Governance Bites #155: What endures when politics, technology, & fashion change, with Sir Bill Birch

Sir William (Bill) Birch brings decades of high-level public leadership and governance experience to the conversation. A senior figure in New Zealand politics for more than two decades, he held several key ministerial portfolios, including Finance, National Development and Energy. During his time in government he was closely involved in major economic reforms and policy decisions that shaped modern New Zealand’s public sector governance. Since leaving Parliament, Sir Bill has remained active in the governance community, serving on a range of corporate and public sector boards. His experience spans government decision-making, board oversight, and strategic leadership, giving him a rare perspective on how governance works across both the public and private sectors.
In this episode, Mark Banicevich interviews Sir William Birch on what truly endures in governance as politics, technology, and trends evolve. Drawing on decades of leadership experience, Sir Bill reveals the timeless principles that continue to underpin effective boards, the role of judgement versus frameworks, and why institutional memory matters more than ever. The discussion challenges assumptions about modern governance, highlighting where experience, values, and discipline still outweigh changing tools. A compelling listen for directors seeking to build governance that stands the test of time.
Book: ""Bill Birch: Minister of Everything"" by Brad Tattersfield, https://natlib.govt.nz/records/42822277
#governance, #leadership, #corporategovernance, #boardofdirectors, #leadershipdevelopment, #decisionmaking, #boardleadership, #governanceinsights, #institutionalmemory, #longtermthinking, #experience, #strategy, #businessleadership, #futureofwork, #directors

Transcript

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Hi, welcome to Governance Bites. My name is Mark Banicevich and today I have once again the honour of spending time with the Right Honourable Sir William Birch. Sir Bill, thank you very much again for your time. You've been so generous with me today. I'm glad to help you. Now, the topic we're going to cover off today is around governance longevity and what endures when politics, technology and fashion change. So talking about what's unchanged in governance. You were a parliament minister for 27 years. Oh sorry, you were an MP [Member of Parliament] for 27 years. You were a minister for a significant portion of that time, both under Sir Robert Muldoon and then in the later period from 1991 under Jim Bolger and successive Prime Ministers. You were also Minister of Finance for six years. You started your portfolios with energy; your "Minister of Everything" was a very astute title given the various portfolios you had over time. And since you retired from politics in 1999, you've been on the boards of several major companies, so you've got a very strong career in governance. You're an amazing person to speak to on these topics.

