commitments are possible.

3. The individual's commitments outside the corporate area also have a major influence on the time available. Where individuals also take on NFP, voluntary, charitable and other commercial activities also limits their productive availability to any particular corporation.

4. The propensity for spontaneous calls on a director's time: if the corporation is in a highly volatile space (calamities, cultural dynamics, union volatility, political volatility, sensitivity to economic dynamics, environmental sensitivity, etc) the more there is likely to be unplanned calls on director time. In that sort of context, it's hard to commit to too many directorship (or other commitments) because of the unpredictability of the context and the inability to "give time and attention" when called upon.

5. Finally, the individual's propensity to accept personal risk: in the current climte of increasing director accountability and shareholder activism, fewer directors are prepared to take on too many commitments (board or otherwise) which enables them to stand accused of negligence through lack of focus.

It is true that the Gillard Government has found most things very difficult so far during its term in office. Part of this has to do with the way it came into power, part the "breaking of promises", part the poor implementation of policy and part as a result of the structure of the minority government.

They are the realities.

In all probability it will be thrown out of office at the first opportunity that the Coalition Opposition can engineer.

What also appears to be a reality is that the Coalition Opposition is so focused in de-legitimising the government that it has failed to develop any policies of its own and appears to be rehashing old policies that saw the Coalition lose government.

A reactionary Right-Wing government may ultimately be the biggest and most impactful legacy of the Gillard Government.

There is a fundamental difference between maximisation and optimisation – and business is not about maximisation, but about optimisation. Dividend and Asset Growth, for example, are competing objectives.  If we wish to maximise dividend, then we have less to apply to asset growth and vice versa. Maximisation is about “the most” while optimisation is about trade-off, or “the best in the circumstance”.

No organisation that I have ever encountered has been focussed on only one objective. Most corporate objectives have the following dimension:

1.        A benefit dimension: dividend, capital gain, shareholder discount, etc.

2.       A value dimension: share price, market capitalisation, net assets, etc.

3.       A growth dimension: sales growth, profit growth, market penetration, market share, all within certain timeframes.

4.      A risk dimension: how much risk the organisation is prepared to endure to satisfy its objectives, with risk often considered to be debt, gearing, diversification, etc.

Management frequently speaks in terms of maximisation: sales, profit, dividend, ROI, etc. yet all these have implications and contexts.

If I wish to maximise profit, I will restrain expenditure thus possibly constraining growth.  If I maximise sales, I may compromise profit. If I maximise dividend, then I may compromise future growth.

This is not rocket science, yet management frequently thinks in simplistic maximisation-terms and fails to recognise the real trade-offs involved in management. That’s why good management is difficult because its about getting the best outcome in a dynamic and multivariable environment.

The common faults of management fall into these categories:

1.          Chasing maximisation at the expense of optimisation.

2.         Not understanding the trade-offs involved in every decision.

3.         Ignoring the dynamic and imprecise: just because and influence is difficult to measure doesn’t mean it doesn’t exist .

4.        Failure to analyse the trade-offs.

5.        Focusing on management-determined objectives instead of shareholder-based objectives. It is easier to manage if you have clear metrics against which to assess options.  Since management-made objectives are coloured by subjectivity, shareholder objectives are more robust.

One does not need to refer to WorldCom, Enron, HIH, Qintex and scores of other profound examples of malfeasance, greed, theft, egotism, connivance, deceit, nepotism, scandal and ineptitude to accept that not all management acts in the interests of the corporation, let alone the interests of the shareholder.

There are many inescapable facts that managers, directors, shareholders, brokers and analysts must acknowledge:

1.          Managers are human beings.

2.         As human beings, they have perspectives, attitudes and perceptions that are unique to their personality, experience and context.

3.         As human beings, most frequently they are attracted by security and shy away from fear, insecurity and confrontation.

4.        Within the corporation, the implications of decisions and actions are not all uniform and predictable.

5.         Decisions that are unpredictable lead to enhancing insecurity and are therefore less preferable.

6.        Managers, like other mortals, pursue self-preservation.

7.         Managers, to “protect themselves”, are less likely to make decisions that are higher-risk and that threaten their security within the organisation. 

