Thursday, June 17, 2021

The shift of Governance

In a high mature organization, governance must be viewed and assessed at the enterprise level, developing innovative governance practices and achieving governance holism.

Considering that unpredictability, uncertainty and the probability of surprising emergent properties increase with the complexity of business ecosystems, businesses across vertical sectors need to reinvent themselves for improving their adaptability. Governance is a mechanism for monitoring the actions, policies, and decisions of corporations. Those organizations that feel stifled by governance may not have matured beyond operational risk and control. 

The Corporate Board leaders need to contemplate: Is today's governance over-control, not resilient enough to embrace the change? Ultimately, the corporate board takes the praise or blame depending largely on their abilities to influence the business outcomes and drive transformative changes seamlessly

The shift of governance to focus on enterprise change and improve organizational maturity: Digital organizations are organic systems with integrated organizational management processes being developed that help to build a cohesive set of business capabilities. Excessive management complexity, enlarges functional gaps, limits performance and slows down change speed. It’s important to look for the linkage between management and governance rather than compliance, corruption, and tough issues, and improve the quality of performance through governance improvement. The insightful BoDs should ponder further: Can the work of managing be pushed out to the periphery of our organizations? Can it be automated? Can it be dispensed with entirely? What should be focused on embed governance mechanisms into the business decisions and key processes to improve effectiveness and agility for adapting the dynamic business environment?

The effectiveness of management can be derived best when overall organization reflects on how the business is structured for responsibilities and accountabilities of key decision-makers. The effectiveness of governance is to encourage, actually orchestrate change, and enforce accountability. The long-term management optimization will require lowing maintainability, lowering overhead and increasing scalability and risks intelligence, and evaluate whether the organization can make continuous deliveries of cost-effective, secure, and innovative business solutions. Governance should be the conception, development, and deployment of solutions. Not only do today’s BoDs need to have sufficient knowledge to understand the digital business ecosystem, develop a set of digital principles that provide a more robust foundation that makes it possible to straightforwardly derive solution-level governance and ensure the effectiveness of business management practices.

Shift the governance conversation from availability of business resources to the most productive uses for the enterprise's scarce resources and capitals: Business resources are limited, including technological, financial, reputational, market structure and institutional assets, etc. Organizational management needs to make an objective assessment of their resource availability and allocation; and corporate boards should oversee their business investment, including resource management, information synchrony, or organizational design optimization, etc. In fact, one of the BoD’s oversight should be focused on the maximization of capital & resource allocation and unleash the full potential of their business.

For every corporation which should work effectively, you need strong GRC disciplines that help executives and management perform a risk analysis, harness connectivity (communication, coordination, and control), raise visibility of their core processes, and improve organizational agility. Insightful BoDs should brainstorm with the management team by asking: Is it possible for an organization to be highly decentralized and precisely synchronized? Can we reduce the performance drag of our top-heavy management structures without giving anything up in terms of focus and efficiency? With strong governance discipline, digital management can translate strategy into operational terms aligning the organizational processes and structures to create synergies in making strategy everyone’s everyday job, mobilizing change through digital synchronization, for ensuring all organization action is directed to achieving high performance results.

The shift of governance from controlling & enabling to encouragement & empowerment: Running a successful business is not just about productivity and efficiency, as innovation is the light every organization is pursuing due to fierce competition and frequent disruptions. Creativity is a long-term endeavor. It must be cultivated. One point of struggle is governance taking away liberties that are essential to people doing their jobs in creative ways. If there's a problem with trust then governance will suffer, because motivations are not aligned across organizational boundaries. Insightful leaders need to ask forward: Are there ways of combining the freedom and flexibility advantages of self-management with the control and coordination advantages of traditional hierarchies? To what extent can Digital Setting remuneration policy and process reflect the desire for the organization to be innovative?

Many organizations are at the crossroads of the business transformation to make sure information and interaction flow in every direction, build up trust by bonding people around clear and benevolent intentions. Statistically many employees do not feel engaged in their work in many companies, and talented people feel “helpless,” to make a splash, self-management" or "peer-management" substitute for manager-management? Corporate board and top leadership team sets culture tones, makes good policies to build up a positive emotional climate, and embeds governance in cycles of performance/potential management, encouraging creativity and empowering people to achieve more, etc. In fact, culture must be fostered from the board of directors downwards; otherwise, no real sponsorship takes place, encouraging autonomy and innovation. Accountability goes hand in hand with the delegation of authority or power.

In a high mature organization, governance must be viewed and assessed at the enterprise level, developing innovative governance practices and achieving governance holism. An effective board enables and directs management towards good outcomes through effective questioning, reflecting, coaching, advising, and making an assessment of the organizational maturity, to ensure the business is on the right track to reach their vision and achieve calculated results.


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