So my first question for you today: 1:10

you've observed governance and leadership across several decades; what principles of good governance have remained constant despite all the changes in politics, technology and economics? What's unchanged in governance? Well, I think the importance of good human virtues is the key thing. In other words, you've got to have people who are strongly motivated, very honest and transparent in their relationships with their colleagues on the board or in Parliament, and their willingness to participate in a big way. In other words, do their homework, be prepared before they go into discussions on decisions. Those things I think are going to be there forever. I mean, those are the human qualities of an honest, hardworking, intelligent, highly motivated person who wants to succeed for his company. Right. Okay. The personal qualities of a director. What about in terms of the hygiene of the process of governance? Is there anything that hasn't changed over all your time in terms of setting an agenda, managing strategy and risk, and all of those kind of technical lens? No, I don't. I think they probably evolve in particular companies in a way that suits that particular company. I mean, there's nothing fixed in regulation or law that controls that sort of process. No. So it's really a matter for each company to determine how that decision-making process is structured. But it's got to be, I think, done. I mean, it's important to have those sort of structures and in politics particularly. I think the public and the voters expect a government to actually be able to pick up a problem and solve it. In other words, do something about it. And what that involves essentially, I think, is immediately working hard to see a pathway to correct the crisis and to communicate that with the public. They'll forgive a government that's working hard to solve a problem. They won't forgive a government that's not working hard to solve a problem. Right. Yes. Fair comment. You've been working in governance, corporate governance alone now, for over probably 30 years in that space, too. Do younger directors and leaders approach governance differently, or do the same fundamental leadership challenges just keep resurfacing? I think the same values prevail. I mean, you're looking for the same virtues in the appointment of directors as you would, I guess, expect in people going into Parliament. Those are just virtues of a good person, really. Yes. You want good people to be elected as parliamentarians. You want good people to be elected or appointed as directors. And then being willing to follow good processes, either in Parliament or in a board. Those processes may differ from board to board depending on the nature of the business. But they for me they tend to centre on risk management, fiscal management, balance sheet management and sufficient vision to understand the future of that particular industry. Right. Yes. Have you noticed any changes in the boardrooms over your career in terms of, for example, the people sitting around the table? Have you noticed an increase in diversity? No. I think one of the good changes is that there's now many more women involved on boards than there were when I first became a director. And they are good contributors. They have their own views about some of these things that might differ from a male board or an all-male board. So I think they make a valuable contribution. That's probably the biggest change. I mean, there's now more consciousness in the private sector about investing in companies that are not producing products that are universally acceptable. I mean, certainly companies that are involved in any sort of illicit business is sort of not supportable. I'm just amazed at the amount of drugs that get imported into this country. I don't know how on earth that they manage to get them in here, but certainly you'd want to keep well, steer clear of anything like that. But in any sort of construction or other businesses, in the export and import businesses or manufacturing business - manufacturing is still reasonably strong in New Zealand. The rural industries are extremely strong and doing extremely well at the moment. So are you saying that there's a better, maybe, awareness of the entire value chain of what's happening for a company and where the sources of products and things are, and those sorts of things, so that people are making more conscious decisions about, "Are we happy working with those companies?" Is that what you're suggesting? Yeah. Well, I think the focus does change. I mean, mining used to be a big industry if you go back 50 or 100 years, but it's now very much just a minor industry. I think the rural industries have fostered well. I think the farming industries have got to deserve a lot of credit for their willingness to actually improve the quality of their products. I think the Fonterra board has made some pretty bold decisions, but I think they've been pretty well guided by that. I think the decisions have been good for the future of the company in the longer term. Yes. Over the time that you've been in governance, particularly in the corporate space, have you noticed any changes or improvements to the principles that are being used? You talked a moment ago about increased diversity around the board table and the different type of thought that was brought by, for example, having more women on the boards. Are there any kind of changes to the process across the various companies you've been on the board of over this time that you've seen? No, look, I haven't been a director in that many companies, but the ones that I've been in, I think carry forward the values of their particular industries. So, I mean, I don't think human values change that much over time. I think what was good commercial decision-making 50 years ago is probably good decision-making today. I think things like Reserve Bank interventions are something that need to be dealt with these days. The anticipation of what the Reserve Bank's going to do requires a bit of judgment, because that affects interest rates, and that affects servicing your debt, and the cash flow of the company. So it's very interrelated. Yes. Of any company. It doesn't matter what sort of company you're in. No. So that's a big factor, I think. But otherwise, I don't think that making of decisions requires a process today that is very much different from a process 20 or 30 years ago. Right. Yes. Over, the life of a director in a business is relatively short, compared to the life of a company. And so, your directors will change over time. How important is institutional memory to ensure, that mistakes from the past aren't repeated, for example? Well, institutional memory is often carried forward by the directors that don't go. I mean, usually the process of a director retiring is over a certain period. So you're getting constant change of a small number of directors. Yes. So the institutional memory is really carried forward by those that remain. Right. Yeah. And I think that works quite well, actually. Okay. Digital technology and data have transformed the information that is available to boards. Has that fundamentally improved governance or just changed the tools that have been available for you? Well, it certainly provided more tools. There's no doubt about that. Yeah. Some of them are actually very impressive tools. But everyone, the whole world, is struggling with AI [Artificial Intelligence] at the moment, as to the effects and impacts it might make. But its potential is enormous. One's got to say that its potential for delivering information quickly to directors is, I think, very valuable. But it's got to be used, I think, from a cynic's point of view with a bit of suspicion. You know, you've got to be understanding that some of it needs to be checked before it's used. And it's like any source pre-AI as well, right. If a source came before you, you'd still read it with a cynical eye and try and get some balanced viewpoints from different sides to make a good decision. Yeah. And you know, if you're a Minister of the Crown particularly, where you've got a lot of responsibility on your shoulders, you've really got to test advice you're getting from your own officials, with advice you get from any other sources in the private sector. Yes. And advice you're getting in the private sector should be tested with the response by the officials. So that's good debate; it's a good debate to have. Yeah. Right. So I'd posit that the availability of information and the tools would enable you to more quickly gather a range of information to help you make decisions, which would hope, would have improved the quality of decision-making to the extent that having better information available can do so. Yeah. Well, it certainly, I think, means that you can get information quicker. I don't know that it improves the quality of the information. In fact, it may in fact not be as good a quality as information that's collected under other different