8.        Some organisations occasionally need to take higher risk decisions.

9.        Managers, because of their own human nature, may fail to make the decisions that are in the best interest of the organisation and therefore the shareholders.

10.      Management through its own subjective filter interprets and decides what is in the best interest of shareholders.

We also know that frequently CEOs choose directors who will serve the CEO’s purposes rather than provide the organisation with the dispassionate and independent adjudication and direction expected of the Board. Self-seeking behaviour therefore stretches from the bottom to the very top of most organisations.

Beware of the manager or director who passionately believes that his/her organisation is an entity apart from its owners. These people argue that “shareholders are merely investors and if they don’t like what they get from their association with the company they can leave and go to another company.” You show me a company with this view and I’ll show you a company that is not only not satisfying is shareholders, but is heading toward oblivion.

Contemporary management has embraced the attitude that it is the employers' responsibility to enable staff to fulfil themselves in the workplace.

This is quite legitimate when the fulfilment of staff is a necessary condition for the satisfaction of corporate and shareholder objectives. However, many organisations pursue the fulfilment of staff as a primary objective of the organisation, ranking equally with other stakeholders and with shareholders - and sometimes above them.

Although sounding somewhat apocryphal and politically insensitive in this 'new age' environment, staff are “merely” enablers to help the organisation fulfil its objectives much like other organisational elements.

The organisation does not exist for the benefit of staff but for the organisational outcomes that are intended to be delivered by them. In order to deliver these outcomes, the organisation needs to employ and maintain staff. In order to maintain staff, it needs to satisfy them sufficiently for them to do their jobs.

This logical argument is intuitively recognised by most organisations. Yet some of them choose to elevate the importance of staff to a point where staff satisfaction is divorced from the roles they are there to fulfil, and rank such satisfaction ahead of shareholder (and sometimes even corporate) satisfaction.

The reason for this is that it is easier to provide employee fulfilment than deliver corporate objective. After all, who among the staff will argue against their own happiness and contentment?

That virtually all employees employed by corporations work for someone and are therefore “enablers” is painful to acknowledge – particularly by those in the organisation.

Even when employees own shares in a corporation, the shareholding is a mechanism to secure commitment and therefore a higher probability of achieving objectives – for all shareholders.

The cost for satisfying staff is borne by shareholders. A position where a corporation incurs costs borne by shareholders for the satisfaction or gratification of staff that do not deliver benefits to shareholders in excess of their own costs is not sustainable in the long term.

Managers need to ask themselves “what is the nature, structure and character of the employees we need to deliver our objectives.” Everything outside that definition is an unnecessary expense and at shareholder cost.

Organisations are often heard to say 'we can't do that because it runs counter to our culture', or similar comments that reinforce the organisation's existing culture. Because culture is legitimately so hard to change, management tends to regard it as a given and something that shouldn't be tampered with.

And yet, culture is as much of a construct (enabler) as any other part of the organisation and it is required of it to contribute to the delivery of corporate and shareholder objectives in the same way as is expected of other parts of the organisation.

Shareholders are not too interested in the preservation or enhancement of the organisational culture of their investment if that culture impedes or hinders the satisfaction of their objectives. That doesn't have to mean 'open slather' or immoral and unethical practices, but it may have implications on style and method related to decision-making, communication, competition, reward, advancement, involvement and empowerment issues, among others.

Culture is an enabler and can be (should be) moulded to provide the optimal outcome for both the organisation and the shareholder. Corporations that are internally focused and consider that they have an existence independent of their owners, find it easier to justify the stability of the organisational culture, since for employees culture helps to define who they are and where they belong. Changing culture creates instability, insecurity and enhances stress.

But when one is focused on shareholders, then culture becomes an enabler and can be prudently changed or refined when necessary.

Many corporations are in the process of spending literally millions of dollars (some hundreds of millions) on creating “knowledge-based organisations”. Yet for some of these corporations, the investment has been akin to sitting in the car park tearing up $100 bills non-stop – an absolute waste of money.

For a “knowledge-culture” to be effective, it requires a culture to share and leverage experience and skill, and to see corporate value from the “sharing” rather than the “having” of knowledge. Many of these organisations desire the benefits of a knowledge-based environment, but aren’t prepared to remove the competitive, blame mentality, inability to learn from mistakes and other dysfunctional elements from their existing organisation’s culture.

