Is Governance Leadership?

Opt 3 July 13

This week begins a new series on the topic of governance in growing businesses.

Governance is not a term typically used by business owners and business leaders. Rather, we hear this term most often in the context of corporate boards, both public and private.

Yet, Wikipedia defines corporate governance as, “the system of structures, rights, duties, and obligations by which corporations are directed and controlled.

  • Governance provides the structure through which corporations set and pursue their objectives, while reflecting the context of the social, regulatory and market environment.
  • Governance is a mechanism for monitoring the actions, policies and decisions of corporations in alignment with the interests among the stakeholders.”

In short, governance is the DIME method that I have talked about previously. Design, Implement, Monitor and Evaluate.

Beginning with “D – Design”.  In my experience, businesses initially develop without much regard to design. And as Vistage speaker Jim Alampi reminds us, while bootstrapping works up to a point, as businesses reach critical milestones of growth, what we were doing up to now, doesn’t work anymore. At this point it is time to pause and ask two sets of questions:

First, the 5 key internally focused questions:

  1. What are our business objectives?
  2. What are the cultural implications of these goals?
  3. What are the financial implications of these goals, revenue, expense, cash and capital needs?
  4. What structure and infrastructure, i.e. key functions and processes are needed to achieve our objectives?
  5. Who on our team is qualified to fill the key roles? Who may not fit? Who will we add?

And, equally important are the 5 key externally focused questions:

  1. What is happening in our industry? Competition, innovation, regulation?
  2. What is happening amongst our customers? Growth, consolidation, innovation?
  3. What are the gaps that provide opportunities for us?
  4. What are the threats to our continued growth?
  5. What diversification opportunities exist?

 

Elisa K. Spain