systems. I think getting to the heart of the, where the information is coming from, who's providing it, what sort of experience have they had, how genuine is that? I mean, you've really got to test the validity of the source of the information, I think. Very much. Yeah. And what hasn't changed is you're still making decisions fundamentally in a position of uncertainty. Not knowing what the future's going to hold. And any decision may turn out over time to be good, or to not be the right decision in hindsight. Yeah. You can't remove the risk of making a decision, of getting a decision wrong. You can only reduce it by doing the work thoroughly. Yes. Modern governance places great emphasis on frameworks, policies and compliance. How important are personal values and judgment, which you've mentioned a number of times before, compared with formal governance structures? How important are those personal values, when you compare them to the structures that you put, and the processes that you put around? Well, I think people get tired of over-regulation, you know, being told how to do things by the bureaucrats. And the government's got to be aware that you need to minimize that. I mean, bureaucrats don't hold all the wisdom in the world, and the government's got to, I think, always be conscious that they should get advice beyond just their own officials on big issues. Certainly in the industry that I'm involved in, in financial services, to the credit of government and the regulators in most cases — there are some exceptions to this — but they've taken time to consolidate, consult rather, with the marketplace, and that leads to a good point of decision. And also regulation has moved over the last 30 years to be a lot more principles-based rather than prescriptive in our industry, which leaves the company enough wiggle room to be innovative, and to do things in different ways. It feels like good regulation is designed so that if you run a good robust business, you're likely to meet the regulatory rules. Yeah. They're not rules for the sake of having rules; they're rules that help, set the train tracks or the swim lanes, within which you can run a good business. There are always rules around reporting and so forth that you have to understand the rules to be able to comply with, but to a large extent our principles-based regulation is just saying:"You want to run a good business, these are the boundaries within which you do it. Now get on with it." So I think it's been a good move in the last 30 years around regulation. Yeah. There's been a bit of pushback about over-regulation in the current term of government, I think. Yes. Largely driven by ACT [New Zealand, political party]. And I think there's some sympathy in the other parties for limiting regulation, as well. We shouldn't over-regulate; we should be just aware of the risk of over-regulation. And for me to say that, my experience in the financial services industry is very limited, as well. You go out into other industries and we have far more prescriptive regulations. So there certainly are opportunities to cut back and create more of a boundary set, rather than a prescriptive rule set. Yeah. I have friends in the dairy industry that ground about regulation all the time. They think there's over-regulation. The council sends out inspectors to look at this, and look at that, and then Fonterra sends out inspectors to look at this, and look at that, because they're required to by the government. Yeah, I mean, you do impose costs on the industry if you're doing that sort of thing. You do, definitely. You have a deep experience in governance both at the national level and at corporate level. Do boards sufficiently value long-term experience, or is there a risk of people undervaluing the experience of the more experienced directors on the board? Good question. I've really got no idea about that. I mean, I always sort of moderate the advice based on what I think is the ability of the advisor. Over time, you know whether you're getting good advice or bad advice. Yes. Very much. Around a board table. Right. Okay. So, your experience there is being able to see through the advice itself to its quality, over time through your experience. Well, yeah. And sometimes it's in a certain space. I mean, in some areas the advice of a director is very valuable, but in other areas it may not be so valuable. So you often say,"Well, who's giving this advice and what's been"their experience? What weight should I put on it?" Yeah. You're entitled to do that. Of course, yeah. Right. Great. Thank you. If you were advising someone who was about to chair a board for the first time — and by advising, I just mean sitting down and picking your brains to say, "How can I do this job well?" — if we make the assumption that, as you've said at the start, the values are there, they're a good person, what enduring leadership habits would you encourage a director to develop? Well, firstly, be familiar with good chairmanship rules. You know, know the rules of — and there's plenty of literature around about that. You can pick up a cheap book in the library on - Robert's Rules of Order, for example. I mean, you can also attend, get tuition on chairmanship. I valued those early JC [Junior Chamber] experiences of people telling us how to chair boards, and things like that. Or chair a meeting, how to do it correctly and give thanks to a speaker, and all that stuff. So I think that is the first thing I'd do. Second thing is that the chairperson's got to know more about the issue than anybody else around the boardroom. You've got to go in there having done your homework. Right. The third thing is that you've got to be prepared to listen to others. Don't be dismissive of them. I mean, you've seen quite a lot of councils sort of get into trouble around New Zealand because they got too many disputes going on internally. That's not good. That probably reflects bad chairmanship, really. Yes. So yeah, there's a lot to take on board if you take on the role of chair. I mean, you've got to be fair. You've got to work harder than anybody else around. You've got to know more about the subject than anybody else around the room, I think. As well as the fact that you're managing or orchestrating the board itself. Yeah. The structure of the debate. Yeah. Yes, right. So, a lot to take in there. Firstly, to know the rules of being a chair; get some training in how to be a good chair. [2] Be very well prepared. Make sure that you know the answers to questions.[3] Listen to all the other directors and take on what they say. And then orchestrate and facilitate, and guide the decision. Guide the decision from there. Yeah. Make sure you get to a decision, yeah. Right. So, one final question for you, Sir Bill. When you reflect on nearly three decades of public leadership, what governance lesson do you think future generations will still find relevant in 50 years' time? Oh god. Only goodness only knows. Your guess is as good as mine, I think. What would be your best guess? Well, I don't think fundamentals change that much, quite frankly. I think that good decision-making today will be good decision-making tomorrow, I think. I mean, it's the tools that change, and they sort of do have an influence on the processes. And the use of AI I think is the big question mark out there at the moment. Yes. To what extent is AI going to be used? I think, as a source of information, and as a process for getting information in front of the board, it's going to be a very valuable tool. But it's got to be treated for what it is. And that is it's not made by a human being. It's an artificial process. Yes. I think one of the potential opportunities that we're going to have with the technology around the board table in the near future, if it's not already here, is the ability to perform what-if type analysis live in the boardroom. You know,"What would happen if we did this? Let's change a couple of inputs and see what the estimated output will be." Well, yeah. The other thing, of course, is the use of television and virtual meetings, and I mean that's becoming widespread now. Yes. I actually sometimes feel that they lower the quality of the meeting, not meeting face-to-face. I get more, I enjoy face-to-face meetings much more than virtual meetings. I agree with you on that. I think you lose something from the collegiality; you lose something from the sense of how people are feeling, which is much harder to take in, in video. And often the audio is not as good, and you don't get such a clear expression. Particularly when more than one person talks at once. Yeah. So you miss what people say, if two people try and talk at the same time, one will cut out. Often the virtual meetings that I'm involved in, you've got people operating from Tauranga and Rotorua and Hamilton and Auckland. The experience that I had when I was on the international organisation of the sports group of the martial art I was involved in, you're in different time zones. And you have people that would be

