ILA and INSEAD: “an important, meaningful partnership”
by INSEAD Emeritus Professor Ludo Van der Heyden
Europe’s leading business school INSEAD had a rethink after the global financial crisis. They recognised that the crisis was due largely to a series of failures by boards of directors, people who missed knowledge that business schools could supply, but were not offering to board members and senior executives. In addition, there was no culture of continuous learning by directors, who typically felt that they were beyond that. The crisis revealed this thinking to be dangerous, and very wrong. The INSEAD International Directors Programme was the result, created by Emeritus Professor Ludo Van der Heyden with ILA as key founding partner.
“We were discussing what should change after the financial crisis at a meeting with the Deans at INSEAD. I said the crisis is a governance failure and it is a problem that board members don’t go to school,” Ludo explained. The Deans were receptive and asked Ludo to champion this proposal and get it off the ground.
Teaching known unknowns
The goal was to create a course to teach the broad, high level knowledge (such as corporate valuation, strategy, M&As) that Directors ought to know and that we already were teaching to MBAs and executives, but not to Directors (at least in sufficient numbers). “Worse, Directors really need to know, while, frankly, for MBAs and execs plenty of it is not directly useful. In addition one of INSEAD’s mottos is that “everyone is a minority”, allowing your INSEAD experience to teach you that there is a lot in the global world you see through your own eyes, in your local biased way, and not as it is, and even less as it is perceived by others” he said. While it is important to learn the financing, auditing, legal and other technical and cultural details of one’s own jurisdiction, this course gives a broader, wholistic view. It challenges directors on how they approach strategic questions, probing their understanding of the board’s role and its relationship with the company and its stakeholders. Directors “emerge” from this experience differently, just like companies emerge out of new board discussions.
Although Ludo is now the INSEAD Chaired Professor of Corporate Governance (as well as Emeritus Professor of Technology and Operations Management, having retired from INSEAD in 2018), at the time he had yet to acquire sufficient deep understanding of the governance topic. He had the great fortune to work with Tim Rowley who had previously designed a corporate governance programme for the Canadian Institute of Corporate Directors and was spending a year at INSEAD in 2009. Tim’s experience and contribution were another key input.
ILA’s key input
This work provided the foundations of a programme with an international focus. Validation and further input from respected corporate governance professionals was now required. “So it was fortunate that out of the blue ILA approached us in 2009, and we had a discussion with Patrick Zurstrassen, Raymond Schadeck, and Monique Bachner” said Ludo. They explained that ILA had a domestic governance course but wanted to add a more international dimension to their offering. Discussions with ILA were quick and on task. Ludo found the Luxembourgers to “know what they were looking for, open to suggestions and highly engaged – in short, it was bliss and lovely, it also gave us credibility and confidence.” Ludo also appreciated that ILA was ok with what would be an INSEAD programme, they even accepted our certification, which became a part of the ILA qualification. Tim, at the University of Toronto, had done the same for the Canadian Institute of Corporate Directors (CICD), who then ran with it. ILA also guaranteed a minimum number of participants, which proved key to having the programme accepted by the INSEAD leadership.
The essence of the course work is to challenge directors to think outside their cultural contexts. “Governance isn’t standard practice. It is a mosaic of practices and INSEAD is one of the few places where directors come with their national views to learn the key lesson that their views sometimes square with those of others, but at other times do not,” said Ludo. “The danger with directors is not what they know and don’t know, it’s those that think they know, when they don’t … and then make major decisions. We structure the course so that it is a journey of discovery to enable ideas to emerge, gestate and then the certification forces them to write them down and apply them in their context.”
Teaching programmes are based on group work. A total of 40 directors attend each session, and they are divided into sub-groups each featuring about half a dozen people. No more than one person per working group can come from the same country, thus ensuring a mix of diverse cultures.
They then work together to understand how each individual approaches the particular challenges of their business and geography. For example, in one exercise each person is asked to tell the group about their biggest achievements and failures in their business lives, thus revealing and learning from the challenges they have all faced. Certification is based on replies to three broad questions “what have you learned?”, “what does this change going forward for your governance posture?”, and “what have you done with this knowledge?”. There are now six editions a year, featuring three three-day sessions. The programme is also offered from Singapore.
Vetting the CVs of participants is an important part of the process. One essential criterion is that admitted candidates have a profile that makes them credible board members. This ensures the working groups are populated with experienced directors, maximising the ability of groups to generate high-level learning benefits. For those people that do not yet meet these requirements, INSEAD created the Aspiring Director Programme, again with input from ILA. The first edition in Luxembourg of this programme took place late last year, under the direction of Ludo’s successor, Jose Luis Alvarez.
“People say they are changed by our courses, and that’s very gratifying,” noted Ludo. It couldn’t have been done as quickly and as well without ILA. “It has been an amazingly positive partnership, a positivity that I have rarely seen, and certainly cannot be taken for granted. ILA has been our best partner, no question.”