The knowledge-based enabler for these organisations is frequently appropriate to their achieving their desired outcomes, but because they regard the organisational culture as sacrosanct, they waste their investment in knowledge, and thwart the organisation’s ability to deliver the necessary benefits to shareholders.

Most managers have experienced the SWOT analysis – strengths, weaknesses, opportunities and threats. The theory is if you understand these things about the corporation, then you can optimise the business to leverage the strengths, minimise the weaknesses, capitalise upon the opportunities and avoid the threats. Anyway, that’s the theory. In practice, two profound dangers occur in using the SWOT.

Firstly, many companies assume that a strength is an attribute that needs to be built upon. True on many occasions, but not a universal principle. IBM correctly believed in the days before the PC, that their core strength was its unsurpassed competence in main-frame computers. Their decision was to leverage that strength.

The problem occurred when the PC came to the market. The strength that IMB had and leveraged, was not the strength that they needed in the “new world”. Many organisations are lulled into a false sense of security by deluding themselves that what they regard as their strengths (and they often rely on their own opinion of themselves) will be the attributes that will see them through to the future of the company. Such assumptions often deaden the organisation to the realities and dynamics of their chosen market. Such delusions are deadly and have seen many corporations realise only too late the price of leveraging only existing strengths.

Therefore rather than asking “what are we good at”, the core question needs to be “what to we need to be good at to get the desired outcomes?”

Secondly, it is very rare (based on nearly 35 years of consulting experience) to see a company undertake a SWOT analysis at every level of the organisation and review that SWOT when basics within the organisation change. 

If a company chooses to embark on a web-based sales channel, for example, then its SWOT will have a certain construction. But if the organisation decides to embark on a manufacturing or retail strategy then that SWOT would (should) look quite different. A decision to leverage certain strengths might be a valid decision in a certain context but entirely inappropriate in another context. As an organisation lurches from business plan to business plan (sometime annually and sometime three-yearly), the SWOT undertaken in year one will, in all probability, be quite different in year “X”.

Inconveniently, most pressure to change occurs between planning sessions, not when an organisation chooses to develop its plan. It is a rare company indeed that constantly reviews its SWOT analysis and the impact at each level of the organisation – yet it is exactly that sort of review that is needed when the corporate focus and activities are significantly based on the outcomes of the SWOT analysis.

There are few people who would contest the statement that most for-profit organisations are driven by efforts to maximise the sale of their products or services. In principle, there is nothing wrong with this provided that such sales contribute to the core outcomes required of the organisation.

Market share does not always equate to profit as there is almost always a cost of securing market share. Often the cost of growth is discounted by corporations in the pursuit of additional sales.

One (of many) large multinational Australian company was frustrated when as a result of a sales growth initiative, it secured its growth objective but found its profit had suffered badly. Staff when encourage to chase sales found it quite easy: they discounted stock. The error of management in that situation was they asked staff to chase sales, rather than margin - “One engenders the behaviour one measures.”

Most companies chase sales because of the benefit (profit) that such sales deliver. Sales for their own sake often leads to loss since the purpose of the sale has been “missed” i.e to generate net contribution.

The planning model proposed below argues that corporate (shareholder) objectives should drive the markets in which a company decides to be active. Each market has different characteristics and a different propensity to satisfy core objectives.

Within that market/s, the company must decide which products or services are best to “entice” the market to buy them. The total of sales and related activity in those markets must secure the objective required. If not, choose additional or different markets.

Once the product and service mix is chosen, then the method of enticing the consumer and getting and supporting the products in the market need to be resolved. Sometimes these decisions impact enormously on the real “cost” of product. The decision by Amazon.com to be web-based rather than retail-based had enormous impact on profitability in the short-term.

The lesson from all of this is quite pragmatic: unless the growth in sales delivers the outcomes desired by the corporation on behalf of shareholders, then don’t pursue it.

Choose the sales level and mix that gives you what you really are there to deliver – not what boosts your ego.

If shareholders have a profile of long-term growth, then strategic positioning in the market by securing market share may be an appropriate strategy. If shareholders have a profile of short-term dividend, then strategic product positioning over the long-term may not be appropriate. 

Product and service sales are enablers to achieve outcomes – not the outcomes themselves.