attending a board meeting at 11: 23:51

00 p.m. or 3:00 in the morning. And other people doing it first thing in the morning or late at night. So it's hard to get the best from everybody when not everyone's operating in the right time zone. Yeah, we haven't suffered too much from that. Most of ours have been within New Zealand. That's very fortunate. If I can take away from some of the things that we've discussed earlier, you would say that it'll still be relevant to be the right kind of person that has the right values, is well prepared for meetings. Those general skills of being able to listen to others and collaborate, they'll largely be unchanged. The need to be very well prepared for board meetings. And also another thing that you brought out earlier was the need to challenge sources and critically think about anything that comes across the table. Yeah. Also, I think you could add a spread of backgrounds, as well. You don't want too many solicitors, or you don't want too many project managers or - Surveyors. - you don't want too many surveyors. Ar accountants. You want that diversity of thought around the board table. Talent, yeah. Well, through their disciplines. Sir Bill, thank you so much. I really, really appreciate your time. It's been absolutely wonderful to spend time with you this morning. It's been enjoyable. Thank you. Hopefully we'll get the chance to do it again, and I'll see you next episode. Thank you for watching this episode of Governance Bites. We have more episodes on YouTube and your favourite podcast channel where I interview directors and experts on various topics relating to boards of directors and governance. We'd love to see you back, and please like, subscribe, and share the videos and podcasts.