Strategy Under Threat Must Remain Governable

An institution faces a challenge to its leadership or strategic independence. A rival makes an offer, a dissatisfied group seeks representation, a regulator questions the existing direction or an internal constituency demands change. The incumbent leaders respond with an ambitious transaction, a special distribution, a reorganisation, a new alliance or a promise of accelerated results.

The response may be the best way to protect the institution. It may also narrow the available choice, consume resources, enlarge complexity or make a change of leadership harder. The fact that a proposal is defensive does not make it wrong. The fact that leaders call it strategic does not make it right.

Strategy under threat must remain governable. Values-based leadership asks the institution to judge the response on its purpose, evidence, alternatives, authority, conflicts, proportionality and complete consequences. A leader may defend a sound strategy; the governing process must still show that the strategy protects the institution rather than the office-holder.

At 8:51 East Africa Time on 14 October, Reuters reported that Institutional Shareholder Services had urged shareholders of Monte dei Paschi di Siena to reject proposed bids for Banco BPM and Banca Generali, as well as a connected special dividend. Shareholders are due to vote on 29 October. Reuters described the proposals as part of chief executive Luigi Lovaglio's response to a takeover offer from Intesa Sanpaolo. Reuters,…