Thursday, March 18, 2021

Boardroom with Characteristics of Coherence

Modern corporate boards play a critical role to exemplify digital leadership and influence corporate culture.

Consider digital organization as the coherent, hyper-connected and interlaced ecosystem, governance is a process for a group of people governing with a set of principles and practices. Corporate boards make ultimate decisions and they should really focus on organizing the corporate assets toward the achievement of the business vision and mission.

 A coherent corporate board can steer the organization in the right direction in a cohesive way. The digital coherence is the ability to maintain focus and clarity, as a decisive factor for the success of business strategy implementation.

Policy coherence: One of the important responsibilities of the corporate board is to make good policies that provide a common corporate "language," and work instructions to decide and take actions for either grasping opportunities or managing risks. The good policy is like the light to guide people through, and ensure the good things are easy to do and encourage expected changes. A good policy governance system guides the board down this path. Corporate board enforces governance disciplines. Governance can begin with frameworks and policies to be put in place, depending on the nature, scale and complexity of the organization,

Corporate governance includes setting principle guidelines, grounding rules and policies, and helping to manage collaborative business results and best practices that view the organizational objectives holistically with the correct strategy lenses/focus. However, the overly restrictive policies will lead to micromanagement or too much controlling which leads to business bureaucracy, inefficiency and stifling innovation. Good policies can shape the high performance culture through trustful relationships, possess transparency, and continuous improvement.

Decision coherence: All company’s performance is directly related to the decisions people make every day. The strategic decisions at the corporate board level need to be coherent for driving desired changes. The ability to maintain focus and clarity, even under extreme pressure, is what science calls coherence. It’s all about leadership from the top which sets the tone and governs corporate boardroom behavior. You would be better served if you educate yourselves on the variables that affect the quality of decisions in general and work together to facilitate better decision-making.

Technically, there are internal decision factors such as decision goals, situation, context, relevant information, and knowledge, organizational capabilities and resources, as well as external decision factors such as technology factors, political and legal conditions, competition and consumer demands. An essential part of the “decision framing process” is to understand what your high-level outcomes are related to the issue, opportunity or problem. Technically, there are many causes of indecisiveness including a linear and static decision-making scenario that commits to a singular path; or there tends to be definitely perceivable choke points due to the inadequate delegation. From top down, organizations need to define a set of measures that help people make informed decisions across the organizational scope cohesively. As a board member, you have to be assured and assure that the best idea always wins, and business executives can strike the right balance of short-term, tactical decision making with the long-term strategic goals of the organization.

Process coherence:
The directorship in any organization must have the ability to guide, inspire and motivate people of the organization toward accomplishing shared visions and goals. You should not confuse governance with compliance! Governance, risk, and compliance is not a single process, but a collection of coherent processes, and other governance mechanisms, such as roles or tools. The starting point to a governance initiative is the stakeholder needs analysis followed by clarifying the organization's value proposition.

When companies become bigger and bigger, they try to control processes and performances with practices and administrative procedures that make it difficult to disguise the real goal of the company. Understanding one's risks and conducting Risk Assessment remains the core exercise before any controls are put in place in the overall context of GRC. It makes sense to have governance processes that are more lightweight, that are more continuous, and that focus more on results rather than detailed plans.

Modern corporate boards play a critical role to exemplify digital leadership and influence corporate culture. Corporate board leadership coherence directly impacts on decision effectiveness and governance coherence. Directors need to be able to guide the senior management team through effective questioning, coaching, advising, and assessment of the business strategy and organization's strategy execution, and improve organizational maturity in a stepwise manner.


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