Thursday, January 14, 2021


Governance= Superior Management.

The purpose of corporate governance is to steer the business in the right direction. More specifically, it’s about enforcing decision effectiveness, and getting people, culture, accountability, and performance right. The value proposition of good governance, brand, and compliance should be integrated within and across operations and functions not only from the financial perspective but also from the involvement and signs being displayed inside the organization.

In practice, how to enforce the organizational governance discipline depends on the nature, scale, and complexity of the organization, as well as understanding its risks and conducting. Effective governance should oversee the following business components and ensure the organization as a whole is more effective and efficient than the sum of pieces.

Plan oversight:
Business is full of uncertainty, volatility, and complexity, business planning enables the management to take step wise actions and drive systematic changes. But the planning fallacy is a business reality. Common reasons include, but not limited to misinformation, over-optimism, static processes, unqualified planners, an unwillingness for the top of the hierarchy to delegate control, etc. The business plan is like a detailed, polished user interface design with all interface elements fully designed out and ready for building. The whole point of dynamic planning is to keep iterating, learning, and working on a rhythm of sustained delivery. With high velocity, a well set up governance system would have the board involved in developing, setting, and monitoring the companies' strategic planning and implementation.

In fact, corporate governance could be part of strategic planning because if it isn't, strategic planning becomes a synonym for wishful thinking, corporate governance is where resources are allocated to turning the strategy into a reality. There might be errors, mistakes, and failures in planning and implementing. So corporate boards should scrutinize it by questioning: Does the company have a business plan, fully developed, showing where the checks and balances are? Does the plan describe how to not only implement strategic decisions but also how to monitor success? Does the plan define the “SMART” goals? Is it easy to make adjustments? To what extent and how does the corporate planning align corporate priorities, sector business plans, and resource allocations? Etc. In a completely new uncertain environment, you need a faster and better tool to capture opportunities and eliminate risk before sticking to plan.

System oversight: Every company is unique as a "system." Digital organizations are dynamic, complex and unpredictable systems that would perhaps be disturbed by nonlinear events, amplify or ameliorate the effects of others and shape business structures and functions. You have to listen to the system data from the outside in and top down - to identify root causes to negative complexity (entropy) with the objective of driving simplicity. Having a systematic oversight of the business at the board level enables the management to avoid tunnel vision, keeps an open mind to explore new possibilities because the best business solution should be the one that responds perfectly to its dynamic business environment and ensures the organization as a whole achieving the better business results. providing a structured view and communication bridge between shareholders/investors and top business leaders such as corporate directors.

A system by its very nature moves through a range of stability. It's imperative to learn how to shape an objective view of the business without the cognitive distortion that results from systemic ignorance or neglect of the cognitive layer of the whole. Corporate GRC discipline can fulfill its purpose as a high-level corporate enabler by fostering business communication, strengthening connections between business units, searching for meaningful business relationships both within these subsystems and between them; monitoring and observing links and feedback systems to achieve business purposes. With solid GRC discipline, the business management should focus on managing a portfolio of relevant cross-border strategic synergies and business interdependence with the appropriate mix of elements and maintaining the right level of digital balance, keeping the business system firm, qualitied and resilient.

Process oversight: Process underpins capability, capability underpins strategy. Thus, key processes and critical information governance are genuinely needed to ensure its coherence because different parts of the business are making shared use of a process or information. Equally, there are many aspects that can be adequately addressed through the normal delegation of controls approach of the managerial structure within an enterprise. Process Governance allows the advantages of standardization, decrease in duplication of effort, decreased risk of violations that can occur. The board’s oversight of key processes at strategic level ensures core processes are “SMART” and dynamic to build differentiative business competencies to unlock performance.

Organizations cross vertical sectors are shifted from inside out mechanical systems to outside in, people-centric. Therefore, the process refinement should focus on improving adaptability and people-centricity. Technically, the process should be specific to the needs of the customer so that it follows the right path; it should have SLAs, KPIs and these should be captured and measured; it should enable or provide features to achieve the goal. The process should capture efforts and cost and time to ensure the goal of the customer is met. A "smart" process is one that solves the customers’ problems with a minimum of interaction. And it follows the “SMART” principle -specific, measurable, achievable, relevant, and time-based goals.

Executive Drive (including culture): Governance is about doing the right things, Corporate governance discipline can fulfill its purpose as a high-level business enabler by providing a structured communication bridge between shareholders/investors and top business leaders such as corporate directors and setting the culture tone for leading progressive changes. In fact, GRC is moving more and more to be the hub and harbinger of culture and values. Organizations should identify patterns for good governance and influence high performance culture with characteristics such as engagement, motivation, and innovation as these are vital aspects of top-performing enterprises in our modern economy.

In many organizations, much of GRC is reactive in the sense that there is a lot of rushing around trying to fix problems instead of preventing risks. Corporate boards need to encourage the culture of risk-intelligence and enforce strong GRC disciplines that help executives and management perform a risk analysis, harness connectivity, raise visibility and awareness for many things that are captured at the different levels of the organization. It’s important to instill GRC discipline in organizational culture, embed the GRC mechanism in the key business processes, and enforce GRC practices at daily business activities.

Resources (time, information, budget, erc) oversight: Corporate resources are limited and there are different types of resources such as funds, physical assets, people, information, and reputation, etc. For any company to succeed in the long term, how resource allocation is determined should be understood by all important parties including BoDs. It is essential for the entire company to be pulling in the right direction by allocating resources, time, and assets scientifically. Business executives are sufficiently aware of the "general condition" of the various capabilities to input into a qualitative assessment, allocating resources effectively. As resource allocation is critical to business management prioritization and running high-performance business with effectiveness and efficiency.

In reality, many businesses took a big bite of resource to keep the lights on, only leaving very little for growth and business transformation, resources management becomes a bottleneck for digital transformation success. Thus, resource oversight at the board level enables top business leaders to set strategic priorities right, take advantage of resources effectively, oversee the processes to integrate, reconfigure, gain and release resources to match and even create market change. For realizing the dynamic strategic goals of the company, rebalancing resources helps the organization take advantage of resources effectively, optimize cost, build a core capability portfolio, keep the business run, grow, and transform steadily.

Governance= Superior Management. With the increasing speed of changes and continuous digital disruptions, there should be a governance mechanism embedded in all crucial business processes, and there are governance practices to enforce accountability at every level of the organization. Strong GRC disciplines enforce the act of guiding, influencing, and regulating the decisions and behaviors of the entire workforce, management included, to drive sustainable value-creation to the shareholders in a structural way.


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